For several years most workers have seen only very small wage increases. This year there have finally been studies showing wage growth. Unfortunately, rising energy costs are now eating into workers' increased pay according to a new study from GLobal Insight Inc.
Authored by Global Insight Inc., the report on annual wage growth prepared for the Conference of Mayors shows the average job in 2005 earned a salary of $43,500 -- a 4.6 percent increase over 2004. The spike in energy costs, however, wiped out almost one-third of those increased earnings.
"We have known for months that families have been feeling the pinch from rising cost of gasoline. Now because of the latest Metro Economy Report, we see that the high cost of gasoline has significantly impacted people's disposable income -- despite recent wage gains. This is concrete proof that our nation needs a comprehensive energy policy that addresses these new economic realities," said Long Beach Mayor Beverly O'Neill, president of the U.S. Conference of Mayors.
Total energy expenditures in the U.S. in 2005 represent 5.9 percent of all consumer spending last year; and energy expenditures in 2005 increased a whopping 20.3 percent over 2004. U.S. households spent $287 billion to fuel cars and trucks, and $225 billion for heating, cooling, and electricity -- an amount equal to 9.0 percent of wages and salaries.
This compares to $230.4 billion spent by U.S. households on gasoline to power cars and trucks, and $195.4 billion spent on other energy costs in 2004 -- an amount equal to 7.9 percent of wages and salaries.
The report also illustrates the effect of rising fuel costs on consumer wage gains in individual cities. For example, the Atlanta metro area had wage increases of $1,740, but saw 45.6 percent of that gain eaten up by gasoline price increases of $792.90. In the Miami metro area, wage gains were $2,109, but gasoline price increases consumed 48.2 percent, or $1,016.10, of the increase. In Detroit, gasoline price increases were 41.7 percent of wage gains, $686 out of $1,646 wage gains. The impact was greatest in Spokane, Wash., where an increase of $549.70 in the price of gasoline ate up 78.2 percent of the area's average wage increase of $761.
Most commuters don't need a study or survye to tell them rising fuel costs are leaving them with less money to spend on what they want. You know it's a difficult economy when you finally start to see wage increases after several years of flat wages and they are quickly erased by rising energy costs and rising inflation.
