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Tuesday, July 31, 2018

Worker pay up; take home pay too

Multi-millionairess Nancy Pelosi, multi-millionaire Joe Manchin, and other Democrats called them crumbs. They opposed cutting taxes for workers. Not one of them -- not a one -- voted for the Tax Cuts and Jobs Act of 2017.

Now six months later, the Tax Cuts and Jobs Act is delivering -- on time and as promise by President Trump.

"Compensation for workers rose to a nearly 10-year high in the second quarter as inflation pressures continued to percolate in the U.S. economy," CNBC reported.

"The employment cost index increased 0.6 percent for civilian workers in the three-month period ending in June, according to a Bureau of Labor Statistics release Tuesday. That brought the 12-month rate up to 2.8 percent, the highest level since 2.9 percent in the third quarter of 2008, amid the financial crisis and the Great Recession."

10-year high.

Once again, President Trump erases a legacy of Obama: low wages.

But wait.

There's more.

Unlike pay raises in the past that were gobbled up in part by federal income taxes, this round of raises coupled with the tax cuts means that in many cases a $30 raise in pay results in a $40 increase in take home pay.

The tax cut provides $20. The raise provides another $20 -- as it is taxed and also hit by FICA.

Crumbs.

We are making America great again.

And now the naysayers are crying inflation.

But if a $40 increase in take home pay costs the employer only $30, prices will not rise to match that fatter paycheck.

I am curious, how much do economists make today? Do their checks not affect prices? Or is their some sort of immunity to inflation when they get a raise?

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12 comments:

  1. As a professional economist--macro economic theory is crap. Wage push inflation is Keynesian theory which totally fell apart in the 1970s. Monetists (sp) were right but had no snake oil solutions to sell politicians.

    Bill

    ReplyDelete
    Replies
    1. Bingo! Micro-economics is all that matters. Micro seems to conveniently ignore the changes in behavior an action brings.

      Delete
  2. And just in time for the elections.

    I love it when a plan comes together.

    ReplyDelete
  3. I'm not an econ guy but the world today would hardly be recognizable to Adam Smith.
    Some new thinking is necessary but there doesn't seem to be much of anything around except the old fear and greed mantras.

    ReplyDelete
  4. I just love how Wall St. is being subordinated to Main St. Where I live.
    Not to mention the left now has to live the Koch Brothers since Trump called them out.
    I wish Halliburton was up to something nefarious these days so they'd have to love them, too.

    ReplyDelete
  5. It's still a Main Street, consumer-driven economy. People buy things. People that make things try to make things people want to buy. If someone has more money they can buy more things. People that make things can then make for things. Money picks up velocity.

    The Wall Street denizens have been milking the economy and making profits by moving to and buying from overseas. But they don't put the money back into circulation for the real economy. Hedge funds, derivatives, etc. are merely big money bets that you don't have to go to Las Vegas to place.

    President Trump is moving our economy from Wall Street to Main Street. Expect more stiff opposition and warnings of woe from the US Chamber of Commerce and their toads in Congress. They will be reaching a fever pitch to rival the worst cicada brood in years. - Elric

    ReplyDelete
  6. You can bet your bottom dollar that it wouldn’t have happened under the egregious aegis of a Hillary Clinton administration.

    ReplyDelete
    Replies
    1. Nope. Hillary doesn't like Main Street. The big bucks are in Wall Street. Everybody would have to pay baksheesh to the Clinton Foundation.

      I like egregious aegis. Good onomatopoeia. I'm stealing it. What do you think of Hillary Clinton's conspiratorial cabal? Naw. Cabal implies conspiracy. It's redundant.

      - Elric

      Delete
  7. You know, watching Trump’s Florida rally, I’ve realized something about his speechifying style.

    After he kicks his opponents in the balls, he does it once again for good measure, then he ironically offers them the equivalent of a low-grade local anaesthetic.

    ReplyDelete
  8. https://www.forbes.com/sites/charleswallace1/2018/07/31/trade-war-hurts-china-while-u-s-economy-booms/#20f0c405b640

    Check it out, so much for the Chinese clout over the U.S economy haha

    Another MSM narrative fail

    ReplyDelete
  9. It's not the pay increase, although that is always nice. It's the sense that Trump has pulled the government monkeys off the worker's back. Under Obama, no sooner would workers adjust to the latest government mandate than another one from another part of government would move it to condemn the new way they did things.

    Under Obama, I knew a lot of working people who felt this was happening to them:

    "He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance."

    ReplyDelete