Benefits versus Wages

Given the last post on the very high marginal tax rates commonly levied on each additional dollar earned by many families, it is not at all surprising that more and more, Americans want their additional work compensation to be in the form of untaxed benefits. This acts to decrease the income of governments and is nothing but a reasonable response to their greed.

James Sherk, the Bradley Fellow in labor policy at the Heritage Foundation, wrote an interesting commentary in the 16 July 2008 Washington Times on this phenomena and its effect on wage earning growth. The article is entitled Forecast for Workers.

Liberals and socialists like to say that worker's wages have not increased over the last eight years. It is true that cash wages have not increased, but one-third of worker's earnings are in the form of benefits. These include paid time off, health insurance, and retirement plans. Over the last 8 years, the average American's total earnings have risen 17%, which is quite a healthy increase! The typical employee earns 20% more paid time off, 33% more in retirement benefits, and 50% more in health benefits per hour worked than in 2000.

Socialists like to claim that worker productivity has increased, but the worker has nothing to show for it. But, when the total worker compensation package is examined and inflation is treated in the same way when comparing compensation as when determining the increase in productivity, then it is seen that worker's compensation has kept pace with productivity. Today, worker's total compensation is about 70% of the total national income, which is the same fraction of income it has maintained for the last 40 years.