Wages failed to outpace inflation in 2004

April 12, 2005 at 10:47 AM
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NEW YORK, April 12 (UPI) -- Some economists hope the failure of wages to outpace inflation in the United States last year does not represent a trend.

From the mid-1990s until last year, pay increases for most workers stayed ahead of inflation, the New York Times reported Tuesday.

Even though the economy added 2.2 million jobs in 2004 and produced strong growth in corporate profits, wages for the average worker fell for the year after adjusting for inflation -- the first such drop in nearly a decade, the Times reported.

The same was not true for higher income earners. The liberal Economic Policy Institute says for the top 5 percent, wages rose by an average of 1 percent, with some gaining much more.

Some economists want to know if the wage decline is just a temporary dip or portends a deeper shift that may cause the pay of average Americans to lag for years to come, the report said.

Other economists are more optimistic, saying the sluggishness is temporary and that real wages have slipped only because a sudden spike in oil prices has briefly left workers behind the curve.

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