Reich: Higher Wages Aren't Coming Back, and Here's Why

Re: Australia vis-a-vis the U.S. ...

They have a very, very different retirement system down under. There, it is not a pay-as-you-go system like Social Security. Rather, it is becoming (the transition has been underway for a while) a full-blown privatized system, in which workers have a substantial portion of their compensation set aside and invested.

I'm sure if you incorporated an estimate of the present value of expected Social Security benefits, U.S. median net worth would be a helluva lot higher. For example, at a 2% discount rate, 10 years of $1,ooo-a-month SS checks has a present value of a little more than $100,000. Thus, someone at retirement age in the U.S. with a financial net worth of, say, $50,000 has a practical net worth that's much higher.

 

Yet still not 4-5 times higher at the median like the Australians.

 

Low gas prices are playing a big part in the current economic uptick.

And, they're leading to the highest levels of consumer confidence in years:

The surge in U.S. household confidence propelled by a strengthening job market and lower fuel costs improves the odds that gains in spending will soon follow.

Consumer Sentiment in U.S. Surges to 11-Year High - Bloomberg

So, what do folks want to do? Raise the gas tax naturally.

Proposals to raise the federal gas tax:

Sen. Chris Murphy, in partnership with Republican Sen. Bob Corker of Tennessee, has renewed a push to raise the federal gasoline tax — a move to shore up a transportation fund that will soon run out of money, threatening road and bridge projects in Connecticut and elsewhere across the nation.

The federal Highway Trust Fund was propped up last summer through temporary funding set to expire in May. About half of the trust fund's money comes from a federal gas tax, now about 18.4 cents a gallon, that hasn't been increased since 1993. Since then Americans are driving less and cars are more fuel efficient, while the cost of building roads and highways has gone up.

Murphy's proposed fix is to raise the tax 12 cents a gallon over two years.

Murphy presses again for gasoline tax hike to shore up highway fund - Hartford Courant

And:

Three months ago, gas taxes were untouchable. Now, with oil prices down, they’re having a moment. Public voices ranging from Larry Summers to Charles Krauthammer are calling for hikes. (Summers argues for a carbon tax; Krauthammer says the tax should be raised “a lot.”)


More important, serious lawmakers from both sides of the aisle have gotten in on the game. The general thrust of the arguments on offer is that with oil prices falling, it’s now possible to raise the gas tax and still leave consumers better off than they were half a year ago.

http://www.newsweek.com/raise-gas-tax-now-299150

And at the state level:

"The states have shown that they are more likely to act on the gas tax than the federal government is," said Carl Davis, a senior policy analyst at the Institute on Taxation and Economic Policy, a research group in Washington. "The states have to balance their budgets. If they see, their roads are in bad shape or their bridges are literally falling down—in some cases—they need to come up with a way to pay to improve that. And there's a limited number of things you can do at the state level."

The increased chatter in state capitals about raising fuel taxes comes after eight states (Maryland, Massachusetts, New Hampshire, Pennsylvania, Rhode Island, Vermont, Virginia, and Wyoming) have done just that over the last two years.

South Dakota Gov. Dennis Daugaard noted in his State of State speech on Tuesday that when South Dakota last raised its fuel tax 16 years ago, the price of gasoline hovered around $1 per gallon, and about 22% of that went toward state fuel tax. The average price for regular unleaded gas in South Dakota is $1.99 per gallon, and the national average is $2.08.

States look at hiking gas tax as fuel prices plunge

 

Meh, maybe ... maybe not. Ragu's right, that sort of click-bait "reporting" can be so much b.s. My post was an attempt to point out that "median net worth" is way the hell more complicated than such stories suggest.

 

How much money does the federal government pay to keep our oil prices at the pump so low?

• Gasoline: fuel prices around the world 2014 | Statistic

Instead of raising state taxes, why not reduce the amount we are paying up front and help balance the budget?

 

I guess I'm trying to figure out how this is news.

Our job market has continually evolved since the founding of our nation. Who expects jobs that have "gone away" to come back?

 

What point are you trying to make? Does the chart you posted show anything other than that we have lower gas taxes than other countries?

So what?

Our country is big. It grew, and spread in large part because of the car, and our highway system. We are dependent on cars.

European cities came of age well before the car. It's a completely different way of life. And, while many romanticize it, I'm not sure how many Americans want to emulate it. Europeans live in small apartments, often without air conditioning. If they have cars, they are small.

If you like that, fine. But, it's not what most Americans are looking for. We want big kitchens, great rooms, open floor plans, big en suite bathrooms with a bath tub, large back yards, etc.

 

According to OECD statistics in 2012 for median household income on a PPP basis the US was at $30,930. Australia was at $29,993.

Median household income - Wikipedia, the free encyclopedia

The OECD defined the poverty level as 50% of median income. Using this criteria in 2012 the Australians had a poverty rate of 13.8% and the Americans 17.4%. Part of this is due to the United States having a little higher median income but it does seem that that a smaller percentage of the population in Australia is below the poverty level.

Income Distribution and Poverty : Poverty rate (50% median income), percentage

 

Australians have a government-funded "Age Pension" that provides people 65 and older with about $28,000 a year. It is means tested, however, and the age is soon going up to 67. On top of that, employers are required to pay 9.25 percent of employees salary into their version of a 401-K, called The Super. Employees may also contribute.

Also, minimum wage is around $17 in Australia and let's also look at the UN's Human Development Index:

Table 1: Human Development Index and its components | Human Development Reports

Bottom line here is that the Australians want and have a far more egalitarian society than us.

 

Consumer prices are roughly 25 percent higher in Australia, so their per capita incomes should be 25 percent higher. Instead, they are slightly lower.

 

Which means diddly squat with respect to differences in median individual/household net worth between the two countries.

You like/admire Australia? Knock yourself out.