Wage Deflation Alert: Forget About a Raise; More Consumers Expecting Paycut

Often over the past couple years I've written about one of my per topics:  Wage Deflation.  It and real deflation are the two key components of deflation.  We've already seen wage deflation in the real estate related industries:  Contractors, subcontractors, their employees, mortgage brokers, and real estate brokers, all for the most part are making less than they used to. 

Today, an interesting poll was released:  Forget About a Raise; More Consumers Expecting Paycut

More Americans expect their salaries to be cut soon, reversing a steady decline in the number of workers who fear pay cuts, according to a March survey. Adding insult to injury, those same consumers expect to take a bigger hit on expenses because of rising inflation.

The percentage of Americans who expect a decrease in their income over the next six months ticked back higher to 15.3 percent in March, up from 13 percent in February, which had been the best reading of wage confidence since 2008, according to fresh survey data from the Conference Board.

The next general area where we will see wage deflation is in the world of municipal employees where cash strapped cities, counties, and states need to pay their people less to make budgets work. 

The second arena is in the world of banking.  Since there is very little organic growth, we should continue to see banks closed by the FDIC and merged into healthy banks, or banks merging on their own.  As we consolidate banking, the supply of bankers should make pay or compensation weak.  The industry might take some time before we get to wage deflation.

The increase in the number of people expecting a salary cut probably correlates with today's decline in consumer confidence.  The two seem to go hand in hand, and it will be interesting to see if these data points continue to worsen and how that impacts consumer spending in the near future.

Hope all is well.

J.D. Rosendahl, Rosey