Economic Naturalist Writing Assignment
A serious issue of current US economy is stagnant wages despite consistent increase in new jobs created by US employers and subsequently a decline in unemployment across USA. The paper will explain the impact of stagnant wages on life of a common man in USA with the use of relevant examples.
Stagnant wages means either paltry or no increment in salaries and wages of an employee because employers are not inclined to increase their costs by increasing their salary budgets. From a common person’s perspective, the scenario adversely impacts one’s household budget and living standard because the market prices of goods and services regularly increase due to inflation but wages remain same. Consequently, the real income or purchasing power decreases that means a decline in standard of living. For example, the price of gasoline is $3 per gallon and the current salary is $1800 per month, which means a person could purchase 600 gallons of gasoline per month if he or she spends all bucks on gasoline. However, if price of gasoline increases to $4 and the salary remains same $1800, the person could now buy only 450 gallons of gasoline per month. Resultantly, the purchasing power of a person has reduced due to freeze in wages, and thus a common man has to compromise on living style by reducing one’s consumption and monthly expenditures to make ends meet.
Secondly, the stagnant wages also adversely impacts a person’s saving rate because monetary spending on goods and services increase due to inflation; thus a person is left with fewer bucks to save and reinvest. In other words, the wage freeze not only negatively affects affordability in short run but also it reduces financial strength of a common person in future. For example, a worker may not be able to save significant amount for bigger expenditures such as matrimony and property acquisition. In short, the stagnant wages in present for a significant time period could bring adverse consequences and damage future motives and ambitions.
Thirdly, the wage freeze also has a psychological disadvantage because it causes anxiety, distress, torture and anguish among workers who face severe trouble in financing their monthly utility bills, educational fees, grocery bills, automobile lease and property mortgage payments. Disruption in meeting routine expenditures and specifically fixed costs of living could jeopardize a person’s health, work motivation and passion for life. Overall, the situation is more destructive for an economy and social life patterns as a whole.
In conclusion, the researcher has highlighted three major repercussions of stagnant wages for a common person that include decline in living standard, reduction in saving rate and psychological distress. Indeed, these issues not only negatively impact a worker’s personal life but also affect economy as a whole.