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Wall Street Worrying About Workers’ Low Wages

June 15, 2014
Plain English Version

Wall Street worryingLow wages are good for corporate profits. They hold down inflation. They make shareholders happy.

What do they not do? They do not increase spending by consumers.

An expert said, “People have fewer dollars in their wallets even though they have jobs again.” He went on, “People are waiting longer to get married and they are having fewer kids. That is making them delay home purchases. It leads to a cautious economy.”

New jobs are not keeping up with the growth of the population. And they are not paying living wages.

Business is slowly starting to see low wages as a drag on the economy. Weak consumer spending holds back profits and economic growth. Consumer spending fell in April for the first time in a year.

Experts have said that stores that serve workers, such as Sears and JC Penney, are losing money. Meanwhile expensive goods and services are in demand.

Progressives say that wages must go up. They support raising the minimum wage. There are efforts to organize workers at places like McDonalds and Walmart.

The inequality between the rich and the poor is increasing every day. When Wall Street begins to notice, it is because they are worried about profits.

Still, it is a good thing when increasing wages becomes a cause for the business sector. The year 2014 did not get off to a good start for business. The economy appears to be growing at a less than two percent rate. They are hoping it will grow at a three percent rate in the second half of the year. But no one is betting on it.

Wall Street and the workers should work together to increase consumer demand.

Sources: The Wall Street Journal May 30, 2014 and June 8, 2014

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