Private wages sink to new lows

posted at 10:55 am on May 25, 2010 by Ed Morrissey

As Matt Drudge puts it, Obama Redistribution Victory.  The percentage of American income from private wages fell to a low of 41.9% in the first quarter of this year, down from 44.6% in the final quarter of 2007.  The percentage of income from government programs rose to 17.9%, up from 14.2%, and government wages rose to 9.8%:

Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.

At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

That means trouble ahead:

The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. “This is really important,” Grimes says.

This comes before the federal health-insurance subsidies hit in 2014, too.  That program provides federal welfare payments to families making less than $88,000 a year who buy their health insurance through the state-run individual exchanges.  As more employers dump health-insurance coverage (and they will), more Americans will move into the dependent class despite making as much as 400% above the poverty level and better household income than 60% of their fellow Americans.

The USA Today article quotes a liberal think-tank analyst as saying that this shows that “the system worked,” and that private wages will rebound when the economy recovers.  We need capital to flow back into the markets to get that recovery, however, and as long as government keeps seizing more of it, the recovery will either be weakened or practically nonexistent.

As far as the system working “as it should,” in the words of Paul Van de Water, it depends on what the system was designed to do.  If it was to create wider dependence on government largesse and keep capital from working towards private-sector growth, then yes, Van de Walter is entirely correct.  If we want to have a real economic recovery, then we need to curtail government welfare programs and stop expanding the dependent class in the US.

It’s more than just unsustainable.  We were already on an unsustainable path before Barack Obama got elected President, with pending entitlement disasters in Medicare and Social Security threatening financial oblivion.  In the past sixteen months, we’ve doubled down on disaster, and the accelerated redistribution of wealth through entitlements has us careening towards it at breakneck speed.


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GW Bush: MISS ME YET?

America: We’re getting there, G-Dubs.

Good Lt on May 25, 2010 at 10:58 AM

I see a big VAT of something coming…it looks kinda like chocolate…but ooooh, it doesn’t smell like chocolate….

RBMN on May 25, 2010 at 10:58 AM

He is no communist…

Inanemergencydial on May 25, 2010 at 10:59 AM

Making all the wrong moves for the American people, but all the right moves for Marxism. Dear Leader is right on target.

d1carter on May 25, 2010 at 11:00 AM

2014 is the deadline for any chance of perserving America as the founders intended. If ObamaCare is not repealed by Jan 1, 2014, the country will be altered for the worse forever. That deadline will not be met if Obama is reelected in 2012.

WashJeff on May 25, 2010 at 11:00 AM

In the past sixteen months, we’ve doubled down on disaster, and the accelerated redistribution of wealth through entitlements has us careening towards it at breakneck speed.

they knew this was coming, so they just had to get their socialist fun up front before it all fell to hell…

ted c on May 25, 2010 at 11:01 AM

Boy I hope this scares independents as much as it scares me.

The liberal agenda is unsustainable. Likewise, a US led by Obama, Pelosi, and Reid is unsustainable.

BuckeyeSam on May 25, 2010 at 11:02 AM

Greece is the Word.

Chip on May 24, 2010 at 2:35 PM

I just had to bring this out for an encore! :)

Dire Straits on May 25, 2010 at 11:02 AM

Two America’s – Government Workers vs Everyone else.

brewcrew67 on May 25, 2010 at 11:02 AM

Obammunism … it’s our future.

Have you seen how swell things are going in Chavez;s socialist utopia these days? Gulags and guns are right around the corner.

tarpon on May 25, 2010 at 11:03 AM

via Drudge:

Obama will be skipping the traditional Memorial Day ceremony at Arlington National Cemetery. ‘He’ll be on vacation in Chicago’

pseudonominus on May 25, 2010 at 11:05 AM

Cough cough… Stock-market crashing… cough cough… What exactly do ya think thats going to do to private wages???

doriangrey on May 25, 2010 at 11:06 AM

Get me off this crazy train!

cmsinaz on May 25, 2010 at 11:06 AM

The day after they propose to bail out union pensions.
“not sustainable” that’s an understatement.

ORconservative on May 25, 2010 at 11:07 AM

For Band of Brothers fans, the more I watch Obama and his wreckage, the more I’m reminded of Lt. Norman Dike. Dear God, where’s our Lt. Spiers?

BuckeyeSam on May 25, 2010 at 11:08 AM

Matt Drudge is the man

faraway on May 25, 2010 at 11:08 AM

The people elected Obama to destroy what was left of the USA…It was a great country…I’ll miss you.

PatriotRider on May 25, 2010 at 11:09 AM

Ha, anyone who cares, Kwame Kilpatrick just got 5 years. Apparently the liberal loony land of Detroit has finally figured out that Mr. Kilpatrick is a filthy liar.
I wonder how long it will take tha country to figure out that Obama is the same.
Oh wait…………..

ORconservative on May 25, 2010 at 11:09 AM

Get me off this crazy train!

cmsinaz on May 25, 2010 at 11:06 AM

If you find a way please let us all know it.

Dire Straits on May 25, 2010 at 11:11 AM

I had to look up the complete “system working” quote to get context.

The shift in income shows that the federal government’s stimulus efforts have been effective, says Paul Van de Water, an economist at the liberal Center on Budget and Policy Priorities.

“It’s the system working as it should,” Van de Water says. Government is stimulating growth and helping people in need, he says. As the economy recovers, private wages will rebound, he says.

The very idea that someone would say the stimulus efforts have been effective is ludicrous. It was supposed to stimulate an economic recovery. That (in the real world) means increase private sector wealth creation. And it obviously has NOT worked.

Van de Water is delusional.

ButterflyDragon on May 25, 2010 at 11:14 AM

Dire straits: you got it

cmsinaz on May 25, 2010 at 11:14 AM

Comrade Zero’s War on Prosperity continues apace.

Cicero43 on May 25, 2010 at 11:14 AM

Didn’t Maggie Thatcher say something about ‘socialism only works until you run out of OTHER PEOPLE’S MONEY’?

GarandFan on May 25, 2010 at 11:16 AM

Everything is 180 degrees out of phase. It used to be shameful to receive government largesse now it is so common that the private sector can’t compete by paying wages for work performed. This may be a victory for the leftists but it is a societal defeat for America.

fourdeucer on May 25, 2010 at 11:17 AM

it was to create wider dependence on government largesse and keep capital from working towards private-sector growth

Mission Accomplished.

Kenosha Kid on May 25, 2010 at 11:19 AM

Cough cough… Stock-market crashing… cough cough… What exactly do ya think thats going to do to private wages???

doriangrey on May 25, 2010 at 11:06 AM

And 401(k)s.

Remember that talk of confiscating 401(k)s to provide a guaranteed return in a nice, safe government scheme like SS – (when it will actually be used to shore up union pensions)?

A stock market around 5 or 6k will be the perfect cover for this.

“We’ll guarantee it !!!”

BowHuntingTexas on May 25, 2010 at 11:20 AM

North Korea sinks a SK vessel while Obama and Pelosi sinks a nation……..heavy sigh

Rovin on May 25, 2010 at 11:20 AM

Tie this in with his approval ratings plummeting.

The only reason his approval rating isn’t zero is because of the loyal black vote and people who depend on money from Obama’s “stash.”

Daggett on May 25, 2010 at 11:25 AM

Everything is 180 degrees out of phase. It used to be shameful to receive government largesse now it is so common that the private sector can’t compete by paying wages for work performed. This may be a victory for the leftists but it is a societal defeat for America.

fourdeucer on May 25, 2010 at 11:17 AM

Exactly! When we were kids way back in the day, you got mocked if you got in the free lunch line and you did everything to try and get out of it. Now the free lunch line is longer than the line of kids who’s parents actually pay for it.

Johnnyreb on May 25, 2010 at 11:28 AM

“See…. I told you Capitalism doesn’t work!” – Barack Hussein Obowma

Just think…

… We have a whole Summer to go through before things get so bad that Obowma cancels the elections.

So what is everyone else doing for Memorial Day?

Seven Percent Solution on May 25, 2010 at 11:33 AM

Johnnyreb: I remember those days

cmsinaz on May 25, 2010 at 11:33 AM

Another modern day, real time example of what Ayn Rand saw back in 1957.

Atlas is shrugging hard right now.

TheAdmiral on May 25, 2010 at 11:33 AM

Nothing like having a communist voted into office to ruin the greatest country on earth.

http://www.youtube.com/watch?v=OPzyuiSUiuQ

xler8bmw on May 25, 2010 at 11:35 AM

It would be much worse except for all the green jobs.

seven on May 25, 2010 at 11:36 AM

Money for Nothing and your chicks for free!

ornery_independent on May 25, 2010 at 11:36 AM

I wonder where I’ll get the money to pay taxes on my unemployment checks, they are taxable BTW.
Do I go to debtors prison?
Do I starve on the streets?
Should I take that job offer I just got?
Is any of this worth it anymore?
DOOOOOMM! I say

Bobnormal on May 25, 2010 at 11:37 AM

The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs.

How does anyone not understand that. Dear Liar hates the private sector, but needs it to fund the government. Why is He trying to destroy it?

rbj on May 25, 2010 at 11:39 AM

See this just shows that the stimoolus worked! Now look over there….

…GAYS! OMG!…ABORTION!…ARIZONA RACISTS!…Palin is a STOOPID CHILLBILLY…

/s

ornery_independent on May 25, 2010 at 11:41 AM

The trend is not sustainable

Ya think?

And don’t worry about your 401(k). The gubmint is gonna fix that too!

PattyJ on May 25, 2010 at 11:41 AM

This may be a victory for the leftists but it is a societal defeat for America.

fourdeucer on May 25, 2010 at 11:17 AM

Runaway train on a down grade! The only hope is for some states to secede and create sanctuaries for democratic republics.

Is that a realistic hope, even?

donh525 on May 25, 2010 at 11:44 AM

GW Bush: MISS ME YET?

America: We’re getting there, G-Dubs.

Good Lt on May 25, 2010 at 10:58 AM

Uh…..W spent too much money too. Yes, Democratic control of the house in 2006, I know, I know. But still. Let’s not pretend the man was a fiscal conservative.

visions on May 25, 2010 at 11:44 AM

Let’s not pretend the man was a fiscal conservative.

visions on May 25, 2010 at 11:44 AM

No, he wasn’t, but let’s not think that “W” wouldn’t be a welcome replacement, at this stage in Americas’ destruction.

donh525 on May 25, 2010 at 11:50 AM

Just don’t call him a socialist!

WisCon on May 25, 2010 at 12:05 PM

Uh…..W spent too much money too. Yes, Democratic control of the house in 2006, I know, I know. But still. Let’s not pretend the man was a fiscal conservative.

Nobody’s doing that. I realize they are two bad choices, but unfortunately, they’re the only choices we have.

Given the choice between what we have now and what we had then, which is preferable?

Good Lt on May 25, 2010 at 12:05 PM

“Mission Accomplished!” – B. Obama

Wyznowski on May 25, 2010 at 12:26 PM

Man, good thing I’m a teacher and not in the private sector and my job’s perfectly safe…oh, wait a minute…forgot that 7.5 pay cut I’m getting next year, furloughs, pink slips, layoffs…

Man, it’s not safe anywhere!

Bob's Kid on May 25, 2010 at 12:30 PM

Hope

Change

And….


They are just getting warmed up

Opposite Day on May 25, 2010 at 12:53 PM

If good people don’t take this country back soon and fix it,
We are doomed.

The problem once we take it back is that the commies (those on the dole, unions and superfluous gubment workers) will take to violence when they lose their free ride.

That’s when it’ll get nasty. Tea Party types tend to respect law and behave while the takers do not. Imagine New Oleans style looting nationwide.

TheSitRep on May 25, 2010 at 12:59 PM

Government-generated income is taxed at lower rates or not at all, he says. “This is really important,” Grimes says.

And since government-generated income is PAID BY THE GOVERNMENT any tax revenue is still a net loss to the public.

I’d say that’s a bit more important Mr. Grimes.

PackerBronco on May 25, 2010 at 1:01 PM

Dear God, where’s our Lt. Spiers?

BuckeyeSam on May 25, 2010 at 11:08 AM

Ya’ know what most people’s problem is? They keep thinkin’ that somehow they’re going to escape the coming collapse. They keep thinking that somehow, they are are going to “get out of all of this”.

My collie says:

What they don’t seem to understand is that they’re ALREADY dead.

CyberCipher on May 25, 2010 at 1:02 PM

Man, good thing I’m a teacher and not in the private sector and my job’s perfectly safe…oh, wait a minute…forgot that 7.5 pay cut I’m getting next year, furloughs, pink slips, layoffs…

Man, it’s not safe anywhere!

Bob’s Kid on May 25, 2010 at 12:30 PM

That’s what we thought- but then the levies didn’t pass, and my hubs “Secure” job went bye bye. It is not safe anywhere. We looked at states where the economy is still ok when we did our job search, and ended up in Utah. Funny how the reddest state in the nation still has jobs. There are help wanted signs in the windows here. people have got to start voting with their feet.

Kristamatic on May 25, 2010 at 1:10 PM

And even now, govt workers, thugs, stooges, and teachers are still marching, screaming, chanting like a bunch of fattened Bolsheviks demanding ever and ever more of America’s money.

Edouard on May 25, 2010 at 1:18 PM

The Augean Stables of entrenched government bureaucrats must be flushed out away; who will be Hercules?

ya2daup on May 25, 2010 at 1:23 PM

When I went to an unemployment orientation (who knew) they told us that the starting salary request should be $8 an hour.

Cindy Munford on May 25, 2010 at 1:27 PM

So this accounts for approx 70% of US income. Where does the other 30% come from? I have a hard time believing that it is all investment income, but what else could it be?

mdenis39 on May 25, 2010 at 11:21 PM