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The truth about wages: Obama's economy

| Thursday, Aug. 29, 2013, 8:55 p.m.

The left and “progressives” love to blame wage stagnation on greedy businesses wanting to gobble a larger share of the pie. But it's actually a product of businesses' uncertainty about taxes, regulations and employee-benefit costs — which the Obama administration has exacerbated.

Merrill Matthews, resident scholar at the nonpartisan, free-market Institute for Policy Innovation ( ipi.org), notes that fresh U.S. Labor Department data show nongovernment, nonsupervisory workers' average hourly wages, adjusted for inflation, have fallen 0.9 percent since the recession ended in June 2009 — “since, well, President Obama's economic policies were put in place.”

Mr. Matthews says businesses “are reluctant to invest” — in pay raises or anything else — without knowing future costs of regulations imposed by a president whose love of regulations is rivaled only by FDR's. And with rising health-care costs, which ObamaCare will exacerbate, holding down wages helps offset rising overall costs for employee compensation.

Then there's uncertainty about taxes. This administration has imposed more new taxes than any other ever has — ObamaCare alone brings 21. And it wants to “reform” — which means increase — corporate taxation.

Businesses' response to these Obama policies — erring “on the side of financial caution” by holding on to their money in case it's needed — is the same as that of families “facing a number of unknown possible future costs,” Matthews says. And with no indication that Obama will change his economic course, “expect the stagnant-wage trend to continue, at least for the next three years.”

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