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Sticky Wages Save the Day
2008-12-17

I know that this may seem hard to believe, especially if you've been following my blogs lately, but I really am a big optimist! It's just so hard to find the silver lining with the way that things are going in the world today. But this morning I was determined to find something! So, after much soul searching I found it! Ok, so here goes; yes, the Country is in recession, and yes, Americans home values have dropped 2 trillion dollars this year and yes, the unemployment rate is the highest it's been in decades, but (and here it is): deflation is on the rise!

Ok, I know, scary thought! It strikes fear in the heart of consumers everywhere! With the prices continually falling, why buy today that which will be cheaper tomorrow? The fear that this will damage the already weakening economy is real, companies may be forced to reduce their prices even lower than they are today, but on a lighter note, there is this thing called the sticky-wage theory.

The sticky-wage theory is based on the fact that when businesses look to cut corners at a time like this, generally speaking they will not cut their workers wages, rather they will cut back on the workers instead. Laying off employees in lieu of cutting back their employees pay. So, while the cost of food in the Pasco County restaurants, the cars being sold in Hernando County, the houses in Hillsborough County and general living expenses all around the Central Florida area are going down, the rate of pay received from your employee will almost always stay the same, which could make life a little easier on millions of people.

Not much, I know, but it's something!