Ed Butowsky: Calculating The True Cost of Living Increase

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Aloha! Good observation! Thank you for responding in the manner you did. This is true and I was hoping someone would take that issue and think about it. That is why I mentioned in my post that the 18% goes to "government". Government is the most corrupt entity to receive tax monies.
I will just examine the "infrastructure" issue you refer to. In the real world if you bother to follow the money these construction projects are called "Public Works". Public works is based on an antiquated law from 1934 invented during the FDR days. The law I refer to is the Davis Bacon Act. This act is the basis of union controlled labor rates called "prevailing wages". These are the same unions backing Bernie Sanders. I almost typed Bernie Madoff, but same difference. Unions are as corrupt as banks. The idea that Bernie brags about being backed by unions instead of Hillary's banks is sadly overlooked.

I speak from experience as for 25 years I was intimately tied to Public Works projects in California. Trade Unions set the wage rates on all Public Works projects where federal/state/county/city funding is required. Current total wage rate for a GED educated Laborer Class II is $93,000 per year, for the county of Oahu in the city of Honolulu, but go ahead and look up the rates for your county, they vary, but they vary at extreme rates for a GED educated ditch digger/broom handler. How much training do you have to have? Very generous benefits are included even vacation pay and medical and pension. In the 1990s I used to have all my payroll "certified" by the union. It's as if the Union had IRS powers to audit.

Is that an efficient rate for the labor duties performed? Or could you hire two laborers for the same price?

Now go down to the union hall and try to apply. The original legislation in FDR days was also a deterrent for blacks to join the union. So in the "Burn Speak" of today unions are some bigot and racist institutes. In my 25 years in the Public Works and union trades I saw about five blacks working on my projects. That's one every five years! These are the backers of Bernie's campaign.

In other words handing money over to any government has always been about total lack of efficiency and fairness. It is never what you know or how skilled you are it is always "who" you know. Being in the IBEW end of the trade unions I never saw anyone get in who did not know someone in the union and many times it was a generational issue. Government is always corrupt.

Our highly successful non-union company was always lobbied on all our projects by Union reps until they made us an offer we could not refuse. All the company execs got paid $80,000 each if we became a union contractor for a one year period minimum. We were taking so many Public Works projects from the union contractors that the union was forced to bribe us. We had such an issue finding qualified apprentices that we decided to go with it and see how it was biding as a union contractor. In one word once we were in we were "lied" to. The Union did not keep many of their promises and threatened legal action if we wanted out of our contract. We decided to quit bidding for a year to meet our contract time and went on a year vacation. We came back as non-union contractors and resumed out bidding union contractors and it became our most lucrative era. But … that's your 18% at work and to be precise many Munis and States had to float huge bond issues because 18% wasn't enough. 

I have only covered half of the infamous costs, "labor". The "material" side is just as corrupt. This is where huge global corporations buy favors to get their products specified through architects and engineers. I assisted engineers and manufacturers by putting together bid estimates for preferential treatment.

Now add up all the tax dollars lost to this inefficiency and corruption from 1934 to now. There is nothing "free market" about government. The US government has added TRILLIONS of wasted taxes and debt onto American taxpayers to sway corrupt unions and keep intact antiquated FDR labor laws from the 1930s. Your kids kids will still be paying for these over priced union controlled projects. FEEL THE BURN!

I can vouch for all my bids on these projects and everything was competitive except the "labor and material" line items in my bids. Every job walk we did there was a union rep there to remind and reprimand any contractor present to obey "prevailing wage" rates. To me that was total government sponsored intrusion into free market capitalism!

Next time you are on a freeway and there is road construction ask yourself how much each guy you see is getting paid. Then when you are in an airport watch the union guys at work. Maybe a journeyman electrician is hanging a light fixture … think $120,000 for that guy! Remember Halliburton and the $200 toilet seat or the $20 Coke six pack? What makes you think the cement and light poles and signage on freeway construction isn't another Halliburton? I can say I marked up both labor and material on my bids by 50%. In a corrupt system you have to do that to survive because you know you're going to run a gauntlet for the full duration of the project. In case I got audited I did not want to have a line item for "bribes"!

That's your 18% at work! It's not inflation … it's corruption! Remember those old signs along roadways back in the 1970s? YOUR TAX DOLLARS AT WORK?

 

 

 

 

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They give the illusion of precision and of reliability!
 

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Thanks for sharing it with us, and for validating the cognitive dissonance we experience between how we're told the economy is doing, and how we actually experience it.

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We all know that we can't have continual economic growth in a finite system. What is it supposed to look like when we get ever closer to resource limits? It seems that stagnant wages combined with rising prices provides a foolproof economic answer to resource distribution. It may not feel good, but it solves the problem.
I don't like it either. I'm not a fan of miserably hot, humid days in summer, and I tend to stay near the fire on bone chilling winter days. Those happen regardless of my wishes. If this is an economic solution foisted upon us, we either deal with it or suffer the consequences.

I've shown my strategy to deal with this situation. It isn't perfect, and it doesn't need to be. I've got about 2 decades left before I die of old age. By that time, my money will have about 1/8th of its current purchasing power. Those of you who have much longer to live (or have grandchildren that you are trying to guide,) really ought to think this out a bit more. If the system isn't going to be around, why participate any more than you have to? What can you do to limit your exposure? What can you do to mitigate the ever eroding purchasing power of the dollar?

Grover

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According to the IBEW union, "all IBEW journeyman electricians earn $20 - $50 per hour".  That equates to $41,600 - $104,00 per year, depending on U.S. location.  Seems like a fair living wage!  With experience, one would expect less "light fixture wiring" and more work on service panels, high voltage applications, and other skilled installations.  If you peruse one union website (IBEW Local 231 in Iowa, http://ibew231.com/offer.html), the case for a living wage, training, safety, retirement benefits, health & disability insurance, and friendship & community support are very appealing.  Isn't that what workers need?  (Incidentally, they also have a no-strike policy and must abide by binding arbitration).

I'm not saying that all unions are good and free of corruption.  But blaming government and unions for "squandering" the 18% gas tax is disingenuous.  Why not go after the 51% that is squandered by the oil & gas companies?  If we want to throw around anecdotal evidence about overpaid employees, how about the oil and gas companies paying exorbitant salaries? There were several young geologists my company hired right out of college.  These young guys needed a lot of training to "boot up", and after we investing 10 - 12 months in training, they were worth perhaps $36,000 - $42,000 per year to us & our clients.  Yet the oil & gas companies would hire these getting "wet behind the ears" geologists for $100,000 - $120,000 per year.  We couldn't compete with those salaries and our clients/budgets wouldn't support it.  I  thought about that every time I fueled up the company truck at $3.50 per gallon.   

Lest you think Haliburton's $200 toilet seat was limited to federal contracts, consider how much they've charged in the oil & gas industry and the mining industry (in which I work).  Same practices - overcharging, driving up prices, buying up competitors, gouging the customer.  A subsidiary of Haliburton purchased a pump manufacturer that we'd used for decades.  Suddenly, the price of purchasing and repairing our high-head slim-set submersible pumps doubled or tripled, meanwhile the service shop got crankier.  This was in private production, not government contracts.

Now, oil prices have crashed.  Geologists are on the streets along with drillers, roughnecks, landmen, and the like.  Couldn't happen to a nicer industry.  If only the financial industry would quickly follow…

Corruption is not limited to the US government. Nor to the banksters.  Nor to the unions.  Nor to the corporations.  It is rampant in our society.  Somehow we need to pull it out by its roots and replant with integrity, honesty, and compassion.  LOCALIZATION will allow us to do this.  Big corporations, big unions, and big government are not accountable to real people.  Small government and small companies can look you in the eye and be accountable. 

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Aloha! I do not think you are reading the "prevailing wage" table correctly. You have to look at total hourly rate and not just the basic rate. For instance the basic hourly rate for a carpenter area 1 northern california counties is $42.40/hr add on the benefits and the total is $70.38/hr x 2040 hours is almost $144,000 a year.
Next you have to compare apples with apples not oranges. The union is a "monopoly"! That means I cannot compete with the union if I want to bid a public funded project. It is a "monopoly" as decreed by a 1934 law that the US Congress still upholds. So long as a "monopoly" exists there is no such thing as "competition". There can never be a truly "competitive bid" in Public Works when labor wages are set by unions.

Since Exxon does not have a monopoly I can go get gas at Shell or Chevron. If they chose to over price labor then the company becomes less competitive. But STILL the US Congress is not telling you that you have to buy gas from Exxon. As a contractor on Public Works I am being told I have to pay a "union" imposed wage rate because it is law.

If you think that is a level playing field and a good deal for taxpayers then vote for Bernie. He's owned by unions. If you think banks are great for the Middle Class then vote for Hillary, as she is owned by banks. This is how career politicians make politics a career. This how corruption works!

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I usually make it a point to listen to the interviews and most are very good,but I was not overly impressed with this one. I have no problems with the theme, the CPI, Unemployment numbers, and the rest are a joke and I think most realize that this is common knowledge and why these numbers are manipulated, CPI to justify reduced COLA and SS benefits, unemployment numbers to put a smiley on the so-called "recovery", but after reading the "500" list, I'm not impressed one bit and I can understand his 10% or more inflation numbers. How often do most of the readers here buy 1st Class Airline tickets, botox, lawn service, pool service, pay-per-view rentals, private school tuition, play station games, People magazine, Country Club membership and dues, valet parking, eyebrow waxing, fast junk food, or luxury box rentals?  In other words,I found many of the items on the list to be disturbing examples that were picked to inflate the percentages, not to mention the fact that a lot of things on that list have gone down in price, for example laptops, dvd and blu-ray players, mobile air compressors to name just a few.
 

It sounds to me like a few of his customers need to rethink a lot more about their priorities when it comes to money, expenses, and good healthy food and exercise for their children. Bling has gone up a lot, good foodstuffs have gone up somewhat (definitely more than 2%/yr over the last 5 years), and no doubt, as a recent CA transplant, many of the basic costs here are borderline ridiculous. But, other than CA, I have just as hard a time believing the overall 10% or better numbers that he cites as I do the overall Govt 1.5% numbers.

 

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The Chapwood Index provides excellent data on the inflation in each year. Kudos to Ed Butowsky for providing real data in defiance of .gov lies.
However, looking at the data on chapwoodindex.com, specifically the column titled '5 Yr Ave', the number given appears to be the average of the annual percentages. This is not mathematically correct since the annual increases are compounded.

For example the annual increases for San Francisco were 12.5, 13.4, 13, 12.7, 12.7 and the average is stated as 12.9%. But in reality those percentages, compounded over 5 years, result in a total increase of 83% which averages to 16.6% per year!!

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Know Chris is uncomfortable w political comments, but anyone proud to be on Fox has little credibility.
Blaming "our spending problem" on social programs, without mentioning war and defense spending, is completely disingenuous and reeks of Fox rhetoric.  Same thing w taxes and regulations being the cause for things being so expensive.

This guy's cola project is credible, but he and his right wing thinking are not.

We need more direct discussion about the erosion of discretionary income, especially given its effect on the  economy.  It has taken a major hit in the last 10-15 years  (for 90% of the population), primarily due to increasing medical insurance, out of pocket health care costs, and home owners insurance.

With aging demographics, poor overall health and climate change, we should plan on these expenses continuing to rise, probably at an accelerated rate.

Maybe even more important than finding an additional revenue source is improving health and reducing reliance on cars.

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In all of these statistics and collective conclusions it's easy to forget that whether your living costs inflate or deflate has alot to do with you. Its not all out of our hands and we are not all at the mercy of government policy.
I raise a son and support a stay-at-home wife/mom on 28k per year. Thats our farm income. We are able to do that because we raise most of our own food, we heat/cook with wood cut from our forest, I do my own repairs and maintain my home/vehicles/equipment. When we first started this life it was actually very expensive…equipment costs, infrastructure, land, etc But once we got situated the costs of living have steadily come down. We have been at this for 8 years now and the past 4 years have seen us using less and less money. We dont have cable tv or any cellphones at all. I'm typing right now on a 5 year old computer ( the only one in the house ). We drive around in a 15 year old pickup truck. We wear carhart clothing because they last many years. Every night we cook homemade meals from scratch using ingredients from our farm…braised lamb shanks, roast chicken, homemade veggie lasagna ( pasta made from scratch ). We bake bread and make our own butter and cheese from Ellie, our milk cow. We have more eggs than we care to eat. My wife sells them to pay for the feed.
I dont need to join a gym or go on medications because the hard work, clean living, and fresh organic food has our doctor ( and dentist ) shaking his head at how incredibly healthy we all are.
Our "job" is being self reliant, and its a very sophisticated trade that takes many years to master. As time goes on we get better at it and we need less and less money, yet ironically as we get better at it we produce more and earn more money. My wife learning to sow has saved us alot of money on clothes, my learning some basic mechanics and carpentry has saved us alot of money in repairs. For everything we buy, we discuss how that expense can be cut out and we have fun devising ways to do it ourselves. Sometimes it doesnt work, but quite often it does.
I'm not saying everyone should run out and be a farmer, its got a down side too and its not for everyone. But everyone can make progress at being more self reliant regardless or what you do or where you live. What you earn is only one side of the coin, what you spend is the other and as HD Thoreau said " A man is rich in proportion to what he can let alone".

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Brushhog,
I've been away from the computer for a couple of weeks. I just saw your post from last week. All I can say is "Good on you!"

We all know the system is unsustainable. Yet, we somehow are able to ignore all that and try to maximize our personal income from the system. I can't remember how many times I've told (older) folks the system is doomed based on simple mathematics. They agree … and then tell me that they're planning to work until they get the maximum social security payment per month. I'm always amazed at the disconnect they are able to keep within their thoughts that quickly.

When the system crashes, most of the things we currently take for granted will be gone. The more dependent people are on the system, the harder time they will have when the collapse occurs. You are taking the right approach. Do what you can with what you have. Learn how to do more. Most importantly, don't covet that which is out of reach. I applaud you!

Today, I let my 5 - 2 month old pullets out of their coop to wander the yard with the older chickens. I spent the time pulling buttercups out of the yard since nothing I have will eat them. The chicks wandered and explored, but came rushing back at the first hint of perceived danger. They untied my shoes thinking it was a worm or something. They pecked at my fingers. One even jumped up to peck at my glasses. Most of the time, I had to be careful not to crush them as I crawled to the next buttercup. What an absolutely wonderful day! I wouldn't trade today's enjoyment for a million bucks.

Many of my friends are caught up in the system so completely that they can't fathom the joy of just being. They work and pay taxes to have bling to impress people they don't care about. Because they work so hard to make money, they feel the need to go on expensive vacations - supposedly to impress those same people. It is a cycle that they are trapped into. Escape is difficult, but not impossible.

The less you are tied to the system, the freer you become. My experience with inflation has been muted because I consume as little as I do. Sure, I feel the pinch of taxes and healthcare costs increasing as much as others do. I can only do what I can do. I make midcourse adjustments as necessary. The point being that I don't feel deprived when I have to let something go. The free things in life have an infinite return on happiness.

You've got the right attitude. Keep up the good work!

Grover