For instance, my only debt is my mortgage at 7 1/8% fixed 30yrs. If my income can keep up.....
That is one damn big "IF".
For my industry (computers), I fully expect salaries to go down, possibly a significant amount. There's massive un-equalities in the job market, I saw it first hand graduating college as I could easily get $50K and most others were lucky to crack $30K (teachers, business, etc). What few realize is the majority of projects going on know don't need to happen. It may be a pain in the ass to run a business on a mainframe using dumb terminals, but it works. In a slowing economy with tougher profits, I think I lot of these kind of projects will get delayed. Combine that with the get dot com rich attitude of many in college and flood of new graduates on the way, and well yes, it's just another bubble to be burst. At best, I don't see wages rising as fast as people are used to. The same crunch will likely be felt in many industries. We've been dealing with a job market that is so tight it is virtually full employment (I believe there's a natural percentage of people that just aren't capable of working, about 3-4%). I don't buy into the productivity gains keeping unit labor costs in check. I expect this little white lie to be unwound. When unemployment moves up, there should be a move to more realistic job markets where people are fighting for jobs. Not like today where you just get fed up and quit because you know you can find something else. The type of job market where if you don't get a raise, you shut up and take it, because you know it's rough out there. Watch labor costs as unemployment moves up in a slowing economy. |
