Pay Squeeze

The frustrating feeling shared by many Americans that their incomes are going up but their spending power is slipping got some additional statistical support last week. Take-home pay rose briskly in August, the Labor Department reported, and the average production worker with three dependents pocketed precisely $182.49, up 5.1% from a year ago. But inflation has made a mockery of the increase, and in fact Mr. Average is 2.5% poorer than he was last year and near ly 4.5% poorer than in 1972. Back then, his take-home pay of $121.68 was worth $96.80 in 1967 dollars. In those terms, the buying power of the pay he pocketed in August 1978 was only $92.45.

The pay erosion has set back consumer confidence. A poll taken this summer by the Conference Board shows that 23% of U.S. families surveyed feel their living standard fell during the past year, forcing a clampdown on buying. Only 20% reported an increase in their standard of living, vs. 31% last spring. The latest consumer price index offered little comfort. It rose six-tenths of 1% in August to an annual rate of 7.4%, vs. a yearly rate of 11.4% in June and 62% in July. Food prices, which had been falling earlier in the summer, picked up slightly in August, but it was mainly increases in other areas that sent the index up. The Carter Administration has finally settled on a forecast of 8% inflation for all this year, and most economists tend to agree with that pessimistic view.

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