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Energy Costs Hurting US Worker Paychecks

The largest industrial trade association in the U.S. says manufacturing production has increased at the fastest pace in more than six years. The latest numbers released by the National Association of Manufacturers (NAM) show U.S. manufacturers posted outstanding gains in the past year. But VOA's Mil Arcega reports the group's annual snapshot of the U.S. economy shows a different picture for workers.

U.S. manufacturing output has grown 5.8 percent over the last 12 months. That is its strongest gain since 1998. The economy picked up 1.7 million new jobs to push unemployment below the five percent mark. The growth in productivity combined with a tightening labor market boosted worker wages by 1.7 percent.

But N.A.M. president John Engler says his group's annual Labor Day report shows workers are actually losing buying power. "Wages, when adjusted for inflation, are not rising. In fact, they averaged a decline of a half of one percent during that same period. The culprit, the main reason wages did not keep pace with inflation? Energy costs -- they went up 23 percent last year."

N.A.M. chief economist David Huether computes so-called "real wages" by factoring in the impact of surging gasoline prices along with benefits and employer contributions. He says those "real wages" have declined by nearly two percent since 2001.

"This illustrates how vulnerable the U.S. economy and workers are to the volatile global energy market, which has become an increasing burden to working Americans," says Huether.

President Bush spoke to a group of workers in Maryland. He agrees energy prices have taken a bite out of workers' paychecks. He says his administration is working hard to develop new technologies to reduce the nation's dependence on foreign oil.

"In order to become less dependent on foreign oil, why don't we become more reliant on American farmers to produce energy for our automobiles? That's the kinds of things we’re doing," said President Bush.

But N.A.M. president John Engler wants the president to go one step further and make energy reform a national priority.

"Rising energy costs are clobbering worker paychecks. Congress and the administration need to recognize: we must act or the cost of energy will continue to impair America's economic growth, hurt its manufacturing base and shrink employee wages,” Engler said.

The report says that even if the U.S. improves energy efficiency over the next 20 years, foreign oil imports will still account for 32 percent of domestic energy consumption.