Real Wages (redirected from Real income)

Real Wages 

wages expressed in terms of material goods and services, indicating the quantity of consumer goods and services a worker can actually purchase with his wages. Real wages are a function of nominal (monetary) wages, the level of prices, for consumer goods and services, and the level of taxes. The dynamics of real wages are calculated for a particular period of time as an index equal to the quotient of the index of nominal wages and the price index for goods and services.

Under capitalism, prices for goods and services increase continuously, as do taxes. Even though the class struggle of the proletariat results in increases in nominal wages, these increases are usually less than price and tax increases. Consequently, there is a tendency for real wages to decrease, and this tendency grows more intense, owing to the chronic inflation that is characteristic of the period of the general crisis of capitalism. In an effort to conceal the true condition of the working people, bourgeois statisticians lower the price index when computing real wages, exclude the army of the unemployed from the calculations, and include in the “average” wage of the workers the salaries of highly paid office employees, managers, and company directors.

In the socialist countries, the general pattern is an uninterrupted increase in real wages, based on the increasing productivity of labor in the national economy and on the increasing efficiency of social production. The increase in real wages is one of the most important sources for improving the prosperity of the people. Under socialism an increase in real wages results not only from an increase in nominal wages but also from a decrease in taxes and the stabilization of prices for goods and services. On the level of the national economy, the average monthly wage of factory workers and office employees in the USSR was 140.7 rubles in 1974, 122 rubles in 1970, and 80.6 rubles in 1960.

Between 1971 and 1974 the implementation of centralized measures alone increased the wages of 47 million persons, or every second factory worker and office employee. Moreover, the ninth five-year plan (1971–75) eliminated taxes on the wages of factory workers and office employees earning up to 70 rubles a month and lowered the tax rate by more than one-third for workers earning up to 90 rubles a month. From 1965 to 1972 the index of state retail prices amounted to 75 percent of the average annual prices for 1950, with foodstuffs (excluding alcoholic beverages) amounting to 71 percent of the 1950 figure and nonfood commodities amounting to 76 percent of the 1950 figure in 1965 and 74 percent of that figure in 1972.

V. F. PARKHOMENKO