Joe the Plumber and the Middle-Class Squeeze

Joe Wurzelbacher is getting his 15 minutes of fame--raising questions about what it means to be middle class. Better known as Joe the Plumber, he stepped into the limelight earlier this month when he asked Sen. Barack Obama, the Democratic contender for the White House, about his tax plan. According to a New York Times story, Wurzelbacher asked Obama if he believed in the American dream, and voiced concern about having to pay higher taxes as a small-business owner. “I’m getting ready to buy a company that makes $250,000 to $280,000 a year,” he told Obama. “Your new tax plan is going to tax me more, isn’t it?" Obama gave a lengthy response, toward the end saying, “I think that when you spread the wealth around, it’s good for everybody.”

In the time since, the episode has made the rounds on the Internet, TV, in print and perhaps most notably, during the final presidential debate at Hofstra University. Sen. John McCain raised the issue of Joe the Plumber, and both he and Obama went on to explain why their tax plans would be more beneficial for America. According to a New York Times breakdown of the candidates' tax plans, Obama would repeal the Bush tax cuts for households earning more than $250,000, extend middle-class cuts, like the $1,000 child tax credit and the marriage penalty relief, and triple the earned income tax credit for workers earning minimum wage. McCain would make permanent nearly all of Bush's tax cuts, increase $3,500 personal exemption for dependents by $500 a year, until it reaches $7,000 in 2016, and offer the option to pay taxes under a simplified code with only two tax rates.

So what do the plans mean for middle-class workers like Wurzelbacher? Tax analysts in a NYT article said neither Wurzelbacher's personal taxes nor those of his business would be likely to rise under Obama's tax plan. However, a NYT graphic in the same story illustrates that the tax bill of a plumber in a situation similar to Wurzelbacher's would be slightly less under McCain's plan--$20,468--compared to $21,068 under the Obama plan, assuming no retirement contributions.

Average Salary Increases: What's On the Horizon for 2009?

Over the last several weeks, it seems the United States has come entirely unglued--at least financially. It's enough to make any worker uneasy about job security and compensation. With all the fiscal unrest, we wonder: what can we expect for an average salary increase in 2009, in light of the sorry state of the economy?

Several reports released earlier this year, before the recent $700 billion federal bailout of banks, provide a clue as to what workers might expect in terms of an average salary increase next year. Hewitt Associates says workers can expect a 3.8 percent average salary increase next year, while a study by Mercer says employers plan to give average salary increases of 3.7 percent. Likewise, a PayScale story, "5 Salary Secrets Your Company Won't Tell You" reports that, according to the 35th annual WorldatWork Salary Budget Survey, workers can expect an average salary increase of 3.9 percent.