Economics 101 (For Minnesota Real Estate Investors)
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A "Market-Basket" (or "commodity bundle") refers to a fixed list of items used specifically to track the inflation or progress of an economy or specific market. If you have ever taken a class in economics, or have a friend that an economist, you've heard this term before. |
For a person, what it refers to is, if you go out into the world and buy one of everything you could consider YOUR markets' basket of goods - take that list and compare it to that same list in another time period. For every person, their market-basket of goods will be different. For an average family, let's say, a market-basket of goods for the week might include several gallons of gasoline, an allotment of assorted groceries, any special medications, haircuts, toilet paper etc.
For a company, their market basket of goods will be very different. It will include such things as costs of maintenance, repairs and operations (MRO).
There are many ways to choose categories of market-basket of goods, or take it as a whole picture of everything we as a nation purchase in a stated period of time. Using this latter definition, our national market-basket of goods, over time has increased an average of 5.5% per year. And given that this takes everything into account, even though the price of T.P. and Ramen-noodles may have gone down, there are other things that will have gone up to compensate.
So, if at your job, your wage increases are less than 5.5% per year, you are actually not getting ahead, but rather falling behind, slowly, one year at a time. Large companies know this and purposefully keep their wage schedules below this number. This gives the company more and more leverage every year it operates. Just one more way to keep the common wage earner down.
This is just one more reason I teach about investing in Minnesota real estate. Most people don't realize this is happening as they get BIGGER houses and cars, a BIGGER TV and more and more debt, they have no idea their buying power is slowly but surely on the decline... 
It is my purpose in life, to see that as many people as possible create their own independent-wealth and become self-sustaining by retirement, if not sooner. This also, in effect, takes much of the burden off our ailing Social Security system (okay, time for me to get off of my soapbox - before I really get started...) 
