Did you read the report last Monday?
In sum, the message is very clear and very disturbing:
1) American worker productivity, that would be labor, is up to an all-time high level.
2) American wages, that would be pay, is in decline.
As a matter of fact, the current sustained economic expansion in the United States may become the first since World War II that fails to offer an extended increase in real wages for most workers.
The median hourly wage for American workers has declined 2% since 2003. And, that, while average worker productivity--what an average worker is able to produce in an hour--has risen steadily during the same time frame.
Today, wages and salaries comprise the lowest percentage of the gross domestic product since records have been kept. On the other hand, corporate profits have soared to their highest level since I was a teenager in the 1960s!
Productivity: up!
Profitability: way up!
Wages: shrinking in the face of great performance and growing wealth creation.
To add insult to injury, the value of worker benefits, such as health care, is also in decline and incapable of keeping up with the rate of inflation.
Average national income and consumer spending levels have continued to go up because of the earnings at the top of the economy, and because of the fact that so many of us work.
To say the least, the benefits of the American economy are not shared or spread with an eye to anything approaching equity.
The New York Times ("REAL WAGES FAIL TO MATCH A RISE IN PRODUCTIVITY," Monday, August 28, 2006, A13) quoted Goldman Sachs economists who summed the situation up by saying, "The most important contributor to higher profit margins over the past five years has been a decline in labor's share of national income."
Political analyst Charles Cook put it this way, "There are two economies out there. One has been just white hot, going great guns. Those are the people who have benefited from globalization, technology, greater productivity and higher corporate earnings.
"And then there's the working stiffs who just don't feel like they're getting ahead despite the fact that they're working very hard. And there are a lot more people in that group than the other group" (A13).
No wonder the number of Americans falling off into the abyss below the poverty line is increasing.
These are not issues to be solved by more charity.
What is called for here is systemic change.
These are matters of justice.
3 comments:
If you are a firm believer in Economics like I am, it has to be very disturbing that one of the main rules of the market's "invisible hand" goes something like this: wages go hand-in-hand with productivity the more goods you produce, the higher your wages go. This is to be the case even in a global economy. The fact that the American worker has been increasing his/her productivity at an amazing rate for the past 5 years while wages have remained stagnant is concerning.
John, thanks for the post.
My point exactly! We need regulation or challenge to the current state of affairs in our largely unregulated marketplace, at least unregulated for the benefit of labor.
Of course, this morning, Dubya said that what we need is "lower taxes."
Incredible. But, again, not surprising.
Sad reminder of the fact that, in order to get government regulation of industry, we must have strong citizen regulation of government.
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