From Sean... See Left Right for the background.
"Of course. But if we look at the first 30 years of the post-WW2 period, a rising tide really did lift all boats. For the last 40 years, that hasn't been true. In a time of "record low unemployment", wage growth for production and non-supervisory employees adjusted for inflation is negative over the last 12 months. "
As economist Jared Bernstein points out, at the last time we were at a similar place in the business cycle and unemployment rate (1999), labor's share of national income was 3.1% higher than it is today. If labor's share of income was where it was back then, the average worker would have $3,400 more income. Where did that money go? Corporate profits -- which have increased their share by 3.5% over that time.
Policy choices -- as Bernstein points out -- are a significant factor here:
NYT: Bernstein on Wage Stagnation
"More than ever, the dynamics of this old-fashioned power struggle between labor and capital strongly favor corporations, employers and those whose income derives from stock portfolios rather than paychecks.
This is evident in the large, permanent corporate tax cuts versus the small, temporary middle-class cuts that were passed at the end of last year. It’s evident in the recent Supreme Court case that threatens the survival of the one unionized segment of labor — public workers — that still has some real clout.
It’s evident in the increased concentration of companies and their unchecked ability to collude against workers, through anti-poaching and mandatory arbitration agreements that preclude worker-based class actions. And it’s evident in a federal government that refuses to consider improved labor standards like higher minimum wages and updated overtime rules.
Even if workers’ real wages do pick up, their gains may be too short-lived to make a lasting difference. The next recession is lurking out there, and when it hits, whatever gains American workers were able to wring out of the economic expansion will be lost to the long-term weakness of their bargaining clout. Workers’ paychecks reflect workers’ power, and they are both much too weak."
"Of course. But if we look at the first 30 years of the post-WW2 period, a rising tide really did lift all boats. For the last 40 years, that hasn't been true. In a time of "record low unemployment", wage growth for production and non-supervisory employees adjusted for inflation is negative over the last 12 months. "
As economist Jared Bernstein points out, at the last time we were at a similar place in the business cycle and unemployment rate (1999), labor's share of national income was 3.1% higher than it is today. If labor's share of income was where it was back then, the average worker would have $3,400 more income. Where did that money go? Corporate profits -- which have increased their share by 3.5% over that time.
Policy choices -- as Bernstein points out -- are a significant factor here:
NYT: Bernstein on Wage Stagnation
"More than ever, the dynamics of this old-fashioned power struggle between labor and capital strongly favor corporations, employers and those whose income derives from stock portfolios rather than paychecks.
This is evident in the large, permanent corporate tax cuts versus the small, temporary middle-class cuts that were passed at the end of last year. It’s evident in the recent Supreme Court case that threatens the survival of the one unionized segment of labor — public workers — that still has some real clout.
It’s evident in the increased concentration of companies and their unchecked ability to collude against workers, through anti-poaching and mandatory arbitration agreements that preclude worker-based class actions. And it’s evident in a federal government that refuses to consider improved labor standards like higher minimum wages and updated overtime rules.
Even if workers’ real wages do pick up, their gains may be too short-lived to make a lasting difference. The next recession is lurking out there, and when it hits, whatever gains American workers were able to wring out of the economic expansion will be lost to the long-term weakness of their bargaining clout. Workers’ paychecks reflect workers’ power, and they are both much too weak."
28 comments:
The assault on unions has been very significant for both union and non union workers. I date the decline of working people to the PATCO strike in 1981 or thereabouts. Now that we are abandoning collective security, the devaluation of work and working people is Ronald Reagan's most lasting legacy.
--Hiram
Here is one of my comments from the other post.
Sean,
I think you are claiming causation where only correlation may exist.
It is true that many changes have occurred over the past 60 years, including:
- consumers preferred higher value products and services from over seas
- environmental regulations were increased greatly
- cost of global shipping, communication and travel dropped greatly
- the rest of the world recovered from WW II
- free trade and globalization proliferated
The reality is that smart, skilled and educated Americans are doing fine for the most part. The questions are:
- how to encourage more Americans to be smart, skilled and/or educated?
- how to encourage more American consumers to "Buy American"?
Remember that investors like me are indifferent to where things are made...
It is America's workers who have suffered due to the American consumers choosing to "Buy Foreign".
I never know what causes anything. It's correlating stuff I pay attention to.
--Hiram
NPR Why America's Wages are barely Rising
CC Comic 1
CC Comic 2
CC Comic 3
Why Don’t We Always Vote in Our Own Self-Interest?
Paychecks Lag as Profits Soar, and Prices Erode Wage Gains
Okay I skimmed both of them.
As for the first, I thought you had posted another correlation vs causation comic... I think the Southerners voting more Conservatively likely has more to do with religious values than race benefits. In 2000 LGBT rights was a non-issue in Kentucky whereas after the SCOTUS ruling the issue was thrown in their face. And folks are wondering why they voted more Conservatively? No duh...
As for the second, how much gain should US workers see in their paychecks because the corporation is making more money on over seas activities? Please remember that a lot of the stock buy backs are being made with dollars that have been brought back from over seas.
I agree that upper managers are often greedy, self serving and annoying, however all of us investors, pension funds, etc insist that they increase profits.
Are you willing to reducae your pension balance to pay employees more than is needed to keep them working?
Or are you willing to invest your 401K into companies that earn you a lower rate of return?
Here is a list of stocks you may want to buy if you want to support the good treatment of employees.
Were you surprised by the names?
Especially that Apple was number 1 after sending so many jobs over seas...
It always amazes me when people talk about wage stagnation or income inequality or somesuch as if those things could be changed, perhaps by government fiat, without changing anything else in the economy. The fact is these things are all the result of a very complicated and interrelated set of economic choices. Some of those are made freely and some of them are mandated by government, but the one thing you can count on with government intervention is the law of unintended consequences. For example, the push for $15/hour. Never answered is "why not $100,000/hour?"
Jerry,
I do not know what is a fair taxation system.
I do agree that the successful should pay higher rates than the unsuccessful for the good of our society and because they benefit the most from our peaceful productive society.
However I certainly do not believe that money should be spent to enable unsuccessful people to stay unsuccessful, dependent and hopeless.
It is an interesting puzzle...
How to encourage all citizens to make choices that are good for them and our society?
We are all in the same boat, we need everyone pulling at the oars instead of dragging their feet in the water.
By the way, your $15/hr vs $100,000/hr is a silly question...
I would prefer to drive wages up by:
- training and motivating citizens
- deporting illegal worker competition
- reduce number of low knowledge low skill immigrant workers
- or even promoting USA jobs, tax credits, tax cuts, etc (ie tariffs)
Over mandatory minimum wages... And yet the reality is that a $15 minimum wage would not hurt most employers because:
- most employers / competitors would have to pay it...
- many are already paying it.
The biggest problem is it would increase the cost of many things that poor people need... And it would make American products and services less competitive... Meaning US Consumers would buy more from over seas.
I would prefer that anti labor judges not be put on the court to hurt working people.
--Hiram
t always amazes me when people talk about wage stagnation or income inequality or somesuch as if those things could be changed, perhaps by government fiat, without changing anything else in the econo
It took changes for those things to happen. Among other things it was there result of a concerted campaign by business to manipulate the labor market. We know how to do it, because we watched it being done.
--Hiram
"How to encourage all citizens to make choices that are good for them and our society?"
Very simple: Give them the freedom to make those choices, free access to those choices, and the responsibility for the choices they make. Those hampered by things outside their control can be helped by, and deserve, private charity. Those hampered by wrong choices on their part will need to be encouraged to correct those mistakes, through the natural consequences of those mistakes.
"I do agree that the successful should pay higher rates than the unsuccessful for the good of our society and because they benefit the most from our peaceful productive society." So, "you didn't build that"? How is it "good for our society" if success is punished and indolence rewarded?
The ONLY reason for taxes is to gather, as fairly as possible, the funds required for the necessary functions of government.
Hiram,
It was the American consumer who weakened the private unions.
Or do you think some government policy was forcing American consumers to buy foreign???
That is why the private unions suffered, where as the public unions grew. And now the tax payers are getting tired of public union excess and starting to change the deal again through our votes.
Jerry,
Yes I understand the Conservative view. Now how do you want to get along with the other half of the citizens in this country?
Actually, unions screwed themselves, and I have no pity for them. Back when they endured terrible conditions as well as low pay, and they got together to right those wrongs, they were good and even necessary. But when they started paying the union leader to lead the union, they went astray and the union actually became poisonous to the business/industry on which it was dependent. I've seen it dozens of times, where the union eventually sees all of its members earning zero rather than 5 cents/hour more.
"Give them the freedom to make those choices..."
Is a person more free or less free or have more or fewer choices when their health care/insurance is tied to their employer?
Moose
How do I get along with the other half? They leave me be. Hasn't that always been the American ideal?
Moose, employer-paid health care is a result of government intervention in the marketplace. And since Obamacare REQUIRES it, aren't you the one supporting fewer choices?
"And since Obamacare REQUIRES it, aren't you the one supporting fewer choices?"
I support the ACA because it's (was) better than what we had.
I support single-payer above all.
Your libertarian views would leave people dying in the streets.
Moose
I am not interested in going into the healthcare debate, however I do wonder where that cost is accounted for in this comment.
"As economist Jared Bernstein points out, at the last time we were at a similar place in the business cycle and unemployment rate (1999), labor's share of national income was 3.1% higher than it is today. If labor's share of income was where it was back then, the average worker would have $3,400 more income. Where did that money go? Corporate profits -- which have increased their share by 3.5% over that time."
How do they account for all of the additional government benefits that people are given?
Does the medicaid expansion and ACA subsidies show up as additional worker money?
Or does the author ignore all social program changes in his math?
People dying in the streets certainly solves the problem of people without health care, doesn't it? Of course we could require them all to have health INSURANCE, but that doesn't do diddly towards getting them health CARE. They still die in the streets but it costs more.
"Does the medicaid expansion and ACA subsidies show up as additional worker money?"
The purpose of the calculation is to compare labor's share of income -- that is, income and benefits related to employment.
Sean,
If Liberals insist on tax / spend wealth transfer... That should certainly part of the calculation...
Or do you plan to reduce the tax / spend in the future?
"That should certainly part of the calculation..."
No, it shouldn't. That's not what it is trying to measure.
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