Wages of Sin (Greed, To Be Precise)

The NY Times has an article about how real wages are not keeping pace with productivity increases. Quoth the Grey Lady:

With the economy beginning to slow, the current expansion has a chance to become the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages for most workers.

That situation is adding to fears among Republicans that the economy will hurt vulnerable incumbents in this year's midterm elections even though overall growth has been healthy for much of the last five years.

The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The drop has been especially notable, economists say, because productivity -- the amount that an average worker produces in an hour and the basic wellspring of a nation's living standards -- has risen steadily over the same period.

As a result, wages and salaries now make up the lowest share of the nation's gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960's. UBS, the investment bank, recently described the current period as "the golden era of profitability."...

At the very top of the income spectrum, many workers have continued to receive raises that outpace inflation, and the gains have been large enough to keep average income and consumer spending rising.

One of the few intelligent things (or at least, politically wise) Ronald Reagan ever said was about unemployment. During Reagan's presidency, he was asked to comment on the roughly 10% unemployment rate. He responded (I'm paraphrasing): that means 90% of people have jobs.

The political wisdom we should learn from that is voters don't really care about the average income or other macroeconomic indicators (although some might care about the median income). Voters care about their own personal economic status. A top-heavy income distribution where income inequality is increasing becomes very politically dangerous (not to mention social and morally corrosive). The Republicans can only rail against gay, flag-burning, Mexican terrorists who want to destroy Christmas for so long.

The question then becomes can the Democrats (and progressives) offer an economic plan that:

  1. addresses the top-heavy income distribution
  2. restores some balance between corporate profits and wages
  3. provides healthcare to all. Keep in mind, the only reason the figures didn't look worse in the Times article was that benefits were included. However, it's not like most people actually received better healthcare. Their employers just ate more of the costs of the same crappy healthcare they already had.
  4. restore the social services middle-class people count on.
  5. can be communicated to voters. Keep it simple, and don't lard it up with bells and whistles. Legislating through the tax code (i.e., tax expenditures) is not the way to go on this because many lower income workers won't see a penny from tax breaks. The program needs to be more systemic

Of course, this would require a competent Democratic Party that isn't in thrall to neo-liberal economics...

More like this

By lowering its benchmark interest rate virtually to zerohttp://www.motherjones.com/kevin-drum/2008/12/median_wages.html, the Federal Reserve has eliminated monetary policy as a financial tool to aid the economy. Good riddance, because this was never a financial crisis. What led to the whole…
While we’re on vacation, we’re re-posting content from earlier last year. This post was originally published on March 6, 2012. The final rule on home health workers has not yet been published. By Liz Borkowski Back in December, the Department of Labor’s Wage & Hour Division published a proposed…
Back in December, the Department of Labor's Wage & Hour Division published a proposed rule that would extend minimum-wage and overtime pay protections to the home care workers who assist elderly and disabled patients with their daily needs. The Fair Labor Standards Act requires that nonexempt…
Or something. Tuesday, I wrote about the reporting on the Oregon ballot initiatives, but, of course, the ballot initiative itself actually matters. And Oregon voters approved the tax increases (italics mine): Yesterday Oregon voters delivered a huge victory for progressives by approving Measures…