Re: Real Wages Fail to Match a Rise in Productivity

On Tue, 29 Aug 2006 09:53:02 -1000, "Alvin E. Toda" <aet@xxxxxxxx>
wrote:

On Mon, 28 Aug 2006, Islander wrote:

Florida wrote:

Alvin E. Toda wrote:

On Mon, 28 Aug 2006, Florida wrote:

http://www.nytimes.com/2006/08/28/business/28wages.html?_r=1&th&emc=th&oref=slogin

Real Wages Fail to Match a Rise in Productivity

By STEVEN GREENHOUSE and DAVID LEONHARDT
Published: August 28, 2006

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.

-SNIP-

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.

[....]

Disturbing news. But not unexpected. The current
economic "recovery" sucks....


And this needs a lot of attention that's being
wasted on fluff news. A fair number of people in our
area seem to believe that the economy is all going
just fine, somewhere else. The truth seems to be
that the rest of the U.S. is now experiencing how
the way the workers in the southern quarter of the
U.S. used to be treated. Workers were and often
still are worked hard and paid the minimum possible.
So in effect there has always been a captive group
of workers in this region, who don't make enough
money even to move away and look for better
conditions elsewhere. Sad to see this feudal system
spreading around the whole country.

US consumption remained relatively constant at about
67% of the GDP from 1980 to 2000. Since then it has
increased to 71%. Is this a sign of prosperity?
No. Between 2000 and 2004 household debt grew by 57%
($6.5T to $10.2T) while wages stagnated. Low
interest rates have encouraged homeowners to cash out
their equity, but instead of investing it, they are
spending it. We cannot write all this off to foolish
spending. Much of it is to compensate for increasing
costs, especially of medical care. Even the
generation of new jobs is alarming. 40% of the new
jobs created in the private sector were housing
related. Now as interest rates increase, even if the
housing bubble does not break, it will certainly
deflate and a lot of these jobs will go with it.

Even Warren Buffet now describes Bush's "ownership
society" as a "sharecropper society." In a 2005
letter to his shareholders, he states, "As time
passes, the family finds that it is working more and
more for the finance company and less for itself."

Why should we care about those households that are
getting deeper in debt? Isn't this just their
personal irresponsibility? Unfortunately, we care a
great deal and not just from a humanitarian point of
view. Even a 10% slump in real estate values would be
multiplied in it's effect on the economy, not only by
increased pressure on homeowners as increased costs
of no-interest and ARM mortgages increase, but as
increased cost of all debt increases and consumption
must inevitably decline. That puts additional
pressure on jobs and increases unemployment.
Meanwhile there has been an expansion of debt
*within* the financial sector over the past 5 years,
all of which will be at risk if there is a
substantial dip in consumption. This is not a
downward spiral that we want to experience!

Indeed, it's a little like one step forward and three
steps backward at the same time. Republicans continue
to ignore this and claim the "recovery" benefits us
all.


Bankruptcies are down dramatically since the laws have been changed.
Foreclosures are up. I wonder how that is good for the average
worker.
THumper
.

Relevant Pages

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  • Re: Major employment problems in western US: Too many jobs, no takers
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    (alt.politics)
  • Re: Major employment problems in western US: Too many jobs, no takers
    ... And that he has wrecked the economy and that the employment figures ... to boost wages or be creative to fill their jobs. ... Francis' current employees also wanted a pay hike. ... companies have a tough time finding workers. ...
    (alt.politics)
  • Re: Let Detroit Go Bankrupt
    ... with the effect on OUR economy. ... "The work rules allow the UAW to essentially pension off older ... The Jobs Bank: "The jobs bank was created in 1984 at a time when it ... replace workers on factory floors. ...
    (soc.retirement)