Wednesday, March 23, 2011

The Results of Wage Suppression

Negligible wage growth for most Americans has been an underreported feature of our political economy for an entire generation. This is as corporate America has wanted it, not because they don't want Americans in general to have higher incomes, but because they care first and foremost about their bottom line. That may seem normal to Americans who grew up in a post-Reagan society, but the result is that corporations have come to dominate policy, and economic ideology, as never before. What is best for citizens, families, and communities need not concern the corporation or the investor class.

We are now seeing the results of 30+ years of wage suppression and the gigantic growth in inequality that was inevitable. In a very recent study by The Economic Policy Institute, Lawrence Mishel reveals just how little workers have benefited from decades of substantial productivity growth:

Over the last 30 years there has been very modest wage growth for the typical worker. This is not because the economy was weak and employers were strapped for cash or profits. The economy enjoyed soaring productivity between 1980 and 2009. The Figure compares median wage growth over that period to average gross domestic product growth per worker, a measure of what each individual worker, on average, contributed to the overall economy. This is equivalent to the growth of income per worker as well. While average income per worker grew 59.0%, median wages grew by just 11.2%. Over this same period the amount of wealth (household assets less liabilities) per worker grew by 63.7%. 

What we usually hear and read is the ignorant and asinine contention that unions and public sector workers are to blame for deficits, poor productivity, and slow growth.  This is a nauseatingly stupid position, and it figures that teabaggers would get behind it. In reality, wage growth has never been a policy goal for most politicians. As Mishel writes, "The focus instead has been on policies that claimed to make consumers better off through lower prices: deregulation of industries, privatization of public services, the weakening of labor standards such as the minimum wage, erosion of the social safety net, expanding globalization, and the move toward fewer and weaker unions."

Below is a graph taken from Mishel's paper. It shows as much as any single graph could as to why so Americans are hurting, despite working longer hours even as they fall into debt. The benefits of all that toil, investment, education, and innovation are not accruing to the middle class, but to upper management and the investor class. (Interestingly enough, the graph shows a distinct, recent uptick in both private and public sectors, even as productivity continues to climb. When was that? After Obama took office. No wonder Republicans hate facts).

In a nutshell, the gap in recent decades means that working- and middle-class incomes have not kept up with corporate America's ability to pay them. Workers' incomes would be significantly higher, but our overclass is pocketing the difference. 

Those outsized bonuses gotta come from somewhere. 

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