The GDP is rising, Productivity is Increasing—and Still Workers Wages Fall

Former labor secretary Robert Reich recently blogged about those recent comments of Obama which have been so distorted over the last several days. The point was to take the media to task for their superficial coverage. An interesting read. But what really caught my eye was the way he introduced the topic.

I was born in Scranton, Pennsylvania, 61 years ago. My father sold $1.98 cotton blouses to blue-collar women and women whose husbands worked in factories. Years later, I was secretary of labor of the United States, and I tried the best I could – which wasn’t nearly good enough – to help reverse one of the most troublesome trends America has faced: The stagnation of middle-class wages and the expansion of povety. Male hourly wages began to drop in the early 1970s, adjusted for inflation. The average man in his 30s is earning less than his father did thirty years ago. Yet America is far richer. Where did the money go? To the top. (Robert Reich, “Obama, Bitterness, Meet the Press, and the Old Politics” ; thanks to Richard Warnick for pointing it out)

This isn’t the first time recently someone has pointed out that the “a rising tide lifts all boats” bromide of the Right just doesn’t hold water. Barbara Ehrenreich discussed the point at length a couple months back in The Washington Post.

It begins to sound a bit naughty—all this talk about the need to “stimulate” the economy, as if we were discussing how to make a porn film. I don’t mean to trivialize our economic difficulties or the need for effective government intervention, but we have to face a disconcerting fact: For years now, that strange stimulus-crazed beast, the economy, has been going its own way, increasingly disconnected from the toils and troubles of ordinary Americans.

The economy, for example, has been expanding, at least until now, and growth is supposed to guarantee general well-being. As long as the gross domestic product grows, World Money Watch’s Web site assures us, “so will business, jobs and personal income.”

But hellooo, we’ve had brisk growth for the past few years, as the president has tirelessly reminded us, only without those promised increases in personal income, at least not for the poor and the middle class. According to a study just released by the Economic Policy Institute, real wages actually fell last year. Growth, some of the economists are conceding in perplexity, has been “decoupled” from widely shared prosperity. (Barbara Ehrenrich, “The Boom Was a Bust For Ordinary People,”

Market cheerleaders balk at the notion that there is anything wrong. They insist that we naysayers are just being pessimistic. The U.S. is doing fine! And sure, superficially things look good for the average person. The dollar figure of wages are up. People have continued to buy houses, cars, electronics, and all sorts of knick-knacks and trinkets from Wal-Mart. But look a little beneath the surface, and perhaps it is a different story. Benefits are being slashed. When adjusted for inflation, Reich and Ehrenrich are correct; the compensation of the average worker have decreased. Perhaps this is partly why the number of households where both parents work—something about which the “family values” crowd on the Right often complains, but about which they rarely seem to consider the roots. The illusion of prosperity is built on the record levels of consumer debt U.S. citizens have accumulated. Is that going to fly if we hit a prolonged economic recession? Seems a shaky foundation on which to claim that all is well in Zion.

Some people complain that the phrase “Social Justice,” is a misnomer. They aren’t entirely wrong. Strictly speaking, much of the agenda to which social justice refers has more to do with compassion than justice. But neither are they entirely correct. I think there is something fundamentally unjust when prosperity is shared only by a select few of those whose work made that prosperity possible. When the economy’s productivity rises and wealth increases, but the average worker upon whose labors the profits are made sees a dwindling share of the fruits of that harvest, that is a call for social justice.

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5 Responses to “The GDP is rising, Productivity is Increasing—and Still Workers Wages Fall”

  1. Andrea Says:

    Start with excessive immigration. Wages at the low end and in the middle are supressed by huge levels of immigration. Two generations ago, a person could support a family relatively comfortably by performing skilled construction work in occupations such as plumber, electrician, carpenter, sheetrocker, and so on. Not any more because companies can hire immigrants at much lower rates.

    It’s basic supply and demand. Increase the supply of workers at the low and middle, wages go down. Republicans want the cheap labor. Democrats want more Hispanic immigrants whose citizen children will vote for Democrats. The rest of us get screwed.

  2. Cstanford Says:

    How about starting with the deliberate weakening of unions and relaxing of regulations? Or better yet, how about starting with the corporate structure itself?

    Excessive immigration might contribute, but uneducated, illegal immigrants don’t seriously compete for the kinds of jobs that once supported a middle-class family on one income. You can lament the lack of work ethic among US citizens that has made agriculture in this country heavily dependent on migrant labor for the past 100 years or so, you can lament that agricultural, food service or cleaning work doesn’t pay enough to support a family on one income, and I’ll agree.

    But when businesses downsize in order to drive their stock up and send their operations to other countries to cut labor costs and evade regulations, I don’t accept excessive immigration as a place to start looking for something to blame.

  3. Aaron Orgill Says:

    I have a lot to say on this matter, but will start by saying of all people, I can empathize with those who struggle, because I’ve gone through so much of that in the past few years. It is indeed getting more difficult to survive on one income. However, I see so much opportunity everywhere, and it is not hard to take advantage of when you focus on others. Success is attainable by nearly anyone in this country. But if you sit there and make up stories and tell yourself that someone (usually an employer) ought to be taking care of you, you should also be willing to make an honest assessment of the value you’re adding to the world and to your employer. I see a lot of people who are half-assed at best about their jobs, yet complain endlessly.

    When I graduated from college several years ago, I intended on going to law school, and at another point a couple of years ago, strongly considered University Administration. Never did I even for a moment think I’d ever be self-employed. But now that I am, and starting to see things improve, I take note of a lot of people who want more but are paralyzed by fear, and I believe it’s ungodly. The Lord would want us to have a few of the fine things of life, and the ability to lift others up. But too many are content with mediocrity, and so-called “security”. I don’t mean to suggest that anyone who doesn’t go into business for themselves is spineless. We certainly have need for teachers, police, and every single business needs good people to contribute. If you ask yourself what you really want out of life, go with that. It may not include self-employment, or even gobs of money, but it will lead to a happy life.

    I would suggest that the best thing we can do is to make education accessible to everyone, and look very strongly at improving the health care system. To say, “here it is; go and get it” is more compassionate than handouts (although those are certainly appropriate at times), because it leads to real fulfillment. This week I had a major shift in attitude and yielded some good results, and I feel great about myself, and much of it came from the tutelage of the friend I mentioned in a recent post. I believe it’s very simplistic to paint employees as all being salt-of-the-earth types who bleed out their lives in dedicated service, while the bosses reap the fruits and won’t share. I have heard (and I have no idea if this is true) that Brigham Young capped out the money he would pay others in his employ as carpenters, encouraging them to go work for themselves. I believe there’s a godly principle in that, and it’s not necessary for our salvation, but eventually we will all have to learn it, and it would be a great thing if more people would do it now, because life could be so much more comfortable and generous. Anyway, kind of scattered thoughts, but I just can’t get too worked up about the fact that the quality of life hasn’t increased exponentially. There was a lot of foolishness in the way things used to be done, with insane lifelong pensions and retirement packages based on the belief that life was just going to be sunshine and butterflies, and it’s come crashing down. We need to take some responsibility ourselves. There are corporate sharks out there and there always will be. But we can and need to do better at really going for the gusto and not treating this life as if it’s a practice run.

  4. Cstanford Says:

    Aaron, I agree with this:

    “I would suggest that the best thing we can do is to make education accessible to everyone, and look very strongly at improving the health care system. To say, “here it is; go and get it” is more compassionate than handouts (although those are certainly appropriate at times), because it leads to real fulfillment.”

    The Church has taught us consistently to not let luxuries become necessities, and I think that the frenetic promotion of new luxuries as instant necessities that is looked on as a major economic motor not only breeds unnecessary malcontent but also can make genuine necessities more scarce for some.

  5. Aaron Orgill Says:

    Stanford, you are exactly right. When people complain in this country, too often it is because they can’t afford to go eat lobster out every week, or satellite TV. Meanwhile, AIDS ravages Africa, China oppresses its own people, and children all over the world don’t have enough to eat. I don’t mean to be harsh, and have been guilty of jealousy myself, but I really don’t feel we have much to complain about here, and that’s why I just can’t conjure up too many tears that the wealthy are getting rich at a faster rate than the poor. Virtually anyone in this country can succeed if they really want to. I don’t condone a lot of the things the corporate fat cats do, but ultimately if they can do things more efficiently, it is their choice how to proceed. I hope that I would try to do something for humanity rather than reach for every possible penny, and even believe that taking that approach will come back to you, but it’s for me to worry about myself, not the Mr. Potters and Montgomery Burnses of the world.

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