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PARALLEL UNIVERSE: Gray Lady Story Recognizes ‘Real Wages Fail to Match a Rise in Productivity’

Posted by kinchendavid on August 30, 2006

By David M. Kinchen
Editor, Huntington News Network

Hinton, WV  – Just as a stopped clock shows the right time twice a day, so does the mainstream media sometimes gets things dead-on right. Such was the case with a story in the Aug. 28, 2006 New York Times by Steven Greenhouse and David Leonhardt bearing the headline:

‘Real Wages Fail to Match a Rise in Productivity.’

The story, which can be accessed here:

http://www.nytimes.com/2006/08/28/business/28wages.html?_r=1&th&emc=th&oref=slogin, says that the median hourly wage for American workers has declined 2 percent since 2003, factoring in inflation. This is something tens of millions of American workers – universally regarded by economists as the most productive in the world – have known all along.

Here’s how the reporters at the Gray Lady of W. 43rd Street put it: “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.”’

It may be a golden age for the rich, but it sure as heck is a cardboard one for workers struggling to keep their head above water as real inflation – not the phony variety offered up by the Federal government that excludes “volatile food and energy costs” – head butts them like the soccer player in the recent World Cup match in Germany.

Several people I know, including retirees and those working full-time jobs, have taken on part-time jobs at discount stories and supermarkets – making barely above minimum wage for physically hard work – to somehow attempt to make ends meet.

The two reporters, calling it as it really is, note that: “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.”

Trade in your hammer for a horn, indeed!

One group that’s worried about this trend is the Republican Party, the authors note. People tend to vote pocketbook issues, I’ve learned in 40-plus years in journalism. If voters this November decide that the GOP is the party of the rich that doesn’t give a damn about the poor, GOP incumbents and challengers may be in a world of woe come Nov. 7.

Not only have wages failed to keep pace with inflation, but so have benefits – especially health insurance, the two reporters note in a story that’s worth reading in its entirety. They write that: “Since last summer, however, the value of workers’ benefits has also failed to keep pace with inflation, according to government data.”

Of course in America – where the motto seems to be “Socialism for the rich and free enterprise for everybody else” – workers at the “very top of the income spectrum…have continued to receive raises that outpace inflation, and the gains have been large enough to keep average income and consumer spending rising,” note Greenhouse and Leonhardt. I’m willing to bet that these two Timesmen are feeling pretty strapped themselves, what with all the poor-mouthing going on in the media business. Not a day goes by that I don’t read of massive buyouts and/or layoffs at the nation’s premier newspapers and magazines.

The writers of the Times story add that the nation’s top economic guru, Federal Reserve Chairman Ben S. Bernanke on Friday, Aug. 25, 2006 warned in a speech “that the unequal distribution of the economy’s spoils could derail the trade liberalization of recent decades. Because recent economic changes ‘threaten the livelihoods of some workers and the profits of some firms,’ Mr. Bernanke said, policy makers must try ‘to ensure that the benefits of global economic integration are sufficiently widely shared.’”

Let me attempt a translation: Memo to overpaid CEO’s: Start sharing some of your obscene profits or workers won’t be able to afford your big-ticket products. This is showing up everywhere from Wal-Mart, which showed a first-time-ever decline in profits, to automakers like Ford and GM who are making big cutbacks in the wake of few buyers for their products. I also note that the new generation Camaro will be built in a Canadian factory, where GM doesn’t have to pay for health benefits thanks to Canada’s single-payer government health coverage – something Harry Truman proposed for the U.S. in 1949.

Here are some other points made by the two Times reporters in this excellent story:

* “Economists offer various reasons for the stagnation of wages. Although the economy continues to add jobs, global trade, immigration, layoffs and technology — as well as the insecurity caused by them — appear to have eroded workers’ bargaining power.

* “Trade unions are much weaker than they once were, while the buying power of the minimum wage is at a 50-year low. And health care is far more expensive than it was a decade ago, causing companies to spend more on benefits at the expense of wages.

“Together, these forces have caused a growing share of the economy to go to companies instead of workers’ paychecks. In the first quarter of 2006, wages and salaries represented 45 percent of gross domestic product, down from almost 50 percent in the first quarter of 2001 and a record 53.6 percent in the first quarter of 1970, according to the Commerce Department. Each percentage point now equals about $132 billion.”

Add to the gloomy news – not for nothing has economics been called the “dismal science” – that consumer confidence is where it was in 1992 and 1993, when the nation was coming out of a major recession, and politicians can join the vast majority of Americans making use of a crying towel.

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