The Great Wage Slowdown of the 21st Century

 

Credit Tomi Um

American workers have been receiving meager pay increases for so long now that it’s reasonable to talk in sweeping terms about the trend. It is the great wage slowdown of the 21st century.

The typical American family makes less than the typical family did 15 years ago, a statement that hadn’t previously been true since the Great Depression. Even as the unemployment rate has fallen in the last few years, wage growth has remained mediocre. Last week’s jobs report offered the latest evidence: The jobless rate fell below 6 percent, yet hourly pay has risen just 2 percent over the last year, not much faster than inflation. The combination has puzzled economists and frustrated workers.

Of course, there is a long history of pessimistic predictions about dark new economic eras, and those predictions are generally wrong. But things have been disappointing for long enough now that we should take the pessimistic case seriously. In some fundamental way, the economy seems broken.

I probably don’t need to persuade most readers of this view, so the better way to think about the issue may be to consider the optimistic case. And last week, in his most substantive speech on domestic policy in months, President Obama laid out that case.

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The Great Wage Slowdown

Since 2000, weekly earnings for low- and middle-income workers are nearly unchanged, after adjusting for inflation. Earnings for workers at the 90th percentile have risen.

It included the usual set of glass-half-full statistics and wishful-thinking proposals that officeholders talk about during political campaigns. More notable, though, was that Mr. Obama – speaking at Northwestern University – explained why he thought wage growth was likely to pick up.

“If we take the necessary steps to build on the foundation,” he said, after a litany of the good news, “I promise you, over the next 10 years we’ll build an economy where wage growth is stronger than it was in the past three decades.”

He may or may not be right about that. But the speech laid out the issues in unusually clear terms. And by any definition, the great wage slowdown – or its end – is one of the most important subjects in the country today.

You can think of Mr. Obama’s argument as falling into two categories (even if he didn’t say so): the reasons that overall economic growth may accelerate, and the reasons that middle- and low-income workers may benefit more from that growth than they have lately. Both factors have contributed to the wage slowdown. The size of the pie hasn’t been growing very fast, and most of the increases have gone to a small share of already well-fed families.

On the growth side of the ledger, both energy and education have been problems. The cost of energy, after temporarily falling in the 1990s, returned to its post-1970s norm in recent years and acted like a tax on the rest of the economy. Education, meanwhile, is the lifeblood of economic growth, allowing people to do entirely new tasks (cure a disease, invent the Internet) or to do old ones with less time and expense. Yet educational attainment has slowed so much that the United States has lost its once-enormous global lead.

On both fronts, the country has been making progress, Mr. Obama rightly noted. The fracking boom and a more modest clean-energy boom have increased this country’s share of energy production and held down costs worldwide. The price of oil has been mostly flat for three years.

And the number of high-school and college graduates is rising. The financial crisis deserves some perverse credit, because it sent people fleeing back to school, much as the Great Depression did. But some of the efforts to improve school performance – by raising standards and accountability – are also playing a role.

READ ENTIRE ARTICLE HERE: http://www.nytimes.com/2014/10/07/upshot/the-great-wage-slowdown-of-the-21st-century.html?_r=0&abt=0002&abg=1

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commented 2014-10-11 02:19:35 -0400 · Flag
Thomas N. writes:

The Entire Bedrock Foundation of the Secular Progressive narrative is dependent upon the corruption of Language, once words have Lost there Meaning, everything that follows is just part and parcel of the secular progressive Propaganda agenda/narrative.

This is the Core Tenent of the self-professed, secular progressive founts of knowledge and enlightenment a system based on values, judgment, accountability, competencey, objectivity MUST Be Destroyed and Discredited, if any measurement standards are permitted to exist the entirety of there contrived world agenda immediately collapses and Reveals them and there legions of enablers for the Self-Serving FRAUDS that they are.

They are parasites that feed off of humanity and society, No Thank You.
commented 2014-10-11 02:18:04 -0400 · Flag
A.A. writes:

The risible “Progressive” narrative about the U.S. economy…only the uneducated and the willfully blind can read such an article and not seethe at the useless propaganda most if its claims make…
commented 2014-10-11 02:17:05 -0400 · Flag
Ed K. writes:

Real wages haven’t grown even with all the Keynesian spending under President OPromiseU. He doesn’t even mention that bigger portion of pay has gone to hidden taxes like the $100 billion in annual hidden taxes and fees to pay for Obamacare.