Fall in Real Wages: Workers haven't earned as much per house since 5 year after LBJ

[Thorgrim]

The Big Disconnect

By PAUL KRUGMAN
Published: September 1, 2006

There are still some pundits out there lecturing people about how great the economy is. But most analysts seem to finally realize that Americans have good reasons to be unhappy with the state of the economy: although G.D.P. growth has been pretty good for the last few years, most workers have seen their wages lag behind inflation and their benefits deteriorate.

The disconnect between overall economic growth and the growing squeeze on many working Americans will probably play a big role this November, partly because President Bush seems so out of touch: the more he insists that it’s a great economy, the angrier voters seem to get. But the disconnect didn’t begin with Mr. Bush, and it won’t end with him, unless we have a major change in policies.

The stagnation of real wages — wages adjusted for inflation — actually goes back more than 30 years. The real wage of nonsupervisory workers reached a peak in the early 1970’s, at the end of the postwar boom. Since then workers have sometimes gained ground, sometimes lost it, but they have never earned as much per hour as they did in 1973.

Meanwhile, the decline of employer benefits began in the Reagan years, although there was a temporary improvement during the Clinton-era boom. The most crucial benefit, employment-based health insurance, has been in rapid decline since 2000.

Ordinary American workers seem to understand the long-term disconnect between economic growth and their own fortunes better than most political analysts. Consider, for example, the results of a new poll of American workers by the Pew Research Center.

The center finds that workers perceive a long-term downward trend in their economic status. A majority say that it’s harder to earn a decent living than it was 20 or 30 years ago, and a plurality say that job benefits are worse too.

Are workers simply viewing the past through rose-colored glasses? The report seems to imply that they are: a section pointing out that workers surveyed in 1997 also said that it had gotten harder to make a decent living is titled, “As usual, people say things were better in the good old days.”

But as we’ve seen, real wages have been declining since the 1970’s, so it makes sense that workers have consistently said that it’s harder to make a living today than it was a generation ago.

On the other side, workers’ concern about worsening benefits is new. In 1997, a plurality of workers said that employment benefits were better than they used to be. That made sense: in 1997, the health care crisis, which had been a big political issue a few years earlier, seemed to have gone into remission. Medical costs were relatively stable, and in a tight labor market, employers were competing to offer improved benefits. Workers felt, rightly, that benefits were pretty good by historical standards.

But now the health care crisis is back, both because medical costs are rising rapidly and because we’re living in an increasingly Wal-Martized economy, in which even big, highly profitable employers offer minimal benefits. Employment-based insurance began a steep decline with the 2001 recession, and the decline has continued in spite of economic recovery.

The latest Census report on incomes, poverty and health insurance, released this week, shows that in 2005, four years into the economic expansion, the percentage of Americans with private insurance of any kind reached its lowest level since 1987. And Americans feel, again correctly, that benefits are worse than they used to be.

Why have workers done so badly in a rich nation that keeps getting richer? That’s a matter of dispute, although I believe there’s a large political component: what we see today is the result of a quarter-century of policies that have systematically reduced workers’ bargaining power.

The important question now, however, is whether we’re finally going to try to do something about the big disconnect. Wages may be difficult to raise, but we won’t know until we try. And as for declining benefits — well, every other advanced country manages to provide everyone with health insurance, while spending less on health care than we do.

The big disconnect, in other words, provides as good an argument as you could possibly want for a smart, bold populism. All we need now are some smart, bold populist politicians.

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This is why the president doesn't tout the economy a lot like Clinton did, Clinton embraced the economy during his presidency and had 60+ approval during the impeachment trial

Right Wing economists have been telling us since '04 about how great the economy is...it might be, but just like China's amazing GDP growth, there are more than a few numbers to look at, and the fact that the average worker and the middle class have a disconnect from the ultra-wealthy is the key here, the last time I kept hearing talkins about a "great economy" while so few benefitted, was the 1920s right before the great depression

[Diesel66]

Originally Posted by Thorgrim

This is why the president doesn't tout the economy a lot like Clinton did, Clinton embraced the economy during his presidency and had 60+ approval during the impeachment trial

So you just posted a article that said the real wages have been decreasing for 20 years but still act like Clinton's economy was great ?

[6SpeedTA95]

I dislike studies like this because it takes into account "wages" and not the host of new salary jobs that are on the market. Salaries which have pushed higher in recent years according to money magazine.

The economy has been good, its been very good lately. In fact its been a little inflated due to government interaction with the markets. They've created a small boost in economic activity that probably shouldn't have existed. The end of this boost primarily in housing is upon us...see my thread...

I find it funny that the article said real wages have been declining since the 1970s yet our standard of living and real costs for many products have dropped drastically. Furthermore as I mentioned above the article fails to account for hte increase in salaries and the BIG jump in salary based jobs which are not included in "wage" based jobs.

[Stylerod]

Interesting timing. I'm guessing he had that all written out so when more good economic news came out he could try to dampen it.

Spending provides cheer on US economy
By Daniel Pimlott in New York

Published: August 31 2006 17:27 | Last updated: August 31 2006 17:27

US consumers delivered good news to the economy on Thursday, as data for July showed spending on goods and services was growing more quickly than at any time this year.

Meanwhile, tame inflation over the month made an interest rate increase by the Federal Reserve in September increasingly unlikely.

[6SpeedTA95]

Originally Posted by Diesel66

So you just posted a article that said the real wages have been decreasing for 20 years but still act like Clinton's economy was great ?

The economy under clinton was pretty damn good up until late 1997 when things began to turn. This good economy was due primarily to good fiscal policy by the fed and a host of advancements and changes that took place in the years leading up to his administration. He was smart enough to see what was going on and make sure the changes he made would have little impact on the booming economy.

[ballz2wallz]

Jobless Rate Dips in August

Hiring perked up in August as employers added 128,000 jobs, pulling down the unemployment rate to 4.7 percent, sending a Labor Day message that the economic expansion still has staying power.

[Stylerod]

Ah. He's still expecting a job when/if the Dems get into office. So he has to play down all good econimic news. He's just being a good little democrat.

Krugman is an outspoken critic of the Bush administration's foreign and domestic policies.

When Bill Clinton came into office in 1992, it was expected that Krugman would be given a leading post

Krugman had been considered a likely pick for a top economic policy post if John Kerry had won the 2004 presidential election.

[Thorgrim]

He's also a leading scholar...he's not a partisan hack, he's respected for apolitical or politically apathetic economists, thats why he's a professor at princeton, not because he writes for the NTY but because he's so respected

[ballz2wallz]

Originally Posted by Thorgrim

he's not a partisan hack, thats why he's a professor at princeton

[Stylerod]

Originally Posted by Thorgrim

He's also a leading scholar...he's not a partisan hack, he's respected for apolitical or politically apathetic economists, thats why he's a professor at princeton, not because he writes for the NTY but because he's so respected

He is absolutley a partisan hack and you know it!

[WickedLou9]

Originally Posted by ballz2wallz

Jobless Rate Dips in August

Hiring perked up in August as employers added 128,000 jobs, pulling down the unemployment rate to 4.7 percent, sending a Labor Day message that the economic expansion still has staying power.

that doesn't disprove what the author said. It's not even relevant.

[Thorgrim]

Originally Posted by Stylerod

He is absolutley a partisan hack and you know it!

People who win economic awards and get praise for their scholarship year after year are not generally regarded to as "hacks"

[WickedLou9]

Originally Posted by Thorgrim

People who win economic awards and get praise for their scholarship year after year are not generally regarded to as "hacks"

And they don't generally teach at the number one university in the country.

[6SpeedTA95]

Originally Posted by Thorgrim

People who win economic awards and get praise for their scholarship year after year are not generally regarded to as "hacks"

[Scrum]

Originally Posted by 6SpeedTA95

Compelling evidence you have there.

[Stylerod]

Originally Posted by WickedLou9

And they don't generally teach at the number one university in the country.

Of course they do. He's proof!

[6SpeedTA95]

Originally Posted by Scrumtralecent

Compelling evidence you have there.

I think that in this case is overwhelming and should not be challenged.

[ballz2wallz]

Originally Posted by Thorgrim

People who win economic awards and get praise for their scholarship year after year are not generally regarded to as "hacks"

noam chomsky isn't biased either

[lew]

LBJ?