"Wages are Falling for Just about Everybody"

This is the type of issue the election should be about. The conversation has been steered elsewhere, the focus is no longer on the economy, and that's to the detriment of those who need help, especially if the connection between the economic policies of the Bush administration, policies that will continue under McCain-Palin, and the economic outcomes people have experienced are not fully recognized:

Wages are falling for just about everybody, by Kathy G.:

Chart from the Wall Street Journal

Today, the Wall Street Journal reports the sobering news that, since 2000, real wages have fallen for every educational group in America except folks with professional degrees (doctors, lawyers, and the like). All other groups, even those with master's degrees and Ph.D.'s, saw declining wages over this period. The WSJ piece is based on recently released Census data (you can find the most recent Census Bureau report on income and earnings here).

In recent years, the college earnings premium has decreased substantially. As the Journal points out:

In 1975, for instance, workers with college degrees earned 60% more per year on average than workers with high-school diplomas only, according to the 2006 Economic Report of the President.

Workers with a college degree saw their earnings premium grow steadily over the next quarter century, and by 2000 their average earnings were roughly double what workers with a high-school diploma made. Over the next four years the trend reversed: By 2004, workers with a college diploma only were earning about 80% more than high-school grads, on average.

The Journal article identifies globalization (including the outsourcing of both blue- and white-collar jobs) and rising health costs as possible causes for the decline in wages. One reason workers' wages aren't keeping up with inflation is that health care costs have risen dramatically in recent years, so employers are shelling out more for health coverage, and less in wages.

For most Americans, these data paint a fairly bleak picture of their economic prospects. About the only good thing I can say about this is that, given this economic climate, I find it almost impossible to believe that the Republicans triumph this November. The seven-year period during which wages have been in freefall just happen to be seven years in which a Republican was president and Republicans, for the most part, controlled Congress. There's no way in hell that the Republicans should be able to get away with this. If, in spite of everything, they end up winning this fall, it will be the con job of the century.

I'm guilty of this too with recent side trips to discuss elitism and other cultural issues, but can we steer the conversation back to the issues that are important? Can the press and everyone else stop fanning the flames of side issues that are nothing but a distraction from what matters to struggling households? It's time to change to conversation, to go on the offensive with these kinds of issues, but how? My opinion is that there's only so much we can do, it's up to the campaigns to set the national conversation, and right now the Democrats are in response mode - playing defense - rather than setting the conversation by aggressive attacks on Republican economic policy, attacks that make it clear how those policies have worked to the detriment or simply ignored the needs of typical households. You can win playing defense, especially if you are already way ahead, but most of the time it's offense that scores the big points.

Comments

[paine]

yikes

the pundits cry intensifies
as the top 1 percent fly away from us all

"higher percentages of higher ed
is our only hope for national salvation..."
and the premium collapses

[Tim]

This is the discussion I am trying to find. We see the problem since 2000. Now, tell me, WHAT can the Democrats do to fix the problem, do away with globalization, etc? What would they have done differently?

[Denis Drew]

To help the people on the income bottom is simply a matter of resetting the checks and balances in the labor market -- boom or bust or whatever:

You can increase the pay of minimum wage workers 100% for 3% increase the cost of output -- probably less in retail prices. Since this would probably start a push up of other (nothing) wages we could seriously bolster the income of half the country for maybe 6% increase in prices for the top half.

The next 40 percentile (50-90) could recover their 6% -- and hopefully a lot more with the legislative introduction of sector-wide labor agreements. Wal-Mart would have to pay what Costco pays (Wal-Mark just abandoned the German market, 88 stores, because it could not make out paying equal wages).

The top 10% enjoyed 40% of all income as of 2001 (my only figures* -- they are doing even better now), up from 27.5% in 1973 (when the inequality slide began), so there is plenty of headroom there for the 50-90s to get their money back from both ends by raising their labor prices.

In economics the poorest should be the easiest to help because it takes so little from those above to multiply their incomes -- a convenient triage. Doubling the minimum wage (to where it should have been all along) and establishing sector-wide labor agreements (practiced in third, second and first world economies) are just boiler plate solutions -- nothing crazy or radical. You don't have to look any further, but the more the merrier.

*http://ontodayspagelinks.blogspot.com/2008/08/income-share.html

[Tim]

Ok...what about inflation, you drive the price of Walmart up or out of business. Then what? The cost of buying the basics increase, how do you overcome that? How do you increase the number of American jobs? How do you increase American job security? Do you impose tariffs? (I am assuming, now)Since most minimum wage jobs occur in small business, how do you compensate them? How do they survive?

[S Brennan]

With apologies to Martin Niemöller

"In America, they came first for the union blue collars, And I didn’t speak up because I wasn’t a union blue collar;
And then they came for the skilled trades, And I didn’t speak up because I wasn’t a skilled trademan;
And then they came for the engineers, scientists and code writers, And I didn’t speak up because I wasn’t an engineer, scientist or code writer;
And then . . . they came for me . . . And by that time there was no one left to speak up."

[piglet]

"This is the type of issue the election should be about. The conversation has been steered elsewhere" not least by our gracious host. Thanks Mark, for coming back.

[piglet]

Denis Drew: "the most obvious abstract solution to unbalanced power debacle in the USA labor market which is surely sector-wide labor agreements"

How do you think this can be achieved? By having the federal government impose it? I doubt this would be constitutional and I doubt even more that such a program would be popular. Anti-union propaganda has been extremely successful in the US to the point that many unprotected low-wage workers actually oppose unionization. This is an area where reform really has to come from the bottom up. Congress and the administration could, and should, and hopefully will, do a lot to level the playing field but they can't also organize workers.

[ken]

How many times does it have to be said: you can't fight something with nothing.

Democrats run away from liberalism while Republicans embrace conservatism.

Even now, after a lifelong committment to New Deal/Great Society liberal ideas I doubt if any Democrat in office or currently running for office shares my values.

Why is this? The answer is because our so called party leaders have repeatedly let Republicans define what liberalism means in a negative sense. What do democrats do in response? They embrace the republican formulation and respond with a lack of conviction that, really, Americans prefer our policies. Oh Yeah? Then why do we still keep losing elections?

[anne]

http://www.cbpp.org/9-5-08ui-stmt.htm

September 5, 2008

The Labor Department’s most comprehensive alternative unemployment rate measure — which includes people who want to work but are discouraged from looking and people working part time because they can’t find full-time jobs — stood at 10.7 percent in August, its highest level since June 1994.

[glory]

yea, if the repubs win again, doesn't that mean the dems _deserve_ to lose?

1) we were attacked by taliban-sponsored qutbist terrorists from afghanistan and went to war in *iraq* based on misguided neoconservative ideology and exaggerated (at best) evidence..

2) we're in *recession*

nevermind character & biography, if the dems are incapable of _articulating_ these two SIMPLE points to the american public, that conservative rule over the last eight years has left the US not only morally bankrupt, but financially bankrupt as well, then we deserve the gov't we get...

[Tim]

What is a liberal, what is a conservative?
New Deal/The Great Society: If I recall correctly (I may be wrong), the only New Deal program currently is Social Security. A part of the Great Society was a massive tax decrease.
What are the solutions? More finger pointing? Americans want solutions.

[anne]

Comprehensive unemployment is at 10.7% as in 1994, while employment density is at 62.1% as in 2003. Where job creation was an average 225,000 a month for the 96 months of the Clinton years, the finest 52 months of the Bush years, to December 2007, averaged 160,000 jobs created.

There has always been a labor market problem these last years, as the economy never grew through the expansion from November 2001 as in expansions before. The question is why, since taxes were low and lowered, long terms interest rates were low, government spending increased enough to produce a deficit, the dollar generally weakened, corporate revenues and savings were at or near record levels.

What went wrong? Warren Buffett told us in 2000 that relative returns to labor had to increase going forward, but Buffett was wrong in terms of ordinary wages and benefits for reasons that I do not understand.

[anne]

http://www.cbpp.org/8-9-05bud.htm

August 29, 2008

How Robust Was the 2001-2007 Economic Expansion?
By Aviva Aron-Dine, Chad Stone, and Richard Kogan

Annual Growth Rates Measured from Trough *

GDP
Consumption
Non-Residential Fixed Investment
Net Worth
Wages and Salaries
Employment
Corporate Profits

Current Expansion

2.8%
2.9%
3.9%
3.5%
1.8%
0.9%
10.8%

Post-War Average

4.3%
4.0%
6.0%
4.1%
3.8%
2.5%
7.4%

1990s

3.3%
3.2%
7.6%
4.1%
2.7%
1.9%
8.0%

Annual Growth Rates Measured from Peak **

GDP
Consumption
Non-Residential Fixed Investment
Net Worth
Wages and Salaries
Employment
Corporate Profits

Current Expansion

2.5%
2.9%
2.0%
3.2%
1.2%
0.6%
9.5%

Post-War Average

3.4%
3.6%
3.7%
3.9%
2.9%
1.7%
3.8%

1990s

2.8%
2.8%
6.4%
4.3%
2.3%
1.5%
8.1%

* Average growth rate in 23 quarters after trough. Current expansion: 2001-IV:2007-III.

** Average growth rate in 26 quarters after peak. Current expansion: 2001-I:2007-III.

[Michael McKinlay]

Obama has nothing to run on.

Obama's economic policies are DLC rehash and everybody knows it. The deepening economic crisis will require bold policies.

The feeling I get is that people would rather hunker down and face the storm with McCain rather than try to move to higher ground with old, tired, tepid Obama policies.

[No Problems]

This is all nonsense. The country is doing great.

Don't believe me? Take a look at the adds in the New York Times? Pretty nice stuff. Not exactly cheap.

OK, maybe just the readers of the New York Times are doing great.

For a real shocker... Check out the adds in Vanity Fair.

This must be the greatest boom of all time.

[So Sad, So True]

"Obama's economic policies are DLC rehash and everybody knows it."

BLOTD

[anne]

http://www.cbpp.org/9-5-08ui-stmt.htm

September 5, 2008

The Labor Department’s most comprehensive alternative unemployment rate measure — which includes people who want to work but are discouraged from looking and people working part time because they can’t find full-time jobs — stood at 10.7 percent in August, its highest level since June 1994.

[Please notice the definition.]

Where complete unemployment is now 10.7%, it was last at 10% in 2003, as low at 7% in 2000 and above 10% before 1996. The broadest measure of unemployment fell steadily from 1993 through 2000. The Clinton years marked the first time since records were broken out by ethnicity in 1980 that African American ordinary unemployment fell below 10%, but that too is gone now.

[swells]

Well, I wish I could be confident that the "sideshow" issues aren't more fundamentally important than Mark believes. I think it tells us something quite important that "real issues" get put on the back burner when "sideshow" issues are introduced. Is that because they are simpler, more entertaining, more of the drama that humans REALLY crave.

I'm still working my way through Paul H. Rubin's Darwinian Politics but as I do I'm becoming more convinced that the "sideshow" addresses exactly the same issues that were important in evolutionary development and that we underestimate the sideshow at our peril.

[anne]

Through the 52 months from August 2003 to December 2007, the finest of the Bush years, there were 160,000 jobs created monthly, as opposed to 225,000 through the 96 months of the Clinton years. That means about 65,000 fewer jobs a month were created monthly even during the finest 52 months of this expansion than through all the months of the Clinton years. Since January 2008, there have been 605,000 jobs lost as the economy has entered what I call an employment recession.

[These figures are labor department sourced.]

[anne]

http://www.whitehouse.gov/news/releases/2008/01/20080104-2.html

January 4, 2008

December 2007 Marks Record 52nd Consecutive Month of Job Growth

More Than 8.3 Million Jobs Created Since August 2003 In Longest Continuous Run Of Job Growth On Record

Today, the Bureau of Labor Statistics released new jobs figures – 18,000 jobs created in December. Since August 2003, more than 8.3 million jobs have been created, with more than 1.3 million jobs created throughout 2007. Our economy has now added jobs for 52 straight months – the longest period of uninterrupted job growth on record. The unemployment rate remains low at 5 percent. The U.S. economy benefits from a solid foundation, but we cannot take economic growth for granted and economic indicators have become increasingly mixed. President Bush will continue working with Congress to address the challenges our economy faces and help facilitate long-term economic growth, job growth, and better standards of living for all Americans....

[Michael McKinlay]

So Sad, So True ~

Obama at a glance ... More domestic spying, more faith based welfare, a health care plan worse than what we have now, no talk of bank regulation, no explanation of the Freddie/ Fannie bailout, bowing to AIPAC, an energy policy that is a sop to Coal and Ethanol, more GWOT, more free trade, and this completely tears it ...

increasing the size and budget of the military.

Obama can only attack McCain, he has nothing to run on ...

[David]

Why doesn't the government just mandate a $20/hour minimum wage. Or how about $30/hour? $50/hour?

Tell me exactly what the Republicans did to cause wages to stagnate or tell me what the Democrats did to boost them in the '90's.

You can't. Because they've had nothing to do with it.

If you talk about broad labor policy or whatnot, tell me what happened to union membership under Clinton? I seem to recall it going down in a pretty straight line since 1982.

And if we want a minimum wage of $30/hour or whatever, well, then we'll get the same dynamic labor market that Europe has. Raise the price of something, and you buy less of it, no? Or is that principle of economics not taught anymore?

what we have a massive increase in global labor supply, since 1989, which has depressed wages, and will continue to do so. Why wages didn't start getting hit until about 2001? Because we were busy hiring US employees to replace themselves with Indians, Chinese and Eastern Europeans. Now that we've successfully offshored ourselves, we're out of work, or competing with them on wages. This ain't that hard to figure out.

[anne]

Also, for clarity, the employer and household surveys of employment-unemployment will at time differ significantly for months, but the differences are statistically reconciled. The labor department data, as such, are quite reliable over time.

[Lord]

Mark, haven't you heard? All those poor professionals can do is work more. Everyone else just wants more leisure. It's called prosperity and McCain is promising us a lot more of it. Soon it will be leisure all the time for all of us. ;-)

[ampersand]

the pundits cry intensifies
as the top 1 percent fly away from us all

Not that canard again.

Most of the top 1% is mostly getting paid more because they work their butts out. These are mostly professionals on the coast who work 80 hrs/week

Except for the top 0.01 % - about 14,000 tax payers as per IRS.

That this top 0.01% hides under the cover of the top 1% is the biggest con job in history. Bigger than the Republican con job described.

[CBBB]

McKinlay,

You are aware that Obama isn't the Republican candidate right? Because most of what you described there is the Republican platform - i.e. what we'll see with McCain the White House.

I don't understand how you can say that the party which occupied the White House for the past 8 years is going to be the one to take the US in a new direction.

[The Contrarian]

When confronted with information that doesn't fit a preconceived linear logical progression, one must reassess his/her thesis.

One might surmise at the risk of going against the conventional wisdom of this blog that the majority of wage earners don't feel the angst of low wage growth or don't blame the usual suspects.

Furthermore, one could make a simple conclusion that since those with 4 yr college degrees and advanced degrees are now experiencing wage stagnation that targeting them for tax increases might not be such a stroke of genius.

[ken melvin]

10.7 - 7.0 equates some 6 million jobs.

[Inflation is the Enemy]

"...real wages have fallen..."

So get rid of inflation, and real wages won't fall. Nominal wages rarely fall. Pensioners won't lose real purchasing power either this way.

[Michael McKinlay]

Tim,

Clinton's economic plan was useful for that period, but not now. The challenges facing the country are daunting and tweaking tax rates ain't gonna cut it.

[Michael McKinlay]

CBBB ~ Bad News

Neither party is going to take the country in a new direction. It is a question of economic meltdown sooner, McCain or later, Obama.

In the final analysis they will defend bank corporatism to the depths of another Great Depression.

[Zero Sum Game]

The pie is shrinking, because foreign savers aren't lending their products very much any more. Either borrowers have to consume less, or everyone else does. Employers can't create new money, lenders can. Borrower consumption therefore continues, so everyone else has a smaller piece of the pie.

Stop the lenders from creating new money, and everyone else consumes more. Borrowers are then the only ones who consume less when they can't borrow as much from foreign savers.

[Michael McKinlay]

Zero Sum Game ~

Oil ? Your theory is only good if we don't need foreign products. We have outsourced just about all production of consumer goods.

We must export as much as we import.

[anne]

While I believe a New Deal spending approach is called for in resolving the problems of ordinary workers, I am bothered in not understanding why workers have faired so poorly since 2001; poorly in comparison to any other period of economic expansion I know of. I would prefer that defense spending be cut, but why was rapidly increasing defense spending coupled with slightly decreased non-defense spending so ineffective in spurring growth and labor returns when all else seemed stimulative?

What am I missing about this period, which has been so different?

[Patricia Shannon]

With the media in the control of the top 0.1%, thru ownership, and depending on advertising revenues, where is the average person who has at least on full-time job, or 2 or 3 part-time jobs, and a family, going to have time to get the information needed to be aware of what's really happening and make good decisions. I found out about how the media distorts the facts for the benefit of the plutocracy long ago. Go to a few events that address problems that affect the poor, for example, and get covered by the media, and contrast what people really said, with what gets reported.

[gina]

Tariffs are currently viewed as a "bad" thing but a selective tariff might be a good thing.
take a cooperation that exports American jobs and impose a tariff that equalizes the wage befit of exporting the job vs staying here would be a good thing I think, no or much lower tariffs on wholly owned overseas companies and huge tariffs on American corporations that screw America for their obscene profits

[Zero Sum Game]

"We must export as much as we import."

We haven't been doing that for a long time. We import far more than we export, borrowing the balance. With no indigenous savings, it can be no other way. All loans must either be imported from overseas (trade deficit), or extracted from citizens via inflation (money creation).

[don]

Yeah - so what's definitely missing is a coherent answer on what can be done to stop the slide in wages. Maybe wage earners are just getting squeezed by greater competition as two huge labor pools (China and India) enter the global market, driving down wages in terms of non-manufactured commodities. Maybe there is nothing useful to be done. If you believe in equality of result rather than opportunity, you can advocate greater redistribution by government. Maybe that should be the focus of Republican and Democratic platforms.
To my mind, the bigger problem may come from failure of the American public to face up to reality, insisting on lavish government programs that they are unwilling to pay for, until the Treasury can't meet a debt payment. Then, we would see some really exciting economic times.

[Pierce Wetter]

Total Compensation (Wages + Benefits) has risen, not fallen.

However, Wages are flat/falling.

Conclusion: Rising Health Care costs are sucking all the energy out of the economy.

So if you want to have a real dicussion about this topic, you have to talk about Health Care.

[DM]

I have all kinds of issues with this post. For one, the linkage between wages and gov't policy is very weak at best. We can keep saying things were better under Clinton, but until someone can actually create some causation between policies and economic outcome, it's just a empty statement.

Secondly, isn't 2000 the peak of the significant boom time... a bubble? Why should other markets have corrections while we have some expectation that labor markets don't.

Third, there was a nice article by Bob Solow (I'm writing this off the top of my head, so I have the author or the author's name wrong) about how the very report Kathy G is referencing is flawed because it's not comprehensive and doesn't take into account other compensation, changes and household structure, etc.

[Denis Drew]

Tim, piglet, David,
First, I think you all need a good dose of anti-Malthusian antidote -- to help you get over all the "government is the problem, not the solution" crap: per person income (output, GDP, whatever) grows about 15-20% every decade (NOT EVEN COUNTING flying cars when they get here for the same $25,000 -- neither will 3DTV for the same $600 even be counted in the CPI). The world is not going to hell in a shrinking economic hand basket (Social Security retirement will become a reverse Ponzi scheme once retiree proportion levels off in about 40 years -- each retiring generation will from then on be able to soak that much more out of the succeedingly higher income worker generation!).

Tim,
Wal-Mart unfortunately does not sell the big ticket items: rent, medical, transortation, etc. -- which is what Wal-Mart employees need a pay raise to buy. BTW, Obama's economic director Jason Furman dopily pointed out that Wal-Mart only squeezes $5 billion dollars out of its workers while producing $263 billion in savings for consumes -- apparently not catching on that Wal-Mart does not need the $5 billion from the workers if the consumer can still save $258 billion without squeezing them.

piglet,
The government now imposes a unionization scheme that has become so prejudicial to the worker that I truly think it would have a chance to be thrown out as a violation of the right to assemble -- if you could get the courts to recognize economic freedom to assemble as a similar if less weighty right than political freedom to assemble (as economic speech is less protected than political speech).

The government imposes every bit of our economic structure from printing money to registering deeds (the latter not finally coast to coast until about 100 years ago). The government imposes sector-wide labor agreements from Germany to Norway to Argentina to Indonesia to French-Canada -- that is the only way labor unionizing can be set up.

I agree the government cannot make the workers want to organize. That is what political leadership -- and the media -- and intellectual leadership (listening progressive economists?) are supposed to do. I never looked into economics until my late 50s and then only by accident -- before that I always sort of assumed that my economic place in the world was looked after. Achh!

A quarter of the workforce is earning less than the minimum wage of 1968 -- last year's minimum sunk to almost half the 1968 lever before last year's small addition -- all the while average income DOUBLED!! Achh! How many people know about this? Why isn't this the biggest story out there. American progressive leaders and American labor are asleep at the wheel as their incomes go off the road. It is not a matter of a higher tech economy leaving the less educated behind either -- the lost 12.5% income share went to the top 3% who were always highly educated.

David,
We already had a $10/hr minimum wage ($1.60 adjusted for inflation) in 1968 -- at half today's average income! Eight-grade* math tells us $13/hr would add about 3% to the price of products and services -- on the average. Fast food would be up more like 33%. Meaning McDonalds might have to charge $6.65 (probably a little less) for today's $5 meal. But, if half the country got a big raise -- the half that goes to McDonalds. This is not theory. My neighborhood Mac's business definitely went up; definitely in the third world end of the clientele, after Illinois minimum was raised from $5.15 to $8.00.
*http://ontodayspagelinks.blogspot.com/2008/08/3-cost-of-gdp-output-and-inflation.html

Minimum wage employers raise their prices to pay for pay increases and other people get their inflation raises -- in my reunionization scheme other people raise their products prices for the top 10 percentile earners whose bargaining power has not recently increased.

My minimum wage doubling and sector-wide one-two punch is designed to CHAIN-shift income share from the very top back to the bottom with plenty left off along the way. Pretty much the end of poverty and crime. (Me for president. :-])

[anne]

Good grief; ordinary labor costs, wages and benefits, were completely contained through the current expansion, while corporate revenues and savings have been at or near record levels. Labor costs have been no problem at all for corporations.

[anne]

http://www.cbpp.org/8-9-05bud.htm

August 29, 2008

How Robust Was the 2001-2007 Economic Expansion?
By Aviva Aron-Dine, Chad Stone, and Richard Kogan

We examine Commerce Department, Labor Department, and Federal Reserve Board data on seven economic indicators: the gross domestic product, personal consumption expenditures, private domestic fixed non-residential investment, net worth, income from wages and salaries, payroll employment, and corporate profits. For each indicator, we look at average growth both since the economy hit bottom in November 2001 and since the last business-cycle peak in March 2001. We compare average growth over these periods with the average growth that occurred over comparable periods in the other business cycles since the end of World War II. (Growth is measured after adjusting for inflation, except for employment levels, where such an adjustment is inapplicable.)

For six of the seven indicators, the average annual growth rate between 2001 and 2007 was below the average growth rate for the comparable periods of other post-World War II economic expansions. Notably, this expansion was among the weakest since World War II with respect to both overall economic growth and growth in fixed non-residential investment. These two indicators should have captured any positive "growth effects" of the tax cuts.

The labor market also was weaker during the 2001-2007 expansion. Both employment growth and wage and salary growth were weaker during this expansion as a whole than in any prior expansion since the end of World War II.

The 2001-2007 expansion outperformed the average post-World War II expansion in only one area: corporate profits, which grew much more rapidly than average.

These conclusions hold whether one focuses on comparisons that examine the period since the expansion began in the fourth quarter of 2001, or comparisons that examine the period since the last business-cycle peak (i.e., since the 1990s expansion ended in the first quarter of 2001)....

[anne]

The problem is domestic, and has to do with domestic policy, and there is every reason to think policy through the Clinton years was importantly more helpful for generating general growth and helpful to workers, but I have read no convincing explanation of why the Bush years have been so relatively weak.

[Michael McKinlay]

Zero Sum Game ~

That's right, we have been importing more than we have been exporting for a long time. And these imports have not been for production but for consumption.

This is why we are in so much trouble, we have been living above our means for decades now, borrowing the difference. Well ... now it's time to pay the bill.

[HJ James, Chicago, IL]

"..it's up to the campaigns to set the national conversation" ???

In my opinion, this option is rather passive. The economic and ethical dilemmas arising from the discrepancy between productivty increases and wage stagnation and those arising from the concentration of wealth in one economic class and debt in all the others have existed for a long, long time. Much longer than just the past 7 years. And the historical evidence indicates that these problems have been actively cultivated by actions of both Republicans and Democrats who are equally beholden to corporate interests.

Where are the campaigns to suddenly find inspiration to formulate mass media messages that frame big business interests as unacceptable to the general welfare? Why would either major party demand that elected officials be held accountable for actions that socialize corporate losses (ie, increasing bailouts and subsidizes and decreasing government regulation and services) and for embracing status quo policies that trade individual rights and opportunities for greater state power?

[anne]

Mark Thoma:

"My opinion is that there's only so much we can do, it's up to the campaigns to set the national conversation, and right now the Democrats are in response mode - playing defense - rather than setting the conversation by aggressive attacks on Republican economic policy, attacks that make it clear how those policies have worked to the detriment or simply ignored the needs of typical households."

However, this very week the Democratic Congress decided not even to vote on a bill to increase the health care insurance coverage for 3.8 million needy children for a mere $7 billion. Where then is determined focused compelling policy?

[Too Much Fed]

Cartoon character little alan greenspan is having multiple wet dreams about this article!

[Patricia Shannon]

This may be at least part of the reason that the U.S. life expectancy is shorter, and per capita medical costs higher, than in countries with universal health care.

http://www.sciencedaily.com/releases/2008/09/080908185119.htm

Better Care Of Sickest Patients Can Actually Save Hospitals Money, Says Largest Study Of Its Kind

ScienceDaily (Sep. 8, 2008) — A new study finds hospitals can save more than $300 a day taking care of seriously ill patients while giving them even better care.

"Americans are aging with serious, chronic illnesses," said Dr. R. Sean Morrison, director of the National Palliative Care Research Center and the study's lead author. "But despite enormous expenditures, they still get uncoordinated care, extreme burdens on their families and poorly managed pain."

* According to the study of eight very different hospitals:
* Hospitals saved from $279 to $374 per day on patients in palliative care programs.
* Hospitals saved $1700 to $4900 on each admission of a palliative care patient.

Savings included significant reductions in pharmacy, laboratory and intensive care costs. This means savings of more than $1.3 million for a 300-bed community hospital and more than $2.5 million for the average academic medical center.

"The potential to reduce the suffering of millions of Americans is enormous," said Diane Meier, MD, director of the Center to Advance Palliative Care, a national organization based at Mount Sinai School of Medicine. "This study proves that better care can go hand in hand with a better bottom line."

Until a decade ago, palliative care in the U.S. was typically available only to patients living at home and enrolled in a hospice program. By 2006, more than 41% of U.S hospitals reported having a program.
======================================================
http://www.sciencedaily.com/releases/2007/06/070613112355.htm

Early Palliative Care Linked To Shorter Stays In Intensive Care
ScienceDaily (June 14, 2007) — Researchers at the University of Rochester Medical Center have found that early palliative care interventions can reduce the length of stay for seriously ill patients in the medical intensive care unit (MICU) by more than seven days without having an impact on mortality rates.
...
In addition to improving quality of care, proactive palliative care consultation in the MICU has an unintended, yet relevant, benefit of financial savings. Extrapolating from the study's findings, the intervention potentially saved approximately 1,400 MICU patient days at a savings of around $450 per day.

[Renterfornow]

Scarey Stuff. Homes prices will crash........

[gordon]

Prof. Thoma: "It's time to change to conversation, to go on the offensive with these kinds of issues, but how?"

Well, maybe by putting together a coherent agenda which all candidates for office can respond to. On Aug. 6th, the post "Stiglitz: Turn Left for Growth" reproduced a Stiglitz article in which he said: "Today, in contrast to the right, the left has a coherent agenda, one that offers not only higher growth, but also social justice. For voters, the choice should be easy".

The trouble was (and is, so far as I know), that this left agenda for the US is invisible. Where is it? Where can you download the .pdf? What's the title of the book?

[mrrunangun]

If indeed we are entering a prolonged period of debt liquidation, without policy changes, wealth disparities will tend to increase as the currently well-off will be more able to ride out the difficulties and then to take advantage of opportunities when they arise. Opportunities also accrue to key political operators as happened in the depression of the thirties. To improve the lot of the not-so-well-off in these circumstances, should they come to pass, will require New Deal style policies of public employment and public works and a method of taxing established wealth, not just income. An inheritance tax can do this, but slowly. Personal property levies work more quickly.
Doubts as to the government's ability to direct effective policies improving the lot of the have-nots vis a' vis the haves relate to the fact that the current arrangements allow for the easy and legal corruption of government by the haves in order to maintain the haves' collective position. Politicians require substantial resources to maintain or improve their positions and they get those from the haves. The haves extract promises of protection for their own position. This is how we got where we are. We see a lot of posturing from both sides of the aisles regarding help for the common man, but when the tough decisions are made the pols make them in favor of their own contributors. The republicans will never hurt the bankers or insurance men and the democrats will protect the trial attorneys and the entertainers. They all protect the hedge fund kings. Those are where those to 1/10 of 1% earners make their money.

[kthomas]

Very very good point, Renterfornow. This is exactly why Fannie and Freddie are gone, and why Lehman Bros is next in the Socialized Losses bread line. Folks, let's be honest: this is what happens when you vote Republican. All the real profits go straight to the top, while everyone else slaves. Not to mention the lack of oversight or regulation, when GOP cronies get put into these offices.

Prof. Thoma is dead on about the need to make the souring economy the ONE AND ONLY SUBJECT. In the end, nobody cares what Obama says about pigs and lipstick. They care about keeping thier jobs and a roof over thier heads.

[paine]

"This ain't that hard to figure out"

"what we have (is)a massive increase in global labor supply, since 1989, which has depressed wages, and will continue to do so"
david

policy ??? action plan ???

oh ...got none ???

classic
fatalistic glibocrat

hope to see u
in fingerless gloves
this winter
roasting spuds over a trash can

[paine]

Michael McKinlay
has a head on his shoulders
and s brengun ain't half bad either
and the drewmobile keeps rollin along

" We already had a $10/hr minimum wage... in 1968 -- at half today's average income...A quarter of the workforce is earning less than the minimum wage of 1968 "

and anne shows us
th bottom line facts
we just had the perfect corporate expansion

"Both employment growth and wage and salary growth were weaker during this expansion as a whole than in any prior expansion since the end of World War II.

The 2001-2007 expansion outperformed the average post-World War II expansion in only one area: corporate profits, which grew much more rapidly than average. "

the end of an era ???

i suspect so

some keen comments here

and yet some need a lift
to the repair shop

and others well
next january 17th
i'd like to see them
around ten pm
in fingerless gloves
roasting a potato over a trash can...

[paine]

and
i'd like to see cheney in fingerless gloves roasting
a idaho potato over a trash can too...

and and and ...

[Too Much Fed]

This is exactly what greenspan wants from free trade agreements and legal immigration (like visas). You can throw in illegal immigration for the lower skilled too.

From:

http://www.democracynow.org/2007/9/24/alan_greenspan_vs_naomi_klein_on

"ALAN GREENSPAN: Well, look, the whole issue of what has happened in this country with respect to the increasing inequality of income is an issue I address and abhor in the book, and I point out that what is causing it to a very significant extent is the fact that skilled labor is under extraordinary demand as the technologies increase, and we’ve had a dysfunctional education system in this country, both in primary and secondary schools, which is showing up in all of the studies, which indicate that while our children in the fourth grade are doing fairly well relative to international comparisons, by the end of high school, they are in terrible shape. And as a consequence of that, we are not putting the proper number of people into the education cycle to get them up to skill levels, which creates much less, or would create a good deal less, in the way of income inequality.

And I also argue in the book that we ought to be opening up our borders to skilled labor from all sorts of—from all parts of the world, because if we were to do that, we would increase the supply of skilled workers, which our schools have been unable to create, and as a consequence of that, we would lower the average wage of skills and reduce the degree of income inequality in this country. It’s a very important issue, and it’s a very important issue which I raise in my book. And we have to confront this both at the education level and on the immigration level."

[Too Much Fed]

So, everyone's real wages should be lower except economists, stock traders, hedge and mutual fund managers, entertainers, media people (especially media wives), doctors, lawyers, and sports players.

If real wages are SLIGHTLY negative, interest rates are low, and nominal wages are low, does that make it more likely that someone will borrow money to maintain their standard of living? Does that help the bankers because they can produce more debt and extract interest payments out of workers?

[Too Much Fed]

Is it the job of the media to distract people from the policies of the federal reserve by using topics like lipstick on a pig?

Are the distractions because most media people stink at math?

[Too Much Fed]

Link:

http://www.democracynow.org/2007/9/24/

plus

alan_greenspan_vs_naomi_klein_on

[paine]

"That this top 0.01% hides under the cover of the top 1% is the biggest con job in history "

actually the con job is to merge
property income
with earned income
as to the 80 hour gigs
what were these gildersleeves clocking back in the 70's

but i agree
driving an agt prop wedge between
the professional merit class
and
us wage class bovines
ala dean baker
is a political mistake
even if dean's quite right
and them nickle plated professionals
have guilded rent sumps
working those same 80 hour weeks
from right inside
the office billing programs

[paine]

"The trouble was (and is, so far as I know), that this left agenda for the US is invisible"

nonsense ....willful nonsense

want to see a left vision
there all over the internet

my favorite source :

look up william vickrey on google
or stig

on optimal forex on inflation on single payer
on market reg
on industrial policy
on any thing

the stuffs out there gathered and scattered

okay not at the dlc or hamilton project
or obama's site

but left coherence is every where
the comment cages here burst with grand policy leads

[Julio]

paine,
"okay not at the dlc or hamilton project
or obama's site

but left coherence is every where"

It's everywhere?? Coherence? Hear the contradiction?

Meanwhile they're getting votes with "Drill, drill drill"??

Maybe "invisible" was not quite the right word for the left agenda, but we could sure use a mission statement to quote. Wasn't Lenin the one who said that the first thing you need is a slogan?

[napablogger]

I think one of the problems is that all the Democratic proposals involve some time of welfare, the government handing out money.

A lot of the blue collar types that Hillary attracted that Obama can't attract that love Palin don't want hand outs. They want a better job. They don't want the government to pay their way--they want to pay their own way.

They feel they are the back bone of the country, and they have a lot of pride.

Don't pay my healthcare, don't feed my kids lunch, I will pay my own way, thank you very much. They feel insulted by Obama, and all the other liberals who figure out, gee, if the government forces your business to pay kids three times the minimum wage then....that ain't going to work because it is welfare.

[gordon]

Paine (in response to my earlier comment that the trouble was that this left agenda for the US is invisible): "nonsense ....willful nonsense".

So I looked up William Vickrey (who Paine mentions), and found a game theorist who won a economics Nobel just before he died in 1996. I'm sure he was a fine theorist, but I didn't find a useful left agenda by searching on "william vickrey".

Paine (about where to look for the left agenda): "okay not at the dlc or hamilton project or obama's site".

I think that is a concession of my original point.

[Lafayette]

The Vision Thing

MT: Can the press and everyone else stop fanning the flames of side issues that are nothing but a distraction from what matters to struggling households?

That's one of the most poignant questions I've seen in the electoral debate so far. And the answer is ... probably not.

For as much as you're are trying, by triangulation, to framework the debate, I doubt that most of America really cars about the subject matter. Which is, namely, the difference in policy stance of the two candidates as regards key issues.

The facts bewilder the body politic and the debate, even in our forum, consisting of comparatively better informed individuals, cannot seem to lose its compass bearing for irrelevance or obfuscation with detail.

The central issue of this election is, or should be, Income Unfairness as demonstrated by the Gini coefficient. Will that be a central theme of the McBush vs: Obama debate? Most unlikely.

Most Americans don't even know that (1) Income Inequality exists to the proportions we know prevail and (2) all they care about is returning to the "good old days". Whatever those were (pre-Reagan or dot.com Clinton -- take your pick), most likely days of job-plenty and increasing salaries in real terms.

So, I submit, we cannot expect mainstream-America to dwell long and hard on the Fundamental Economic Criteria (FEC) of our day. I submit further that these FEC are quite beyond their means of comprehension in the necessary detail.

I will opine that Americans can be motivated by a Vision Thing, which is a short-hand for FEC. Obama has the better chance of moving the nation in that context. He's an accomplished orator. He may succeed for as long as he avoids the pitfalls of complexity and employs KISS (Keep It Simple to Sell).

How he can translate into KISS, I suggest, his Vision Thing will ultimately define his victory or defeat. In round-robin fashion, his Vision Thing must touch upon:
* Affordable and Universal Health Care
* Affordable and Universal Education (to tertiary levels) that enhances America's ability to compete in a globalized economic world
* Revitalizing American industrial sectors to meet the challenge of globalization (largely tied to Infrastructure Investments)
* Complete renovation of the nations energy supply, emphasizing but not limited to renewable sources and moving us away from the dependence upon the carbon molecule.
* Global warming and the need to meet better-than-Kyoto criteria on emissions.

Each and everyone of the above criteria have been the source of endless debate in this forum. Obama must learn to project his Vision Thing to Americans in far less esoteric terms than our debates.

And as for the press corp, expect them to pander to the public the most Common Political Denominators -- in order to sell advertising, which is their raison d'être. His handlers will have to manipulate the media, which manipulates public opinion (largely due to the dominance of TV as our principle source of information).

[reason]

swells...
could it be that the population thinks electing the president is another run of big brother and not about policy. The problem is that you have an elected king, that the election is about personality and not about policy. If people thought the election was about policy they would vote on policy. American's need to rethink their constitution.

[reason]

This post really should be combined with this:
http://economistsview.typepad.com/economistsview/2008/09/fed-watch-get-s.html
They are part of the same problem. If the country is living beyond its means, then real income loss is inevitable (it is just a question of sharing it around). American's need a dose of reality. Unfortunately, that is exactly what they like to avoid.

[Blissex]

«A lot of the blue collar types that Hillary attracted that Obama can't attract that love Palin don't want hand outs. They want a better job.

And what if that is really some kind of handout? If they really wanted better jobs they'd move to China or India.

What they actually want is a figleaf, a rent of position, that goes *only* to their position.

A job where they do the same work as a Chinese or Indian worker but get paid 10 times more, and not a cent of of that 900% extra goes to the exploitative parasites with a darker skin.

«They don't want the government to pay their way--they want to pay their own way. »

They don't want the government to pay the way for dark skinned parasites leading a high life of free cadillacs and t-bone steaks.

«Don't pay my healthcare, don't feed my kids lunch, I will pay my own way, thank you very much.»

Well, if these guys are very happy to compete with Chinese/Indian wages on Usian expenses and to end up working at Wal*mart or as gardeners to the wealth, good luck to them, as their belts rust.

But the very same blue collars were all for high taxes and government welfare back in the 40-50s-60s when those benefited in practice unionized light skinned blue collar workers, and the vast majority of dark skinned servants/farmers were excluded from the nicer bits of New Deal.

Then the "foolish" Democrats started to actually enforce the equal protection clause, and the blue collar irish/italian "know nothing" working class turned their back on the Democrats and the New Deal and put their faith in Reagan who showed to them that their class allies were the rich, as both rich and working class were exploited by their real class enemies, those dark skinned parasitical welfare queens and strapping young bucks.

[Invisible Hand]

If I were an alien from outer space looking at the USA, I would quickly assume that real wages would be declining in the nation. I would see:
1. Massive trade imbalance, with most of the goods coming from nations with low wage rates.
2. Massive population increase, mostly immigrants and their children, with immigrants underbidding native-born workers across most occupations.
3. A country where a huge and growing number of adults are retired or otherwise not employed.

There are other powerful forces driving American incomes down, but these three are obvious, even from outer space.

If these issues are so obvious, why aren't they on the Election front burner?

[Blissex]

«If the country is living beyond its means, then real income loss is inevitable»

There are a two distinct and large problems here:

#1 About 5-10% of USA GNP has to be permanently transferred from the USA GNP to that of oil and other commodity producing countries as shrinking reserves and rising global demand increases their pricing power.

#2 The bargaining power of USA employers has been greatly increased by increased labor competition from the enormous industrial reserve army of the 3rd world, and by the Fed*mart policy of subdizing with a very low cost of capital the export of jobs from the USA.

That the Fed*mart (always low interest rates -- always!) has a very accomodating monetary policy as in #2 is to finance in nominal terms the shrinking of the pie as in #1.

«(it is just a question of sharing it around).»

Well, it has been widely shared among wage earners. After all they have the weakest pricing power, and the rhetoric is that anyhow they are the least productive, least deserving members of society.

«American's need a dose of reality. Unfortunately, that is exactly what they like to avoid.»

When that reality is that USA peak oil happened in 1970, world peak oil probably is happening now, and that they have been fooled by the reaganites and the neocons for the past 30 years (with some complicity by the triangulators), I can understand that.

Very few democratic countries have a leadership that is better than their voters deserve, and even when that happens it does not last long.

[swells]

reason, I think you are probably right on both counts. I personally am perplexed and stunned when political campaigns degenerate to sideshow issues. It makes no sense to me. When I find myself in that position, I look at things from the perspective of evolutionary theory and it usually becomes clearer. For instance, I don't understand cheating on one's wife. But, when I understand that males can increase the percentage of their genes in future populations by reproducing pretty much indiscriminately, it starts to make sense to me as to why it happens. I think Dawkins introduced the idea that in some sense we are bags of protoplasm that our genes use to propagate themselves. By that, meaning we do many, many things that aren't in our best interests as volitional entities but make sense from the stand point of differential reproduction of our genes.

Not trying to wax too gene deterministic here but I do find that a sociobiological approach can make sense of much that is seemingly nonsensical. I don't know if you saw my earlier response to you but I am looking at Paul H. Rubin's Darwinian Politics - The Evolution of Freedom. It's quite good on this score. He's a professor of Economics and Law at Emory University if you are interested in checking out his ideas.

[Lafayette]

Retraining or recycling or ... flipping hamburgers

napa: A lot of the blue collar types that Hillary attracted that Obama can't attract that love Palin don't want hand outs. They want a better job. They don't want the government to pay their way--they want to pay their own way

That's may be what they want, but how does a government respond? Abracadabra? Magic? Or wishful thinking?

An economy does not create jobs where they have high-tailed it for China because they're un- or semi-skilled. So, what are these unemployed left to do? They look for and get non-delocatable jobs that pay the minimum wage.

Enough of the "handout bullsh*t". Federal retraining subsidies (linked to welfare payments) are, rather, an investment in manpower skills that will allow people to remain employed, in stead of going on welfare. And, it is not just once in a lifetime. Continuous education means just that, continuous -- and regardless of any prior education or experience.

The sooner blue collar workers realize that those jobs that have left ain't comin' back, the better. Because the situation is NOT going to get better. The level at which there will be competition with American jobs is rising steadily, each and every day. They have already started to take on white collar jobs.

The Far East has only begun to scratch the surface. They’re on a roll and have no intention of stopping it – in the past fifteen years far too many people who were living in wretched poverty have been moved into the middle-class.

Retraining / recycling or ... flipping hamburgers under the Golden Arches. Which would you choose? Do you have a choice?

[reason]

swells
My response.

http://economistsview.typepad.com/economistsview/2008/09/paul-krugman-th.html#c130100632

I think perhaps Prof Rubin's approach may be more useful in this case, than when talking about natural "rights". I tend to follow David Brin's approach that emergent effects make it possible to get results than one would assume by just looking at human nature. But like David Brin I'm a pragmatist and don't necessary trust a priori analysis. Careful step-wise experimentation is the way foreward. (Or the law of unexpected consequences will get you).

[reason]

oops missed out a very important word

... to get better results than one would expect ...

says...

There are a lot of people I know, with college, that are doing poorly. I also know of a few people doing extemely well, with little or no college. It all depends. College is expensive, but I've noticed that some who got into a job somewhere usually at cheap wages, then got college, do very well. Also, some who never went to college, but got some special training in some technical area, strategically chosen, do exceptionally well too. I am sorry, but there is a point to when retraining just isn't the answer. Good choices matter the most, and some of us are not always in a position to take advantage of opportunities, or don't have the guidance or wisdom to choose better. This has become a bitter and harsh society, with haters and predators, as well.

[Julio]

Lafayette,

"The central issue of this election is, or should be, Income Unfairness as demonstrated by the Gini coefficient. Will that be a central theme of the McBush vs: Obama debate? Most unlikely."

How did two wars and their daily carnage and unfathomable expense slip into the background?
Is one of the problems in our debate (at every level, national, electoral, this forum, the dinner table) a focus on the news du jour?

[Julio]

paine,

"and
i'd like to see cheney in fingerless gloves roasting
a idaho potato over a trash can too..."

You're too nice.
Does he also get to share the fire with those brave troops he's always going on about?

[Icarus]

The reality is that Western Labor has steadily lost its superior value (wage rate) over the past decade because of new entrants. We now have a huge supply of quality labor, which will work for much lower price points.

So, American labor is simply not as valuble as it once was, especially at the lower ends.

Yet, while labor rates decrease (and I'm not convinced this is a bad thing)...we have lower cost commodities. Everything from computers to clothing....all cheap now (cheap in every sense of the word).
And, as consumers, we prefer this.

The net result is a re-setting of expectations. American Labor has to adjust expectations. Having a "household" is costly, and no longer can anyone afford it in the US, who has a low paying job. We have to socialize this reality. If you make $10/hour, you probably should not have a child.
And, if you want to move up the wage ladder, you have to behave in certain ways (kind of like a student).

Raising minimum wage is a bad idea. We should let the market dictate wages. If the job can be done for 1 penny less, why should we prevent that floor from being reached?

Also...it's the healthcare costs which have shifted the compensation stats. We do pay too much for labor in the US, and too much of that goes toward spiralling health costs.
We have 50% of the population who expects/demands healthcare, but don't want to pay any of its inherent costs. This leads to a transfer of costs to the other segments of society, who of course, will resist.

We need healthcare for the masses...but, a solution which is cost friendly. You can't have treatments which cost tens of thousands of dollars (or more), but have no revenue from population segments. In this scenario, medical centers and emergency rooms tend to close, and the poor are even more poorly served.
We need healthcare for $50/month...the type anyone can/should pay for.
But, it won't include expensive treatments, so there will be managed tragedies. All these lofty slogans about how precious life is are just that...slogans. Life is what you make it.

The lifestyle of the American Middle Class must change. They have a standard of living they can't afford. People in other countries have to watch costs more.

A few examples...

- You may have to share housing...the expectation of privacy is expensive, and must be adjusted. Especially when single...instead of that 1 bdr apartment for one, you may have to share (even a room).

- Starting a family is expensive. You may have to wait. If you don't have proper savings, you shouldn't have a child. No amount of handouts will allow the child to compete in this global economy. A child can cost $150 - $200k to just raise. Many can't afford that, hence they shouldn't have kids.

- You have to have enough money saved to plan/enact a job-shift. You may have to re-train, or move cities. Mobility is an asset. Don't trust your current employer, and it's nobody's job but your own to save enough to transfer to another career.

And...Income Inequality doesn't exist because of the rapaciousness of the wealthy (as often posited on this blog).
Income Inequality exists because the value of our labor is very different. Hedge Fund managers have a rare skill, and are compensated because of it. It's no different than Alex Rodriguez getting paid handsomely for his skills. You can't pay the Peanut Vendor (at the ballpark) more because Alex gets paid a lot. They're not related. You pay the Peanut Vendor what you have to pay him, and you pay Alex what you have to pay him. The market works here.

-

[reason]

Everybody is wringing their hands (oh how terrible), and Icarus is rubbing his (Great -GIVE ME MORE!!!). It is an ill-wind....

[reason]

Icarus is the grouch in Sesame Street.

[Denis Drew]

Icarus says: "Raising minimum wage is a bad idea. We should let the market dictate wages. If the job can be done for 1 penny less, why should we prevent that floor from being reached?"

Common sense would seem to say that the true measure of the utility of anything for sale (e.g., labor) is the highest price it can command, not the lowest fire sale price (of say a plot of land when your family is starving; probably not the highest last-lot squeeze from the other end either). As long as someone is willing to pay the price, it is usually economically worth it.

Morals aside; we the majority have the raw political power to squeeze out a minimum wage law that helps us more than hurts, so we will. The minimum wage law merely becomes our bargaining mechanism (for those who we have no other: union, etc.). Interfering with a natural market outcome (leading to inefficiency) would be raising the minimum wage so high that the job loss hurt us more than it helped.
**********
The shift in income share in this economy is between the bottom 90% and the top 3% -- over the last 35 years. The top 3% have always been educated and highly skilled so it is not a matter of their greater education. Are the top 1% worth 4X greater share of overall income than they were 25-35 years ago. Are the top .1% worth 25X greater share of the pie since then?

Fact is there is lots of money to go around. Every 10 years average income grows 15-20% -- not even counting the free gifts of technology like a much better $600 TV every 10 years. Problem is American labor (uniquely) fell asleep at the bargaining power wheel (an accidental cultural by product of our much better nineteenth century labor history, if you ask me) - and has not been getting what it could command if it stayed awake.

If you could have predicted to Americans in 1939 that by June 2007 the minimum wage would be substantially unchanged (1939: $4.50/hr in 2007 dollars w/no tax) they would have asked how productivity could remain unchanged for almost 70 years while the depression never ended -- were Martians going to invade and freeze all economic and scientific progress? The money is there -- and more all the time -- it is all about neglected bargaining power for 35 years and all Obama and the Dems want to bring to repair it is a dollar more than 1956 minimum wage and a 1930 legislative retread: the card check (instead of modern sector-wide labor agreements).

[Callahan]

Losing faith in fellow voters, can't believe the polls show em even up, guess some of us like moose-eatin, gun-totin, lip-stickers, no matter that trickle down don't work, give me a YEEEEEAAAAHOOOOOOOOOO, fer that pertty woman.

Moose yer stew baby.

But vote Obama!!!!!!!!!!!

[Icarus]

Reason,

I would think those of you whining for a bigger piece of the pie are the grouches.

And, as well, more prone to sit in garbage cans...;)

[Icarus]

Denis Drew,

If I am shopping at a car lot...then yes, I do want to pay the least possible. This is the gift of market negotiations. The lot has the right to hold out, but, as a savvy consumer, I want to ideally pay one penny more than salvage value. That's what the product is worth, in a sense.

Labor is a commodity, despite the ire of marxist philosophy. You sell your labor as you would a car.

Think of the small business...if they have a job, which they could pay $5/hour for...isn't it in our best interst to let them make that offer? If they get a bad laborer, or a lot of attrition...fine. That's the nature of offering such wages.
And, as well, some jobs are not gains for the firm. A high minimum wage prevents such apprentice style jobs. If I'm a contractor, or electrician...perhaps getting an intern for $5/hour (a nominal wage) is ok. I'll train him, I'll teach him...and this is more valuble than the monetary compensation. Shouldn't we want that?

[Icarus]

Callahan,

Actually, I don't think the strange polls have to do with a moose or a gun, or even a flag.

Ultimately, people don't want higher tax rates. Obama has openly touted that he'd raise taxes, repeal the Bush tax cuts, and increase payroll/inheritance tax, etc.

I don't think the american population wants that. Ultimately, I suspect they realize the inheritance tax is absurd and confiscatory. The payroll tax increase is not right, given that payouts won't be proportional to the tax, and that we already pay way too much in federal income tax.

Obama has made the classic mistake of campaigining openly on tax hikes. The public seems to have responded.

[don]

Invisible Hand is essentially correct. Add in that the massively undervalued yuan exacerbates greatly the effect on U.S. low-skilled wages compared with what would result from the natural tendency of trade to equalize factor rewards.

[Denis Drew]

Icarus,
If I want to sell my labor for $13/hr and I can get by passing minimum wage legislation, I will -- that is a free market "despite your" unfettered market philosophy. I will get $50/hr out of the minimum wage if I can get it but that would exceed by $17/hr what all income, $9.24 trillion (2/3 of GDP) divided by 280 billion hours (140 million employees X 2000 hours) yields. That $9.24 trillion contains some interest, dividend, capital gains income -- actual working wages per hour are more like $25 (don't know where official figures get $17/hr but that must not include ALL working income).

A minimum wage half of the average income is workable. LBJ's minimum was $10/hr at half today's average income ($13/hr) -- so he really pushed the outside of the envelope (over 75% of average wage).

Point is the sky is not falling. All this Republican worry worry stuff seems based on a picture of us as as poor as China. The fact is the money is there. There is no reason for 25% of the workforce to earn less than LBJ's minimum wage other than that they have not used what bargaining power they have to get all they can: LABOR MARKET FAILURE!

Socialism and unfettered market philosophy both miss the facts of human nature. A market is just a bunch of interaction among SELFISH players -- and as the Smart Jew said a long time ago: "Many are called but few are chosen" -- most players are trying to eat other players lunch. What both socialism and unfettered market philosophy both miss out on the need for is: CHECKS AND BALANCES.
*************
The death tax should be preferable to the "live" tax. We need so much money to pay the bills. We will take it alive if we don't take it dead. If you get to keep it alive you can invest and make more money for the government and your relatives. Be he alive or be he dead; we'll find his bones and take his bread.

[Jon]

Care to expand on the difference between Republican and Democrat economic policies? In particular, I would appreciate a description of those Republican policies that have worked to the detriment of typical households, and which Democrats have proposed rolling back; and likewise a description of Democratic proposals that address the issues Republicans have ignored.

Because it seems to me that the Democratic line on the Economy is "Things suck, therefore we should vote for change." Catchy, but I'm not convinced.

[Patricia Shannon]

We pay taxes to support the necessary services that would not be possible, or would be impractical, to do on an individual basis. Somebody like Paris Hilton, who inherits wealth, still depends on the infrastructure and military defense of our country. Why should she be subsidized by people who work? Especially people who do real work, not whiney wimps like Icky who are unwilling, and probably unable, to do so.

All money is taxed over and over. The money I am paying taxes on came from somebody else, and before that from somebody else, etc., all of whom paid taxes, unless they were extremely rich.

BTW, why should somebody who works hard at honest jobs, but is only able to afford a miserable existence, care about their society/country? We are lucky that most of them do.

[CasualObserver]

Patricia,

How is Paris Hilton being subsidized? I would be interested to see you explain how this works.

[gordon]

Icarus: "Income Inequality exists because the value of our labor is very different".

How does this explain the falling share of wages and salaries in National income overall? In 2007 the CBPP published a paper entitled "SHARE OF NATIONAL INCOME GOING TO WAGES AND SALARIES AT RECORD LOW IN 2006: Share of Income Going to Corporate Profits at Record High", saying "The result of these trends is that, in 2006, the share of total national income going to wages and salaries was at the lowest level on record. (See Appendix Table 3.)"

[ken melvin]

Don't think we can make it the way it was ever again. Seems to follow that most of the actions being proposed to get back won't work.

says...

Gordon,

American Capital is less reliant on American Labor, than ever. This is the difference now. And, perhaps we cannot call it "American Capital". Following Hardt and Negri, in their intriguing book, "Empire", we have a constellation of global Capital which now exceeds the boundaries of a particular Nation State, and perhaps plays them off against one another.

So, the reason American Labor is getting a smaller share of national income is that most of them are providing services which simply have a lower relative value than in recent history.

That is, that high school graduate who has relatively remedial brainpower is simply not worth what they were, within the US, 30-50 years ago. With digitized information streams, and more trade corridors, we can now off-shore some of it, automate more of it, or trade for it. All of that is cheaper. Now, of course we need nontradable labor, and we have it. But, with immigration, some of that remains wage deflated. If you work at a Waffle House, and expect to have a standard of living which can raise a household, you're either living a dream, or drunk. It's just not very skilled work, and you can be replaced for 1 penny less.

Ultimately, your worth is simply based on the cost of replacing you. That's it. The rest of it is political wrestling to gain more from the collective spoils.

This, however, does not mean that the value of high end labor has decreased. Perhaps the contrary. We now have a few hundred million more entrants at the bottom of the Capitalist wage ladder...and, of course, hundreds of thousands at the very high end.
The distribution of rewards (wages) isn't necessarily proportional to previous levels of inequality.

I don't think this is too complicated. Joe-America just doesn't do anything all that special anymore, and better wake up. The enemy isn't the successful professional...there is no enemy. We've just evolved. No longer do we have to pay $30/hour for unskilled, easily replacable work.

[Icarus]

The comment above was mine, not "Says"...

says...

Casual Observer,

Patricia 2.13 and a few others on this blog would argue that confiscating earned wealth is appropriate, at the time of death.
Many of us disagree.

Paris Hilton has been given wealth which is the private property of someone who's already paid taxes.

The Death Tax would only encourage capital flight, or the creation of expensive/cumbersome trusts, which help avoid such confiscation.

The government, or socitey, simply should not have a right to confiscate another 50% of someone's wealth. That's just highway robbery.

Yes, we need money to pay bills. I say we reduce those bills. Defense, infrastructure, and a few other areas of collective need. The rest should be left to civil society.

[Icarus]

Again, that last post was mine. Sorry Says.

[kthomas]

Icarus, please. Why not just say, "This post brought to you be your friendly nieghborhood GOP representative."

You should get paid to post your drivel.

[Larry]

@Denis - "You can increase the pay of minimum wage workers 100% for 3% increase the cost of output -- probably less in retail prices."

That would cost many jobs, and make it much harder for the weakest new workers to get started. The only way to raise the lowest incomes without destroying jobs is with the EITC or wage subsidies.

@anne - "The Labor Department’s most comprehensive alternative unemployment rate measure — which includes people who want to work but are discouraged from looking and people working part time because they can’t find full-time jobs — stood at 10.7 percent in August, its highest level since June 1994."

All the more reason not to add straws to the camel's back by increasing the minimum wage and/or greater unionization.

@anne - Warren Buffett told us in 2000 that relative returns to labor had to increase going forward, but Buffett was wrong in terms of ordinary wages and benefits for reasons that I do not understand."

One part is that average education levels measured by degrees stopped increasing and actual education started declining in the 70's. Always before, education and income tracked well...

Another part is globalization, both immigrants coming in, and offshoring. Both those helped keep prices down, which is why we live a lot better now than before, even though incomes aren't rising.

A third part is that a higher fraction of compensation is benefits than before, specifically health care. If we put less in that bucket, there would be more in the wage bucket.

@CBBB - "I don't understand how you can say that the party which occupied the White House for the past 8 years is going to be the one to take the US in a new direction."

McCain hates Bush with most of his being. Bush is following McCain on Iraq, not the other way around. I don't know whether McCain can handle the job, but he ain't Bush III.

@Inflation is the Enemy - "Nominal wages rarely fall."

No, but their jobs get offshored if they don't.

@Michael McKinlay - "The challenges facing the country are daunting and tweaking tax rates ain't gonna cut it."

Correct.

"In the final analysis they will defend bank corporatism to the depths of another Great Depression."

We're in a new world. The key is to eliminate the imbalances. A high art, that.

@Michael McKinlay - "We must export as much as we import."

Historically, this is not true, for the US or anyone else, except over the very long term (decades?)

@anne - "a New Deal spending approach"

Please be more specific.

@gina - a selective tariff might be a good thing."

We have thousands of selective tariffs. Please be specific about what you want.

@don - "what's definitely missing is a coherent answer on what can be done to stop the slide in wages."

see Pierce Wetter - "Total Compensation (Wages + Benefits) has risen, not fallen."

Yup.

@DM - "For one, the linkage between wages and gov't policy is very weak at best. We can keep saying things were better under Clinton, but until someone can actually create some causation between policies and economic outcome, it's just a empty statement."

Thank you.

@Denis Drew - "BTW, Obama's economic director Jason Furman dopily pointed out that Wal-Mart only squeezes $5 billion dollars out of its workers while producing $263 billion in savings for consumes -- apparently not catching on that Wal-Mart does not need the $5 billion from the workers if the consumer can still save $258 billion without squeezing them."

Thank you.

anne - "Labor costs have been no problem at all for corporations."

Agree on wage costs, but not on overall costs. Work rules (see automobiles) are crippling many industries.

"there is every reason to think policy through the Clinton years was importantly more helpful for generating general growth and helpful to workers"

What are some of those reasons?

@HJ James - "The economic and ethical dilemmas arising from the discrepancy between productivty increases and wage stagnation and those arising from the concentration of wealth in one economic class and debt in all the others have existed for a long, long time. Much longer than just the past 7 years."

See my reasoning about stagnation above.

@anne - "However, this very week the Democratic Congress decided not even to vote on a bill to increase the health care insurance coverage for 3.8 million needy children for a mere $7 billion. Where then is determined focused compelling policy?"

Isn't this the old habit of parties to value issues more than solutions. Once the issue is gone, they can no longer use it to separate themselves from the other party. A bipartisan vice.

@gordon - "Stiglitz: "Today, in contrast to the right, the left has a coherent agenda, one that offers not only higher growth, but also social justice. For voters, the choice should be easy".

Read Stiglitz' stuff. Unfortunately, it shows no connection to the actual world.

@mrrunangun - "To improve the lot of the not-so-well-off in these circumstances, should they come to pass, will require New Deal style policies of public employment and public works and a method of taxing established wealth, not just income. An inheritance tax can do this, but slowly. Personal property levies work more quickly."

Tax changes have only short-term effects. The people with those super-high incomes will find other ways to get paid. Sustainable changes require currently unskilled workers to get competitive skills. That seems obvious...

@kthomas - "this is what happens when you vote Republican."

Please explain how Republican policies help the rich increase their incomes. I understand that tax cuts let them keep the money they get, but that's a different story.

@Lafayette = "I doubt that most of America really cars about the subject matter."

Perhaps they care, but they realize that Presidents don't really set tax or other economic policies. Instead, Congress and the Fed carry most of that load.

Given that most of America is still trying to figure out if either of these never-run-a-budget candidates has a clue how to run the world's only superpower. They may be forgiven for looking for clues in strange places, no?

@Invisible Hand - "3. A country where a huge and growing number of adults are retired or otherwise not employed."

This is true in every developed country, and in most of the developing countries, too. Including China.

[Lafayette]

Eight wasted years

anon: I am sorry, but there is a point to when retraining just isn't the answer. Good choices matter the most

What you relate in your post is purely anecdotal and personal. The statistics show the fact that the higher your level of education, the higher in general your level of income.

Also, the less time one spends on unemployment.

The notion that tertiary level education (trade school, two-year college, four-year university, grad school) has become an absolute necessity for each and every high school graduate is obvious.

We're sticking our collective head in the sand not to recognize it.

Another unfortunate fact: Despite the fact that America has one of the highest incidences of college/university level education (about a third of the population has at least an Associate or Bachelor degree), its secondary school quality of education is mediocre.

Meaning, we are pushing dunces through secondary school and they are failing at tertiary level education. We need not only more discipline in secondary school education, but also more testing at lower levels -- meaning, national testing at entry to high-school, after the sophomore year and finally with SATs. The sooner we spot the slackers (based upon nationwide test levels and not local testing) the sooner we can assist the kids with remedial courses.

This is necessary to enhance the quality of education delivered throughout secondary school and assure a higher throughput of students into tertiary level education who are likely to complete it.

Maybe we should have two kinds of secondary school diploma: One that orientates a student for college/university and one that orientates them to trade school. Anything to keep them away from the siren song of Army recruiters who promise them a professional training ... then send them home in body-bags because some lead-head of a PotUS has to show the world that he has cojones .

Education is not rocket-science, but neither can we have an adequate secondary schooling without putting more money into it.

Think of what the "Education President" could have accomplished if the trillion dollars pissed into the Iraqi sandbox had been employed on upgrading the level of secondary school education.

Eight wasted years. Count 'em, eight.