[P2P-F] Fwd: ZNet Commentary: Pete Dolack: The Lag In Wages Vs. Productivity

Mon Sep 15 18:57:19 CEST 2014

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From: ZCommunications <no-reply at zcomm.org>
Date: Mon, Sep 15, 2014 at 8:09 PM
Subject: ZNet Commentary: Pete Dolack: The Lag In Wages Vs. Productivity
To: michelsub2004 at gmail.com

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Pete Dolack: The Lag In Wages Vs. ProductivityZ Communications Daily
Commentary

Working harder and making less isn’t a great deal for you, although it
certainly is good for corporate profits. The ongoing pattern of stagnant
pay as worker productivity increases, having raged unabated since the
1970s, now costs an average United States household $18,000 per year in
lost income.

By no means a pattern limited to the U.S., the average Canadian household
is short at least $10,000 per year because of pay lagging productivity
gains. Wages have begun to decline in Britain, as well as elsewhere.

By now, studies demonstrating these trends risk finding themselves in the
category of “the Sun will rise in the east tomorrow.” But although the
Earth’s rotation is an immutable phenomenon of nature, getting screwed at
the workplace need not be. For now we are, and for North Americans in
particular this has gone on for more than three decades. A new study by the
Economic Policy Institute
<http://send.zcomm.org/wf/click?upn=9PHos1J7-2FD2Lw6jereECeNLGs3ocss1O2kcgD4VkZGxNQKyMz3VkxHcbWOxm-2F-2FK4zNQOFozl5YCGVxHlRDfLMSmSGI2ij-2BGhR28K-2B6jFY-2BroECs-2FkAat-2Fqc3y6IrKdunpfu7p6eSyptVp5zKUX-2FxHhh8I2wvhIcYD1OXYI-2FrvMA-3D_V-2FUUiW5KvBPNV-2FItFYsbuIFOqr58NacNTIV3-2FGcH-2BSCwnu5aGhfOSJt7MjSGi8ti-2F6A0D8qsxXoomRTKgpCx5-2BdTDEpHgNRM42riM16fOEmQ4sQoik2gNBFHQ-2FKV2VhlPdBvddL2zD0QBfMNYDVLF1hNX8Ecpc-2FB-2BJIEmbYxRweUNOo56ooGVkYIbziDBmDlBrxKBWPgjeNcFrU6MTGPbw-3D-3D>,
written by economist Elise Gould, reports:

“Between 1979 and 2013, productivity [in the U.S.] grew 64.9 percent, while
hourly compensation of production and nonsupervisory workers, who comprise
over 80 percent of the private-sector workforce, grew just 8.0 percent.
Productivity thus grew eight times faster than typical worker
compensation.” [page 4]

As a result of that under-compensation, according to the Economic Policy
Institute study:

“By 2007, the growing wedge between economy-wide average income growth and
income growth of the broad middle class (households between the 20th and
80th percentiles) reduced middle-class incomes by nearly $18,000 annually.
In other words, if inequality had not risen between 1979 and 2007,
middle-class incomes would have been nearly $18,000 higher in 2007.” [page
3]

Might your personal finances be easier with that extra money?

Another way of conceptualizing this trend is the share of wages and
salaries as a percentage of gross domestic product. Fred Magdoff and John
Bellamy Foster, writing in the March 2013 edition of *Monthly Review*,
calculate that wages and salaries constituted 53 percent of U.S. GDP at the
start of the 1970s but only 44 percent in 2011
<http://send.zcomm.org/wf/click?upn=9PHos1J7-2FD2Lw6jereECeNLGs3ocss1O2kcgD4VkZGxNQKyMz3VkxHcbWOxm-2F-2FK4zNQOFozl5YCGVxHlRDfLMSmSGI2ij-2BGhR28K-2B6jFY-2Bonz6F1TJlWuThj9rf-2FWqc-2BMPWmt-2Bmz-2BZAQt6NENqfIe9OAzlE-2FAvROPEFU4aP-2Bv34-3D_V-2FUUiW5KvBPNV-2FItFYsbuIFOqr58NacNTIV3-2FGcH-2BSCwnu5aGhfOSJt7MjSGi8ti-2F6A0D8qsxXoomRTKgpCx58YP4b9bxEB0N9Ml5nS0tVgDnNQ2RElts-2BqMB8m-2FUEPl-2BeH-2Bd2gKFPaM1VnCLm5iUSamPX-2BqBajUh-2Bt-2Fi4Hmwz4gKz55W8Anp3THAnyfMrbC7Rf8UvkG3C3GPgmYJmcqLw-3D-3D>.
The authors, however, caution that even that statistic understates the
decline in wages because it includes the salaries of chief executive
officers and other high-level executives, whose compensation has risen.
They write:

“Thus, although the wage share of income has sharply dropped in the U.S.
economy, this decline has not been shared equally, and applies mainly to
what is properly called the working class, i.e., the bottom 80 percent or
so of wage and salary workers.” [page 7]

*The problem is bigger than your degree*

The canard that an “education gap” is responsible for rising inequality —
perhaps the favorite excuse of Right-wing commentators, simply isn’t true.
The Economic Policy Institute study reports real (inflation-adjusted)
hourly wages for workers with a college degree has increased all of 1.6
percent from 2000 to 2013. As a result:

“[T]he gap between the wages near the top of the wage distribution and the
middle … has grown much faster since 1995 than has the wage gap between
those with a four-year college degree and those with a high school degree.”
[page 21]

It’s not as if there is no money for raises: U.S. publicly traded companies
are sitting on $5 trillion in cash
<http://send.zcomm.org/wf/click?upn=9PHos1J7-2FD2Lw6jereECeNLGs3ocss1O2kcgD4VkZGxNQKyMz3VkxHcbWOxm-2F-2FK4zNQOFozl5YCGVxHlRDfLMSmSGI2ij-2BGhR28K-2B6jFY-2Bqe2Uf0ow-2FzC483PVhl6bbRRspDVMKFgu02b-2BIFz8Jh6ytWFCzgigk-2Bas6pSqfXPeE-3D_V-2FUUiW5KvBPNV-2FItFYsbuIFOqr58NacNTIV3-2FGcH-2BSCwnu5aGhfOSJt7MjSGi8ti-2F6A0D8qsxXoomRTKgpCx56aTGn4v0gruK5ftBgxlYOYrPoTy-2BHoqj5T48Kh1Urr6LfexMp4swY6AZfRdrxHfu6X85ufqfGFGeAojSRPoddnWsqps3zcUECiOEgopLzDDg8RiO6DarO5KW9FN-2FkEXfQ-3D-3D>,
five times the total during held during the mid-1990s.

Canadian workers have fared little better. A Canadian Centre for Policy
Alternatives paper
<http://send.zcomm.org/wf/click?upn=9PHos1J7-2FD2Lw6jereECeNLGs3ocss1O2kcgD4VkZGxNQKyMz3VkxHcbWOxm-2F-2FK4zNQOFozl5YCGVxHlRDfLMSmSGI2ij-2BGhR28K-2B6jFY-2Bq4fDgKiIn3sffDUdGA75FbSNKg2wyLe2r1fC7ABA4aiJNHBrr7bEI7hoLBANB-2B3CA-3D_V-2FUUiW5KvBPNV-2FItFYsbuIFOqr58NacNTIV3-2FGcH-2BSCwnu5aGhfOSJt7MjSGi8ti-2F6A0D8qsxXoomRTKgpCx51V-2Bowd7WeZaTV3GCG01b1Zhwh1Y6A-2BKvHSMtZl0XMjy9XHbQhiOVMB-2B5xo0et6Q1XJ2yonuVDE6KZwHLlLk1-2BznuLiTbJrRXrh9Vxd879wBW-2Fhc-2FuHZUhjAHibNwPxooQ-3D-3D>
found that, although Canadian wages are flat since 1991, the average weekly
wage would be $200 per week higher if wages had kept up with gains in
productivity. That adds up to about $10,000 per year. As in the U.S.,
low-wage workers fared the worst, the paper said:

“After adjusting for inflation, the average provincial minimum wage has
decreased from $9.14 to $7.32 between 1976 and 2006 in terms of 2006
dollars.” [page 8]

Wage decay is a more recent pattern in Britain, but wages there have
suffered what the London School of Economics and Political Science calls
“unprecedented falls.” A school study
<http://send.zcomm.org/wf/click?upn=9PHos1J7-2FD2Lw6jereECeNLGs3ocss1O2kcgD4VkZGxNQKyMz3VkxHcbWOxm-2F-2FK4zNQOFozl5YCGVxHlRDfLMSmSGI2ij-2BGhR28K-2B6jFY-2BquJUCVN4CvbtXaMf3NH1G-2BGFZw1RsMlKUA-2Bx-2BRunumlpbe466jejUrcnJXG-2Fr9CT8-3D_V-2FUUiW5KvBPNV-2FItFYsbuIFOqr58NacNTIV3-2FGcH-2BSCwnu5aGhfOSJt7MjSGi8ti-2F6A0D8qsxXoomRTKgpCx5966C-2BKAjt6RnHnD5um5KXHccTz3e-2Fa898NvVhTpEXHTQgb4ru51V5paOc6B-2Bzcrn-2FzOocjdCVjGAEWmzZAfp8V3NxRz7fWbHUJzCrUVW9anTwPWSo9-2FP9OP2cMRH02ciA-3D-3D>,
lamenting that “the long US experience of stagnant real wages might be
viewed as a warning sign for the UK,” found that British wage growth has
lagged productivity growth for more than a decade. The study, released
earlier this year, says:

“The real wages of the typical (median) worker have fallen by around 8-10%
— or around 2% a year behind inflation — since 2008. Such falls have
occurred across the wage distribution, generating falls in living standards
for most people, with the exception of those at the very top.”

*There is no returning to a Keynesian past*

It’s not uncommon for those angered or depressed by the neoliberal
onslaught of recent decades to advocate a return to Keynesianism. Alas, it
is not so simple to do that, nor would it actually provide a solution to
today’s economic crises. For one thing, it is not a matter of a leader
somewhere decreeing that we shall now have neoliberalism instead of
Keynesianism, or that another leader can simply reverse the policies.

The mid-20th century Keynesian moment was a product of a particular set of
circumstances
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that can’t be repeated. The New Deal and the rising wages following World
War II were the products of mass movements — communist, socialist and union
— that simply do not exist today.

Mid-20th century Keynesianism depended on an industrial base and expanding
markets. A repeat of history isn’t possible because the industrial base of
the advanced capitalist countries has been hollowed out, transferred to
low-wage developing countries, and there is almost no place remaining to
which to expand. U.S. capitalists could tolerate rising wages then because
of enormous export opportunities in the wake of the destruction of European
and East Asian industry due to World War II and because of long pent-up
domestic demand that couldn’t be fulfilled during the Great Depression and
the war.

The rest of the world eventually got on its feet, increasing competition,
and eventually profit rates began to come under pressure. The neoliberalism
that began to take hold in the 1970s, and the accompanying financialization
of the economy, were a response by capitalists to what, for them, were
deteriorating conditions. Margaret Thatcher and Ronald Reagan may have
ushered in the age of neoliberalism, but they were the political
instruments of corporate offensives. In the U.S., neoliberalism could be
said to have begun during the Carter administration, when then Federal
Reserve chairman Paul Volcker unilaterally began to raise interest rates
sky high, inducing the deep recession of the early 1980s.

We are living in very different times than the post-war years; the
neoliberal offensive is the natural development of capitalism and the manic
competition that mandates capitalists to grow or die. Even were it possible
to bring back Keynesianism through legislation, it would at best be a
temporary balm; the capitalists who are saved through such policies re-gain
the power to again impose their preferred policies. There is no salvation
in attempting to “stabilize” what is inherently unstable nor any realistic
prospect that what is structurally unfair and unequal can be made just.

The advances that are the fruits of the 20th century’s mass movements have
largely been erased, with no end to the race to the bottom. This century’s
mass movements will have to aim much higher than mere reforms.

ZCommunications, 18 Millfield St., Woods Hole, MA, USA, 02543
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