When working families look back at the early years of the turn of the century, they will undoubtedly remember the period as a lost decade.
The vast majority of Americans are walking in place—even falling down—as they cope with a persistent economic malaise.
Sadly, this has been going on for so long now that we should no longer think of our troubled times as an aberration in U.S. history.
Many of us (well, not necessarily minorities and women) used to idealize the ‘50s as a period of shared prosperity. But it’s quite apparent now that those years were the aberration.
First came the Vietnam War. Then came the oil crisis and stagnation. Later the Berlin War fell, putting an end to the threat of communism. The housing bubble bust, but the banksters got away with financial murder while the rest of us took an underserved hit in the pocketbook.
All along, it was open season on working people and their unions. Except for a brief period in the late 1990s under President Bill Clinton, the economy didn’t ever improve significantly for the poor and middle class. Meanwhile, economic inequality returned to what it was during the Great Depression nearly a century ago.
So, today wages remain stagnant.
What’s disturbing—and frightening, frankly—is that few signs exist of any significant improvement in the coming years.
College graduates face years of indebtedness and the prospect of only finding jobs that pay below what they expected to receive with their degrees. Most of the employment growth is in low-wage service jobs.
“A Decade of Flat Wages,” a recent report by the Economic Policy Institute, lays out a sad picture of wage trends of the ugly 21st century economy of the 1 percent.
“The wage and benefit growth of the vast majority, including white-collar and blue-collar workers and those with and without a college degree, has stagnated, as the fruits of overall growth have accrued disproportionately to the richest households,” Lawrence Mishel, president of EPI, and Heidi Shierholz, an EPI economist, write in their disturbing and critical 18-page briefing paper.Translation: The 99 percent are getting screwed while the 1 percent are laughing to the bank.
Wage growth remained relatively strong in the first two years of the 21st century, bolstered by the robust wage growth of the late 1990s. But 2002 to 2012 has constituted a “lost decade” for the vast majority of Americans who have not seen their earnings grow, the authors write.
“Between 2002 and 2012, wages were stagnant or declined for the entire bottom 70 percent of the wage distribution,” the authors write. “In other words, the vast majority of wage earners have already experienced a lost decade, one where real wages were either flat or in decline.” Significantly, they add, “This lost decade for wages comes on the heels of decades of inadequate wage growth.”This unequal distribution of wages is obviously not a reflection of the mysterious workings of the “invisible hand” of the marketplace. No, it’s a reminder of the unequal power relation between the 1 percent and the 99 percent, or capital and labor.
The Breakdown between Productivity and Wages
A particularly important insight and theme of Mishel and Shierholz’s paper is that there is a breakdown between productivity and wages.
Until the 1970s, productivity and wages moved up together. But that stopped in the ensuing decades as the economic elite captured a greater and greater share of productivity.
This trend has coincided with the implementation of government policies that have favored the rich and powerful: lower taxes, the drop of the federal minimum wage, deregulation, trade policies that have hurt domestic manufacturing, the smashing of unions, globalization and the contracting out of government services. With high unemployment and the lack of strong unions, workers are less willing to press for higher wages.
Productivity growth has “far outpaced” increases in wages and compensation, the EPI report says. Between 2007 and 2012, compensation for all private-sector occupations didn’t budge even though productivity grew by 7.7 percent. Sadly, Mishel and Shierholz see little immediate hope for a significant improvement in wages.
“With continued high unemployment, wage growth is unlikely to accelerate much in the next few years,” they write.
What Needs to Be Done
For an economic turnaround, Mishel and Shierholz suggest, we need to push for important changes in government policies, such as raising the minimum wage, measures to increase the strength of unions and reestablishing state and local government services cut during the Great Recession.
The emerging movement of fast-food workers indicates that workers are more willing to fight back. Another hopeful sign includes the AFL-CIO’s progressive economic program of “shared prosperity” unveiled at its recent convention. That, along with its plan to increase its political clout by becoming an umbrella organization for all workers (not just union members) could force the Democratic Party to shift to the left.
Some also view Bill de Blasio’s election as the Democratic candidate for mayor of New York City--with his promise to address inequality—as an indication of an emerging political realignment. Let’s hope so.
Threatened by this possible change, the Koch brothers and other powerful conservative interests have signaled their willingness to pump millions into an effort to block de Blasio from becoming mayor of the world’s financial capital.