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Candace
Talmadge
Read Candace's bio and previous columns
January 23, 2009
Economic Stimulus
Debate Ignores Stagnant Wages
The new administration
wants to spend megabucks to revive an economy on life support. But as
long as U.S. workers’ wages continue to stagnate, an entire world of
fiscal stimulus won’t resolve the underlying issue.
Today’s
recession/depression is the logical and inevitable outcome of the war on
the middle class and trade unions. Yes, it’s rude to mention the term
class warfare. It’s far ruder to wage it, which is exactly what
Republicans have been doing since the 1970s, enabled and abetted by
Democrats eager for their share of corporate campaign contributions.
After all, the real reason for President Nixon’s 1972 China visit was to
open a vast new source of cheap labor, readily exploitable by a
combination of global businesses aligned with the repressive Chinese
government.
During the 20th
Century, it was an article of faith among economists that when workers
become more productive, their wages rise. Productivity is their term for
the amount of goods or services a worker produces in an hour. Just be
more productive, they lectured the unions, and wages will rise.
Something odd happened
at the start of Ronald Reagan’s second term. Productivity went up yet
paychecks began not keeping pace. A graph from the Economic Policy
Institute charts the soaring productivity of U.S. workers between 1973
and 2007 – an overall rise of 83 percent, according to Heidi Shierholz,
an EPI economist.
In stark contrast on
the same chart are wages, which since 1985 have lagged farther and
farther behind the hefty gains in productivity. Shierholz calculates
that had wages actually kept pace with productivity during the same
34-year timeframe plotted on the chart, the minimum wage would be $11.93
an hour (in 2007 dollars), more than twice its real value of $5.85 (in
2007 dollars).
If U.S. workers were
making a minimum wage of $11.93 an hour, and the higher wage jobs were
not being outsourced or off-shored in record numbers to poverty-pay
nations, we might not be in such an economic pickle. Yet as a matter of
unstated national policy (otherwise known as class warfare), the United
States has chosen to shore up corporate profits and CEO pay over
workers’ rights and welfare during the past four decades.
“The country has been
getting richer, but the spoils have not been reaching those who have had
a large hand in producing those riches,” Shierholz says. Today’s yawning
gap between wages and productivity is a real poser for contemporary
economists, and she says there appear to be a host of factors
contributing to the discrepancy.
The bottom line,
however, is that Americans’ paychecks no longer cover even their basic
expenses, and they have run out of plastic and home equity to hide this
pesky little fact. On top of that, there are no convenient bubbles like
the dot-com boom or housing to maintain the pretense of prosperity any
longer.
Cash-strapped and
saddled with mountains of debt, Americans are at the end of their
spending ropes. Even behemoth retail discounter Wal-Mart, Inc. – the
store of last resort for the poor and newly impoverished – has warned of
lower than anticipated financial results for 2008. That’s when we know
it’s really, really bad.
By all means,
slap a Band-Aid on the situation with heavy fiscal spending. Unless we
change the national course, however, and start supporting domestic
manufacturing and other jobs that pay according to worker productivity,
any recovery will be fleeting at best.
© 2009
North Star Writers Group. May not be republished without permission.
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