[Mb-civic] NYTimes.com Article: An Economy That Turns American
Values Upside Down
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michael at intrafi.com
Mon Sep 6 10:37:37 PDT 2004
The article below from NYTimes.com
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An Economy That Turns American Values Upside Down
September 6, 2004
By BOB HERBERT
The Labor Department reported last week that 144,000
payroll jobs were created in August. Let's put that in
The number was below market forecasts. It was also below
the number of jobs needed to accommodate the growth in the
employment-aged population. In short, this was not good
news. It's only by the diminished job-creation standards
that have prevailed since the last recession that any
positive spin could be put on last month's performance.
As the Economic Policy Institute tells us, in a book-length
report it is releasing today: "The United States has been
tracking employment statistics since 1939, and never in
history has it taken this long to regain the jobs lost over
In "The State of Working America 2004/2005," the institute
shows in tremendous detail how those lost jobs and other
disappointing aspects of the recovery are taking a severe
economic toll on working families.
According to the institute:
"After almost three years of
recovery, our job market is still too weak to broadly
distribute the benefits of the growing economy.
Unemployment is essentially unchanged, job growth has
stalled, and real wages have started to fall behind
inflation. Today's picture is a stark contrast to the full
employment period before the recession, when the tight
labor market ensured that the benefits of growth were
"Prolonged weakness in the labor market has left the nation
with over a million fewer jobs than when the recession
began. This is a worse position, in terms of recouping lost
jobs, than any business cycle since the 1930's."
What is happening is nothing less than a deterioration in
the standard of living in the United States. Despite the
statistical growth in the economy, the continued slack in
the labor market has resulted in declining real wages for
anxious American workers and a marked deterioration in job
>From 2000 through 2003 the median household income fell by
$1,500 (in 2003 dollars) - a significant 3.4 percent
decrease. That information becomes startling when you
consider that during the same period there was a strong 12
percent increase in productivity among U.S. workers.
Economists will tell you that productivity increases go
hand-in-hand with increases in the standard of living. But
not this time. Here we have a 3.4 percent loss in real
income juxtaposed with a big jump in productivity.
"So the economic pie is growing gangbusters and the typical
household is falling behind," said Jared Bernstein, the
institute's senior economist and a co-author of the new
This is the part of the story that spotlights the
unfairness at the heart of the current economic setup in
the U.S. While workers have been remarkably productive in
recent years, they have not participated in the benefits of
their own increased productivity. That doesn't sound very
much like the American way.
According to the institute, "Between 1947 and 1973
productivity and real median family income both grew 104
percent, a golden age of growth for both variables." That
parallel relationship began to break down in the 1970's,
but it is only recently that it fell apart altogether,
leaving us with the following evidence of unrestrained
"In the 2000-03 period income shifted extremely rapidly and
extensively from labor compensation to capital income
(profits and interest)," so that the "benefits of faster
productivity growth" went overwhelmingly to capital.
American workers are in an increasingly defensive position.
In a tight labor market, when jobs are plentiful, workers
have leverage and can demand increased wages and benefits.
But today's workers have lost power in many different ways
- through the slack labor market, government policies that
favor corporate interests, the weakening of unions, the
growth of lower-paying service industries, global trade,
capital mobility, the declining real value of the minimum
wage, immigration and so on.
The end result of all this is a portrait of American
families struggling just to hang on, rather than to get
ahead. The benefits of productivity gains and economic
growth are flowing to profits, not worker compensation. The
fat cats are getting fatter, while workers, at least for
the time being, are watching the curtain come down on the
heralded American dream.
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