[Mb-civic] Stagnant wages? Made in USA - Robert Kuttner - Boston Globe

[William Swiggard]

  Stagnant wages? Made in USA

By Robert Kuttner  |  April 1, 2006  |  The Boston Globe

AS CONGRESS GRAPPLES with immigration policy, most experts agree that 
wide-open immigration slightly depresses wages, especially among 
unskilled workers. But the main reason for static wages has more do with 
policies made in the United States.

Immigrants, coming from destitution at home, will work for less than 
American wages. And, if they are here illegally, they can't defend 
themselves against subminimum wages and working conditions otherwise 
against the law.

Some of this is supply and demand -- more workers competing for the same 
supply of jobs. But as former labor secretary Robert Reich has noted, if 
labor laws were enforced, immigrants would be less likely to depress 
wages. Moreover, the supply of jobs is not static. As immigrants enter 
the stream of commerce, they generate economic activities and jobs.

The Republican Party is now split between business groups who want cheap 
workers and jingoists who are just plain anti-immigrant. The nativist 
wing of the GOP plays both to the national security and economic fears 
of ordinary Americans.

The attacks of 9/11 did happen (though the attackers were not Mexican.) 
Wages of ordinary workers are in fact depressed (though immigrants are 
not the main cause.) Both sets of fears make it harder for Congress to 
legislate sensible policy.

It is a small miracle that four Republican senators on the Judiciary 
Committee broke ranks and voted for the McCain-Kennedy bill, which would 
toughen border enforcement and penalties for employers who employed 
undocumented workers, in exchange for a small ''guest worker" program as 
well as an earned path to permanent citizenship. Some Republicans 
support this because the House bill (no path to citizenship and a 
Berlin-style 700-mile wall along America's southern border) would 
reverse whatever recent gains the Republicans have made among Hispanic 
voters.

However, it is worth leaving the immigration debate to explore the 
deeper causes of stagnant living standards that make so many Americans 
fearful of immigrants. In the current recovery, for the first time since 
the government has kept such statistics, median household income has 
lagged behind inflation in a recovery for five straight years.

Census data show median household income fell 3.8 percent or $1,700, 
from 1999 to 2004, according to economist Jared Bernstein of the 
Economic Policy Institute (on whose board I serve.) And this drop 
occurred during a period when average productivity rose three percent 
per year.

Moreover, as economist Jeff Madrick has observed in his book ''Why 
Economies Grow," , the reality is worse because prices of commodities 
that make us middle class are rising much faster than inflation 
generally: housing, college education, health care, and also child care. 
These very rapid price increases are offset by falling costs of consumer 
electronics, basic food, and clothing, creating misleadingly low 
inflation measures.

It's great that shirts are cheaper than a decade ago, and that we all 
have cell phones. But that doesn't exactly substitute for a house, an 
affordable college education, or health care.

According to economist Bernstein, whose study covers the years 
1991-2002, households in the middle fifth of the economy increased their 
incomes (not adjusted for inflation) by 41 percent. Inflation during 
that period, as measured by the government's Consumer Price Index, went 
up 33 percent. That implies real living standards rose by a not very 
impressive 8 percent during more than a decade.

But hold on. During the same period, housing, healthcare, education, and 
child care went up 46 percent, or more than incomes. We cannot afford 
the big things we need and comfort ourselves with gadgets. The cheaper 
laptop, plasma TV, and GPS screen in your car make it appear 
statistically that living standards are not falling as much as they are.

The emblem of the new economy might be a 35-year-old, listening to an 
iPod, living in a house much smaller than the one he grew up in.

To use a favorite word of my grandmother's, call it the Tchotchke 
Economy (a Tchotchke is a small trinket): Plenty of nifty, ever cheaper 
electronic stuff -- and ever more costly housing, education, healthcare. 
An iPod is swell, but it doesn't exactly make you middle class.

Why does this describe America in 2006? Don't blame it on immigrants. 
Blame it on the people running the government, who have made sure that 
the lion's share of the productivity gains go to the richest 1 percent 
of Americans. With different tax, labor, health, and housing policies, 
native-born workers and immigrants alike could get a fairer share of our 
productive economy -- and still have the nifty iPods.

Robert Kuttner is co-editor of The American Prospect.

http://www.boston.com/news/globe/editorial_opinion/oped/articles/2006/04/01/stagnant_wages_made_in_usa/
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://www.islandlists.com/pipermail/mb-civic/attachments/20060401/78e4148b/attachment.htm