Workers: the poor orphans of the US economic boom

[Omaha Steve]

http://www.brecorder.com/business-a-economy/189/1141293/

January 11, 2015 RECORDER REPORT

It is one of the contradictions of the US economic boom: the unemployment rate has fallen to the lowest level in six years, but workers' wages have remained almost flat. The anomaly is troubling enough that it has sparked questions about whether the economy's rebound from the 2008-2009 recession is all that strong.

"Why is wage growth so slow?" the Federal Reserve's San Francisco branch asked in a research study Monday, calling the stubbornness of wages amid surging growth "unusual behaviour", economically speaking. In theory, the sharp fall in the jobless rate from 10 percent in October 2009 to 5.8 percent today should have sparked firm rises in the pay for the average American worker. With the supply of available workers falling, they should be in the position of forcing employers to pay more.

But the reality is that paychecks have barely risen, measured against inflation. "In real terms, wages have been about flat, growing less than labour productivity," said Fed Chair Janet Yellen last August, and nothing has changed since then. In November the annual growth of wages was just 2.1 percent, compared to the 3.9 percent rise in 2007 before the crisis. According to the San Francisco Fed study, some 15 percent of Americans saw no wage gain in the year to November 2014, compared to 12 percent in 2007.

Even while celebrating the fall in the jobless rate, the White House itself pointed to the problem in December. "There is more work to be done to further boost wage growth and address longer-standing challenges around both the quality of jobs and the growth of wages," it said. Indeed, in constant dollars the average hourly salary of $20.67 is barely higher than the $19.18 of 1964.

FULL story at link.

[midnight]

1. American workers could use a wage increase...

[senseandsensibility]

2. This is no accident, as most of us know.

Thirty years of propaganda have prevailed.

[Skittles]

3. can we stop saying 30 years

it's more like 35 years now

[tuhaybey]

4. Broken models

The economic theory is that productivity and unemployment rates drive wages. If unemployment isn't high, wages follow productivity. That is in fact what happens in a highly competitive market. But that hasn't been happening in the US for decades. Wages have been steadily falling relative to productivity since the 1970s. During that time, we've had major increases and decreases in unemployment, but the larger trend has continued relatively unabated. We need to face the reality that the labor market is not functioning like a competitive free market any more and hasn't been for a long time. Systemic factors are undermining the negotiating power of employees- too much concentration in the employment market, overly limited collective bargaining rights, price fixing between employers, etc. need to be addressed.

[Sherman A1]

5. K&R!

It certainly appears that employers have used the last economic bust and the resulting "do more and more with less and less" world to put the squeeze on wages for the working people.