General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsIf the Economy Is Back, Why Are Wages Still So Low?
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First off, a new paper by a trio of researchers confirms some old news: Adjusted for inflation, wages began stagnating for both men and women 10 years ago. Men's wages have actually decreased slightly since 2000, while women's wages, which had been rising steadily for decades, flattened out nearly to zero. But it could have been worse. Economists have long known that there's a floor to wages because employers don't like to reduce nominal wages. If you make $10 per hour, they won't cut your wage to $9 per hour. They'll just hold it at $10 and let inflation eat it away. This phenomenon is called wage stickiness.
But in "Wage Adjustment in the Great Recession," these researchers have found that wage stickiness, which is driven mostly by social convention, not economic law, might be dying out. During the Great Recession, employers were increasingly willing to cut nominal wages. Among hourly workers, the usual number who experience wage cuts is around 15 percent. That had risen to 25 percent by 2011. Among nonhourly workers, the number rose from about 25 percent to nearly 35 percent. Increasingly, it seems, wage stickiness isn't acting as a barrier against wage losses.
So what does this mean in the real world? Economist Jared Bernstein points us to the chart below. It shows growth in nominal wages, growth in benefits, and growth in total compensation (wages plus benefits). The news is grim. Total compensation (the gray line) grew at about 3 to 4 percent per year during most of the aughts. Since the Great Recession hit, that's dropped to 1 to 2 percent. This is less than the inflation rate, which means that even when you account for benefits, real compensation has been declining since 2008.
Bottom line: Wage stickiness is disappearing, and with it a social convention that prevented wages from dropping too harshly even during recessions. As a result, wages are getting cut in bad times and never catching back up in good times. This is the world we live in today.
http://www.motherjones.com/kevin-drum/2013/06/permanent-wage-decline-great-recession?google_editors_picks=true
Tierra_y_Libertad
(50,414 posts)Populist_Prole
(5,364 posts)alterfurz
(2,474 posts)WovenGems
(776 posts)Welcome to a service economy. We need to bring back "MADE IN AMERICA".
progressoid
(49,988 posts)FarCenter
(19,429 posts)Also America Has Way Too Much Manufacturing Capacity
http://www.businessinsider.com/america-has-too-much-manufacturing-capacity-2013-6
Mnemosyne
(21,363 posts)was the only one running the entire clinic, except for volunteer doctors and nurse three times a month.
The board finally hired her to run the entire clinic for $10 per to raise two children. She accepted because she was desperate for paid work in her field. She worked for that wage for 14 1/2 months. Then her electric bill was ridiculous and she tried to find help to get it paid, the board fired her for embarrassing them. They told her how much she had embarrassed them about two weeks before they decided she messed up her sick day on the time sheet and used that as an excuse to fire her.
They had just agreed to give her two paid sick days and a week paid vacation about a month before, which she couldn't ever take because there was no one else to take over the clinic.
These are wealthy people on the bod, and they consider anyone poor as stupid and deserving of it, even when they are the ones keeping someone in poverty.
I've gone broke helping her and the kids survive. We both have to sell our homes now to survive. Thankful to have a home to sell, but damn, does it ever get any easier?
On edit - and she took out student loans, which the school convinced her she would be able to repay because she would be making at least $30,000 to start.
reformist2
(9,841 posts)Mnemosyne
(21,363 posts)Loge23
(3,922 posts)I just don't see that happening anymore, sadly.
Even sadder, is that so many working class Americans have brought the lie about unions - even with the reality of the alternative staring them in the face.
The great paradox is this is why the economy sucks! If you starve the middle-to-lower class out, you kill broad-based spending.
cstanleytech
(26,291 posts)A good one though can be an asset both for the company and the workers.
socialist_n_TN
(11,481 posts)nm
cstanleytech
(26,291 posts)the workers and the company as a whole.
I just wish more CEOs did what was best for the workers and the company as a whole as well but it seems most of them are out for themselves from what I have seen.
reformist2
(9,841 posts)If it weren't for the internet bubble of '96-'00 and the housing bubble of '03-'07, I think we would have seen this downward trend in wages much sooner. But now that those bubble-related, too-good-to-be-true jobs are gone, we are seeing the stark reality of what globalism means to American wages.
woo me with science
(32,139 posts)It was a deliberate restructuring.
ananda
(28,859 posts)...
It started under Reagan with the huge Tax Cuts to the Rich and Busting of Unions,
accelerated under Clinton with "Free Trade", De-Regulation of Banks and Telecoms,
and has continued to accelerate under Bush2 and Obama.
The final Death Blow will be the The Trans-Pacific Partnership (NAFTA on Steroids)
currently being negotiated in secret by the Obama administration.
Snowfield
(46 posts)"The Trans Pacific Partnership Forum" with Georgia Kelly, Arthur Stamoulis, Margaret Flowers and Kevin Zeese from the Public Banking Institute's Public Banking 2013: Funding the New Economy conference. Georgia Kelly talks about Fast Track; Arthur Stamoulis about what the TPP is; Margaret Flowers on healthcare; and Kevin Zeese on how to fight back.
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Senator Warren Presses White House to Release Pacific Trade Text
http://www.businessweek.com/news/2013-06-13/senator-warren-presses-white-house-to-release-pacific-trade-text
The TPP Could Destroy the American Middle Class
http://economyincrisis.org/content/the-grave-danger-ahead-the-tpp-could-destroy-the-american-middle-class
The Dangers of the Trans-Pacific Partnership
http://www.brownpoliticalreview.org/2013/03/the-dangers-of-the-trans-pacific-partnership/
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Triana
(22,666 posts)ctsnowman
(1,903 posts)Maybe if we can just get a multimillionaire or better yet a billionaire to run the NLRB things will get better.
Sherman A1
(38,958 posts)about 1980.....
TomClash
(11,344 posts). . . given Drum's criticism of Greenwald. There is no real news here.
former9thward
(32,002 posts)Wages are low so the economy is back.
DCBob
(24,689 posts)Once we get back under 6% unemployment, I suspect wages will start going back up again.
socialist_n_TN
(11,481 posts)They want to keep the reserve army of labor hungry for ANY job and that means unemployment will stay above that 6% mark. It'll acutally probably stay closer to 7% from now on. Or at least as long as end stage capitalism exists.
Triana
(22,666 posts)Drive wages into the dirt. Suffice to say the multinational corprats have succeeded in re-creating slavery and driving more and more middle-class workers to becoming the working poor with no hope of ever being anything else.