Saturday, October 08, 2005

Thought You'd All Like To Know...

Just a brief note from economist land because, day in and out, I read essays written by economists from major investment banks. I get them in my e-mail. Usually, these missives are just for wealthy investors but I'm media, so I get them too. So I thought you'd all like to know that, since the recession of 2001, we've been in a period of economic expansion. All of the economists say this. There is some jon growth, profits at public corporations are way up, GDP Growth is beating inflation.

But, you know what isn't beating inflation and what hasn't since 2000? Wage growth. Inflation is still around historic lows and wage growth isn't keeping up. Some say the cause is globalism and outsourcing. But, were those signifigant, they would reduce GDP growth since outsourced workers in India or China or Africa don't add to GDP, they add to products that are logged as imports. Were outsourcing the major cause, it would cut into our robust GDP growth, just by definition.

The cause is a concept treated as abstract but that really isn't -- productivity. Simply put, it's workers in the US producing more, for the same wage. Any time you've been assigned an extra job at work, but offered no raise for doing it, that's productivity. I'm going to guess that this has happened to most of us. It happened to me and my colleagues. I find the extra tasks mostly pleasurable and not too demanding and so I do them and don't complain. You? Any of you out there? Anyone get some extra jobs that aren't pleasurable and that drive you nuts, for no more money?

In terms of the raw numbers, you have to give Bush some credit. The economy is growing, not shrinking. On paper. But we don't live on paper, we live in the real world. There's a problem. First, we had a jobless recovery, the longest jobless recovery since World War II, and now we have a wageless recovery. Most of the economists I read ignore this issue. The ones who deal with it usually say, "give it time." Higher productivity has, historically, led to even higher wages in the long term. Perhaps it has and perhaps it will, but...

What about compensation for this time spent waiting, when, for half of a decade, wages have trailed inflation?

Yeah, I want a raise and deserve one and haven't had one in too damned long. But that's not really why I'm writing this. I want this complaint published somewhere because, if the "wait and see," economists turn out to be right and wages start growing after another year or two of GDP growth, I don't think we should all jsut blithely celebrate... we should be asking about compensation for those years where we were forced to make do. It's not unreasonable, unless you really believe that the national economy is fundamentally flawed, to assume that another boom will come and, as during the late 1990s, we'll all benefit to some extent but, when those times happen, we tend to forget the years before.

I'm also a little annoyed with my brethren in the financial press. The media has taken note of the fact that wages have been behind inflation for a long, long time, but the media has not made an issue of it. To me, it's the human face of productivity. It's also of interest to the typical reader and typical American, but it hasn't been covered.

Last week, I received a copy of a newsletter meant for CEOs and high level executives. The cover story asked an interesting question which I paraphrase as, "why, when executivesget huge, annual raises and workers get nothing, are the workers not angry." There's only one good, practical answer in the piece -- fear. Nobody wants to lose a job for yelling out.

I sympathize. I believe that's the answer. The current corporate solution for firings isn't, "We'll replace you," it's, "We'll make the people in the cubicles around you pick up your slack." That's just, based on what I read daily, where we are right now. Unless this is a new era of history, that will change within a few years. If there is a fundamental change, we're in trouble and headed for a lower standard of living. If there isn't, well, deferred payment is still a loss. If you've ever had to wait 10 days for a deposited check to clear, you know what I mean.

My point is, this should be a political issue. But nobody on the left or right has made more than passing mention of it. The current situation, which boils down to most Americans working harder, better and smarter for no more, or even less, money, should be a political issue. Why isn't it?


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