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State of Working America: Workers Produce More, Get Less In Return |
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America’s workers know that although our economy may have grown since the recession ended in 2001, the average worker is in worse shape now than when the recovery began. Workers’ finances are stretched to the limit as the price of gas, food, clothing and other necessities rises and their paychecks remain stagnant.
According to The State of Working America 2008/2009 by the Economic Policy Institute (EPI), healthy growth in the gross domestic product and historically high productivity growth since 2000 should have raised paychecks up and down the income ladder. Instead, the benefits of that growth have bypassed most of the people who made it possible.
An advance version of The State of Working America 2008/2009 was released just before Labor Day and is now available online here. The authors plan to add chapters later this year on poverty and health care. The full printed report will be released in January 2009.
EPI says this is the first-ever business cycle during which the percentage of working-age people who held a job actually dropped. The 1.1 percent decline in labor force participation translates to about 1.4 million people who are neither working nor actively job-hunting. While, on average, jobs grew 2 percent a year during previous business cycles, job growth was just 0.6 percent between 2000 and 2007. It took nearly four years (47 months) to get back to 2000 job levels
Says Heidi Shierholz, a co-author of the State of Working America:
If job growth from 2000 to 2007 had matched the 1990s cycle, the economy would have added 7 million more jobs than it did. The weak jobs situation means that the potential of millions of productive, hard-working Americans has been left untapped—a profound disservice to them, their families, and the economy as a whole.
Here are some other key points about today’s economy, according to the EPI study:
- The share of workers who want full-time work but cannot find it continues to rise, as employers cut costs by reducing work hours. As of June 2008, the number of people involuntarily working part-time jumped to about 5 million.
- Most household income is stagnant or dropping. The real income for the median family fell by 1.1 percent from 2000–2006. Yet income more than tripled for the top 1 percent, who enjoyed a 203.7 percent increase.
- Income inequality is the highest it has been since the Great Depression. Some 60 percent of families that start in the bottom fifth are still there a decade later. At the other end of the income scale, 52 percent of families that start in the top fifth finish there at the end of the decade.
Click here for the online advance version of The State of Working America.
The State of Working America clearly details the impact of the failed economic policies of the Bush administration and the need for strong action to turn things around. Sen. Barack Obama has promised to turn the economy around by rewarding employers that create jobs in the United States rather than those that send jobs overseas, investing in American infrastructure, skills and clean energy and providing tax cuts for 95 percent of working families.
His Republican opponent, John McCain, supports continuing the Bush administration’s economic policies of tax cuts for the wealthy.
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Why is it that half the respondents to the “Where Do You Get Your Political Information” straw poll claim the Internet, but there are no comments to this intensely germane issue of soaring productivity and wage and income decline ? The late W. W. Winpisinger, President of the IAM&AW in the 70s & 80s detected this failure of the productivity promise as early as 1980, and often pointed out its dichotomy with the downward wage trend. Plotted on a line graph, as the productivity curve rose upward and onward, the wage & income line on the graph sloped downward. Wimpy called this divergence “the Trumpet Effect,” since it resembled the bell of the horn in outline and shape. He often argued that, when sweet reason failed in collective bargaining and in the halls of government, the Trumpet Effect should be used to sound the call to battle. Unfortunately, there were few takers to the idea then, and the nation has endured Conservative business and government punishment for the better part of the last quarter-century. Whether there will be observable response to EPI’s current trumpter’s call to action, will be determined , first, by election results in November, and by policy initiatives and legislative and administrative corrections to the long adverse rule of retro managers in both the private and public sectors of the economy. One thing we know for certain, continued Conservative economic policies and programs will widen Wimpy’s Trumpet Effect. It’s time to sound the “Charge !” And recapture productivity’s rewards for labor.
The plight of a recession in America reflects the plight of the working families. so goes working families economy, so goes the national economy. With jobs decreasing in America with technology, sending jobs overseas along with factories, importing foreign labor, the USA has finally succeeded in self destruction. The former Premier of Russia, Gorbachev, made a true prophesy when visiting as a guest of the then President Reagan to the effect, No outside coountry could destroy Ameiica, they will destroy themselves. This is coming about.
I agree that there is a huge discrepancy between positive economic growth and negative job creation data. I believe that the government employs questionable methods in collecting economic data. What I have seen in the last 6 years is that a lot of jobs have disappeared. As a result, businesses have disappeared too due to lack of customers.
Another point I want to make is how the government measures WEALTH. Is wealth defined by how much money you can borrow or is wealth defined as your skills and potential at earning on the job? If this is the first case; then, everybody has the potential to be very wealthy because you can borrow and spend. On the other hand, if this is the second case, then there are not too many wealthy people in America because you are not earning enough money to pay for the basic necessities of life.
There are lies, damn lies, and statistics, and this couldn’t be more true with economic data. These “macro” measures of the economy are only as accurate as the underlying distribution of the data allow them to be. Americans like simple messages and simple stats, like means, and totals and that is what gets reported. What most don’t understand is that if you take a mean of a set of values that are not “normally” distributed (the classic bell-curve), the mean won’t really tell you anything about the overall population of those values. In a sense, that is what is happening with economic indicators.
The current disconnect between aggregate economic measures and the reality most of us see can, in large part, be attributed to the gross income inequality that now exists. For that 25-40% of the population that controls nearly 90+% of the wealth in this country, times are still not that bad. The economic data for the rest of us, who control only a small percentage of the economic wealth and for which there has been no growth, are simply swamped in the calculations. If we reported GDP on the basis of what it means to a median income person, we’d see a very different story, but the folks who run this shellgame know that, and even though that sort of data is out there, you won’t see it in the news.
What still strikes me as odd (but not surprising since greed is a powerful force), is that more of the captains of industry haven’t figured out that their underlying profit base (consumers with disposable income) is being eroded, which spells severe trouble for their own long term economic self interest. With this latest economic “downturn” being driven in large part by a shutdown in consumer spending, many on Wall Street are finally starting to take notice, which is why I figure Obama will likely get elected. They know that the safety valve has to be released and some level of widespread economic prosperity has to return or they’re going down with the rest of us. But because of that safety valve, we’re not likely to get the economic restructuring this country really needs unless we take it for ourselves.