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American Dream Done: WSJ -- Steep, Lasting Drop in Wages

by Jonathan Tasini

Tuesday 11 of January, 2011
Posted to Front Page Posts

The jobs crisis is really devastating. We all know the numbers on how
many people are out of work. But, the truth is that just calling for
more jobs is not enough--because what we lack in the country is
GOOD-PAYING JOBS. And wages are not coming back.

The Wall Street Journal
reports what many of us have been trying to point out for a long time:

> But the decline in their fortunes points to a signature outcome of the long 
> downturn in the labor market. Even at times of high unemployment in the past, 
> wages have been very slow to fall; economists describe them as "sticky." To 
> an extent rarely seen in recessions since the Great Depression, wages for a 
> swath of the labor force this time have taken a sharp and swift fall.

> The only other downturn since the Depression to see similarly large wage cuts 
> was the 1981-82 recession. But the latest downturn is already eclipsing that 
> one. Unemployment has stood above 9% for 20 straight months?longer than the 
> early 1980s stretch?and is likely to remain above that level for most of 
> 2011, putting downward pressure on wages.

> Many laid-off workers who have found new jobs are taking pay cuts or settling 
> for part-time work when they get new ones, sometimes taking jobs far below 
> their skill levels.

> Economists had wondered how far this dynamic would go in this recession, and 
> now the numbers are starting to show it: Between 2007 and 2009, more than 
> half the full-time workers who lost jobs that they had held for at least 
> three years and then found new full-time work by early last year reported 
> wage declines, according to the Labor Department. Thirty-six percent reported 
> the new job paid at least 20% less than the one they lost.[emphasis added] <

 When will we get those wages back. Maybe never:

The severity of the latest downturn makes it likely that many of the
unemployed who get rehired will take wage cuts, and that it will be
years, if ever, before many of their wages return to pre-recession
levels, says Columbia University labor economist Till von Wachter.
"The deeper the recession, the lower the wage you're going to get in
the next job and the lower the quality of your next job," he
says.[emphasis added]

The WSJ article though is wrong: this actually has been taking place
for at least three decades. Productivity has been rising, more or
less, steadily for the mast 30 years but wages have been flat. So, we
have been falling behind.

When the recent job stats came out, I pointed out that one in five
Americans does not have good-paying work.

We treat poverty as a way of doing business in America. The minimum
wage is a poverty-level wage. We say people who work full-time for the
minimum wage are "employed" but, for a family of four, that puts them
below the federal poverty line. The minimum wage should be above $19
an hour if we factored in productivity over 30 years--how hard people
have worked.

Now, let's be clear about a few things.

First, this has NOTHING to do with education. The "Field of Dreams"
strategy and claiming that we would all be just fine if we were
smarter and we were all "symbolic analysts" was just malarkey. The
chief purveyor of that discredited theory, Robert Reich, was among a
cadre of people who were too afraid to speak out in the 1990s--and
earlier--about the vast class warfare that was underway.

An example from the story:

> Others, like Mr. Cronan, the Starbucks barista in Massachusetts, take 
> whatever work is available. He lost his job in January 2009 at a Boston 
> money-management company, where he says he earned a $100,000 salary and 
> $50,000 annual bonus in recent years. Mr. Cronan, 40, enrolled in 
> adult-education courses and tried to wait out the downturn as he saw other 
> people with MBAs take entry-level, $40,000-a-year jobs.

> But once his 19-month severance period ended, Mr. Cronan needed health 
> insurance and decided he couldn't limit his search to only his field. So, in 
> August, he got a job at his local Starbucks?the one he'd visited daily since 
> losing his job?even though he expects to leave once he finds employment in 
> his field.

>He says he's now earning $8.85 an hour for about 38 hours a week of work.<

Getting education is fine. But, it is not a national strategy to increase wages.

If you look actually at the facts, the top four jobs in the past year
accounting for over 14 million jobs in that period paid less than $10
an hour. And if you scan the chart you can see that the median wage of
the majority of those occupations is under $30K a year.

Which brings me to the second point. The decline in wages is directly
tied to the failed strategy of so-called "free trade". And it is not
by chance that the people who embraced the "workers are too stupid and
they need to be smarter if they want to earn decent living" were the
same people--Bill Clinton and Robert Reich, chief among them--who
shoved NAFTA down the throats of the American people.

Yes, the current Great Depression (using the word "recession" I
believe soft-peddles how bad it is for regular people) is just the
next step in the progression. We should not be misled into thinking
that this is just a result of the financial crisis. It is not.

If we want wages to rise in this country, if we want people to have a
decent living, we have to talk about "class warfare". We must be clear
that the people have been robbed and that it isn't their fault and it
isn't because they are too stupid. Rather than attack public sector
unions, we should have an economic strategy that builds up unions as
the key pillar for a decent wage base.

It is because too many of the country's leaders have embraced an
economic strategy (one, by the way, quite favored by Bill Daley) that,
for all the rhetoric about the "middle-class", is based on the lowest
wage possible, along with a good dose of attacking public workers.

Wages are not going up--until we change the system that is being
rammed down our throats.
Jim Devine?/ "The conventional view serves to protect us from the
painful job of thinking." ? - John Kenneth Galbraith

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