considering the source -- i.e., USA TODAY -- I'm guessing that it's a different Paul Davidson.
Perelman, Michael wrote: > Paul Davidson is a very active post-keynesian. > Profits don't flow through to wages > Paul Davidson and John Waggoner, USA TODAY9:59 a.m. EDT May 6, 2013 > May Day Labor > > (Photo: Spencer Platt, Getty Images) > Story Highlights > > After inflation, workers' pay is little changed since recession ended > With scant growth in revenue, employers boost profits by holding down > costs > Stocks' gains aren't shared by many households with small portfolios > > Stock markets and corporate profits are breaking records. The economy > suddenly looks brighter after the government's surprising report > Friday that employers added 635,000 jobs the past three months. > > But instead of celebrating, many working Americans are borrowing a > line from the 1996 movie Jerry Maguire: "Show me the money." > > Hourly wages ticked up 4 cents in April to an average $23.87, rising > at about the same tepid 2% annual pace since the recovery began in > mid-2009. > > But taking inflation into account, they're virtually flat. Workers who > rely on paychecks for their income have been running in place, > financially speaking. Adjusting for inflation, an average worker who > was paid $49,650 at the end of 2009 is making about $545 less now — > and that's before taxes and deductions. > > Stagnant wages aren't only tough on workers — the American economy is > paying a price, too. Living standards aren't rising. Consumer > spending, which is 70% of the economy, is more restrained. And the > recovery advances at a slower pace. > > "Ultimately, for the economy to thrive we need everyone > participating," says Mark Zandi, chief economist of Moody's Analytics. > > The profits of Standard & Poor's 500 corporations hit a record in the > first quarter. Their healthy earnings have boosted stocks, and April's > encouraging jobs report propelled the stock market even higher Friday. > The blue-chip Dow Jones industrial average crossed 15,000 for the > first time and closed at a record 14,973.96, up 142.38 points. > > The roaring market is making the richest Americans richer, and giving > them more money to spend. But in 2010, only 31% of U.S. households had > stock holdings of $10,000 or more, according to the Economic Policy > Institute (EPI). During the first two years of the recovery, average > net worth rose for the top 7% of households but fell for the other > 93%, the Pew Research Center says. > > Meanwhile, Corporate America isn't sharing their record earnings with > their own employees. > > "Don't hold your breath," for employers to become more generous, says > John Lonski, chief economist for Moody's Investors Service. One > reason, he says, is that revenue growth has been meager, up between > 0.5% and 1% in the last year. > > In fact, higher profits owe partially to employers' success in > controlling labor expenses, by holding down raises and hiring > conservatively. > > Productivity, or output per labor hour, has risen an average 1.5% a > year since the recovery began. Companies are squeezing more out of > each worker even as inflation-adjusted wages have stagnated. > > Another reason for stagnant wages is the law of supply and demand. > Sure, the job market has picked up. Employers added 165,000 jobs last > month and an average 196,000 a month this year, up from 183,000 in > 2012. And the unemployment rate has fallen from a peak of 10% in 2009. > > But today's 7.5% jobless rate is still high. Nearly 12 million > Americans are unemployed, and millions more want to work but are so > discouraged they've stopped looking. With an abundant supply of > potential workers, employers have little reason to shell out big > raises. > > "High unemployment hurts workers' bargaining power," EPI economist > Heidi Shierholz says. "Employers know they can go get someone else." > > So many Americans are out of work that employers could get away with > giving no raises at all, Zandi says, leaving household income falling > behind inflation. Employers, however, realize that would hurt morale > and, in turn, productivity, he says. > > Still, wage increases that just barely keep up with inflation don't > make for a prosperous economy. > > "We're not seeing the the living standard growth of American workers > that we should be seeing," Shierholz says. > > Stagnant wages also hurt consumer spending. Low- and moderate-income > workers typically spend nearly all of their paychecks, juicing the > economy, while high-income workers tend to save a significant portion, > says Dean Baker, co-director of the Center for Economic and Policy > Research. > > Larry Breech, of Milville, Pa., a retired farmer who makes about > $10,000 a year, says his per diem pay for substitute teaching hasn't > changed in several years. > > "We will be frugal," he says. "Fiscal restraint is imperative." > > Consumer spending, which has been growing at an average annual rate of > about 2% during the recovery, would be rising by 2.5% if employers > simply passed their productivity gains onto their workers, Zandi says. > > Some workers are getting bigger raises. While the lowest 10% of income > earners got average raises of 0.3% last year, those in the top 25% saw > their pay jump 3.1%, according to the Bureau of Labor Statistics and > Moody's Analytics. Workers with higher skills and more education in > booming industries, such as energy and technology, can command higher > salaries. > > Stephen Allen, an oil industry contractor in St. Louis, says his wages > have increased by more than 60% the past three years. He makes about > $85,000 a year. > > For now, it's up to Americans like Allen and those with large stock > holdings to generate a bigger share of spending and economic activity. > The top 20% of households based on income account for nearly half of > consumer spending, according to Barclays Capital. > > A bright spot is that despite puny wage increases, other barometers of > household finances show improvement. The housing market is continuing > a solid recovery. Climbing home and stock prices have helped > households overall recover the wealth they lost in the recession and > housing crash. > > And the share of income that Americans are using to pay off debt has > fallen to 10.4%, the lowest level since the government began tracking > the data in 1980, according to the Federal Reserve. Meanwhile, falling > gasoline prices are putting more cash in consumers' pockets. Such > developments can partly offset sluggish wage growth and pave the way > for higher spending. > > After working off debt the past three years, Allen says he expects to > be debt-free this summer "and then save for a down payment on a > house." > > Still, economists say consumer spending won't take off in earnest > until inflation-adjusted wages return to a normal growth rate of about > 1.5% a year. Baker says that likely won't happen until unemployment > falls below 6%, probably in 2016. > > Then, employers will begin to worry about not finding enough workers. > > "They'll start to hire more aggressively," pushing up wages faster, Zandi > says. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
