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I've really been enjoying the Wal-Mart discussion.
Ok, here's an edited version of today's NY Times editorial (not the entire
article...) which does relate to our discussion...and I'll disappear until
tomorrow as I use up my remaining post for today...
Also on MPR today I caught the fact that more children will see their
families go through bankruptcy than through divorce. 2/3 of all
bankruptcies are because a family member lost a job. (As I haven't heard
that any Wal-Marts have closed recently, I can only assume it wasn't because
of Wal-Marts going under...yes, I'm being ironic...)
It may not matter how low the prices are at the St. Paul Wal-Mart, if the
people who patronize them can't afford to buy...Do Wal-Mart employees get a
store discount?!
The thing that really sticks out for me is that even when doing well, a
corporation doesn't have to share the gains with workers. That's why we
need minimum wage laws. I don't care if it's not pure capitalism to say so.
And CEOs making 500 times the salary of their lowest paid workers is not a
healthy long term strategy for a balanced society...
I urge folks to read Twin Cities' author Marjorie Kelly's "The Divine Right
of Capital: Dethroning the Corporate Aristocracy". In return, I promise to
read any fervent free market theorist you like! :)
Elizabeth Dickinson
West Side
Op-Ed Columnist: Our So-Called Boom
December 30, 2003
By PAUL KRUGMAN
It was a merry Christmas for Sharper Image and Neiman
Marcus, which reported big sales increases over last year's
holiday season. It was considerably less cheery at Wal-Mart
and other low-priced chains. We don't know the final sales
figures yet, but it's clear that high-end stores did very
well, while stores catering to middle- and low-income
families achieved only modest gains.
Based on these reports, you may be tempted to speculate
that the economic recovery is an exclusive party, and most
people weren't invited. You'd be right.
Commerce Department figures reveal a startling disconnect
between overall economic growth, which has been impressive
since last spring, and the incomes of a great majority of
Americans. In the third quarter of 2003, as everyone knows,
real G.D.P. rose at an annual rate of 8.2 percent. But wage
and salary income, adjusted for inflation, rose at an
annual rate of only 0.8 percent. More recent data don't
change the picture: in the six months that ended in
November, income from wages rose only 0.65 percent after
inflation.
Why aren't workers sharing in the so-called boom? Start
with jobs.
Payroll employment began rising in August, but the pace of
job growth remains modest, averaging less than 90,000 per
month. That's well short of the 225,000 jobs added per
month during the Clinton years; it's even below the roughly
150,000 jobs needed to keep up with a growing working-age
population.
But if the number of jobs isn't rising much, aren't workers
at least earning more? You may have thought so. After all,
companies have been able to increase output without hiring
more workers, thanks to the rapidly rising output per
worker. (Yes, that's a tautology.) Historically, higher
productivity has translated into rising wages. But not this
time: thanks to a weak labor market, employers have felt no
pressure to share productivity gains. Calculations by the
Economic Policy Institute show real wages for most workers
flat or falling even as the economy expands.
An aside: how weak is the labor market? The measured
unemployment rate of 5.9 percent isn't that high by
historical standards, but there's something funny about
that number. An unusually large number of people have given
up looking for work, so they are no longer counted as
unemployed, and many of those who say they have jobs seem
to be only marginally employed. Such measures as the length
of time it takes laid-off workers to get new jobs continue
to indicate the worst job market in 20 years.
So if jobs are scarce and wages are flat, who's benefiting
from the economy's expansion? The direct gains are going
largely to corporate profits, which rose at an annual rate
of more than 40 percent in the third quarter. Indirectly,
that means that gains are going to stockholders, who are
the ultimate owners of corporate profits. (That is, if the
gains don't go to self-dealing executives, but let's save
that topic for another day.)
Well, so what? Aren't we well on our way toward becoming
what the administration and its reliable defenders call an
"ownership society," in which everyone shares in stock
market gains? Um, no. It's true that slightly more than
half of American families participate in the stock market,
either directly or through investment accounts. But most
families own at most a few thousand dollars' worth of
stocks.
A good indicator of the share of increased profits that
goes to different income groups is the Congressional Budget
Office's estimate of the share of the corporate profits tax
that falls, indirectly, on those groups. According to the
most recent estimate, only 8 percent of corporate taxes
were paid by the poorest 60 percent of families, while 67
percent were paid by the richest 5 percent, and 49 percent
by the richest 1 percent. ("Class warfare!" the right
shouts.) So a recovery that boosts profits but not wages
delivers the bulk of its benefits to a small, affluent
minority.
***********************************************************
The big question is whether a recovery that does so little
for most Americans can really be sustained. Can an economy
thrive on sales of luxury goods alone? We may soon find
out.
http://www.nytimes.com/2003/12/30/opinion/30KRUG.html?ex=1073801744&ei=1&en=
912a9f8d413f2fbe
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