Wednesday, August 30, 2006

What a comfort for the widow,a light to the child

An internet query of the NY Times produced 10 stories mentioning the search term "real wages" since May of this year. A similar search of the term "living standards" produced 8 results. These numbers are instructive. A search for "inflation" produced 450 stories ..."productivity", 138 results..."profits", a staggering 547 results...and "terrorism", 742 results. Well, actually not staggering, given the constituency of the Times. It does not require much analysis to determine what these numbers signify. This is not a "Marxist" interpretation, it is just that nobody discusses it. When this kind of media analysis is conducted, almost invariably you get, "So what? You act like you are surprised.When are you going to abandon your adolescent Utopian fantasies?". I am not surprised at all, but these numbers are simply not discussed. Profits? Of course we can talk about those. So here, in my tiny corner of this idiotic ego-sphere, I offer these findings as a simple reminder. It took me all of 3 minutes to perform the research. I gently urge those reading this to take a few minutes out of your day to look into the resources that are widely available.

The following NY Times story is one of eight mentions of "real wages" since May 1st of this year. The Times has provided a rare mainstream glimpse at an important topic. Sure, one must read it carefully to tease out the information of particular importance, but I thank them for this one of eight. It details the continuing decline of this indicator, and what it means. This is a longstanding development though, a continuing trend that has had the right economic results for those who matter. All the more necessary then, to avoid the discussion, unless it is in terms of profits and productivity. Now that electoral outcomes may be slightly altered, it is permissible to broach the topic. Notice that great emphasis is placed on the effect this may have on the mid-term elections. The Republicans fear that they may lose their position of dominance over the bureacracy that does so well for their constituency. The calculable social effects do not matter. What is important it that corporate capital is doing just fine, as worker productivity is way up. As if Democratic victory would alter the forward thrust of the past 300 years. "Forward escape" is the only option we seem to be offered. Insert pseudo-intellectual pomo reference here : I refer the reader to Baudrillard's Fatal Strategies. The solution thus proposed would be a complete surrender to the forces of de-humanization, transformation of the self from a subject to inert object. This unlikely/unmanageable situation would somehow short-circuit the all pervasive code, as yet completely inescapable.

Read the article if you have time. Emphasis and comments have been added:

Real Wages Fail to Match a Rise in Productivity - August 28, 2006

With the economy beginning to slow, the current expansion has a chance to become the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages for most workers.

That situation is adding to fears among Republicans that the economy will hurt vulnerable incumbents in this year’s midterm elections even though overall growth has been healthy for much of the last five years.

The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The drop has been especially notable...because productivity...has risen steadily over the same period.

As a result, wages and salaries now make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960’s.
UBS, the investment bank, recently described the current period as “the golden era of profitability.”

[A standard comment. Similar examples can be found, and are repeated often.]

...Since last summer, however, the value of workers’ benefits has also failed to keep pace with inflation, according to government data.

At the very top of the income spectrum, many workers have continued to receive raises that outpace inflation, and the gains have been large enough to keep average income and consumer spending rising.

[The Times does not hesitate to reveal the sectors actually benefitting.]

Political analysts are divided over how much the wage trends will help Democrats this fall in their effort to take control of the House and, in a bigger stretch, the Senate. Some see parallels to watershed political years like 1980, 1992 and 1994, when wage growth fell behind inflation, party alignments shifted and dozens of incumbents were thrown out of office.

But others say that war in Iraq and terrorism, not the economy, will dominate the campaign and that Democrats have yet to offer an economic vision that appeals to voters.

But polls show that Americans disapprove of President Bush’s handling of the economy by wide margins and that anxiety about the future is growing. Earlier this month, the University of Michigan reported that consumer confidence had fallen sharply in recent months, with people’s expectations for the future now as downbeat as they were in 1992 and 1993, when the job market had not yet recovered from a recession.

“Some people who aren’t partisans say, ‘Yes, the economy’s pretty good, so why are people so agitated and anxious?’ ” said Frank Luntz, a Republican campaign consultant. “The answer is they don’t feel it in their weekly paychecks.”

But Mr. Luntz predicted that the economic mood would not do significant damage to Republicans this fall because voters blamed corporate America, not the government, for their problems.

[Ignorance among the masses of the significantly tangled nexus of corporate/state, must be maintained.]

Economists offer various reasons for the stagnation of wages. Although the economy continues to add jobs, global trade, immigration, layoffs and technology — as well as the insecurity caused by them — appear to have eroded workers’ bargaining power.

Trade unions are much weaker than they once were, while the buying power of the minimum wage is at a 50-year low. And health care is far more expensive than it was a decade ago, causing companies to spend more on benefits at the expense of wages.

Together, these forces have caused a growing share of the economy to go to companies instead of workers’ paychecks. In the first quarter of 2006, wages and salaries represented 45 percent of gross domestic product, down from almost 50 percent in the first quarter of 2001 and a record 53.6 percent in the first quarter of 1970, according to the Commerce Department. Each percentage point now equals about $132 billion.

Total employee compensation — wages plus benefits — has fared a little better. Its share was briefly lower than its current level of 56.1 percent in the mid-1990’s and otherwise has not been so low since 1966.

Over the last year, the value of employee benefits has risen only 3.4 percent, while inflation has exceeded 4 percent, according to the Labor Department.

In Europe and Japan, the profit share of economic output is also at or near record levels, noted Larry Hatheway, chief economist for UBS Investment Bank, who said that this highlighted the pressures of globalization on wages. Many Americans, be they apparel workers or software programmers, are facing more comptition from China and India.

In another recent report on the boom in profits, economists at Goldman Sachs wrote, “The most important contributor to higher profit margins over the past five years has been a decline in labor’s share of national income.” Low interest rates and the moderate cost of capital goods, like computers, have also played a role, though economists note that an economic slowdown could hurt profits in coming months.

For most of the last century, wages and productivity — the key measure of the economy’s efficiency — have risen together, increasing rapidly through the 1950’s and 60’s and far more slowly in the 1970’s and 80’s.

But in recent years, the productivity gains have continued while the pay increases have not kept up. Worker productivity rose 16.6 percent from 2000 to 2005, while total compensation for the median worker rose 7.2 percent, according to Labor Department statistics analyzed by the Economic Policy Institute, a liberal research group. Benefits accounted for most of the increase...

..Average family income, adjusted for inflation, has continued to advance at a good clip, a fact Mr. Bush has cited when speaking about the economy. But these gains are a result mainly of increases at the top of the income spectrum that pull up the overall numbers. Even for workers at the 90th percentile of earners — making about $80,000 a year — inflation has outpaced their pay increases over the last three years, according to the Labor Department.

“There are two economies out there,” Mr. Cook, the political analyst, said. “One has been just white hot, going great guns. Those are the people who have benefited from globalization, technology, greater productivity and higher corporate earnings.

“And then there’s the working stiffs,’’ he added, “who just don’t feel like they’re getting ahead despite the fact that they’re working very hard. And there are a lot more people in that group than the other group.”

In 2004, the top 1 percent of earners — a group that includes many chief executives — received 11.2 percent of all wage income, up from 8.7 percent a decade earlier and less than 6 percent three decades ago, according to Emmanuel Saez and Thomas Piketty, economists who analyzed the tax data...

...At the same time, he said that the Bush administration was not responsible for the situation, pointing out that inequality had been increasing for many years. “It is neither fair nor useful,” Mr. Paulson said, “to blame any political party.”

[One must not draw connections between huge corporate profits, and economic policies that favor them. To do so would be inexcusable. Politics, of course, has no stake in the success of accumulative capital.]


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