This, from Robert Reich, seems to make a great deal of sense:
Missing from almost all discussion of America’s dizzying rate of unemployment is the brute fact that hourly wages of people with jobs have been dropping, adjusted for inflation. Average weekly earnings rose a bit this spring only because the typical worker put in more hours, but June’s decline in average hours pushed weekly paychecks down at an annualized rate of 4.5 percent.
In other words, Americans are keeping their jobs or finding new ones only by accepting lower wages.
Meanwhile, a much smaller group of Americans’ earnings are back in the stratosphere: Wall Street traders and executives, hedge-fund and private-equity fund managers, and top corporate executives. As hiring has picked up on the Street, fat salaries are reappearing. Richard Stein, president of Global Sage, an executive search firm, tells the New York Times corporate clients have offered compensation packages of more than $1 million annually to a dozen candidates in just the last few weeks.
We’re back to the same ominous trend as before the Great Recession: a larger and larger share of total income going to the very top while the vast middle class continues to lose ground.
And as long as this trend continues, we can’t get out of the shadow of the Great Recession. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don’t have enough purchasing power to buy what the economy is capable of producing.
If for no other reasons than the principle of parsimony, why is this not the widely held perception? Even adherents to trickle down theories should be able to recognize that those with all the money can’t engage in new entrepreneurial ventures if no one can afford to buy their new product. And the data clearly shows that there are five or more people for every new job and that increasing amounts of income are being fast-tracked to the upper strata of the economic food chain. I’m just befuddled.
Nick
Are the rich still getting richer despite this?
There’s your answer.
Tokyokie
Because anybody who mentions it will be accused of class warfare.
c u n d gulag
I think they all expect us to work as greeters as the local WalMart. But, at those wages, you can’t even shop at the WalMart you work at.
Lesson forgotten by 21st Century capitalists:
Producers need consumers.
Ooops, what’s wrong with me?
We don’t produce anything anymore.
Here’s all that the American economy is based on nowadays: These people getting huge salaries moving other rich peoples, and one anothers investments, from one place to another.
The rest of us can starve to death, for all they care.
Gated communities with security forces can only keep you safe for so long, assholes. I hope you decide to change before we decide to prove that to you.
pharniel
because they don’t understand that when people figure out they cannot possibly win the game because it’s rigged, they will find a new game to play.
Like France, 1807 or so.
But in the mean time, It’s good to be the king.
(Throw in a few hoocudanode’s and sprinkle a mix of ‘no one could have predicted’ and ‘mistakes were made’ and then bake in economic despair for 10 years..)
mai naem
But Barack Obama is black and he’s Muslim and he’s a baby killer and he’s a socialist and to top it off he’s for rights of those queers.
Also too, this is for real, good news for President John McCain.
And ACORN too.
PaulW
@Tokyokie:
That’s true. And anyone who points out that the middle class is still losing after 30 years will get shot.
The upper class is winning the class war. The battlefield has been rigged and the media cheerleaders are mostly rooting for the rich.
This reminds me of a bit from Hitchhiker’s Guide to the Galaxy, describing the ancient Galactic Empire: Many men of course became extremely rich, but this was perfectly natural and nothing to be ashamed of because no one was really poor — at least no one worth speaking of.
Zoogz
Our office took all of us salaried workers and made us into hourly. The scuttlebutt around here is that it’s because they can hire new people at far lower wages, and that’s in an industry where the average is about 15k higher than the average salary here. (Their goal seems to be forcing us out to hire new workers who get salaries somewhere around 20-30k lower than industry average, in order to come closer to the salaries they’re paying for facilities in India and the Phillippines who do “the exact same work”). Said place is now telling us that there is effectively “no budget for overtime” while at the same time giving us black marks on our performance if we can’t get all their work done.
Of course, the free market rules all… I’m currently interviewing in order to find a job closer to the industry average, and once I find that job all my frugality in learning to deal with these tiny wages will be quite a benefit. Only problem is that transition costs will be a bitch. It’s amazing how the free market is only free to certain people, it’s far different than all these promises of capitalism I’d heard about when I was growing up.
From Both Sides
Aspirational politics (or in this case, economics) at its finest. People stubbornly believe despite all evidence that they too will somehow be amongst the rich, and therefore want to protect that sliver of society so that when they get there, they won’t be giving away anything to the has-beens that they left behind.
Morbo
Careful with that word “should.”
El Cid
In the new economic magic, deficits aren’t caused by a lack of revenue but entirely by social spending and black people stealing homes.
Businesses will start to grow and invest and hire without any consumer demand on which to plan revenues and profits as long as they don’t fear taxes or deficits which will cause the huge inflation that no one is predicting.
Whether it seems conspiratorial or not, big businesses and its hired policy & pundit & media whores have been on a counter-attack against post-New Deal generations of higher equality for the working and middle class since the late 1960s, and with occasional and serious government moves to take slight steps back, the political establishment has kept pursuing this for both ideological and financial reasons (campaign donations, etc., all the other typical rewards for which big money can buy Congress long-term), and because much of policymaking and advising is done directly by the business class and their ideological allies.
Obviously the most direct effect on such generations-long effects on the political process and campaigns by the power elites are on Congress. As many people have often pointed out, many times businesses can make much, much more money lobbying Congress for tax and subsidy favors than they could by just doing what they’re supposed to be doing on the market.
bleh
I think everyone’s missing part of the reason.
Yeah, the rich are happier getting richer, even if annoying twerps occasionally remind them that their castle is built on sand. (A million-dollar paycheck today beats a warning about a possible tomorrow.)
But the rich are only a small part of the population. Their money gives them a big megaphone, but they’re still a tiny fraction. The question is, why isn’t Congress going all populist on their asses, in response to overwhelming economic need among all but the very well off?
And the answer is, the rest of the country is divided. There are simply too many of them who would rather “tough it out,” accept lower wages, work harder, and be more miserable, as long as none of “their money” goes to black or brown people, especially under the administration of a black socialist president.
Nixon is laughing in his grave.
priscianusjr
It’s the fault of our liberal media.
Michael
Recessions and depressions have always magnified the economic and political power of the top tier of the status quo. That’s how it has always worked, which tends to explain why there isn’t a lot of momentum in that top tier to fix things.\
It is a feature, not a bug.
arguingwithsignposts
Interestingly, this morning, NPR had another concern-troll story about the “European Welfare State.” I was prepared to be disappointed, but the story was pretty even-handed, all things considered. Here’s the link.
I especially liked this quote from a French worker:
A to the fuckin’ men. The French understand social contracts, at least.
Also, this near the end:
El Cid
@arguingwithsignposts:
I remember once a brief quote on the topic of European social equality policies by Noam Chomsky to the effect of, “American liberals perceive Europeans to be more advanced in terms of social programs which redistribute economic gains more evenly to the population. But from the point of view of power, Europe is trailing the US in terms of dismantling this long-ago achieved consensus in favor of the US model of unrestrained business profiteering, and with a few political changes, maybe a crisis, the powers that be in Europe will make sure to catch up.”
It made an impression on me, and I feel like now I’m seeing it realized.
bemused
The trickle downers, the pee-ers, with the power and the $ push the bogus economic theory for their own benefit and to keep the masses, the peed on, bamboozled. I suspect a number of pee-ers must know exactly what they are doing and just don’t give a rats ass about anyone but themselves, other pee-ers may have convinced themselves that trickle down works because those mega dollar signs have a way of doing that but one would think that some of the loyal peed ons would start to get a clue. I think it takes a sledge hammer to get through to people with deeply entrenched beliefs.
The article “How Facts Backfire” in the Boston Globe recently was thoroughly depressing. Studies show that some people have a set of “facts” lodged in their minds and in the face of obvious, correct information, instead of changing their minds, they can entrench themselves even deeper.
Somehow, I ended up on the US Chamber of Commerce email list. If I join today, I will receive a free copy of Laura Ingraham’s new book, The Obama Diaries. I am told that Ingraham is a consistent voice for solutions for America to get back to work without bankrupting it.
Michael
@arguingwithsignposts:
This touches something interesting that nobody ever really wants to talk about.
In all the right wing howling about the evils of pension benefits, it occurs to me that the tradeoff of deferred compensation was that workers would forego making pay demands for present higher wages all so that executives and shareholders could take a huge chunk of revenues out in the here and now.
Nobody is framing these issues on the part of the poor working stiff as “you got your big chunk and promised to pay me in the future, and now you’re reneging on the bargain only after I’m older and can’t recoup my years of labor”.
Johnny B
@bleh:
This is spot on. The rich, including the traditional press, are making well over the medium income. They don’t give one hoot whether or not some guy who drives a bus for a living is falling further behind. Their response: “Look over there, it’s Lindsay Lohan!”
I would say that ignoring the economic needs of the middle class is a recipe for political disaster. But this is America, where most white Americans spend a disportionate part of their political energy (if any) embittered over how some black or brown person got a job or benefit they didn’t deserve.
The 2012 election is going to be a replay of 1968, with similar results.
D. Mason
@Michael:
Fixed that for you. I’m no conspiracy theorist but if anyone thinks these recessions and subsequent money/power grabs are a coincidence I have a bridge to sell.
Kryptik
We keep getting fed Alger-esque bullshit about how we can’t tax the rich higher because the economy hinges on them and solely them, and if only you worked harder you could join that storied 1%. But right now, it’s all about the folks swimming in money telling the poor to ‘pull yourselves up by your bootstraps’ while denying them the ability to buy boots.
Zandar
Why screw around with the stupid middlemen of the free market when the stupid middlemen of government wealth transference are already doing the job of giving them fat sacks of cash?
You don’t need “customers” and “products” and “business plans” when taxpayers are giving you trillions.
Davis X. Machina
We’re looking at the age-old maximin problem that conservatism has instead of an actual political philosophy: How much money can we take from the peasants before we have to sleep with one eye open? Get it wrong on the high side, and they slit your throat in the night — get it wrong on the low side, and you only have three houses, instead of four, and the third house is on Block Island instead of Nantucket.
ErinSiobhan
As a Canadian engineer who spent a lot of time working in northeastern USA pulp and paper mills, I was always astonished by the resistance to paying taxes. These were mills that were generally heading into or out of bankruptcy, many workers had lost all or part of their company pensions, medical insurance was slashed or lost by many, and large numbers of workers had permanently lost their jobs.
In spite of all this, there was still a surprising resistance to paying higher taxes to support a better social safety net. By far the most successful public relations campaign launched by the right has been to convince people that:
a.) Goverment is unable to provide assistance.
b.) Redistribution of wealth via transfer payments is evil.
Overcoming these prejudices (which largely don’t exist in Canada) is a fundamental problem.
Montysano
I’ve wondered the same thing: what is the end game? Where is the profit in gutting the middle class? For a while, I considered dark conspiracy theories involving the Illuminati and the Rothchilds. However, since the Iraq war, Katrina, etc, etc, I’ve come to suspect that it’s merely greedy short-sighted incompetent fuckups. I’m not sure which is worse…
Mike in NC
Cue the Republican Revolution of 2010-2012!
MTiffany
Yes! Because taxes are too high! Lower marginal tax rates now! Laffer curve! Government waste! Socialism! Birth certificate! Lipstick! Pitbull! Pay your doctor with a chicken! Aghhhhh! (dissolves into incoherent screeching and muttering…)
BigHank53
End game? What end game? Dude, have you seen the quarterly numbers?
The only people who have an endgame planned are the Christian Reconstructionists, who are as scary a bunch of fucks as you care to imagine. They’re just fine with bankrupting the country, because in the resulting chaos they plan on convincing everyone that holding another Constitutional Convention is a really good idea. Expect the New America to be a much less friendly place if you’re brown, gay, or have a uterus.
Read Jeff Sharlet’s story on the Family, and start shopping for canned goods and ammunition.
ErikaF
I have to wonder how much of our reluctance to discuss our finances has to do with the financial class warfare? How much do your coworkers make – do you know? How much does your plumber make (assuming he’s salaried)? How much does your hairdresser make? Since we have no real scale of job values or earnings, all we can use is our own experiences (which then becomes empirical knowledge and then reality to us).
When I was starting out 20+ years ago, I earned 16K a year. I manage to take some small vacations and buy a car on that salary. I know what I felt like earning that type of money and what I could do 20+ years ago. I don’t have much sense of how much 16K goes nowadays – I earn much more (and have much more stuff to go along with it). I know in my head that it must be hellacious to live on now, but my experiences tell me that I managed it (thanks to roommates) 20+ years ago.
Same thing with taxes – I don’t pay taxes as a lump sum (I adjust my withholding so I don’t have to pay) so I don’t see the amounts until I get my W2 – then it looks excessive. But I manage just fine without the tax money remaining in my account. How many of us explode about paying taxes when you see your W2 and are filling out the forms? Now how much do you explode when you receive your paycheck every week?
As I talk to folks who believe in the trickle-down tax cut philosophy, I see a lot of misplaced ignorance and misconceptions about actual earnings. I also see a lot of anger about earnings, and invariably the conversation turns to “When I earned that much, I supported a family”. They don’t see how times have changed and inflation has eaten up the gains they’ve made, or how their productivity hasn’t been rewarded.
celticdragonchick
Also read Michelle Goldberg’s “Kingdom Coming”.
Definitely buy ammunition.
There is historical precedent for a crazy but very vocal minority taking political power during a time of economic crisis and loss of foreign prestige. The real funny part is that this time, they will be calling us the Nazis as they try do it again…
Ab_Normal
@ErikaF:
The employee handbook for my current job says I can be fired if they catch me discussing my comp plan with a co-worker. I don’t think it’s unusual, either… it’s in management’s favor if we don’t know what our fellows are making.
Brachiator
Some economists and business writers have been pointing this out. No one has been listening. Even Reich, in the past, has written more about stimulating the economy by boosting consumption than about wage stagnation. Or they would pretend that credit and increasing home prices (before that bubble burst) could substitute for real wage declines.
The problem is accelerating. I haven’t seen data yet from other parts of the country, but in California, both the public and private sector are increasingly using furlough days to cut wages. Other employers are just flat out cutting wages and benefits, like the poster who noted salaried workers being converted into hourly employees.
Trickle down was always BS. But some people with big bucks were always shortsighted, figuring that as long as they were doing OK, someone could be paid or bought off to make sure that their lives continued in comfort. Also, those with money to invest don’t have to invest domestically. Profit does not respect borders.
Ironically, this tends to preserve the status quo. If you don’t have jobs, economic productivity, a broad based economy and economic mobility, redistributing wealth simply masks weaknesses in the society.
thomas
@PaulW:
“The upper class is winning the class war. The battlefield has been rigged and the media cheerleaders are mostly rooting for the rich.”
that’s because the media cheerleaders are the rich – not the super rich but since they’re making above the $250K cut they don’t want to share.
F them.
Joe Bauers
@Michael:
Reminds me of that line from “Animal House”: “You fucked up! You trusted us!”
Mr Furious
Because Henry Ford was a soshulist, that’s why.
There’s no one in finance or even at the executive level of any major corporation who is worried beyond the next quarter’s earnings statement. These fuckers are all about raping whatever company they’re currently at, grabbing everything they can shove in their pockets, and moving on to the next one.
Henry Ford would be laughed off Wall Street for wanting to eschew immediate profit for building a long-term business model.
ErikaF
@Ab_Normal: Exactly. It’s to management and thus business’ interests to ensure that we don’t know what our coworkers are making. This way we don’t have empirical evidence of undersalary (or oversalary for certain people), and can’t sue or petition for a more appropriate wage. The only people that know what coworkers make are the upper crust (upper management = upper class). I’m not saying it well, but when people don’t know the facts, they’ll only make up the facts based on their own past experience, and those facts don’t tend to match up with current reality. This is where a lot of the misplaced anger and misconceptions come from.
It’s actually geared into our business culture for us to not know the financial status quo and reality. Then it’s easy to be manipulated.
Mike from Philly
I’m sure there’s a connection between the continued screwing of the middle classes and yesterday’s thread about how nobody seems to care that Obama has passed watered down financial reform…but I can’t quite grasp it.
Ab_Normal
@ErikaF: I fight it in my own small way, by “over-sharing” with my compatriots. But not when management’s looking… I’m not that brave.
Remember November
Let them eat Big Macs!
geemoney
@ErinSiobhan: I would also add that the vilification of unions is a large part of that. I am amazed at how people in the US hate unions.
Quest
Did you folks fail Economics 101? It is a matter of supply and demand.
dhd
Can you say “deflationary spiral”, kids? Good, I knew you could…
Mr Furious
@geemoney: Word.
swellsman
Every time I read something like this, I am reminded of something Jonathan Schwarz wrote over a “A Tiny Revolution” way back in August, 2008 (http://webcache.googleusercontent.com/search?q=cache:LdgdT6UTVuYJ:www.tinyrevolution.com/mt/archives/002508.html+insane+billionaire+%22communist!%22&cd=1&hl=en&ct=clnk&gl=us):
Almost all political conflict, especially in the US, boils down to a fight between the Sane Billionaires and the Insane Billionaires. It generally follows this template:
INSANE BILLIONAIRES: Let’s kill everyone and take their money!
SANE BILLIONAIRES: I like the way you think. I really do. But if we keep everyone alive, and working for us, we’ll make even more money, in the long term.
INSANE BILLIONAIRES: You communist!!!
So from a progressive perspective, you always have to hope the Sane Billionaires win.
Brachiator
@Quest:
Yes. He who controls the supply can make the demands.
Remember November
@geemoney: they hate them because caring, kind and compassionate ceo’s have hypnotized the American populace into believing unionists are greedy thugs, unlike people like Ken Lay, or Lloyd Blankfein
Judas Escargot
Henry Ford would be laughed off Wall Street for wanting to eschew immediate profit for building a long-term business model.
This.
Which makes me wonder… if the raise-capital-to-fund-production-to-generate-profit model is no longer operative… why is Wall Street still necessary?
kdaug
Like Carlin said, there’s a club, and you ain’t in it.
cat48
@SIA Consider it walked back. I apologize for the misunderstanding. I notice Jonathan Alter seriously says this a lot that no one showed up to fight for HC, Dems, or Obama at the summer Townhalls. It seems to really bother him. Me too some, but I don’t usually say anthing because I wouldn’t have gone to a townhall alone here in SC because Dems here weren’t interested in doing that. Lindsey & I know Deminted would have ejected me in all probability if a local didn’t kill me first. : )
muddy
What is this “inflation” of which you speak? The gov’t told people in their social security checks that there is no inflation, so, no rise for you! But I guess they base inflation on houses and gasoline, not food or meds. Too bad for you, old and sick peeps!
mnpundit
Because the Obama administration is wedded to the status quo.
Mr Furious
@Judas Escargot:
Because Vegas is a long flight from the Northeast, and doesn’t pay a salary.
Wall Street is now nothing more than a casino—but even more stacked in favor of the house.