The Sunday Post-Dispatch lead editorial, Connecting Dots, does just that in this excellent analysis of this summer’s news stories and the economy of the last 40 years.
This analogy of wage stagnation during that time rings true,
What shows up in the news is often part of the same story, and this is what it is:
“According to every major data source, the vast majority of U.S. workers — including white-collar and blue-collar workers and those with and without a college degree — have endured more than a decade of wage stagnation. Wage growth has significantly underperformed productivity growth regardless of occupation, gender, race/ethnicity, or education level.
“During the Great Recession and its aftermath (i.e., between 2007 and 2012), wages fell for the entire bottom 70 percent of the wage distribution, despite productivity growth of 7.7 percent.”
This quotation is from “The State of Working America,” published annually by the Economic Policy Institute. The think-tank leans left, but the numbers don’t.
The wage-stagnation trend actually dates to 1973. The nation was riveted on Watergate, but forces were at work that would create problems even larger than Richard Nixon’s. Wages would grow in a few years in the late 1990s, but that turned out to be an aberration. The long post-World War II growth of middle-class prosperity peaked in 1973.
Why? Uncertainties about oil supplies and hyper-inflation marked the first few years, but beginning with the Reagan administration, America began redistributing income. Jobs used to be the way income was distributed, and it worked well: Between 1946 and 1973, overall per capita income tracked the GDP, increasing 2.4 percent a year.
But a long series of tax and public policy decisions has created an America that valued wealth far more than work. Today America has twice the wage income that it did in 1973, but that income is held in far fewer hands.
Put another way, the average guy making $44,000 in 1973 would be making $97,000 today if wages had grown at 2 percent a year. Instead he’s still making $44,000. Somebody else has his extra $53,000.
So now connect the dots: Walmart, built in part on low wages, is now enduring the blowback. The working poor can’t afford to buy as much, even at low, low prices. Henry Ford paid a decent wage so his workers could afford to buy a Model T. The lesson has been lost.
This situation can be solved. Workers supporting each other as we try and get our share of that $53,000 back. This can be accomplished through giving workers a voice through unionization as well as political policies that reward work and productivity while closing the escape hatch created by unsustainable trade policies. Let’s get started.