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NYT Today - The Wage Stagnation Consensus Grows Ever Stronger
Last month, Rob and Simon wrote a memo here arguing that there was a growing progressive consensus on wages. We've noted further bad news since. The point was that the whole progressive family could gather round the issue of declining real wages for most Americans, and combine that with the campaign to raise the minimum wage, as a way to get a grip on the various complicated ways in which the Bush economy wasn't delivering for most americans. It turns out we were wrong. It is now clear this isn't just a progressive consenus. This long piece in the New York Times today makes clear that evidence of stagnant incomes is so overwhelming that this is now a national consenus too. And in particular we're delighted they picked up that this is now very likely to be the first post-war expansion in which median wages did not rise.
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.
It is important to note that the Repbulican response is changing rapidly over time. There have been four phases: dishonesty, denial, assertion and admission. We began with outright intellectual dishonesty when the President argued that (nominal) wages were rising. It then morphed into denying it was structural problem, and emphasis of the lag effect to catch up with productivity. This changed again at Bush's weekend powwow, where he asserted the economy was good, without addressing this issue. In recent weeks - following the front page story in the FT - it is a mixture of admitting there is a problem and hoping for the best. And then on Friday we had Bernanke, speaking in Central banker code but speaking publically nonetheless:
In a speech on Friday, Ben S. Bernanke, the Federal Reserve chairman, did not specifically discuss wages, but he warned that the unequal distribution of the economy’s spoils could derail the trade liberalization of recent decades. Because recent economic changes “threaten the livelihoods of some workers and the profits of some firms,” Mr. Bernanke said, policy makers must try “to ensure that the benefits of global economic integration are sufficiently widely shared.”
Republicans can point to the unerlying wages problem being a long-term trend, at least for male workers. But they simply cannot avoid the fact that the issue is beginning to bite because of a set of interconnected "made under Republican leadership" issues they are doing noting to fix. In no particular order, these are: slowing housing values, sharply rising consumer debt, fast price hikes on commodites (.g. oil) and non-tradeable goods (e.g. college education); and the crisis in the funding of pensions and healthcare cost for American business. On these issues, it is clear it doesn't matter if the GOP chose denial or hoping-for-the-best: noting much is going to change. And the NYT piece backs this up:
Until the last year, stagnating wages were somewhat offset by the rising value of benefits, especially health insurance, which caused overall compensation for most Americans to continue increasing. Since last summer, however, the value of workers’ benefits has also failed to keep pace with inflation, according to government data.
Which is why NDN over the coming weeks will be putting this issue at the top of our agenda in the run-in to the elections.