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“Keeping Their Eyes On The Prize”: Democrats’ No. 1 Job; Remind Voters That American Wages Have Flatlined

For the moment, the Democrats have resumed their time-honored posture of arguing about trade policy. It’s an important issue, and one on which I’m not sure where I come down. But as they prepare to rip each other’s flesh, they might bear in mind it isn’t the issue. The issue, as I wrote two weeks ago in urging Hillary Clinton to go big, is wage stagnation. I offer this up as a timely public-service reminder: Remember, folks, what you agree on.

As I noted in the go big column, wages have been in essence flat for earners—up 6 percent (adjusted for inflation)—in the middle of the income scale since 1979. For the top 1 percent, compensation has risen about 140 percent since the fateful year. This needs to be the issue of this campaign. If American voters don’t know these 6 percent and 140 percent figures November 8 next year, Hillary Clinton and the Democrats will have done something very wrong.

Economists choose 1979 as the cutoff year because, looking back over the numbers, that’s when the flattening started. It’s also about when compensation at the top started soaring (a little later, actually). Until the early to mid-1980s, Wall Streeters and corporate lawyers and actors and university presidents and star athletes made more than the rest of us, but they didn’t make gobs more.

For example, the average baseball salary doubled, up to around $370,000, from 1981 to 1985. The average wage in that same time frame went from $13,773 in 1981 to $16,822 in 1985, an 18 percent increase. Not bad, better than average; but not double by a long shot. I’m not saying the juxtaposition of these numbers proves anything more than it proves. But it is certainly representative of what was happening to American wages then and has been happening since.

Another way of looking at it: The average ballplayer went from making about 12 times the average American to 22 times. Today, incidentally, it’s 108 times, $4.25 million to around $39,000.

So what we’re gonna do right here is go back, way back, as an old song had it, to the year of Apocalypse Now and Get the Knack and those hideous Pittsburgh Pirates uniforms  that so offended my aesthetic sensibilities that I had no choice but to cheer against the team I’d grown up worshipping. Let’s ask: What if the wage structure in the United States today were the same as it was in 1979?

Larry Summers asked the question in the Financial Times back in January. The bottom 80 percent of earners, he wrote, would have $11,000 more per family, and the top 1 percent would have $750,000 less. In the wake of Summers’s column, the folks at NPR’s Planet Money took it one step further and calculated the increased (or decreased) income for households at several points along the wage structure. It’ll pop your little eyes.

The poorest wage-earners, at $12,000, would be making $3,282 more. That’s a 27 percent increase. Those at $30,000 would be making $6,928 more (23 percent). Those at $52,000 would be getting $8,752 more (16.8 percent). For those at $84,000, the increase drops off, to $5,834 more (7 percent). But it kicks back up for those at $122,000, to $17,311 (14.2 percent). And finally, those in the top 1 percent, at $1.41 million, would see a decrease in earnings of $824,844, or a whopping 58 percent.

Now before we go any further—no, no one today is talking about anything as confiscatory as wiping out 58 percent of the top 1 percent’s earnings. That isn’t how it’s going to work anymore, with top marginal tax rates of 76 percent (which does not mean that the government took three-quarters of someone’s money; go look up the concept of “marginal” if you don’t get this).

But the wage structure is a function of a whole host of other policies and practices that have nothing to do with marginal tax rates. It has to do, yes, with the minimum wage. It was $2.90 in 1979. Adjusted for inflation, that would be $9.38 today instead of the actual $7.25, which is a 23 percent decline for those workers, and minimum wage is generally thought to have knock-on effects at least a third of the way up the wage chain. It has a lot to do with corporate culture: In 1979, CEOs at the top few hundred corporations made about 28 times the average worker’s salary; now they make more than 200 times. There were 15.1 million private-sector union workers  in the United States in 1979; last year, there were 7.35 million. And in 1979, Washington oversaw a lot more in public investment than it does today, and those dollars by and large went into real things, from bridges to scientific research, instead of swaps and derivatives.

Now, 1979 was a bad year in some important ways—inflation, hostage crisis—so I’m not saying I think it would be the world’s greatest idea for the Democrats to campaign on bringing back 1979. It’s not about the year per se. That just happens to be the year the thing started happening. And the thing is flat wages for most people who work for a living.

The trade fight has to be played out, and it seems that the unions and the Warren wing are probably going to lose, because the president will get enough votes from Republicans and moderate Democrats. And of course it’ll be interesting to see how Clinton plays it. Whichever position she takes, we can be sure she’ll do it cautiously.

So dust will be kicked up over that. It has to be. The differences are real. But comparatively, the differences are small. Democrats must keep their eyes on the prize. “Who cares more about increasing the wages of working Americans?” is a debate question the Republicans can never win. The Democrats have to make sure the election is about that question.

 

By: Michael Tomasky, The Daily Beast, April 24, 2015

April 29, 2015 Posted by | Democrats, Minimum Wage, Wage Stagnation | , , , , , , , | Leave a comment

GOP Jobs Plan: Old Ideas, Fancy New Clip Art

Academic books pack about 600 words to a page. Normal books clock in around
400. Large-print books, you know, the ones for kids or the visually impaired — fit about 250. The House GOP’s jobs plan, however, gets about 200 words to a page. The typeface is fit for giants, and the document’s 10 pages are mostly taken up by pictures. It looks like the staffer in charge forgot the assignment was due on Thursday rather than Friday and cranked up the font to 24 points and began dumping clip art to pad out the plan.

Which is odd, because there’s nothing in this plan that hasn’t been in a thousand other plans. When I asked David Autor, an economist at the Massachusetts Institute of Technology and a specialist on labor markets, to take a look at the substance, he pronounced it a classic case of “what Larry Summers would call ‘now-more-than-everisms.”

“Here’s how it works,” Autor wrote in an e-mail. “1. You have a set of policies that you favor at all times and under all circumstances, e.g., cut taxes, remove regulations, drill-baby-drill, etc. 2. You see a problem that needs fixing (e.g., the economy stinks). 3. You say, ‘We need to enact my favored policies now more than ever.’ I believe that every item in the GOP list that you sent derives from this three-step procedure.

“That’s not to say that there are no reasonable ideas on this list. But there is certainly no original thinking here directed at addressing the employment problem. Or, to put it differently, is there any set of economic circumstances under which the GOP would not actually want to enact every item on this agenda? If the answer is no, then this is clearly now-more-than-everism.”

If you read Autor’s answer and then guessed at what’s included in the plan, you’d probably get it about right. The GOP wants a separate congressional vote on every significant regulation. It wants to cut taxes for corporations and small businesses led by individuals. It wants a tax break on profit that corporations earn overseas. It wants to pass pending trade agreements, increase domestic production of oil and enact spending cuts. The only two proposals you couldn’t have guessed sight unseen are patent reform and visas for the highly skilled.

But even if you think every item on that agenda is a grand idea, this isn’t exactly fast-acting medicine. “At best, an agenda like this is meant to improve long-term growth by a couple of tenths of a percentage point,” says Larry Mishel, president of the Economic Policy Institute. “It takes a really long time to move the dial. It’s not a response to a cyclical downturn.”

That’s okay, because the document doesn’t believe in cyclical downturns. It only believes in deviations from the Republican agenda. The first page sets out the GOP’s narrative of the unemployment crisis. See if you recognize what’s missing here: “For the past four years, Democrats in Washington have enacted policies that undermine these basic concepts which have historically placed America at the forefront of the global marketplace. As a result, most Americans know someone who has recently lost a job, and small businesses and entrepreneurs lack the confidence needed to invest in our economy. Not since the Great Depression has our nation’s unemployment rate been this high this long.”

Four years ago, of course, George W. Bush was president. And he was, as you might remember, a Republican, not a Democrat. As for Wall Street, well, Wall Street who?

But it’s not just that you could read this jobs plan without knowing the financial crisis ever happened. You could read it without knowing the past decade ever happened. As Mishel says, “If lower taxes and less regulation was such good policy, then George W. Bush’s economy would have been a lot better. But under Bush, Republicans cut taxes on business and on investors and high-income people, and they didn’t add many regulations, and that business cycle was the first one in the postwar period where the income for a typical working-class family was lower at the end than at the beginning.”

That, however, is the agenda the House GOP thinks we need. And now more than
ever.

 

By: Ezra Klein, Columnist, The Washington Post, May 26, 2011

 

 

 

May 29, 2011 Posted by | Businesses, Class Warfare, Congress, Conservatives, Corporations, Democrats, Economic Recovery, Economy, GOP, Government, Ideologues, Ideology, Jobs, Lawmakers, Middle Class, Politics, Regulations, Republicans, Right Wing, Tax Loopholes, Taxes, Unemployed, Unemployment, Wall Street, Wealthy | , , , , , , , , , | Leave a comment

“Hypocrisy,” Say Morons

Elephants and facts just don't seem to go together

Stephen Moore of the Wall Street Journal editorial page, simultaneously reporting and propagating the Republican line du jour, accuses President Obama of a fiscal flip-flop:

Republicans plan to hammer the debt and deficit hypocrisy theme in the days and weeks ahead. White House economic adviser Larry Summers has lectured Congressional Democrats that now is a good time for the federal government to borrow to “stimulate demand” because interest rates are low. Yet the President keeps insisting that fiscal responsibility is an important priority of the White House. Republicans are having a field day. A recent email blast reminded supporters of a statement made by President Obama on November 18th: “It is important though to recognize if we keep on adding to the debt, even in the midst of this recession, that at some point, people could lose confidence in the U.S. economy in a way that could actually cause a double dip recession.”

Fiscal schizophrenia reigns in the White House.

Okay, let’s go back and read what Obama said last November 18th:

There may be some tax provisions that can encourage businesses to hire sooner rather than sitting on the sidelines; so, we’re taking a look at those. I think it is important though to recognize that if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the US economy in a way that could actually lead to a double-dip recession.

And so one of the trickiest things we’re doing right now, is to on the one hand make sure the recovery is supported and not withdraw a lot of money either with tax increases or big spending cuts – and states, for example, need a lot of support to keep hiring teachers and so forth – at the same time, making sure that we’re setting up a pathway longterm for deficit reduction.

Got that? Obama was saying the same thing he’s saying now. In the short run, we have an economic crisis that requires deficits. In the long-run, we’ll need to reduce the deficit. (And the long-term costs of temporary stimulus are pretty low.) Indeed, taking steps that increase long-term deficits could actually hurt in the short run. These are not contradictory ideas. Indeed, in his November interview, Obama endorsed the very notion (helping states mitigate budget cuts for teachers and other things) that he’s pushing for right now.

Moore and the Republicans think it’s “hypocrisy” to be for high deficits during a liquidity crisis but against them during a recovery. Really. The whole Republican message is based on not understanding this distinction.

By:  Jonathan Chait-The New Republic-June 18, 2010

June 18, 2010 Posted by | Economy | , , , , , , , , | Leave a comment

   

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