Friday, August 29, 2008

The US economy since 2000 from the perspective of working families

Brad DeLong offers us a foretaste of some figures from the Economic Policy Institute's upcoming "State of Working America" report. Other estimates will differ in detail, but the basic patterns accord with pretty much all serious analyses. The overall economy has been growing (though not nearly as much as during the Clinton years, perhaps coincidentally), but the benefits have not been widely spread around.

Since 2000, overall national output (GDP) has gone up 18%, productivity has gone up 19%, median weekly earnings of full-time workers have gone up .2%, and median income has gone down 1%. (Meanwhile, as we know, the cost of gasoline has been going up, many families have seen their home equity evaporating, and more and more of them are going deeper into debt--not to mention a pervasive increase in economic insecurity even for people who are doing OK.)

So what is everyone whining about?

=> What happened to median household income since 2000? Here's a graphic summary by Paul Krugman:

=> Of course, median income is a summary measure which doesn't tell us how that overall national income is distributed. So who has actually been getting the payoff from economic growth? Back in March, Lane Kenworthy summed up the longer-term picture this way:
The chart shows average inflation-adjusted incomes of the poorest 20%, middle 60%, and top 1% of households since the 1970s. The incomes include government transfers and subtract taxes. For the bulk of American households, incomes have increased moderately or minimally. For those at the top, by contrast, they have soared. [pdf version is available here]

The rest of the top 20% have also been doing well, of course--though the gains have been mostly concentrated in the top 10%, and ever more spectacularly as one gets to the top 5%, 1%, and .1%. But those people have been whining, too. (Just read the Wall Street Journal editorial page.)

=> A sober and serious discussion of why all this has been happening, and what should be done about it, ought to be high on the agenda of political discussion. Curiously, it's not.

--Jeff Weintraub

P.S.  Richard Sennett, in an e-mail communication, suggests a useful addendum:
Thanks for this. One thing you want to add to this, a complementary emphasis, is what has happened to work itself over the course of the last 8 years -- the focus of my books The Culture of the New Capitalism and The Corrosion of Character. Inequality is increasing, but so is unease about what people actually do when they go to work. To wit:

Changes in the organisation of modern work have weakened workers' experiences of autonomy and of procedural justice in the work-place; more, American workers are losing the "skills race," in Robert Reich's words, to equally or to more qualified workers in India, Brazil, Israel, and parts of Eastern Europe. Combined, these changes produce increased insecurity on the job. The Bush administration did not cause these changes, but it did weaken the government's willingness to address and redress them; it has done nothing to help reinvent work for American workers, or to provide rights to workers, or to invest in improving their skills. I was saddened to note that the platform of the Democratic Party also avoids engaging these issues; the crisis in the economy is treated simply as a question of finance capital.

If you do feel the issue of labor should be addressed, how could we get this discussion going in the public realm?
An excellent question.