Over the past decade, the failure of the economy to raise wages has
become undeniable. Until recently, both corporate profits and the
nation's productivity -- to which economists have traditionally linked
wages -- have risen strongly. Although the value of corporate benefits
such as health care have risen somewhat faster, the median full-time
worker's wage still amounts to some $38,000 a year, only marginally
higher than it was in 2001. Median family income is about $1,000 lower
than it was then.
This situation may now be getting more attention, but it is not new
to the 2000s. The real wages and salaries of the median full-time male
worker in his thirties with a high school diploma are down steeply from
levels reached at the beginning of the 1970s. But even those with
college degrees have not fared especially well. For example, for men
between twenty-five and thirty-four with college degrees, median
earnings, according to Census Bureau data, are up only marginally, by
about 3 percent. For women of the same age and education, median
earnings have risen more rapidly, by about 20 percent, but this is an
annual rate of gain of only 0.5 percent. And despite the increase,
women working full-time with similar educations still make only about
three quarters of what men with similar educations earn. Family incomes
have risen modestly over this period largely because spouses work many
more hours.
-- From the NY Review of Books' assessment of The Big Squeeze: Tough Times for the American Worker
You can read the first chapter of the book here, or the NYT review on May 28, 08. The review's ending is worth attention:
[T]he components of an efficient social safety net are reasonably well
understood. For instance, we could easily afford a single-payer health
system like the one in France, which covers everyone and delivers
better health care for about half the amount we now spend per capita.
We could easily afford to supplement the American Social Security
system, which transfers income from workers to retirees, by
establishing a national retirement savings plan in which a portion of
each worker’s wages was deposited in a tax-sheltered investment
account, enabling families to take full advantage of the miracle of
compound interest. We have ample resources to supplement lagging wages
by raising the Earned Income Tax Credit, which Ronald Reagan called the
most effective antipoverty program ever devised by Congress. And we
could easily reduce the college-tuition burden on low-income families
by expanding the existing program of Pell Grants.
Skeptics
invariably counter that the taxes needed to pay for an expanded social
safety net would cripple the economy by weakening people’s incentives
to work hard and take risks. Yet there are many ways to raise
additional tax revenue that would actually cause G.D.P. to grow rather
than shrink. A tax on carbon and other environmental pollutants, for
example, would raise substantial revenue and yield a cleaner, more
sustainable environment. Congestion taxes would save millions of hours
currently wasted in traffic jams. A progressive income tax that exempts
savings would divert billions of dollars from wasteful mine-is-bigger
spending contests.
As Greenhouse’s interviews vividly remind us,
no economic system can prosper in the long run if people who work hard
and play by the rules cannot meet their basic needs.
I may have to get over my needlework store aversion to make a sampler: No economic system can prosper in the long run if people who work hard
and play by the rules cannot meet their basic needs.
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