Friday, January 9, 2015

A continued real moderation in wage growth

That's how the business press describes declining wages. "A continued real moderation in wage growth" is part of a quote from Burt White, chief investment officer for LPL Financial in Boston, in a Reuters article about today's jobs report that said wages declined in the last quarter. In the same article White calls the decline in our incomes "muted wage growth."

Nowhere in the article, of course, or in any mainstream media outlet, does it ever say wages haven't risen in real terms since Reaganomics was adopted as our official economic model more than 30 years ago, which is probably why most Americans aren't aware of it.

An entire language has been developed to conceal what's been done to us. You'll often hear the term "productivity," which is a much watched economic indicator and always has be increasing for Wall Street to be happy. "Productivity" is simply how much they wring out of us. It's the Capitalist's measure of how much wealth a worker costs you compared to how much wealth the worker creates for you. To a Capitalist, it's how much you make off an employee. The rate of Capitalist exploitation, to get technical about it.

They don't often go into what "productivity" means or what it's really measuring. Occasionally someone will say that increases in productivity are due to more efficiency, more technology, more automation, or what not, without ever offering any evidence. They never say it's because workers are being paid less than before. The never say worker pay has barely kept pace with inflation (meaning it hasn't increased in real terms).

And if wages aren't driving inflation, other things are, like the prices we have to pay to buy what we're producing at less and less cost to the Capitalist. Which helps explain why wealth inequality is worse than it was in the 1920s, the era of big tycoons and workers sleeping next to their machines.

Here's a chart from the Economic Policy Institute that demonstrates what this post is about better than I can. It shows income and productivity rising in tandem during the post war era when the US working class achieved the highest standard of living of any working class in the history of the world. Then Reaganomics came, at which time productivity kept rising, but wages didn't go up any more.

Note: This shows the lines parting before Reagan came into office in 1980. While Reagan is credited with popularizing the economic model that bears his name and with the shift in political climate that made its implementation possible, it began before he became president. For information about that search "Powell memo." Reagan's predecessor, Jimmy Carter, a socially liberal president, actually began the process by implementing significant deregulation. The chart however reflects the deep recession during Carter's term. High unemployment leads to short term lowering of wages.

The stagnation of wages through good times and bad is amply demonstrated by the chart.

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