Bending the Third Rail

Because We Should, We Can, We Do

Friday, June 16, 2006

Redundant Economic Post

But after 2000 something changed. The pace of productivity growth has been rising again, but now it seems to be lifting fewer boats. After you adjust for inflation, the wages of the typical American worker—the one at the very middle of the income distribution—have risen less than 1% since 2000. In the previous five years, they rose over 6%. If you take into account the value of employee benefits, such as health care, the contrast is a little less stark. But, whatever the measure, it seems clear that only the most skilled workers have seen their pay packets swell much in the current economic expansion. The fruits of productivity gains have been skewed towards the highest earners, and towards companies, whose profits have reached record levels as a share of GDP.

What happened in 2000? Bush moved in to the White House and along with him came the cadre of NeoCons bent on raiding everything they could while dismantling the government of the people, by the people, and for the people. Note the sentence "In the previous five years, they rose over 6%." That was under Bill Clinton. That was also during a period of time when the administration balanced the budget and started to pay down the deficit.

America: where the gap between rich and poor is bigger than in any other advanced country.
America: where workers now produce over 30% more each hour they work than ten years ago.
America: where parental income is a better predictor of whether someone will be rich or poor in America than in Canada or much of Europe.
America: where over 70% of Americans support the abolition of the estate tax (inheritance tax), even though only one household in 100 pays it.

During the 1950s and 1960s, the halcyon days for America's middle class, productivity boomed and its benefits were broadly shared. The gap between the lowest and highest earners narrowed. After the 1973 oil shocks, productivity growth suddenly slowed. A few years later, at the start of the 1980s, the gap between rich and poor began to widen.

The 1950s and 60s were also the years of peak membership in labor unions.

Written at 5:00 AM by Lynne.

2 comments

2 Comments:

Anonymous said...

Me thinks the majority of Americans have no idea what estate (death!) tax means. :mrgreen:

7:39 AM

Lynne said...

I know they don't. The Republicans have done an excellent job of framing the issue to suit themselves, as usual.

9:32 AM

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