Wage stagnation, plus more on inequality | Michael Tomasky

Here you will find a new issue brief from the good folks at the Economic Policy Institute - yes, a progressive think tank, but (or shouldn't that just be an "and"?) a highly respected one whose experts are quoted and cited everywhere. I think this is worthy of your attention because it highlights the fact that the question isn't whether public employees are doing better than their private-sector counterparts, but why all of them are being screwed.

From the report:

• U.S. productivity grew by 62.5% from 1989 to 2010, far more than real hourly wages for both private-sector and state/local government workers, which grew 12% in the same period. Real hourly compensation grew a bit more (20.5% for state/local workers and 17.9% for private-sector workers) but still lagged far behind productivity growth.

• Wage stagnation has hit high school–educated workers harder than college graduates, although both groups have suffered—and a bit more so in the public sector. For example, from 1989 to 2010, real wages for high school-educated workers in the private sector grew by just 4.8%, compared with 2.6% in state government. During the same period, real wages for college graduates in the private sector grew 19.4%, compared with 9.5% in state government.

• The typical worker has had stagnating wages for a long time, despite enjoying some wage growth during the economic recovery of the late 1990s. While productivity grew 80% between 1979 and 2009, the hourly wage of the median worker grew by only 10.1%, with all of this wage growth occurring from 1996 to 2002, reflecting the strong economic recovery of the late 1990s.

• The fading momentum of the 1990s recovery failed to propel real wage gains for college graduates employed by private-sector firms or states from 2002 to 2010, despite productivity growth of 20.2% over the same period.

So you can see from these points that public-sector workers have indeed done better than private-sector ones in terms of non-wage compensation in recent years (the first bullet point). Okay, fair enough, so there is indeed something to the argument that public-sector employees have done pretty well benefit-wise, which your correspondent has long acknowledged.

But the rest of it tells a larger story. Getting private-sector median-wage earners livid at their public-sector counterparts while they have confiscated ever larger piles of wealth since 1980 has been among the top earners' neatest tricks.

But wait - they haven't done it themselves. It's our political system that has done it. I was trying to say this in the Kardashian post, but now let me say more.

Economists point to many reasons for the growing income inequality in the US. This Wikipedia entry is actually pretty accurate and thorough.

I'm not so interested in the concrete causes. That's a question of economics. What I am interested in is the question of why, upon seeing such a dramatic growth in inequality for whatever reason, we don't do more about it. And that is a question of politics.

There was a time when the Kardashians of the world - and I don't mean to pick on them; choose your symbol, Wall Street fat cats or NBA stars or whatever - made a fraction of what they make now. A fraction. Yet they were still rich. Very rich indeed.

And American society as a whole thought: well, they should give more of that back. We will tax them more and distribute goods more equitably. That was done, of course, through politics.

Through the last 25-odd years, politics in the US has largely looked after the interests of the top 1%, or maybe 5%. And so we have even more inequality. The US is the outlier among advanced countries; far more inequality than Britain or Germany etc. The explanation for that is political, not economic. Our political system - the modern right, the GOP, the thousands of handsomely remunerated lobbyists - exists to sustain inequality and indeed to exacerbate it.

People of the middle class, private and public, are being robbed in plain daylight. It is not sustainable. I understand our conservative commenters taking issue with this, but I was surprised the other day that even many of you on my side seem resigned to this being the way things naturally are. It isn't. From the Wikipedia entry cited above:

As I've often said, this is not the type of thing which a democratic society - a capitalist democratic society - can really accept without addressing.

The speaker was discussing inequality. It was Alan Greenspan. Not that he did much about it, but if even he thought it, then it's not some radical Kenyan point of view.

US domestic policyMichael Tomasky
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