Wage Depression
There has been a lot of partisan tit-for-tat bickering over the strength, nature and yes, even the reality of the current economic expansion.
It's no secret that Bush has been actively talking up the economic recovery recently, saying the economy is in "high gear".
Equally apparent is Kerry's downplaying of the current economic expansion. Kerry is - as late as last week at least - invoking comparisons to the Great Depression of the 1930s.
Leaving aside the long term issues that ever-widening deficits and lack of spending control is likely to have, what is the current and likely near term state of the economy? How is the state of the economy affecting wage workers?
I'll make a meager and incomplete attempt to answer these two questions(please bear in mind I'm an engineer, not an economist).
I'd say it's a mixed bag. This rising tide hasn't lifted all boats. In fact, while corporate profits have been quite robust - startlingly so - the wage worker has actually lost ground.
Where's my evidence, you ask. From the Bureau of Economic Analysis. Right from the Feds.
As far as their respective statements on the economy, both Bush and Kerry are right, and also wrong.
By the numbers:
I wish that I had ready access to historical 'real' wage data to back up what I have heard cited by commentators on the Left and a few on the Right.
That position is this: growth in corporate profits combined with a drop in wage and salary incomes suggest that the recovery has a narrow base, with most American consumers only able to increase their purchasing power through debt.
Personal debt levels are either at, or within a fraction of a percent of all time highs in the U.S.
This WaPo piece from January of this year highlights both the record levels of consumer debt, and also points out that personal debt will rise along with interest rates.
In summation, both men are right on some key elements of the economy as it is today, and they are also demonstrably errant in their rhetoric about others.
*******************************************
(I'll leave the bigger picture stuff to Brad DeLong and others :)
It's no secret that Bush has been actively talking up the economic recovery recently, saying the economy is in "high gear".
Equally apparent is Kerry's downplaying of the current economic expansion. Kerry is - as late as last week at least - invoking comparisons to the Great Depression of the 1930s.
Leaving aside the long term issues that ever-widening deficits and lack of spending control is likely to have, what is the current and likely near term state of the economy? How is the state of the economy affecting wage workers?
I'll make a meager and incomplete attempt to answer these two questions(please bear in mind I'm an engineer, not an economist).
I'd say it's a mixed bag. This rising tide hasn't lifted all boats. In fact, while corporate profits have been quite robust - startlingly so - the wage worker has actually lost ground.
Where's my evidence, you ask. From the Bureau of Economic Analysis. Right from the Feds.
As far as their respective statements on the economy, both Bush and Kerry are right, and also wrong.
By the numbers:
Corporate profits have risen ~62.2% since the peak, compared to average growth of ~13.9% at the same point in the last eight recoveries that have lasted as long as the current one. This is the fastest rate of profit growth in a recovery since World War II.This certainly bolsters Bush's statements about the current state of the economy when he talks about "company profits" and so forth. I have no qualms about that. It's accurate.
Total labor compensation has also turned in a historic performance: growing only 2.8%, the slowest growth in any recovery since World War II and well under the historical average of 9.9%.This affirms Kerry's position that the economy is currently in a rather weak phase. There is independently verifiable data to make comparisons on some data sets between the economy today, and the Great Depression. Again, I have no issue with this part of Kerry's position. It is supported by facts available to anyone.
Most of the growth in labor compensation have not gone toward larger paychecks, they have gone into non-wage items. Rising health care costs and pensions account for the majority of the growth.
Growth in wage and salary income - the primary barometer of the health of wage workers - has been negative for private sector workers: -0.6%, versus the ~7.2% gain that is the average increase in private wage and salary income at this point in a recovery.
I wish that I had ready access to historical 'real' wage data to back up what I have heard cited by commentators on the Left and a few on the Right.
That position is this: growth in corporate profits combined with a drop in wage and salary incomes suggest that the recovery has a narrow base, with most American consumers only able to increase their purchasing power through debt.
Personal debt levels are either at, or within a fraction of a percent of all time highs in the U.S.
This WaPo piece from January of this year highlights both the record levels of consumer debt, and also points out that personal debt will rise along with interest rates.
In summation, both men are right on some key elements of the economy as it is today, and they are also demonstrably errant in their rhetoric about others.
*******************************************
(I'll leave the bigger picture stuff to Brad DeLong and others :)
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