(I am pleased to publish this post by guest-blogger Eugene Mirabelli. Gene is the author of six novels, plus short stories, poems, many journalistic pieces and numerous book reviews. For many years, Gene was the editor and creative force behind Critical Pages, the online social and cultural commentary site that provided the inspiration for my own modest blogging efforts. I’m also honored to say that I was Gene’s student thirty years ago at SUNY Albany. If I remember correctly, Gene was in his late teens and I was a five year-old sophomore.)
Let’s enjoy the good news. We’ve avoided a ferocious 1930s-style depression. The worst of the recession is over. Unemployment has stopped rising. Employers can’t increase the workload any further and must now hire more workers if they want to boost output. The stock market has risen dramatically, which means that people with real money to risk are betting the economy is going to revive.
Wait, there’s even more good stuff. Inflation remains low and stable. People are paying off their credit card debts and are beginning to save money again. The bipartisan National Commission on Fiscal Responsibility and Reform has come up with a long list of suggestions on how to reduce the government’s debt. Lawmakers of both parties clearly recognize that the current imbalance between what the government takes in and what it spends is leading us to disaster. So let’s enjoy the good news.
Because from here on the news gets bad. (You sensed this was coming, right?) Employment is going to rise, yes, but very, very slowly. A financial earthquake, such as we had in the final months of the Bush administration, followed by a collapse of the “real” economy, as we had in the early months of the Obama presidency, takes an especially long time to repair. The Chairman of the Federal Reserve, testifying this month before Congress, said he hoped it would take only four or five years from now before employment reaches normal levels.
Furthermore, when we get back to those previous levels of employment we won’t be living as well as we used to. When there’s a big supply of eager workers and a small supply of jobs, wages don’t rise; they fall. But the problem goes much deeper than that. For the past thirty years, workers in the middle class haven’t been paid a decent share of the wealth they’ve produced. For three decades their productivity has been fine but their wages have stagnated. According to the census bureau, in 2007 a male worker earning the median male wage took home a little over $45,000. If you factor in inflation, this makes his take-home pay less than it was thirty years earlier.
By the way, our economy was much larger in 2007 than it had been thirty years earlier. The economist Robert Reich calculates that if the rise in the national economy had been divided equally among us, the typical worker would be more than 60 percent better off than he actually was in 2007. I’m not sure who got that money, but there are some interesting clues. In 1965 CEOs in major companies earned only 24 times more than an average worker, but by 1977 they earned close to 35 times more and by 1989 it was a whopping 71 times more than the average worker. Hang on, there’s more. By the year 2000, happy CEOs were pulling down 300 times more pay than the average worker. The last figures I have are for 2005 when our average blissful CEO was paid $10,982,000 a year, or 262 times the average worker’s $41,861. In other words, an average CEO earned more before lunchtime on the very first day of work in the year than a minimum wage worker earned all year.
Yes, number facts can be fun, but let’s get back to those floundering middle class families and what they did over those thirty years. They kept faith in “the American Dream.” Sure, it’s a silly, sentimental phrase, but it stands for the belief that if you work hard, you’ll earn more and live better. You’ll say good-bye to the landlord and own your own home. Maybe it’s only a bungalow with a patch of scruffy grass and a swing set for the kids but, by God, you’ve worked hard and it’s all yours.
But for thirty years wages didn’t rise. So middle-class wives went out to work to bring family incomes up to where everyone sensed they should be. But they were still falling behind. So wives and husbands began to work longer and longer hours. By the mid 2000s the typical American family put in a staggering 12 weeks more of work than it had in 1979. But you can’t keep earning more money by working more hours; you run out of hours. So families began to borrow on their credit cards. And in the last few years before the crash, they borrowed against the value of their homes.
All that’s gone now. As middle-class families go back to work they’ll find their wages effectively lower, not higher than before. Conservatives in control the House of Representatives are hyperventilating over President Obama’s stimulus policies and elbowing each other in a rush to cut government spending. When they did this in 1937 they managed to stall the recovery and extend the Great Depression. The Japanese have managed to do worse; their recession has been going on for the past twenty years and last year Japan fell behind China which became the second largest economy in the world.
The decline in unions from 30 percent of the workforce in to about 7 percent today parallels the period of wage stagnation for the average male worker. This same period has seen a growing influence of moneyed interests in Washington. But only the past is unchangeable, not the future. If middle-class voters unite to limit the power of rich people and wealthy corporations to make the laws of this country; if they demand and get a more progressive income tax; if they downsize the Pentagon budget, we’ll all live better.
(For a more complete profile, visit Eugene Mirabelli at The Author’s Guild.)
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