Po-Mo Feudalism

Okay, of course it's not really that bad. But as we commemorate the anniversary of Hurricane Katrina and await new federal statistics on poverty this week (as well as the final recommendations of Mayor Bloomberg's Commission on Economic Opportunity here in NYC), some new economic numbers suggest one of the core problems:

The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The drop has been especially notable, economists say, because productivity — the amount that an average worker produces in an hour and the basic wellspring of a nation’s living standards — has risen steadily over the same period.

As a result, wages and salaries now make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960’s. UBS, the investment bank, recently described the current period as “the golden era of profitability.”

Until the last year, stagnating wages were somewhat offset by the rising value of benefits, especially health insurance, which caused overall compensation for most Americans to continue increasing. Since last summer, however, the value of workers’ benefits has also failed to keep pace with inflation, according to government data.

At the very top of the income spectrum, many workers have continued to receive raises that outpace inflation, and the gains have been large enough to keep average income and consumer spending rising.

In the American Prospect blog, Ezra Klein focuses on what the Times authors briefly reference at the end of their article: the fundamental but largely overlooked change in relative bargaining position between workers and managers over the last several decades:

The culprit here is a simple lack of bargaining power on the part of employees. The pernicious fiction that corporations will happily redirect their profits into appropriate raises and benefit increases has been widely adopted -- we're now supposed to assume that whatever Wal-Mart or UBI is paying is exactly what they should be paying, and the willingness of workers to take those jobs is proof that the compensation is adequate. That, of course, is nuts. The balance of power between worker and employer has shifted radically in the employer's favor, and while folks still need jobs, the decline of unions and the rise of conservative (and neoliberal) regimes in government have allowed corporations to set the terms. Those terms, as you'd expect, prioritize executive salaries, corporate profits, and share prices, while seeking to keep labor costs as dirt low as possible. They've succeeded.

I don't think it's quite this simple, much less reducible to basic Marxist tenets of surplus labor value and the inevitability of exploitation in capitalism. Market economies run, in large part, on faith: one tenet of that faith (which I've at times shared myself) is that business ownership and top management will see long-term value in fairly compensating their workers. Doing so, the argument follows, both helps them maximize productivity and cuts down expenses related to turnover, re-training, goldbricking, and what have you. A related point is that as long as this is the case, we're generally better off not regulating the economy, because even a more equitable distribution of profits might not be worth it if the regulation unduly shrinks the overall size of the pie.

At this point, though, it's tough to argue that things aren't out of balance. Conservatives and their fellow-travelers essentially have argued that there's nothing immoral about a state of affairs in which those at the very top take home an enormous, disproportionate share of the bounty, and that (with some obvious exceptions) those who make the most deserve the most, by nature of the opportunities they create. I suppose it's possible that those exceptions--the crooks, like Ken Lay, and the grotesquely overcompensated based on performance, like Mr. Triple-Chin Exxon CEO (seriously, given world events, profits would be crazy regardless of who held that job)--are so glaring that they overbalance the entrepreneurial goodness of the "good super-rich."

But although this view is certainly defensible (I disagree with it, but I acknowledge it's plausible), it doesn't really do much for those in the middle and below who are working just as hard but seeing their real incomes decline. It also bodes ill, of course, for the party in power that has done so much over the last 25 years to tilt the field in favor of those at the very top. The Times story also notes:

“Some people who aren’t partisans say, ‘Yes, the economy’s pretty good, so why are people so agitated and anxious?’ ” said Frank Luntz, a Republican campaign consultant. “The answer is they don’t feel it in their weekly paychecks.”