Posted on 09/26/2006 5:20:47 AM PDT by .cnI redruM
Lately, there has been a big debate going on among Democrats about why workers aren't outraged by their economic condition, and therefore more hostile to Republican economic policies and more sympathetic to Democratic policies.
On the surface, it would appear that workers should be in open revolt. According to the Bureau of Labor Statistics, the average worker is no better off today than he was seven years ago in real terms. In August 2006, his average weekly earnings were $275.49. In August 1999, they were $275.61 (both in constant 1982 dollars).
Census Bureau data confirm this trend. According to recently released information, median annual earnings for men fell to $41,386 in 2005 from $43,158 in 2003 (in 2005 dollars), despite steady economic growth. Male earnings in 2005 were lower than in every year since 1997. Female earnings also fell in 2005 to $31,858 from $32,285 a year earlier and were lower than in any year since 2000.
Looking at the broadest measure of economic well-being, median household income, we also see flatness. In 2005, the median income -- the point at which half of households are above and half are below -- was $46,326. This was up from the levels in 2002, 2003 and 2004, but below those registered from 1998 to 2001. Median household income peaked in 1999 at $47,671 (in 2005 dollars) and fell every year thereafter until 2005's small uptick.
There is no simple explanation for worker passivity in the face of income stagnation. One argument is that labor union membership has fallen sharply over the last generation and, consequently, workers have no organizational mechanism through which to bargain for higher wages or protest wage stagnation politically. In 2005, labor union membership was down to just 7.8 percent of private sector workers, from 24.2 percent in 1973.
Another possibility is that workers have been so beaten down by layoffs and give-backs in recent years that they are just grateful to have jobs at all, even if their pay stinks. And because of declining health coverage by employers, those lucky enough to have health insurance may feel compelled to hold onto such jobs. If they switch to another job, they may get higher pay but lose their health benefits in the process.
Indeed, the rising cost of health benefits is a key reason for the flatness of wages. From the point of view of employers, their total labor costs have risen sharply. But all of the increase has gone into benefits, with nothing left over to raise wages. Workers may not like this fact, but accept its reality.
According to the BLS, wages and salaries have fallen from 72.6 percent of total compensation in 2000 to 70 percent in June of this year. At the same time, health benefits have risen from 5.9 percent of compensation to 7.7 percent.
Still another explanation is that the changing demographics of the population have eased the transition to an economy with slower wage growth. Many baby boomers have just seen the last of their children finish college and leave home. Suddenly, they have had a huge increase in their discretionary income, as the enormous costs of tuition and child care that they have borne for decades have now disappeared. They may not be any better off in terms of their family income, but they feel a lot better off financially.
Finally, despite wage and income stagnation at the macro level, people continue to move up out of the working class into the middle and upper classes. According to the Census Bureau, the percentage of all households with an income below $25,000 per year (in 2005 dollars) fell to 27.1 percent last year, from 27.6 percent in 2004. In 1995, 28.9 percent fell into this income class. In 1985, the percentage was 30.5 percent. In 1975m it was 33.1 percent.
At the same time, the percentage of households that are considered well-to-do -- those with an income above $75,000 (in 2005 dollars) -- rose to 28.3 percent last year, from 27.9 percent in 2004. In 1995, only 24.4 percent of households had that much income, up from 20.2 percent in 1985 and 14 percent in 1975.
In short, despite all the talk about the rich getting richer at the expense of the poor, the fact is that the percentage of households with low incomes has fallen and the percentage of those with high incomes has risen. This is perhaps the main reason why Democrats have had trouble getting traction on the income issue -- there are fewer people in the income class to which they historically have directed their message.
The more people there are in the $75,000-plus income category, the more people there are who are receptive to the Republican message of low taxes.
I one thought that too.
Dunno where you live, but NONE of this is applicable to where I live (Des Moines/Omaha).
Yes, and some think they can pass out tax cuts and put the difference between revenue and expenditures on the national credit card.
Where in the article does it say that? If this is not in the article where did you get your information from?
The cost of housing, not inlcuding interest rates, is sky high
Long term interest rates have been falling for five months and are still at historically low levels. The cost of housing takes a smaller chunk of our budget today than it did a generation ago.
Wealth producting industries are closed or declining
Is that why our household net worth is at record levels and has almost doubled during the last ten years?
People whose wages have been cut do not have extra money for investing.
Yet, the percentage of working Americans who are invested in the stock market has increased from about 25% in 1980 to almost 60% today. You should probably get some facts before posting your doom and gloom nonsense here.
And it the cost of the benefit, such as health insurance, has doubled, has his compensation increased or is his increase due to inflation?
Health care costs are increasing at a far greater rate than inflation, and for a multitude of reasons.
I'm disappointed he left out the fact that for the median family of four the Bush tax cut has increased take-home pay after taxes by about $1,450 a year.
If you can't afford the increase in your local taxes maybe you should vote with your feet.
I also can't wait for the super-capitalists who will come here and poo-poo the idea of adjusting for "real" wages
In all the debates I've seen with the doom and gloom squad over wages, real numbers are always used. What good are wage and salary numbers if they're not adjusted for inflation?
You dropped a decimal. With 300 million people (100 million households, IIRC) 0.5% is 1.5 million people or 500,000 households.
The number of rich people went up by 120,000
0.4% would be 1.2 million people or 400,000 households.
If the discussion involves "real" compensation, inflation is already included so his compensation has increased.
See my chart and then tell us why employers covering the rapidly increasing cost of benefits for their workers should not be included in the equation?
While that isn't strictly true, it is true that you can increase your income within that 7 years by moving to a higher-paying job, either through promotion or by moving to another company.
Assuming you're somewhere where there's another company to work for.
I'm anticipating a quote (no link) from the E.P.I., AFL-CIO, CISPES or Media Matters any time now to support her bogus claims.
When minimum wage was $1.25, regular gas was 26 cents a gallon, now minimum wage is $5.15 and regular gas is around $3.00 a gallon. A cottage that rented for $65 back then rents today for $1,200. A minimum wage worker would need to work 52 hours to pay $65 rent and 233 hours (assuming no taxes) to rent the same cottage today. A $1.25 would buy 4.8 gallons of gas contrasted with $5.15 buying 1.7 gallons of gas at $3.00 a gallon.
For those that inflation and the tax cut has made victim of the AMT, the tax cut is far less and for some, nonexistent.
The flip side is that there is a lot of money in the health care sector. Not just for health care workers, but the companies that make and supply medical equipment and pharmaceuticals.
How does a cut in the marginal tax rate expose one to the AMT? I'm getting a sneaking suspicion that you don't know what the hell you are talking about.
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