Posted on 11/10/2007 10:03:26 AM PST by 1rudeboy
Daniel Griswold directs the Cato Institute's Center for Trade Policy Studies and authored the new study, "Trading Up: How Expanding Trade Has Delivered Better Jobs and Higher Living Standards for American Workers," available at freetrade.org.
President Bush urged Congress yesterday to pass four pending trade agreements, telling a White House audience that open markets boost economic growth, raise standards of living by creating higher-paying jobs and deliver more choice and better prices for consumers. Despite claims to the contrary by populist opponents of trade expansion, the president has the facts and decades of experience on his side.
Critics of trade counter that real wages have stagnated while the middle class has been squeezed by a loss of jobs to low-wage competitors such as China and Mexico. Democrats in Congress point to those anxieties to justify their opposition to any meaningful trade-expanding legislation — including pending free trade accords with South Korea and Colombia and renewal of presidential trade-promotion authority.
Like so many assumptions about trade, the belief that more global competition has somehow lowered the living standards of the average American worker and family is just a myth.
The critics have it all wrong: The middle class isn't disappearing — it's moving up.
The Census reports that the share of U.S. households earning $35,000 to $75,000 a year (in '06 dollars) — roughly, the middle class — has indeed shrunk slightly over the last decade, from 34 percent to 33 percent. But so, too, has the share earning less than $35,000 — from 40 percent to 37 percent.
It's the share of households earning more than $75,000 that's jumped — from 26 percent to 30 percent.
Trade has helped America transform itself into a middle-class service economy. Yes, the country's lost a net 3.3 million manufacturing jobs . . .
(Excerpt) Read more at freetrade.org ...
Still no directions to the alleged source but he does walk thru the process. First, to get to the 22 percent you must consider real hourly compensation not hourly wage, says the CATO employee.
Actually, it's all an oft-repeated claim that appears here in these threads regularly. To wit, it ain't the salary alone that counts it's the salary, benefits, and lower consumer prices that make the 22 percent increase.
In that case here's my reply summary: So that 22% increase in hourly "compensation" is partly ipods and cell phones replacing 8-tracks and pay phones. I see.
I just knew that hedonism would make an appearance A.k.a., technology inflation, a.k.a. Hedonic Price Indexing.
[End of summary]
After citing authors who say wages have fallen he dismisses them as not understanding and states, "Contrary to the common tale, expanding levels of trade in recent decades have been accompanied by rising real hourly compensation for American workers and a higher median income for households."
(Note: recent decades have brought higher median incomes for households. Yes, recent decades have introduced the two-income family.)
Free trade promotes greater employment in higher-paying sectors "[t]hus expanding trade tends to raise overall wage and income levels. Even for the majority who work in nontrade sectors, global competition delivers lower prices for everyday consumer goods, allowing workers to stretch their paychecks further."
"First, the real wage does not include benefits. Second, it relies on cost-of-living estimates that have tended to systematically overstate inflation in recent decades and thus understate gains in real earnings. Third, real wage numbers are often compared to previous peak years, a practice that tends to minimize longer-term upward trends."
Honest, I knew that hedonism would make an appearance. To wit, "Consumer Price Index tends to overstate the cost of living compared with past years because it often fails to accurately capture the increased quality of new and improved products." A.k.a., technology inflation, a.k.a. Hedonic Price Indexing.
So part of that 22% increase in hourly "compensation" is gained by ipods and cell phones replacing 8-tracks and pay phones.* I see.
Then the author goes on to complain about a "peak year" being used as a base year -- 1982 was a recession year, as the author earlier noted. Instead he complains about 2000 (a peak year) being compared to following years. Yet, there's no complaint about 1982 (a recession year) being used as a base that exceeds following years and was exceeded by earlier years.
* "In that light, the real hourly compensation and even the flawed real wage data look much more benign: In the decade since 1997, as the U.S. economy has become more globalized, real compensation per hour for American workers has risen by 22 percent."
The author talks about "the facts and decades of experience on his side" and denounces the myths of those who oppose. IMO the author's posted article is flat dishonest though he does say "real hourly compensation;" and the article mentions benefits, lower prices, and increased household incomes. I'd like to see real hourly wages and 1982 data mentioned rather than the cheap shots at opponents.
I am reminded of CATO's Reynolds who wrote and "proved" that no significant number of manufacturing jobs had been transferred offshore. Limbaugh and Tom Sullivan used that to bash those who knew otherwise. Reynolds' proof? Manufacturing was still the same percentage of GDP as the past several decades. He "forgot" to mention that the way manufacturing is measured changed in the late 1990s.
Exactly! Back when 80% of Americans lived on farms, Dad was the only one who worked. That's why school vacations coincided with harvest time. When Americans moved to the city and lived in tenements, Mom and the kids never worked in miserable factories and sweatshops. That's why we never needed child labor laws.
We need more plentiful cheaper energy. We need more production. We need more machines and more fuel to run those machines. And we need machines that require less maintenance and less manpower to operate them.
This is how we improve standard of living. This is how we maintain our position of dominance in the world.
Dad was the only one who worked
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I understand what you are saying, but I would prefer you didn’t word it like this. My grandmothers worked harder than most females today ever did or ever will. But they didn’t work for income. Before modern convienences, homemaking was more work than it is today...especially on a farm. And with 10 plus kids running around in hand washed diapers and homemade clothes out of old flour sacks, the work was unceasing. Gardening, quilting, cooking, canning, helping with the animals...sure, women never used to work. And neither did the kids. Heck, those hayseed kids just ran around all day playing in the dirt and fishing and swimming in the pond, rigth? THat’s why they were so uneducated, right?
Not quite. They all worked themselves to death. THey just didn’t get a paycheck on friday.
Are you trying to say that we have a higher standard of living now?
Gardening, quilting, cooking, canning, helping with the animals...sure, women never used to work.
Are you saying that people who claim women never worked until the 1970s are wrong?
That’s why they were so uneducated, right?
Who said anything about education?
They all worked themselves to death.
In case you haven't figured it out yet, I agree with you.
Are you trying to say that we have a higher standard of living now?
~~~~~~~~~~~~~~~
I would say that we do have a higher standard of living now. But I would also say that our standard of living is slipping some.
How so?
We slipped some in the jimmy carter days and we’ve never got back to where we were. Part of it is taxes, part of it is irresponsible consumers, part of it is soaring health care, part of it is soaring education costs, part of it is college degree escalation. What I mean by college degree escalation is that too many jobs require too much schooling. I’d say 75 % of the jobs requiring a college degree could be done by someone without a college degree.
Too many people are wasting 4 years(or more) of their lives getting a worthless degree for the privilege of being interviewed for an average or below average job.
How common? 80% of the families? 50%? 20%?
What I mean by college degree escalation is that too many jobs require too much schooling.
True.
I’d say 75 % of the jobs requiring a college degree could be done by someone without a college degree.
A high school diploma used to mean you learned something. Now it means you warmed a seat for 4 years.
Too many people are wasting 4 years(or more) of their lives getting a worthless degree
A bachelors degree today is the only way an employer can be assured they're hiring someone who can read and write. Usually.
I agree with you on this. A degree implies a modicum of effort.
I agree. The areas of our economy experiencing the largest increases in prices, college tuition and health care, are the areas with the most government spending. You never answered my question in post #49.
How common? 80% of the families? 50%? 20%?
Did it hurt to admit this? LOL!
I can only go by memory and personal experience. But I would say somewhere around 50%, I think. Maybe slightly less...40%. And now all my relatives and people I grew up with have families of 0, 1, or 2 kids...with 2 being the rarest and stay at home moms are very rare.
Why are you asking?
So even back when things were so much better, 50% to 60% of mothers worked?
Why are you asking?
It seems like many on FR believe that 100% of mothers stayed home with their kids while 100% of working fathers, with only a HS diploma, could afford a big house and a new car every other year.
And then free trade ruined it and now 100% of mothers have to work and even fathers with a masters degree in engineering can't find work.
I'm just trying to get a better feel for what's exaggeration and what's truth.
Actually, the numbers I was guesstimating from my old old fuzzy memories were for family of 4 kids or more. But the stay at home mom thing...well, I suppose those numbers are somewhere in the ballpark for that too.
So we’ve gone from half of moms being stay at home with 4 or more kids, to lets say...5% of moms being stay at home with 2 or less kids in today’s world.
In other words, it takes twice as many wage earners to support half as many children. I’d call that a big thing. Wouldn’t you? Well, since half of the moms were working in the seventies, and since I really think the family size has shrunk by more than half (by my memory anyway) we’ll call it 1.5 times as many wage earners to support 1/3 as many kids.
So in the seventies: 0.25 wage earners per child
today: 1.125 wage earners per child
THat means it is 4.5 times more expensive to raise a child to adulthood today than it was in the seventies...by my crude estimation and fuzzy memory that is.
95% of moms are not in the workforce now.
I’d call that a big thing. Wouldn’t you?
If it were true.
95% of the moms I know are. In fact, I only know one mom that is stay at home and that is my sister. And she intends to stop being a stay at home mom as soon as her toddler is old enough for preschool. Other than that I know absolutely zero stay at home moms. No one had kids before age 30...well maybe age 28 or 29 for the mothers, but not the fathers.
You know what they say about anecdotes.
No one had kids before age 30...well maybe age 28 or 29 for the mothers, but not the fathers.
People want more, they buy more, so they have to work more.
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