Monday, August 28, 2006

Class Warfare - Who is Winning?

The New York Times reports today that the median wage for hourly workers has declined two percent since 2003, after factoring in inflation, even though productivity has continued to rise. Wages and salaries now make up the lowest share of the nation's gross national product since the government began recording the data in 1947! Furthermore, corporate profits have reached their highest share since the 1960's.

Economists at Goldman Sachs explained one reason for the high profits of corporations this way - "The most important contributor to higher profit margins over the past five years has been a decline in labor's share of national income."

Americans used to believe, and for most of the last century they were correct in believing, that wages and productivity naturally rose together. If we continued to work harder and smarter, we would benefit. But so far in the 21st century, that prospect has been turned upside down: productivity has continued to increase, but wage increases haven't kept up. In 2000-2005, productivity was up 16.6 percent while wages only rose 7.2 percent, according to the Labor Department.

Quoted in the New York Times, Jared Bernstein, a senior economist at the Economic Policy Institute, said - "If I had to sum it up, it comes down to bargaining power and the lack of ability of many in the work force to claim their fair share of growth."

In 2004, the top one percent of earners received 11.2 percent of all wage income. In 1994, their percentage was 8.7 and 30 years ago, it was less than six percent.

In other words, the rich are getting richer and the poor (and middle class) are getting poorer.

Usually, if you quote statistics like these, the right side of the political spectrum loudly accuses you of fomenting class warfare. What the working class doesn't realize is that there has been class warfare going on all along and we are getting our butts kicked.