Our So-Called Boom
The New York Times discusses the disparagies between our economic "boom" and the reality of jobs and wages:
Which brings me to a conversation I recently had with my boss. He's a millionaire owner of a medium sized computer manufacturing facility in Southern California. I asked him if he received his tax cut and what he was doing with it, personally. Did he invest it in his business? No. Did he invest it in the stock market? No. He bought his sixteen year old daughter a new Lexus. When I told my boss that President Bush was hoping that these tax cuts would stimulate the economy by giving upper-class citizens more money to invest in the markets, businesses, etc.--he just laughed at me and said, "yeah, thanks Mr. President for my daughter's new car," and walked away.
I am the creative director here and I've desperately needed at least two new artists/flash animators. Because all the economic indicators show that business is improving and the outlook looks good, I put in my request for additional help. I was flat out denied. When I asked why, I was told that things were running just fine as it is. Running fine as it is? I'm doing to the job of three employees, wage increases have been permanently frozen, our 401K has been disabled and, after kicking ass this last quarter, NO CHRISTMAS BONUS!
I don't care how much SPIN people want to use to justify this fantastic economic recovery, but the article above perfectly illustrates the REALITY of the situation with average, everyday Americans.
Quote:
It was a merry Christmas for Sharper Image and Neiman Marcus, which reported big sales increases over last year's holiday season. It was considerably less cheery at Wal-Mart and other low-priced chains. We don't know the final sales figures yet, but it's clear that high-end stores did very well, while stores catering to middle- and low-income families achieved only modest gains.
Based on these reports, you may be tempted to speculate that the economic recovery is an exclusive party, and most people weren't invited. You'd be right.
Commerce Department figures reveal a startling disconnect between overall economic growth, which has been impressive since last spring, and the incomes of a great majority of Americans. In the third quarter of 2003, as everyone knows, real G.D.P. rose at an annual rate of 8.2 percent. But wage and salary income, adjusted for inflation, rose at an annual rate of only 0.8 percent. More recent data don't change the picture: in the six months that ended in November, income from wages rose only 0.65 percent after inflation.
Why aren't workers sharing in the so-called boom? Start with jobs.
Payroll employment began rising in August, but the pace of job growth remains modest, averaging less than 90,000 per month. That's well short of the 225,000 jobs added per month during the Clinton years; it's even below the roughly 150,000 jobs needed to keep up with a growing working-age population.
But if the number of jobs isn't rising much, aren't workers at least earning more? You may have thought so. After all, companies have been able to increase output without hiring more workers, thanks to the rapidly rising output per worker. (Yes, that's a tautology.) Historically, higher productivity has translated into rising wages. But not this time: thanks to a weak labor market, employers have felt no pressure to share productivity gains. Calculations by the Economic Policy Institute show real wages for most workers flat or falling even as the economy expands.
An aside: how weak is the labor market? The measured unemployment rate of 5.9 percent isn't that high by historical standards, but there's something funny about that number. An unusually large number of people have given up looking for work, so they are no longer counted as unemployed, and many of those who say they have jobs seem to be only marginally employed. Such measures as the length of time it takes laid-off workers to get new jobs continue to indicate the worst job market in 20 years.
So if jobs are scarce and wages are flat, who's benefiting from the economy's expansion? The direct gains are going largely to corporate profits, which rose at an annual rate of more than 40 percent in the third quarter. Indirectly, that means that gains are going to stockholders, who are the ultimate owners of corporate profits. (That is, if the gains don't go to self-dealing executives, but let's save that topic for another day.)
Well, so what? Aren't we well on our way toward becoming what the administration and its reliable defenders call an "ownership society," in which everyone shares in stock market gains? Um, no. It's true that slightly more than half of American families participate in the stock market, either directly or through investment accounts. But most families own at most a few thousand dollars' worth of stocks.
It was a merry Christmas for Sharper Image and Neiman Marcus, which reported big sales increases over last year's holiday season. It was considerably less cheery at Wal-Mart and other low-priced chains. We don't know the final sales figures yet, but it's clear that high-end stores did very well, while stores catering to middle- and low-income families achieved only modest gains.
Based on these reports, you may be tempted to speculate that the economic recovery is an exclusive party, and most people weren't invited. You'd be right.
Commerce Department figures reveal a startling disconnect between overall economic growth, which has been impressive since last spring, and the incomes of a great majority of Americans. In the third quarter of 2003, as everyone knows, real G.D.P. rose at an annual rate of 8.2 percent. But wage and salary income, adjusted for inflation, rose at an annual rate of only 0.8 percent. More recent data don't change the picture: in the six months that ended in November, income from wages rose only 0.65 percent after inflation.
Why aren't workers sharing in the so-called boom? Start with jobs.
Payroll employment began rising in August, but the pace of job growth remains modest, averaging less than 90,000 per month. That's well short of the 225,000 jobs added per month during the Clinton years; it's even below the roughly 150,000 jobs needed to keep up with a growing working-age population.
But if the number of jobs isn't rising much, aren't workers at least earning more? You may have thought so. After all, companies have been able to increase output without hiring more workers, thanks to the rapidly rising output per worker. (Yes, that's a tautology.) Historically, higher productivity has translated into rising wages. But not this time: thanks to a weak labor market, employers have felt no pressure to share productivity gains. Calculations by the Economic Policy Institute show real wages for most workers flat or falling even as the economy expands.
An aside: how weak is the labor market? The measured unemployment rate of 5.9 percent isn't that high by historical standards, but there's something funny about that number. An unusually large number of people have given up looking for work, so they are no longer counted as unemployed, and many of those who say they have jobs seem to be only marginally employed. Such measures as the length of time it takes laid-off workers to get new jobs continue to indicate the worst job market in 20 years.
So if jobs are scarce and wages are flat, who's benefiting from the economy's expansion? The direct gains are going largely to corporate profits, which rose at an annual rate of more than 40 percent in the third quarter. Indirectly, that means that gains are going to stockholders, who are the ultimate owners of corporate profits. (That is, if the gains don't go to self-dealing executives, but let's save that topic for another day.)
Well, so what? Aren't we well on our way toward becoming what the administration and its reliable defenders call an "ownership society," in which everyone shares in stock market gains? Um, no. It's true that slightly more than half of American families participate in the stock market, either directly or through investment accounts. But most families own at most a few thousand dollars' worth of stocks.
Which brings me to a conversation I recently had with my boss. He's a millionaire owner of a medium sized computer manufacturing facility in Southern California. I asked him if he received his tax cut and what he was doing with it, personally. Did he invest it in his business? No. Did he invest it in the stock market? No. He bought his sixteen year old daughter a new Lexus. When I told my boss that President Bush was hoping that these tax cuts would stimulate the economy by giving upper-class citizens more money to invest in the markets, businesses, etc.--he just laughed at me and said, "yeah, thanks Mr. President for my daughter's new car," and walked away.
I am the creative director here and I've desperately needed at least two new artists/flash animators. Because all the economic indicators show that business is improving and the outlook looks good, I put in my request for additional help. I was flat out denied. When I asked why, I was told that things were running just fine as it is. Running fine as it is? I'm doing to the job of three employees, wage increases have been permanently frozen, our 401K has been disabled and, after kicking ass this last quarter, NO CHRISTMAS BONUS!
I don't care how much SPIN people want to use to justify this fantastic economic recovery, but the article above perfectly illustrates the REALITY of the situation with average, everyday Americans.
Comments
In this market, most of the people who hold jobs recognize the need to "deliver the goods" despite staffing shortfalls. It's a recognized phenomenon that the NYT is calling it out into the light. In tight crunches you have that teamwork spirit, but if it's over a long-haul you begin to experience exhaustion and a feeling that the guys you're producing for have lost an appreciation for what you're turning out. In many instances there's an added paranoia of hiring your own replacement, which is what drives many people to do that extra bit to keep their niche deeply carved out and protected.
I'm in occupational hibernation right now, been repurposing my career objectives over the last year too....so I'm not sure what's going on in 2004. If I lived anywhere near you I'd be dropping off a resume for one of those positions...even if I did butt heads with you in AO~
As for the Paul Krugman/Enron connection....read this for Krugman's take on it...besides which, I am not certain how that would be relevant to the discussion at hand anyway.
http://www.pkarchive.org/personal/EnronFAQ.html
To make it easier for anyone who is still interested in this story to get the facts right, here are some frequently asked questions about my role on the Enron advisory board, with answers.
1. What did I do? In early 1999 I was asked to serve on a panel that offered Enron executives briefings on economic and political issues. As far as I knew at the time, they genuinely wanted to learn something. I resigned from that board in the fall of 1999, when I accepted an offer to write for the New York Times.
2. What was I paid? It turns out that I was actually paid $37,500 - the last quarterly payment did not take place, because of my early resignation from the board.
3. Was this exorbitant? It didn't seem so at the time. In 1998-1999 my normal fee for a one-hour business speech in Boston or New York was $20,000 - more if the speech involved long-distance travel. The Enron board required that I spend 4 days in Houston. So the sum they offered didn't seem out of line - if anything it seemed rather low compared with my usual rates.
4. Was I being paid off because I was a journalist? That Enron board, when I was on it, did not strike me as a board of pundits. It included Larry Lindsey and Bob Zoellick - future Bush administration officials, though I had no way of knowing that, but certainly not journalists. It also included Pankaj Ghemawat, a strategy professor at Harvard, and Irwin Stelzer, an economist at the American Enterprise Institute. (Stelzer had a column in the London Times, but I didn't know that) The only person there I thought of as a journalist was William Kristol - I thought he was there to regale us with Washington gossip. And I regarded myself as being in the same category as Ghemawat - an academic expert, who was there because of his expertise.
Now that we've cleared the air about Paul Krugman's credentials and his limited advisory role at Enron, we can talk about what's going on TODAY! With today's economy; with today's wage earning reality; and with today's corporate America mentality of "All hail the stock price!"
Originally posted by BuonRotto
There is no boom. Has anyone really siad there has been? I know I've heard about a recovery, and people debate over how much we've seen and how much we're going to see, but I didn't think any sane person would qualify any improvements to the US economy as a "boom."
The term "boom" has been used over and over and over again by conservative pundits and "economists." Just google bush boom. Kudlow's article here is one example of many.
In any case, I don't think the real story of this recovery is that it's leaving the middle class behind - that's the story of the 80s and 90s as well. The real story IMO is that this recovery is based on borrowed money. We've run up our federal credit card with these tax cuts and spending increases. Even Reagan's economy wasn't as bad as what we're doing now. We badly need some grown-ups running things. Who knows what shape we'll be in if these folks go another four years.
give me libertarians! (probably the #1 group for responsible spending)
8. Was Enron trying to buy my soul? That's for them to answer. But I wasn't selling.
I bet his enron masters made him say that.
It sounded phony back then, too. Has anything really changed from then to now?
Originally posted by alcimedes
what we need is to vote out 90% of the jackasses in office and put some people with a few morals and ethics in place. not to mention brains.
give me libertarians! (probably the #1 group for responsible spending)
Or we could deport 90% of the dumb-asses that vote the jackasses in office
Originally posted by Scott
BTW everyone should know that Paul Krugman was a paid Enron advisor.
I guess you reckon thats a good qualification then?
It might send him
Originally posted by jimmac
Gosh,SDW had better not read this thread!
It might send him
Oh but I did. On the contrary...it just makes me laugh.
Originally posted by SDW2001
Oh but I did. On the contrary...it just makes me laugh.
HA, HA! THE ECONOMY'S BOOMING! BOOMING I TELL YOU! BOOMING! HA, HA, HA!
Originally posted by ShawnJ
go socialists!
Yea! Go away!
from an article in yeatserdays LA Times, revealing how the unemployment statistics are massaged to make the situation look better than reality:
The nation's official jobless rate is 5.9%, a relatively benign level by historical standards. But economists say that figure paints only a partial ? and artificially rosy ? picture of the labor market.
To begin with, there are the 8.7 million unemployed, defined as those without a job who are actively looking for work. But lurking behind that group are 4.9 million part-time workers such as Gluskin who say they would rather be working full time ? the highest number in a decade.
There are also the 1.5 million people who want a job but didn't look for one in the last month. Nearly a third of this group say they stopped the search because they were too depressed about the prospect of finding anything. Officially termed "discouraged," their number has surged 20% in a year.
Add these three groups together and the jobless total for the U.S. hits 9.7%, up from 9.4% a year ago.
Remainder of article here:
http://story.news.yahoo.com/news?tmp...tskipsmillions