Wednesday, June 14, 2006

The Fallout from Falling US Wages. A Librarian at the Kitchen Table. No. 368.

The Fallout from Falling US Wages
by Rick Wolff

MRZine (Monthly Review) - June 12, 2006

Real wages in the US rose during every decade from 1830
to 1970. Then this central feature of US capitalism
stopped as the figures below show:

Source: Labor Research Associates of New York based on
data from the US Department of Labor, Bureau of Labor
Statistics; wages expressed in constant 1982 dollars.

1964 $302.52
1974 314.94
1984 279.22
1994 259.97
2004 277.57

No comparable steady rise in real wages has occurred
since. The most recent data from the Bureau of Labor
Statistics indicate real weekly wages declined again
over the last year (2005-2006). American workers'
reactions to this downtrend in real wages have
profoundly shaped the nation's economy and society for
the last thirty years.

Stagnant or falling real wages undermine workers' basic
expectations of rising levels of consumption. Those
expectations had become key parts of what it meant to
be "an American." Rising consumption has long
functioned as the evidence of success in achieving the
American dream. When, after the mid-1970s, real wages
no longer allowed for rising consumption, wage-earners
turned, with growing urgency, toward other ways and
means to maintain rising consumption . This delayed the
inevitable, a falling standard of living, but at great
economic and social cost.....
[read entire article]

Bush's recent loss of public approval may signal the
limits to the last twenty-five years of economic change
and policy. A vast outrage may arise among Americans
who "forget" their beliefs in and complicity with
policies that are now becoming exposed as failures and
who will insist that they were duped and mislead. Then
the political pendulum can swing as far toward
government economic intervention as before it swung the
other way. Such shifts have, after all, happened many
times in the past. "Economic science" may yet again be
reformulated in Keynesian or "socialist" terms to
justify such shifts (note Latin America's recent
dramatic moves away from its extreme neo-liberal
policies after the1970s).

The key questions for many now are (1) how much longer
can the combination of real wage decline, rising work
effort, debt, and family stress, and deepening social
inequalities continue; (2) what might enable Bush & Co.
nonetheless to continue the economic direction they
champion; and (3) how fast and how far will the
backlash proceed if they cannot do so? For socialists,
the key political question is different. When private
capitalism a la Bush hits its crisis, will the chief
socialist response be (as it mostly was after 1929) to
support a government intervention aimed to save the
system by making it more worker-friendly for a while
till the crisis passes? Or will they demand far more
basic economic change?

[Rick Wolff is Professor of Economics at University of
Massachusetts at Amherst. He is the author of many
books and articles, including (with Stephen Resnick)
Class Theory and History: Capitalism and Communism in
the U.S.S.R. (Routledge, 2002).]

No comments: