Saturday, September 21, 2019

One-Third of American Workers Pay Is Being Stolen. Here's How

Source: The Unz Review


If you're a member of the working class, 1/3 of your pay has been stolen from you.

You would think this would be front page news every day until the problem is fixed. Not only is that a huge amount of money for a huge portion of the country, but you would expect our left leaning media to be all over this. There is no better evidence that capitalism, at least in its current state, is failing. If the left actually cared about the working class, if the wave of cultural Marxism that has spread through academia and the media was actually about the plight of workers oppressed by a distant and uncaring elite, no fact would be repeated more often than this.

And yet, aside from a handful of articles – such as one from the New York Times in 2011, and another from The Atlantic in 2015 – the issue hardly gets mentioned by the media. And even when it is mentioned, it is often editorialized in a way that distorts the problem and hides its root cause, if not outright lied about by a media with an agenda that has little to do with helping actual workers.

The evidence for the theft of 1/3 of the working class' pay comes primarily from a left wing think tank called the Economic Policy Institute, and comes from a comparison of productivity growth in the economy vs the average hourly pay of non-management workers. Their graph shows that worker pay increased steadily at basically the same rate at productivity from the 1948 until 1972. In 1972, productivity was up 92.2% from where it was in 1948 while the average worker's hourly compensation was up 91.3%. From 1972-3, productivity rose to 97.0% higher than its 1948 value while pay fell to only 91.0% higher than it was in 1948. Productivity and pay both fell from 1973-4, but productivity rose again from 1974-5 while pay declined for another year, widening the gap between productivity and pay growth to over 10% for the first time since 1948, a gap which would never close again.

Pay then rose more slowly than productivity for the rest of the 70s, fell during the 80s and early 90s, grew slowly again during the dotcom boom of the late 90s when productivity grew far more rapidly, and stagnated again for most of the 00s. Then from 2008-09, pay rose sharply by almost 8% of its 1948 value. In other words, during the housing market collapse, when wealthy investment bankers were losing a lot of money (and before they got it back during the bailout), workers' hourly compensation jumped up faster than productivity for the first time in decades – though not by nearly enough to close the gap, as productivity had risen by more than 100% more than pay by 2008. After the bailout, pay stagnated again, though according to many sources pay is increasing under Trump at a faster rate than it did for most of the past few decades.

However, for some reason, both the Economic Policy Institute's current graph and the New York Times graph put a line through 1979 to divide the era of regular pay growth and pay stagnation, despite the gap having grown to about 15% by then. It would seem that 1972-3, when pay growth stagnated and then fell for the first time in decades, would be a better place to put the line – and indeed, that is where The Atlantic’s graph (and some older versions of EPI’s graph) put it. Is there a reason for this obfuscation?

There is, of course, some disagreement over EPI's findings. Right wing sources like the Heritage Foundation claim that worker pay is actually rising at about the same rate as productivity. Their main disagreement with EPI's findings is due to the fact that EPI doesn't include management workers and self-employed professionals in their estimate of worker pay. When those groups are included, pay did in fact increase at almost the same rate as productivity – however, as the Heritage Foundation notes, only the top 20% of earners saw their earnings rise at a faster rate than productivity since the 70s, while the middle 60% saw far lower growth in their pay, so their findings are of little comfort to a majority of American workers, particularly the shrinking middle class.

One final analysis, this one from BLS data published by Pew Research and Statista, both of whom look only at wages and not productivity, actually suggests the situation may be even worse than EPI’s data suggests – where EPI shows wages grew by about 25% of their 1948 value from 1972-2018, Pew shows worker pay peaking in 1973, falling from the mid 70s through the mid 90s, and rising slowly from the mid 90s until now with a significant jump during the 2008 recession. According to Statista, 2019 was the first year wages rose above their 1973 value – by about $0.05 cents an hour in 2019 dollars.

Please go to The Unz Review to read the entire article.

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