Friday, February 23, 2007


Liberals like me often laugh at the old saw that “a rising tide lifts all boats.” Whether you call it “trickle-down” or “Voodoo economics,” the idea that what’s good for the economy generally and the very rich in particular will inevitably – and almost magically -- benefit the middle-class or poor worker has been subjected to all sorts of ridicule by economists and pundits alike. Now, and perhaps only now, are we seeing some justification for our liberal scorn.

This fall, the New York Times reported that now, for the first time since WWII, a period of an expanding U.S. economy is poised to fail to offer an increase in real wages for the average worker. Assuming, in other words, that the recent economic expansion is coming to an end, the nation as a whole will have gotten richer at the same time that most Americans are getting poorer. Specifically, from 2003 to the present, a time when national productivity has increased steadily, the median American hourly wage has dropped by two percent. Corporate profits are at a four-decade high, but the trickle has not been felt down below.

It’s easy to look at these figures and blame the White House – the tax cuts, for example, or the shrinking minimum wage. But there may be something amiss here that transcends the policies of any particular administration or Congress. Consider what’s happened to that formerly great American institution, the trade union. If someone tried to make On the Waterfront now, nobody would know what it’s talking about. Or consider the rising costs of health care -- costs that will only skyrocket as we Baby Boomers get as old as I sometimes feel already. Companies will need to spend a greater share of their profits on health care, and that will leave less money to pay the wages that workers need to feed their families and enjoy the American dream.

All these facts and figures sound kind of dry and boring – at least until we realize what’s at stake here. Increasingly, we’re witnessing a threat to what is perhaps the most impressive and distinctive aspect of the American culture: the notion that everyone, practically, is a member of the middle class. The idea of a nation of middle-class farmers, shop owners, and unionized skilled workers suggests a tri-part America dominated by a vast middle class, with a tiny group of Brahmans at the top (the Adams’s, the Bush’s, the Kennedy’s, the Rockefellers) and another small group of urban and rural poor at the bottom. But, in fact, the situation wasn’t quite that utopian before, and it’s certainly not so now. In fact, we seem to be on the verge of heading toward a bi-polar economy.

On the one hand, you have a growing number of multi-millionaires – lawyers who bill $600 an hour, corporate executives who receive annual bonuses of several hundred thousand a year in addition to their huge salaries, and doctors who receive similarly overstuffed salaries, all the while complaining that they’re not making quite enough. On the other hand, you have an increasingly un-unionized force of laborers who are watching their bosses get richer while finding it harder and harder to purchase what even they had grown accustomed to buying.

As our country grays over the next few decades, I find myself wondering whether the problem of the median hourly wage will get better or worse. What will happen, for example, to social security? Will we provide universal health care, as opposed to allowing large fragments of the work force to grow old without the help of modern medicine? And will the graying of America depress real wages because of the health care burden, or increase wages due to a dwindling supply of labor? (I raise that latter point as a question, but I find it difficult to believe that the supply of labor in this country will actually drop – our population seems invariably to be on the rise.)

I have no crystal ball on this issue, but I do have a preference: whatever we can do to ensure that the median wealth in this country is on the rise, and not merely the mean, that’s what we must do. Let’s take care of this situation now before we split any further in two. We’ve tried splitting up before, and while it produced some pretty darned gripping theatre, in the end Lincoln turned out to be right.

No comments: