Re: U.S. growth

[Doug Henwood <dhenwood@xxxxxxxxx>]

Belatedly....

Louis Proyect wrote:

>Doug, what do you make of Alex Cockburn's recent LA Times article:
>
>Here, on data from the Bureau of Labor Statistics, is what has happened to
>real compensation (wages plus benefits) since the start of the Clinton
>presidency. In 1993, it fell by 0.4%; in 1994, it fell by 0.9%; in 1995, it
>fell by 0.3% and in 1996, it rose by 0.3%.

Two points. First, a sustained unemployment rate of below 5% does seem to
be having the desired effect of boosting real wages, and most of that
action has occurred during the last 12-18 months. So stopping at 1996
misses a large part of the gain. Since the present expansion began in 1991,
compensation (by this definition) is up 3.1% - cume, not annual growth
rate.(Productivity, it should be noted, is up almost three times as much as
wages.) Using this broader compensation measure (part of the quarterly
labor productivity series) was a favorite trick of the right in the 1980s,
since it includes employer-paid health care premiums. While those were
inflating rapidly, it was the brighter measure; now that those aren't
inflating, and workers are losing benefits, compensation is now behind
direct pay. Since most of us used the direct pay number (part of the
monthly employment series) in the 1980s, consistency demands at least
reporting it for the 1990s. Since the dawn of the Clinton era, real direct
hourly pay for all private sector workers is up 2.6%, with most of that
gain in the last year or so.

>By the end of 1996, a median
>income family of four had income 3% below that of a similar family in 1989,
>and just 1.6% above the income of such a family in 1973.

I don't have the family of four numbers at my fingertips, but this is true
of the average household. But, between 1993 & 1996, the average household's
income is up 4.6% in real terms.

>And this has been
>a period when women have poured into the labor force to boost family
>earnings.

Absolutely. As I said here the other day, this is a society that's sick
with overwork.

>It's true that the overall proportion of the population in the work force
>is high, but the proportion of people losing jobs is at an all-time high.
>Between 1992 and 1995, 15% of people holding jobs for more than a year lost
>those jobs, and on average made 14% less than their old wage if they found
>a new one. The rate of job loss in the 1990s boom is higher than in the
>recession years of the early 1980s or early 1990s.

I don't know where these numbers come from. I thought that there's a
near-consensus in the literature that the risk of job loss is not all that
much higher now than in the past, though just because that's the consensus
doesn't mean it's right. And, as Jim Devine and others have pointed out,
the cost of job loss is a lot higher now than in the past - which means,
among other things, that people are less likely to quit a job that sucks.

The BLS recently released its numbers on the share of the workforce that
had a spell of unemployment at any time in 1996 - 11.7%. This is the lowest
number since the series began in 1958. In 1989, the fattest point of the
1980s expansion, the number was 12.9%; in 1979, 15.8%. Also, the 1990-91
recession years saw about 16% of the workforce experiencing unemployment,
compared with 22% in 1982.

>Here's our fundamental truth: What's described as a "boom" today is in fact
>a wage freeze. And the minute Greenspan says it looks as though the wage
>freeze won't hold, the system goes into shock.

One reason I've been pushing the more upbeat side of the numbers is that we
should entertain the possibility that Anwar Shaikh is right, and that the
long "crisis" that began in 1973 is over, and that a long upswing is
underway. I don't know what to believe on this, but if it's true, it should
be good news for labor.

Greenspan's hand has been stayed by the Asian crisis. I'll bet they would
have tightened in November, and/or would tighten at the December FOMC
meeting; 4.6% unemployment and 2% real wage growth is the kind of thing
that Fed governors lose sleep over. But it's very unlikely that the Fed
will pull the trigger as long as Asia's still in trouble. When they do,
though, things could get mighty interesting - and we'll have a better idea
of whether this "boom" is for real, or if it's just made of hot air & paper.

Doug