I'm really not much of a dooms-dayer, even if I sometimes sound like one. I actually prefer to acknowledge, discuss, and debate current shortcomings with an eye towards improving future outlook.. the desired end result, of course, would be preventing any doom.
Not all doom can be prevented, of course, most of all short term. See: The Great Depression. By now we should all know and realize that economies operate as natural systems and, therefore, exist in a certain state of chaos - complexity beyond our means to grasp - even Keynes. No matter how much interest rate finagling the Fed may do, they can't promise to completely smooth out economic cycles. And, indeed, perhaps like a shark who pauses mid-swim, a linear economy will surely die? Who knows, that is pure conjecture.
What I've come to tell you today, however, isn't about sharks. It is about the lacklustre performance of the U.S. economy in the role of preserving (forget about increasing) the average American worker's standard of living. In any given year or time or era, if you look around hard enough, you'll find someone complaining that things used to be better, that things are going into the shitter. I'm not hear to tell you that, I'm just here to point out that the politicians that insist things just keep getting better aren't the only game with an opinion in town, and it is always worthwhile to look at both sides of the coin. Otherwise, how would you know that there is any heads at all?
From the Center for Economic and Policy Research (CEPR) comes this November 2007 report - The Good, The Bad, and the Ugly: Job Quality in the United States over the Three Most Recent Business Cycles
This report looks at the evolution of "good jobs" over the last three business cycles (one each in the 1980s, 1990s, and 2000s), where a "good job" is defined as one that pays at least $17 per hour (the inflation-adjusted median male earnings in 1979) and offers employer-provided health insurance and a pension.
A review of annual data from the March Current Population Survey covering the years 1979 through 2006 finds that the 2000s business cycle underway (2000-2006) has consistently under-performed comparable periods during the preceding two cycles (1979-1985 and 1989-1995).
Major findings include:
- Over the current business cycle, the share of "good jobs" fell substantially (2.3 percentage points), following much smaller drops over the same period in the 1980s (down 0.5 percentage points) and 1990s (down 0.1 percentage points) business cycles.
- The deterioration in good jobs in the 2000s business cycle has been particularly sharp for men -- down 4.4 percentage points, compared to a 3.4 percentage-point decline in the 1980s and a 1.9 percentage-point drop in the 1990s.
- Over the 2000s business-cycle to date, the share of women in good jobs fell (down 0.2 percentage points), reversing the solid positive trends over comparable periods in the preceding two business cycles (up 3.3 percentage points in the 1980s cycle and 2.0 percentage points in the 1990s cycle).
- The 2000s cycle has done relatively well when it comes to increases in the share of jobs that pay at least $17 per hour (up 0.6 percentage points overall between 2000 and 2006). The share of jobs paying at least $17 per hour, by contrast, was essentially flat in 1980s (up 0.1 percentage point) and fell slightly in the 1990s (down 0.2 percentage points).
- The driving force behind the decline in the share of good jobs in the 2000s is the sharp deterioration in employer-provided health insurance (down 3.1 percentage points) and employer-sponsored pension and retirement-savings plans (down 4.9 percentage points).
- The fall off in health and pension benefits has been sharper in the 2000s than it was over comparable periods in the earlier two decades. Health insurance coverage declined 3.1 percentage points in the 2000s, compared to a 0.7 percentage-points drop over a comparable period in the 1980s and a 1.5 percentage-points fall in the 1990s.
- Pension coverage trends have also been worse in the current decade (down 4.9 percentage points) than they were over corresponding periods in earlier cycles (down 3.1 percentage points in the 1980s and up 1.6 percentage points in the 1990s).
The take home message here is highlighted in the fourth bullet point above. Not only has average worker productivity severely increased
since 1979, but the benefits given to those workers has fell, significantly in this decade. Meanwhile, wages have remained basically stagnant.
So who is benefiting from this increased productivity? It's murky. We need to remember that products such as computers and cell phones have consistently come down in prices since 1979.. but we must also remember that the average consumer's need for a computer and a cell phone has only gone up.
Like I said, it is a chaotic, complex economy out there.