American Wages Out of Line?

[Hannah Bell]

The NYT told readers that wages in the United States are out of line with the rest of the world. The basis for this assertion is that the U.S. has a large trade deficit.

http://www.nytimes.com/2009/11/11/business/11views.html?ref=business

The deficit does provide evidence that prices in the U.S. are out of line, but it doesn't necessarily tell us anything about wages. First and most immediately, it suggests that the dollar is over-valued (a point noted in the column). The real value of the dollar is still up from its levels in the mid-90s. A lower valued dollar will reduce wages in the U.S. relative to our competitors, but it will have only a limited impact on real wages in the U.S. (Import prices will rise, which will lead to a limited drop in real wages. For example, if import prices rise by an average of 15 percent, this will lead to a fall in real wages of 2.4 percent.)

It is also possible that U.S. goods are not competitive because profits are too high. The profit share of income had risen over the last three decades, so one could plausibly argue that excess profits are making U.S. goods less competitive. We could also argue that the inefficiency of the sectors of the economy that are protected from foreign competition -- most notably health care -- is driving up the price of U.S. goods and making them uncompetitive. In that story, the problem is not the wages of auto and textile workers, but of doctors and hospital administrators.

- dean baker

http://prospect.org/csnc/blogs/beat_the_press_archive?month=11&year=2009&base_name=american_wages_out_of_line

[Brickbat]

1. Well, sure. And so are our labor standards, environmental regulations, cost of living and cultural

standards. Might as well just chuck all them out the window, too, so we can all look like Hanchen City (to pick one at random) -- oh wait, I keep forgetting: THAT'S WHAT THEY FUCKING WANT.

[FormerDittoHead]

2. Do these guys shop for houses or food? How low are our wages supposed to go? n/t

[Romulox]

3. I think they are. I've long argued that the service sector can't be shielded from globalism

There's no moral argument to be made that certain sectors of the economy (namely manufacturers) should "compete" with the world, but that other sectors can (or should) be protected. :shrug:

[RaleighNCDUer]

5. Nonsense.

The wages of burger flippers and bus drivers has NOTHING to do with it - it's the upper management of ALL sectors sucking up extraordinary salaries and perks that is the problem.

We were competitive in the global economy 25 years ago when we had a great disparity of wage income between US workers and overseas labor - but now, with CEOs making 400x the wage earner's pay instead of 40x the wage earner's pay, NOW we are not competitive, and their answer is to depress the wage earner's pay even more.

This is class warfare, and we are LOSING.

[Spider Jerusalem]

11. Competitive in the global economy 25 years ago...

BEFORE the industrialisation of India and China which have larger reserves of relatively unexploited natural resources and lower employment and manufacturing and raw materials costs, etc...

[Romulox]

12. Wages are set by *supply and demand* not your conception of "fairness"

:hi:

[RaleighNCDUer]

16. Again, nonsense.

Supply and demand has ALWAYS been mitigated by political and economic necessity. There is no such thing as Randian unfettered capitalism, and the idiots that have been trying to serve exactly that up to us for the past 30 years are the ones responsible for the wage disparities, the outsourcing of industry and the flight of capital from the US - they are LOOTERS, not businessmen, who are trying to get everything they can out of the system before it collapses under their excesses.

Supply and demand does NOT apply to wages when those running the economy are deliberately maintaining high unemployment for the purpose of undercutting any possibility of the workers demanding higher wages - they can always reach into the pool of the unemployed to get someone who will work cheaper.

[Romulox]

17. Of course supply and demand applies to wages.

I'm not the author of economic injustice just because I point out how this works. Whether or not the supply of, or demand for, labor remains manipulated, wages are set by supply and demand, not by "justice".

The true delusion is the idea that one can make a deal with the devil (i.e. subscribe to neoliberal economics) and not get cheated.

[Sinti]

4. This is more of their campaign to sell the "new normal"

Our wages and job opportunities will diminish, unless we step up and stop them. We will be made to believe it's the only way we can go forward, our survival depends on accepting less and doing more. Be glad you're not one of the homeless, worthless, and dying. Look at the slums of India, then look at the cities near your hometown - they will be the same if we continue down this road. It's really our choice, but first we have to realize we have a choice.

[Echo In Light]

8. And when it gets ugly, whip out that "anti-terror" legislation, since that's what it's intended for

[Sinti]

10. Boo!

This is precisely why we need some kind of peaceful revolution of the mind throughout our society. So that we don't have to worry about such heinous potentials in the matrix, because we know our brothers would not be willing to serve the few and participate in such things. They can't do anything of the kind without cooperation from some.

This is the only valid solve for that particular type of equation, IMO. What do you think? How do you capture the minds of the 'still stuck to conservative' side?

[napi21]

6. I guessd I shouldn't cherry pick the report, but profits ARE way too

high in some sectors! There is no lagic why anyone should make multi-millions each year for doing anything! Most of the sectors involved in this insane earning structure are things you can't say "the hell with it I'm not paying that much!" You have no choice in buying HC or prescription drugs other than to go without and die!

[Sherman A1]

9. Agreed & Well Said

You and several others responding hit the nail on the head (watch out for those carpenter's wages). If wages are too high, certainly corporate profits are as well. Do not American consumers account for a substantial part of the economy? If wages are too high, then how are we to purchase all those things such as housing, autos, healthcare, food and the many things that China wishes to export to us? What happens to all those jobs in the supply chain, if the consumer can no longer afford to buy as many items?

This is bunk.....

[Wapsie B]

7. The last sentence tells it all.

Although I don't hold it against a physician if they make a high income. They have skills that took years to perfect and saved many lives in the process. If a surgeon makes a 7-figure salary (or more) so be it. What I have a problem with are those like the former head of United Healthcare with his billion dollar + compensation and the army of administrators clogging the healthcare system in this country.

[TheKentuckian]

13. Of course! How did we miss it?!? The problem with the economy is

that burger flippers can afford an occasional burger.

If only these devils would learn to live on a dollar a day as their station rightfully deserves then everything would be golden! Then as soon as possible we need to get the so called "middle class" to understand that several families can share a 2 bed room apt and then we'll have a real sunrise in America. How long can we expect the top 10% to get by with only 50% of the income?

:sarcasm:

[Romulox]

14. This is how globalism works. It flattens wages in ALL sectors, not just manufacturing.

:shrug:

[Bigmack]

15. Welcome to the Third World, folks.... nt