For months, the talk in conservative circles has been about the strength of the economy — and the unknown variable that leads Americans to express widespread discontent about the president’s handling of the economy. Growth in the GDP is relatively good, the unemployment rate isn’t awful, interest rates are fairly low, so what’s with all the complaints?
I’m going to go out on a limb here and suggest it has something to do with less money in people’s pockets.
With the [tag]economy[/tag] beginning to slow, the current [tag]expansion[/tag] has a chance to become the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real [tag]wages[/tag] for most [tag]workers[/tag].
That situation is adding to fears among Republicans that the economy will hurt vulnerable incumbents in this year’s midterm elections even though overall growth has been healthy for much of the last five years.
The median hourly [tag]wage[/tag] for [tag]American[/tag] workers has [tag]declined[/tag] 2 percent since 2003, after factoring in inflation. The drop has been especially notable, economists say, because productivity — the amount that an average worker produces in an hour and the basic wellspring of a nation’s living standards — has risen steadily over the same period.
As a result, wages and salaries now make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960’s. UBS, the investment bank, recently described the current period as “the golden era of profitability.”
Hmm, the economy is growing, corporate profits are higher than they’ve been in decades, and more workers have less money. And Bush and his allies are dumbfounded as to why there’s discontent?
Keep in mind, it’s not just wages.
Until the last year, stagnating wages were somewhat offset by the rising value of benefits, especially health insurance, which caused overall compensation for most Americans to continue increasing. Since last summer, however, the value of workers’ benefits has also failed to keep pace with inflation, according to government data.
But you’ve heard that the average income and average rate of consumer spending has risen in recent years? That’s sort of true, but it depends on what you mean by “average.” As Ezra noted, “The reason that the statistics on compensation haven’t attracted more media alarm is that they’ve remained positive: the media reports mean compensations, where massive raises for the rich have kept the numbers positive, rather than median compensation, which has fallen.”
As for the politics of this, Republican pollster Frank Luntz told the NYT, “Some people who aren’t partisans say, ‘Yes, the economy’s pretty good, so why are people so agitated and anxious?’ The answer is they don’t feel it in their weekly paychecks.”
Luntz argued that voters are mad at corporations, not the government, so we shouldn’t expect too much political upheaval as a result of this public frustration. The GOP had better hope he’s right — when the nation has its first expansion in decades that managed to produce negative wage growth, and at the same time one party dominated government, promising that exorbitant tax cuts would lead to an economic nirvana that never came, it might make voters a little feisty.
We can debate whether the electorate is tragically uninformed and what that means to the democratic process, but no one needs to read several newspapers a day to look at his or her paycheck.