May 01, 2014
Is the economy
back to health? Look to the paychecks.
Employment Law Project’s recent review of private-sector staffing since the
Great Recession does not offer hope: “We find that low-wage job creation was
not simply a characteristic of the first phase of the recovery, but rather a
pattern that has persisted for more than four years now. Deep into the
recovery, job growth is still heavily concentrated in lower-wage industries.”
leftists note that an important milestone has been reached. According to the Bureau of Labor Statistics, in March, the
number of private positions surpassed its January 2008 peak. (That’s not a typo
-- there was no net job gain in America’s
accountable, reality-based sector for six
But as “The Low-Wage
Recovery” documents, the quality of the gigs generated during the rebound
isn’t impressive. While lower-wage industries (retail, hospitality) accounted
for 22 percent of job losses in the Great Recession, they’re responsible for 44
percent of employment growth since the slowdown hit rock bottom. Comparable
shares for mid-wage industries (construction, durable-goods production) are 37
percent and 26 percent; for higher-wage industries (engineering, law), 41
percent and 30 percent.
doesn’t reach back further than the recession. If it had, the numbers would be
scarier. Compensation, for those unable to land a government sinecure,
has been close to flat in the last few decades.
snapshot is revealing. Between 1988 and 2013, the average hourly value of
private pay and benefits grew from an inflation-adjusted $27.16 to $29.13.
That’s “progress” of only 0.3 percent a year, despite a massive boost from the
boom times of the late 1990s.
results are all the more infuriating when one grasps the widespread, bipartisan
consensus on what’s good for American workers. Contrary to the claims of pundits
panicked over “gridlock,” in the post-Cold War era, political elites attained
near-complete agreement on the mechanisms needed to raise the U.S. standard of living.
first assumption is that schooling is essential to success in the workplace. Teacher-union
political muscle, “equity” lawsuits, and inattentive taxpayers yielded government
K-12 education obscene windfalls. Class size shrunk. Non-instructional
personnel exploded. Preschool and full-day kindergarten became common. And revenue
flooded into tertiary education. In 1988, 20.3 percent of the adult population
obtained at least four years of college instruction. In
2013, the figure had risen to 31.7 percent.
establishment’s second precept is that science and technology, funded and
choreographed by Washington,
contributes to wealth creation. Even The
Wall Street Journal’s editorial page believes that basic research is a “proper
role for government.” So scientists kept their seats on the subsidy train. Again,
looking at the 25-year period, federal spending on research
and development rose from $116 billion to over $135 billion. States, eager to brag about their prestigious university
systems, added to the largesse.
conventional wisdom holds that planning is preferable to laissez-faire. Politicians and bureaucrats now consider themselves
experts at “economic development.” Between 1988 and 2013, the U.S. Department
of Commerce’s inflation-adjusted budget more than doubled,
from $4.5 billion to $9.9 billion. (Bill Clinton was a big fan.)
At the state
level, tax-abatement, infrastructure-improvement, and job-training schemes are
pervasive. IT, nanotech, stem-cell research, entertainment production, space
tourism, “green” power -- if your enterprise is fashionable, there’s a solid
chance that it can land a sweetheart deal. (At a 2006 shovel-turning ceremony
for the new headquarters of a soon-to-be-bankrupt
subprime lender, Connecticut’s
governor beamed, “This is the new financial-services industry. These are high-paying
jobs -- career jobs. These are the jobs we want for the future.”)
aren’t about to be left out. They pursue downtown “redevelopment,” spending and/or
borrowing billions for sports arenas, convention centers, zoos, aquariums,
museums, and shopping promenades. Eminent domain, prior to the U.S. Supreme
Court’s Kelo decision, was a
frequently used tool.
private-sector workers, the triumvirate -- more education, R&D
“investments,” and crony capitalism -- has flopped. If anything, the policies
have been counterproductive, since all
three tactics expand the payrolls of rapacious government entities.
compensation growth has many causes. Foreign competition is fierce. Investors demand
that costs be constrained. An older population is less likely to innovate and
fueled by junk science, is rampant. Popular culture elevates sloth and
ignorance, and thus, goldbricking is severe. (“Cyberslacking”
But isn’t it
time to recognize the role “public servants,” suffused with “vision,” have
played? It’s blindingly obvious that their prescription for stronger wages and
better benefits has failed. Shouldn’t they face consequences for their incompetence?
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
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