Work Harder, Take Home Less.

[Einhander Sn0m4n]

This is CNN.

Work harder, take home less
From 2000 to 2007, worker productivity rose significantly in the United States, but real income fell for middle-class families, a group of economists says.
By David Goldman, CNNMoney.com staff writer
Last Updated: August 28, 2008: 7:05 AM EDT

NEW YORK (CNNMoney.com) -- For most of the past decade, the economy grew much stronger - but middle-class Americans had little to show for it.

That's the conclusion of a trio of economists who on Thursday released a preview of their book The State of Working America in 2008/2009 due out next year.

Despite two periods of recession in the past decade, U.S. worker productivity still rose 18% in the 2000s - about 2.5% per year, according to author Jared Bernstein, a widely followed economist from the liberal-leaning Economic Policy Institute.

But inflation-adjusted income for the American middle-class family actually fell during the same period. The median real income for working-age middle-income families in the United States dropped $2,000 between 2000 and 2007, from about $58,500 to $56,500, the U.S. Census Bureau reported Tuesday.

As a result, the 2000-2007 business cycle was the first ever in which the nation's middle-class families had less real income at the end than when they started.

"It's a compelling example of a large disconnect," said Bernstein. "Americans aren't being rewarded for their productivity."

That's a stark change from 1989 to 2000, when the median income for working-age middle class families rose 10% - about half of the productivity growth over the same period, according to EPI. Had the trend of the '90s continued, the median income of working-age households would have risen by $3,600 instead of falling in the 2000s.

Not every economist agrees with that assessment.

"The numbers are misleading, because you need to take into account everything that workers are earning, including substantially more in health care and retirement plans," said James Sherk, the Bradley Fellow in Labor Policy at the conservative-leaning Heritage Foundation.
Weak job market

Bernstein said the middle class has not taken out an equal share of what it put into the economy because of weak job creation during the decade and a widening gap between rich and poor.

"This is a story of missed opportunity," Bernstein said.

The nation suffered through a weak job market in the 2000s. Jobs grew only 0.6% during the period, which wasn't enough to keep up with the growing population, the EPI said. As a result, there were 1.5 million more unemployed workers at the end of the business cycle than at the beginning.

"The official unemployment rate understated how difficult it was to find a job in the 2000s," said EPI economist Heidi Schierholtz. "The U.S. jobs creation machine came to a screeching halt after the 2001 recession and barely picked up steam in the recovery."

Schierholtz cowrote The State of Working America with Bernstein and another EPI economist, Lawrence Mishel. The book was originally published in 1988; the new edition includes updated chapters on jobs, wages and income.

According to the book, the economy took four years to return to the previous peak jobs level after the 2001 recession - an unprecedented amount of time. The recovery took more than twice as long as the 21-month average of all other recoveries after 1945.

Jobs weren't helped by a second round of very weak economic growth toward the end of the cycle.

"The economy of the 2000s has been like shampoo instructions: Bubble, bust, repeat," Bernstein said. "We need to generate growth that's sustainable, not on bubbles."

By the end of the business cycle, nearly one in five unemployed workers had been out of a job for at least half a year.

Furthermore, one in 11 workers were underemployed in the 2000s, as they were looking for full-time work but involuntarily took part time jobs. Workers' hours were cut by 2.2% in the 2000s, which negated the median family's 1% rise in hourly wages.

Sherk said, however, that unemployment levels are comparable to other decades other than the 1990s, when the tech bubble added a disproportionate number of jobs to the economy.

"Unemployment is high compared to the late '90s, but not the '80s," Sherk said. "It's not unusually high, especially when you consider that the labor force hasn't grown as rapidly this decade as it did in the 90s."
Increased inequality

Another finding from the book:Many middle class Americans who had jobs probably found that their bosses were getting big raises, while their paychecks were staying about the same.

That's because 90% of the growth in U.S. workers' income from 1989 to 2007 went to the top 10% highest earners, EPI said. Income for the top 1% grew 204% since 1989, and the top 0.1% saw their income grow 425% in that span.

But Sherk said the top earners are rarely the same today as they were five years ago. "This is coming from people who weren't in the top 1% before," he said.

"Bill Gates, Jeff Bezos, the Google founders. It looks like they're getting more than their share, but it's actually something else: They're all setting new high standards," Sherk said.

Still, the gap continues to grow. In 2006, the top 1% held the highest share of total U.S. income since 1928, according to EPI.

"There was a vast disconnect in what people earned with what they produced," said EPI's Mishel. To top of page
First Published: August 28, 2008: 5:50 AM EDT

This is unsustainable in its face. Only so much blood can be squeezed from the turnips before they die or take up arms.

[Big Orange]

They'll come a cropper eventually because their eyes are bigger than their stomachs and they're appalling at long term planning (since chasing after short term gain and ignoring long term pain is so inherent in Neoliberalism).

How can businessmen in American and the UK make a profit in the long run if their business practices will possibly impoverish most of their consumers?

[Patrick Degan]

They'll come a cropper eventually because their eyes are bigger than their stomachs and they're appalling at long term planning (since chasing after short term gain and ignoring long term pain is so inherent in Neoliberalism).

How can businessmen in American and the UK make a profit in the long run if their business practices will possibly impoverish most of their consumers?

Ah, but they don't see that. Same trap that Louis XVI and the Romanovs fell into before they were confronted rudely by reality.

[J]

Ah, but they don't see that. Same trap that Louis XVI and the Romanovs fell into before they were confronted rudely by reality.

Or they do see it and plan to be retired in a foreign luxury resort by the time reality gets off its butt and hits them with the big stick.

[Big Orange]

Ah, but they don't see that. Same trap that Louis XVI and the Romanovs fell into before they were confronted rudely by reality.

It does seem to a very slow and subtle class warfare launched against the working and middle classes of the US and UK in earnest since the early 1980s - the wealthy in the 1970s wanted more and were afraid of the commies in the unions. The working class have been long since plundered and now more recently it is the middle class' turn, with the wages being driven down, a Job For Life being a distant memory, and much of the logistical middle management is being sent to India (you know something is wrong when a job that could logically be done better inhouse is suddenly sent to a distant country where the oversized underclass is told to eat rats).

My dad is too blinkered to the see the inherent problem of the super rich, but however that said seems shrewed enough to have recently taken up a job that would be unlikely to be sent overseas or be taken up by a foreign labourer (two popular modes of business seen as 'dynamic'). In the Republican Party aren't the greedy corporate stooges and racists at each other's throats because of Hispanic immigration being exploited? Not that it is a problem since California and Texas initially belonged to the Mexicans anyway.

[Fingolfin_Noldor]

Ah, but they don't see that. Same trap that Louis XVI and the Romanovs fell into before they were confronted rudely by reality.

Or they do see it and plan to be retired in a foreign luxury resort by the time reality gets off its butt and hits them with the big stick.

Someone still has to feed the bastards. What? Do they plan to do their own gardening?

[Big Orange]

Or they do see it and plan to be retired in a foreign luxury resort by the time reality gets off its butt and hits them with the big stick.

Someone still has to feed the bastards. What? Do they plan to do their own gardening?

Then there is the fact that these foreign resorts, often in developing countries, are probably going to be up in arms as well.