there's a large number of citizens in this country who really don't like what's going on in DC.
I think you are far more correct here than most people realise. Take for example Pelosi's comments on what a $1,000 bonus means to the average wage earner. Last I checked that is a pretty nice amount of money for most people, so nice an amount that California, in its infinite "wisdom", considered it to be a fair fine for a server giving an patron an unsolicited straw. It may not be a significant amount to Pelosi, but she is not the one who is receiving it. Even for someone earning $50,000/year it's nearly an extra week's worth of pay. What could you do with an extra week's pay? New washer and dryer? Back to school clothes? Next Christmas' gift budget? Down payment on a "new" car?
What could you do with an extra week's pay? New washer and dryer? Back to school clothes? Next Christmas' gift budget? Down payment on a "new" car?
Really? You actually went there?
There is no question that there are things people can do with $1000; inflation in the U.S. isn't so bad that one can't find all sorts of ways, even practical ways to spend $1000. The thing about wage increases is that their merit is aptly evaluated not in absolute terms, but in relative terms, and generally, the point of comparison is whether the pay increase materially improves one's lifestyle, which in economic terms is called satisfaction.
While nobody puts a specific dollar sum on what wage increase is enough to create/maintain workers in a state of overall satisfaction with regard to their wages, it doesn't take much to tell that when wages maintain parity with productivity increases, workers are, for the most part, content. Indeed, it's plausible even to surmise that that workers would be content even if wages lagged 10% to 20% behind productivity.
Now one can, and economists do, argue about what caused the nearly 75% lag/gap between productivity growth and wage growth (from the early 1970s, when the split commenced, to the present). The most common and probably causes are (I've merely listed them. Read the linked documents for the details.):
For the most part, among economists, the debate is over the weight assigned to each of those factors more so than whether they each have or have not contributed to the increasing gap between productivity increases and wage increases. [1]
Recognizing that the gap derives from multiple causes informs one that there was a time when it was considered the "norm" that pay and productivity be aligned.
That norm emerged out of negotiations from 1947 to 1950 between General Motors and the United Auto Workers. It then spread through collective bargaining with other auto companies by unions and companies that adapted it to their specific circumstances in other industries and by nonunion firms that wanted to minimize the incentive for their employees to unionize. But something changed around 1980, as the chart shows. Since the late 1940s, however, real wages have increased only about ~15% compared with a ~242% increase in productivity.
Be that as it is, the multiplicity of causes means too that there is "silver bullet" fix. But what if we focused instead on reestablishing a simple norm that wages and incomes should rise in tandem with worker productivity? How might we retrofit the old policies and institutions that supported this norm to work in today’s innovation-based economy?
Such an effort has to start with education. Continual technological changes require both higher levels of skill and the ability to learn throughout one’s career. This calls for strategies that expand apprenticeship programs and technical schools that engender the skills companies will need as Millennials mature into the workforce, as well as expanding the number of college graduates with the advanced science, technical, math and problem-solving skills [2] in high demand.
If global competition makes it difficult to sustain high wages in manufacturing or other industries under outsourcing pressure, then wage increases in these sectors will need to be tied more directly to profits, customer service or other indicators of enterprise performance. This is the approach the United Auto Workers and domestic automakers took to better align incentives of owners and workers in ways that both help drive productivity and reinstall a sense of fairness at the workplace.
While this kind of norm should emerge from the private sector, ultimately it will take a comprehensive update of labor law to provide workers the ability to bargain at the highest levels where the key decisions affecting wages are made.
Minimum wages could also be tied to other economic indicators such as the cost of living or the ratio of the minimum to median wages and raised gradually to allow employers to make adjustments in strategy to avoid or minimize negative employment effects. That’s the
strategy Seattle employed to pass its $15 minimum while easing the impact on business.
What might replace collective bargaining as the means for diffusing this norm across the economy? Here government can learn from its
historic role in spreading equal employment practices across industry when it started in 1965 requiring government contractors to take affirmative actions to eliminate discrimination in employment. The purchasing power of government can be brought to bear by requiring employers to disclose their wage and hour compliance records. It can also give priority in awarding contracts to firms that pay above-average wages and have in place supportive productivity-enhancing work practices. The federal government was on a course to do the first part. President Obama signed an executive order requiring companies to disclose their compliance records, but I don't know if Trump undid that one too.
Nonetheless, what's clear is that wages need to get back into alignment with productivity for whatever increase workers obtain to be "enough." In aligning the wage and productivity increases, we need also to be careful also not to compromise the free hand of the market.
Notes:
- To be sure, while economists acknowledge that it's all those factors combining to cause the gap, one will surely have no trouble finding "wingnuts" -- partisans, ideologues, whatever one cares to call them -- who will insist that it's "this" one that is "the" root of all evil, so to speak.
- As someone who from the mid-to-late 1980s to the mid-2000s taught, interacted with, delivered career development lectures, and interviewed literally thousands of young adults (twenty-somethings to early 30s) seeking high paying jobs in consulting, far and away the most rarely encountered skill was that of structured, sound/cogent analysis and problem solving. I never ceased to be amazed at that being so, but so it was and apparently remains. And I really don't know why because while there are some very specific career paths that require one to "onboard" having deep and strong technical skills in math, accounting/finance, engineering computer programming, the law, or science (social or natural), for many, many more financially rewarding careers strong analytical skills is enough because most jobs have very narrowly defined technical elements, and strong problem solvers/analysts can be taught them in a day or two. Indeed, in most instances, one'll have to teach such techniques to recent grads regardless of what they leave school having learned.
Make no mistake, I daily read posts on this site and wonder to myself how the hell someone let that person out of school with a diploma/degree. I can understand why they let them leave the school, it's just that I don't "get" how or why the school did so and gave the person a "sheepskin." It's for that reason I think the incidence of poor analytical and problem solving skills is no less now than it was when I routinely participated in development and recruitment of junior staff. That is likely the single biggest "WTF" for which I have no good credible answer. And the only reason I care is because such people do have a "sheepskin;" if they didn't, it wouldn't be a problem because the expectations incumbent with having one wouldn't exist.
I too suspect Trump is a last gasp, before the demographic tide of Haitian-style anarchism overwhelms us. I actually expect a breakup rather than a coherent revolution of the whole polity, as happened in France starting 1789. France almost broke up but didn't. We're a lot bigger in territory and political geography matters: look at the fast breakup of the large Soviet Union in 1991.
