Excerpt from a Boston Globe article on U.S.A. wages...
The following excerpt comes from an article by Robert Kuttner I found on CommonDreams.org. Entire article is found here: http://www.commondreams.org/views06/0401-20.htm
"....In the current recovery, for the first time since the government has kept such statistics, median household income has lagged behind inflation in a recovery for five straight years.
Census data show median household income fell 3.8 percent or $1,700, from 1999 to 2004, according to economist Jared Bernstein of the Economic Policy Institute (on whose board I serve.) And this drop occurred during a period when average productivity rose three percent per year.
Moreover, as economist Jeff Madrick has observed in his book ''Why Economies Grow," , the reality is worse because prices of commodities that make us middle class are rising much faster than inflation generally: housing, college education, health care, and also child care. These very rapid price increases are offset by falling costs of consumer electronics, basic food, and clothing, creating misleadingly low inflation measures.
It's great that shirts are cheaper than a decade ago, and that we all have cell phones. But that doesn't exactly substitute for a house, an affordable college education, or health care.
According to economist Bernstein, whose study covers the years 1991-2002, households in the middle fifth of the economy increased their incomes (not adjusted for inflation) by 41 percent. Inflation during that period, as measured by the government's Consumer Price Index, went up 33 percent. That implies real living standards rose by a not very impressive 8 percent during more than a decade.
But hold on. During the same period, housing, healthcare, education, and child care went up 46 percent, or more than incomes. We cannot afford the big things we need and comfort ourselves with gadgets. The cheaper laptop, plasma TV, and GPS screen in your car make it appear statistically that living standards are not falling as much as they are.
The emblem of the new economy might be a 35-year-old, listening to an iPod, living in a house much smaller than the one he grew up in.
To use a favorite word of my grandmother's, call it the Tchotchke Economy (a Tchotchke is a small trinket): Plenty of nifty, ever cheaper electronic stuff -- and ever more costly housing, education, healthcare. An iPod is swell, but it doesn't exactly make you middle class.
Why does this describe America in 2006? Don't blame it on immigrants. Blame it on the people running the government, who have made sure that the lion's share of the productivity gains go to the richest 1 percent of Americans. With different tax, labor, health, and housing policies, native-born workers and immigrants alike could get a fairer share of our productive economy -- and still have the nifty iPods."
Robert Kuttner is co-editor of The American Prospect. His column appears regularly in the Globe.
