An Unwieldy Economic Recovery - by H. Meyerson

 

An economic recovery that leaves workers further behind
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By Harold Meyerson,
Washington Post / Opinions
Published: April 10
Why is this recovery different from all other recoveries?

Many of the reasons are widely known: Rebounding from a financial crisis takes an excruciatingly long time; the huge decline in housing values has reduced Americans’ purchasing power; large corporations are making do with fewer employees — at least, in this country.

But what really sets the current recovery apart from all its predecessors is this: Almost three years after economic growth resumed, the real value of Americans’ paychecks is stubbornly still shrinking. According to Friday’s Bloomberg Brief, “the pace of income gains is well below that of the past two jobless recoveries and real average hourly earnings continue to decline.”

The Bloomberg report cites one reason for this anomaly: Most of the jobs being created are in low-wage sectors. According to Bloomberg, fully 70 percent of all job gains in the past six months were concentrated in restaurants and hotels, health care and home health care, retail trade, and temporary employment agencies. These four sectors employ just 29 percent of the country’s workforce but account for the vast majority of the jobs being created.

Among the economy’s better-paying sectors, construction still has an unemployment rate of 17 percent. Given the persistence of mass foreclosures, the continuing decline of housing values and Republicans officeholders’ reluctance to allot public funds even for paving roads, construction isn’t coming back anytime soon.

Hiring has picked up in manufacturing, but manufacturing wages are falling nonetheless. The standard wage at Midwestern auto factories has declined from around $28 an hour to $15 an hour for workers hired during the past two years. New hires have their hourly wages contractually capped around $19, no matter how long they may work for the automakers. But the plunge in wages hasn’t stopped at $15. At a new high-tech locomotive plant in Muncie, Ind., Caterpillar is hiring workers at $12 an hour. That’s $24,000 a year — let’s say $30,000 with overtime, if there’s overtime — to assemble some of the most sophisticated machinery that this country builds. That’s not the kind of money you can send your kid to college on, or use to shop for much more than your daily bread.

So, if not to workers, where’s the money going? Of the companies that comprise the Standard and Poor’s 500, net income (chiefly, their profits) has risen 23 percent since 2007, the last year of the bubble, the Wall Street Journal reported this week. Their cash reserves have increased 49 percent during that time — in large part because they’re neither hiring in the United States nor boosting their workers’ incomes. Workers are producing more: “In 2007, the companies generated an average of $378,000 in revenue for every employee on their payrolls,” the Journal reported. “Last year, that figure rose to $420,000.” But workers are seeing none of that increase in their pay.

Profits and dividends are up and wages are down — which is why, as University of California economist Emmanuel Saez has documented, all income growth in the United States in 2010 went to the wealthiest 10 percent of households, and 93 percent to the wealthiest 1 percent. Profits and dividends are up largely because wages are down, as JPMorgan Chase chief investment officer Michael Cembalest has documented. “U.S. labor compensation,” Cembalest wrote in a newsletter to the bank’s major investors last year, “is now at a 50-year low relative to both company sales and U.S. GDP.”

Why is this recovery different from all other recoveries? Because American workers have lost all their bargaining power. That’s a function of ongoing high unemployment levels, but not only that. The 1981-82 recession had even higher rates of joblessness, but wages didn’t continue to decline during the ensuing recovery. There have been two fundamental alterations in the U.S. economy since Ronald Reagan was president, however. First, American multinational corporations now locate much of their production abroad. Second, with the rate of private-sector unionization down to a microscopic 6.9 percent, workers have no power to bargain for higher pay. Employers can serenely blow them off — and judging by the data, that’s exactly what employers are doing.

This recovery differs from its predecessors because it is concentrated among the affluent, and almost entirely among the very rich. Until we address the imbalance of power in the U.S. economy, and until Americans regain the clout that their parents and grandparents had to compel employers to share their revenue more equitably, the difference between our recoveries and our recessions will grow harder to discern.
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meyersonh@washpost.com

"Lying as a Business Plan" - by Richard Cohen

Mitt Romney, a man of falsehoods
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By Richard Cohen *
Washington Post / Opinion
Published: April 16,2012   Among the attributes I most envy in a public man (or woman) is the ability to lie. If that ability is coupled with no sense of humor, you have the sort of man who can be a successful football coach, a CEO or, when you come right down to it, a presidential candidate. Such a man is Mitt Romney.

Time and time again, Romney has been called a liar during this campaign. (The various fact-checking organizations have had to work overtime on him alone.) A significant moment, sure to surface in the general election campaign, came during a debate held in New Hampshire in January. David Gregory, the host of “Meet the Press,” turned to Newt Gingrich and said, “You have agreed with the characterization that Governor Romney is a liar. Look at him now. Do you stand by that claim?”

Gingrich did not flinch. “Sure, governor,” he started off, and then accused Romney of running ads that were not true and, moreover, pretending he knew nothing about them. “It is your millionaire friends giving to the PAC. And you know some of the ads aren’t true. Just say that straightforward.”

Me, I would have confessed and begged for forgiveness. Not Romney, though — and herein is the reason he will be such a formidable general-election candidate. He concedes nothing. He had seen none of the ads, he said. They were done by others, he added. Of course, they are his supporters, but he had no control over them. All this time he was saying this rubbish, he seemed calm, sincere — matter of fact.

And then he brought up an ad he said he did see. It was about Gingrich’s heretical support for a climate-change bill. He dropped the name of the extremely evil Nancy Pelosi. He accused Gingrich of criticizing Paul Ryan’s first budget plan, an Ayn Randish document whose great virtue is a terrible honesty. (We are indeed going broke.) He added that Gingrich had been in ethics trouble in the House and ended with a promise to make sure his ads were as truthful as could be. Pow! Pow! Pow! Gingrich was on the canvas.

I watched, impressed. I admire a smooth liar, and Romney is among the best. His technique is to explain — that bit about not knowing what was in the ads — and then counterattack. He maintains the bulletproof demeanor of a man who is barely suffering fools, in this case Gingrich. His message is not so much what he says, but what he is: You cannot touch me. I have the organization and the money. Especially the money. (Even the hair.) You’re a loser.

There are those who maintain that President Obama, too, is a liar. The president’s recent attack on Ryan’s new budget proposal sent countless critics scurrying to their thesauruses for ways to say lie — “comprehensively misrepresenting” is the way George F. Will put it. (He also said Obama “is not nearly as well educated as many thought.”) Obama does indeed sometimes play politics with the truth, as when he declared that a Supreme Court reversal of his health care law would be unprecedented. He then backed down. Not what he meant, he said.

But where Romney is different is that he is not honest about himself. He could, as he did just recently, stand before the National Rifle Association as if he were, in spirit as well as membership, one of them. In body language, in the blinking of the eyes, in the nonexistent pounding pulse, there was not the tiniest suggestion that here was a man who just as confidently once embodied the anti-gun ethic of Massachusetts, the distant land he once governed. Instead, he tore into Obama for the (nonexistent) threat the president posed to Second Amendment rights — a false accusation from a false champion.

A marathon of debates and an eon of campaigning have toughened and honed Romney. He commands the heights of great assurance, and he knows, as some of us learn too late in life, that the truth is not always a moral obligation but sometimes merely what works. He often cites his business background as commending him for the presidency. That’s his forgivable absurdity. Instead, what his career has given him is the businessman’s concept of self — that what he does is not who he is. This is what enables the slumlord to be a charitable man. This is what enables the corporate raider to endow his university. Business is business. It’s what you do. It is not who you are. Lying isn’t a sin. It’s a business plan.

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* cohenr@washpost.com