“The evidence from the past two years strongly supports those who have argued all along that income has not decoupled from productivity. A wide range of economists, including Martin Feldstein, Stephen Rose, Edward Lazear, Joao Paulo Pessoa, John Van Reenen, Richard Anderson of the St. Louis Fed and a team from Goldman Sachs, have produced studies showing wages tracking very predictably with productivity.
If anything, as Neil Irwin of The Times’s Upshot has noted, wages are a little higher than you’d expect from looking at the productivity and inflation numbers alone.The problem of the middle-class squeeze, in short, may not be with how the fruits of productivity are distributed, but the fact that there isn’t much productivity growth at all. It’s not that a rising tide doesn’t lift all boats; it’s that the tide is not rising fast enough.For those interested, Shawn Sprague has a good summary of the data at the Labor Department’s “Beyond the Numbers.” He shows conclusively that during this recovery we’ve endured a historically low labor productivity growth rate of 1.1 percent. By some estimates if productivity increases had kept pace with the mid-20th-century norm, l median incomes would be $40,000 higher than they are today.”
David Brooks, two years of modest growth do not make up for three decades or more of severe decline in middle class incomes.
The comments, as I expected, shred your report. Here are the top ones:
Mark Stave Baltimore 8 hours ago
Mr. Brooks, over the last few years, I have noted with interest your emphasis on character, compassion, empathy, commitment to something larger than oneself.
All of which seems to be belied when you label a 3% increase in household income “especially good news for the poor” I work as a Legal Aid attorney representing abused and neglected children in the foster care system. Please be advised that your ‘especially good news’ has had no impact on the number of children suffering among ‘the poor”.
A 3% increase in the household income in a household where the children don’t have enough to eat – well, that works out to one day a month of not being hungry. This is not good news, this a way for those who live their comfortable lives to justify doing nothing while children are hungry in the richest country on the planet.
Ted Morton Ann Arbor, MI 7 hours ago
The economy IS broken David, you’re wrong.
I run a small company, an LLC, and I pay 35% tax; technically my company pays no taxes but all that happens is that any profits made pass through to the owners who then have that treated as taxes on personal income – for the last 20 years, I have paid 30-35% of my income in tax and over those 20 years my income has been the same – stagnant.
Just Google “companies that pay no taxes’ to find articles that list major corporations that pay zero taxes or, in some cases, negative taxes; these include GE, AT&T, Wells Fargo, J.P. Morgan Chase, Verizon, and IBM – some of the most profitable companies in the world.
Out of the $1,686 billion 2017 global spending on defense, the USA spent $611.2 billion, that’s 36.25% of global defense spending and we are less than 5% of the world population! The minimum wage for those poor people who work at my local TGIFs is $3.38 per hour, our infrastructure is in shreds, and a bunch of billionaires have bought off most of our so-called representatives in Congress who get platinum healthcare for life while voting to deny ANY coverage for 30 million people. The US economy IS VERY broken.
Tim Berry Mont Vernon, NH 7 hours ago
The economy IS broken for the majority of us David and what will fix it is taxes.
MORE, not less taxes. Taxes on the rich and corporations need to get so high that they will no longer have the funds to purchase our “elected” representatives.
Bejay Williamsburg VA 7 hours ago
So Obama’s policies fixed the economy and in the last two years of his administration, things went very well. Fine. Does that make up for the decades preceding?
I have worked in the same place for 38 years. When I started there, in 1980, I was paid $5.00 an hour. Last year the rate for new hires in the same job was raised by more than 10% to $11.00 an hour. No doubt that raise was the sort of improvement Brooks speaks about. However $5 in 1980 adjusted for inflation is equivalent to $15 in 2017 dollars. So, in terms of buying power, new hires are still paid less today than they were in 1980. And the ceiling, the highest rate that a front-line employee can earn, with enough senior-and-merit increases, was recently lowered. So they earn less, and have less hope of improvement in their income if they stay with the job as I have done for almost 38 years. I know now that it is highly unlikely I will ever make a penny and hour more than I do now.
These are a kind of direct public service jobs, but in which skill, experience, and knowledge are assets. There has not been much room for increased productivity, except in the sense that staffing is reduced, and everyone has to work harder than we once did. Working harder to receive less in buying power, while things like health insurance take a bigger chunk of the gross than they did 30 years ago. This is not progress.
I did not think I was living high in 1980, but compared to the young people coming in today …
chickenlover Massachusetts 7 hours ago
The “problem of the middle-class squeeze” is explained by Brooks to be the result of stagnation in productivity. He goes on to note that ” It’s not that a rising tide doesn’t lift all boats; it’s that the tide is not rising fast enough.”
Well, if it is the case that the “tide isn’t rising fast enough,” then I’d ask Brooks to explain how the ultra rich had such a boost in their income and why their share of the total wealth increased as much as it did?
Socrates is a trusted commenter Verona NJ 4 hours ago
Lord Brooks thinks two years of good economic news (thanks to Obama-era progressive policies) has cured three decades of right-wing Grand Old Parasitism that has systematically leeched the economic blood out of the middle class, the poor and the common good.
Look at the data for the preceding 34 years of cruel and sadistic Reaganomics that we’re still drowning in, Mr. Brooks.
Incomes for the top 0.001% richest Americans surged 636% during the 34-year period between 1980 and 2014
Meanwhile, the average pretax income of the bottom 50% of Americans has stagnated since 1980, while the share of income going to Americans in the bottom half of the distribution collapsed from 20% in 1980 to 12% in 2014.
The top 1% made 12% of income in 1980, but it’s up to 20% in 2014.
The top 1% of US adults now earns on average 81 times more than the bottom 50% of adults; in 1981, they earned 27 times what the lower half earned.
And the wealth picture is even bleaker.
The richest 10% of American families are worth a combined $51 trillion, equal to 75% of American household wealth.
And the eight richest humans on the planet have as much accumulated wealth as the poorest 3.6 billion humans.
But according to David Brooks, everything’s pretty good thanks to two years of 3% raises for the peasants after a near liftime of Grand Old Plantationomics.
Get your head out of the Republican sand and wake up, Mr. Brooks.