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Pay no attention to the people behind the curtain

Thursday, August 31, 2006

Don't Blame Doyle for Wage Drop: Blame Republicans

The Right Cheddarsphere is atwitter over this story from yesterday:
Feeling pinched financially? If you live in Wisconsin, you're not alone, because median household income in the state declined by $2,226, to $45,956 in 2004-'05, according to U.S. Census Bureau data released Tuesday.

The stunning drop meant that Wisconsin scored the third-largest decline, behind Virginia and Kansas.
Taking their cue from Mark Green, quoted later in the story, the righties are all over Doyle on this issue. A couple of examples:
  • Peter DiGaudio writes, "[I]ncome earners in Wisconsin have experienced a major drop over the past two years on Diamond Jim’s watch. A decrease of $2,226 dollars or a drop of 4.6 percent. Only two states were worse: Kansas and Virginia. Combine that with taxes of all kinds going up and you have a recipe for people leaving the state."
  • Owen strikes a similar refrain: "Our taxes didn’t go down at all over the same period. In fact, they went up." (One of his commenters expresses mock disbelief that "Doyle’s minimum wage stunt didn’t work." That would be the minimum wage increase that didn't happen until this year, and, therefore, doesn't make the study.)
  • Elliot predicts this post of mine: "I can’t wait to see how Wisconsin Governor Jim Doyle’s people manage to make this George Bush’s fault."
  • Decidedly non-righty Tony Palmieri still blames Doyle: "Doyle has given Wisconsin Manufacturers and Commerce everything it wanted. Never before in the history of Wisconsin have big corporations, whether in or out of state, had as much of a friend in the guv house. Not even in the dog days of Tommy Thompson did big business call the shots like they do now."
Trouble is, they're pointing the finger in absolutely the wrong direction. Doyle, certainly, is in an unenviable position, and this story perfectlt fits the Journal Sentinel's one-paper front-page war-on-Doyle world-view. But, what is happening in Wisconsin is probably just a more profound represntation of what is happening nationally.

In other words, the bad news Wisconsin's workers are getting is not Doyle's fault, but the fault of Bush and the Republicans in Congress.

Now, I know what you're thinking: Jay, you're saying to yourself, isn't that just your Bush Derangement Syndrome talking? In fact, no. Here's a graph, courtesy of The Big Picture, from a report by the Federal Reserve:


You'll have to click to get the larger version if you can't read that, but the dark line at the bottom of the graph is worker compensation as a percentage of US Gross Domestic Product. The lighter line at the top is the percentage of corporate profit as a percentage of US GDP. Notice what happens in 2001: The corporate profits line heads up, and the compensation line heads down. Was Jim Doyle elected in 2000? No. Could the fall in Wisconsin's wages be be responsible for such a sharp drop in compensation nationwide? No.

Consider this New York Times story from Monday:
With the economy beginning to slow, the current expansion has a chance to become the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages for most workers. [. . .]

The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The drop has been especially notable, economists say, because productivity--the amount that an average worker produces in an hour and the basic wellspring of a nation’s living standards--has risen steadily over the same period.
Can Jim Doyle possibly have managed to get average wages to drop nationwide since 2003? No.

Clearly something bigger is happening here. The graphics accompanying the story lay it out: Wages are at their lowest share of GDP ever. Two things to note: First, nationally, we're working better than ever; however, we're not seeing the rewards for our hard work. Second, though the Census Bureau notes that per capita median income is up, mean hourly wages are down. That might seem to be a contradiction, but what it really means is that the rich are getting richer and us working stiffs aren't.

More from the NYT:
Average family income, adjusted for inflation, has continued to advance at a good clip, a fact Mr. Bush has cited when speaking about the economy. But these gains are a result mainly of increases at the top of the income spectrum that pull up the overall numbers. Even for workers at the 90th percentile of earners--making about $80,000 a year--inflation has outpaced their pay increases over the last three years, according to the Labor Department.
That is just an absolutely stunning statment: You have to be in the top 10% of earners over the last three years to see your income beat inflation--and we're not in a recession! How many of you are in the top 10%? I'd bet very few. When you click through to the Journal Sentinel's graphic, you can see clearly what the the Census Bureau means when it says that "Real median income of households rose in the Northeast (2.9 percent) and in the West (1.5 percent) between 2004 and 2005. Income remained statistically unchanged for the South and Midwest." How many of the top 10% of earners live in Wisconsin--or the Midwest generally--compared to the Northeast and West, where wages grew faster?

Probably the single most appalling statement from the NYT article, though, was this one:
Total employee compensation--wages plus benefits--has fared a little better. Its share was briefly lower than its current level of 56.1 percent in the mid-1990’s and otherwise has not been so low since 1966.

Over the last year, the value of employee benefits has risen only 3.4 percent, while inflation has exceeded 4 percent, according to the Labor Department. [. . .] In another recent report on the boom in profits, economists at Goldman Sachs wrote, “The most important contributor to higher profit margins over the past five years has been a decline in labor’s share of national income.”
There is absolutely no arguing the point--the economy is "booming" because you and I are seeing our compensation fall. Do you follow? What has pulled this country out of a recession and restored business growth is an economic policy that incents business to screw labor. Our boats aren't rising on this tide; they're being deliberately torpedoed.

I have no problems with companies making a profit. I don't even always have a problem with companies making obscene profits, the way, say, Big Oil or Big Pharma do. But when that profit comes entirely at the expense of those who need to buy their products--can you live without gas or your prescriptions?--there is a moral line they've crossed.

What could Jim Doyle have possibly done in the last three years to encourage Wisconsin employers to share the wealth? Palmieri's critique of Doyle as already business-friendly is a common one even among Doyle supporters, let alone Greens. Wisconsin's corporate taxes are about as low as we can make them without their complete disappearance. Even allowing business to destory the environment in an effort to create jobs is meaningless if the business won't share the joy with its workers, if the only ones profiting are the ones who do so at labor's expense. Even Green's plan to personally hand out checks to business will do little to change the fact that business is not rewarding labor for higher productivity and is, instead, keeping the profits to itself.

What about what the Right Cheddarsphere wants--tax cuts? Cutting the tax rate for that top 10% of earners just might draw a lot of them to the state, which, you know, would certainly increase that average income figure. But it still wouldn't do a thing for me or you, unless you happen to be in the yacht business.

This is not to say that we need to reject every BuySeasons.com that comes along that doesn't offer high wages. (In fact, I think next year's number will be better given the minimum wage increase that did happen this year, to go higher in 2007, meaning low-wage workers will probably see higher growth than the middle class.) This is not even to suggest that we instigate some kind of mad socialist scheme where we track down anyone in the state who is in the top 10% to make them hand over their booty to us average joes and joe-ettes.

What I am suggesting is that the blame lies at best in non-partisan "national trends," not in the Governor's office. At worst, as the data suggest, we can identify Republican economic schemes applied nationally that have encouraged the trend of growth for 10% and struggle for the vast unwashed masses. And who was it who was sitting in Congress that whole time, mindlessly supporting every economic policy to come out of the Bush White House that told business to screw you?

If you said "Mark Green," you'd be right. Now, if only you could be paid for being right . . .

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