We Live in Different Worlds

Printable Version | [eMail this article!] |

Whose economy is it? When we're told how well the economy is doing, exactly whose life are they looking at? A prime example of the reality of the US economy is in the 7/18/04 NY Times. In the "Your Money" section Gretchen Morgenson writes No Wonder C.E.O.'s Love Those Mergers. She writes:

SHAREHOLDERS like it when their companies are acquired, because their stocks rise in value. Chief executives like it, too, because their severance agreements kick in. And that means they can become truly, titanically, stupefyingly rich.

Her examples include:
Wallace Malone of SouthTrust who got a $59 million termination packets and a $3.8 million annual pension.

Wallace Barr of Ceasars Entertainment is up for a $20 million "change of control provision," with another $6.6 million if Harrah's and Ceasar's actually merge.

On the other end of the spectrum we have (most of) the rest of the population. In the "Business" section, Eduardo Porter contributes Hourly Pay in U.S. Not Keeping Pace With Price Rises. He states:

he amount of money workers receive in their paychecks is failing to keep up with inflation. Though wages should recover if businesses continue to hire, three years of job losses have left a large worker surplus.

"There's too much slack in the labor market to generate any pressure on wage growth,'' said Jared Bernstein, an economist at the Economic Policy Institute, a liberal research institution based in Washington. "We are going to need a much lower unemployment rate.'' He noted that at 5.6 percent, the national unemployment rate is still back at the same level as at the end of the recession in November 2001.

He notes that the average worker lost about $8 a week between January and June of 2004. That's about two dollars a week, which may not sound like much but it adds up - particularly at the lower end of the wage scale.

The following quote is particularly damning (emphases mine):

Wages at the bottom should eventually recover, as businesses continue hiring to meet growing demand. The question is how fast. "As unemployment slides down, more of the benefits of growth should flow to the working class," Mr. Bernstein said. "But not until we reach truly full employment are they likely to see their earnings rise at a level closer to that of productivity."

The first part, "should" is total hyperbole, because the last part, "truly full employment," is stratospherically unlikely. I doubt that the US has had a period of full employment in the 19th or 20th century. Particularly over the last 30 years, unemployment has been manipulated to control both inflation and the costs of labor - raise unemployment and cost of labor and inflation (hypothetically) go down. Of course, that is a "control" that is born by workers - and not by corporations and those at the top - as noted in Morgenson article.

This, is the capitalist economy at work.

Posted by rowan at July 18, 2004 09:08 AM | TrackBack | Printable Version | [eMail this article!] |