Farmboy, I feel you

[Kennigit]

does that address 2010-2016?

because inonimatu's post shows record profits for 2010-2016 without wage stability and without wage growth

 

[Hygro]

Wages are starting to creep up for the first time since the last brief jump (recovery) in the late 90s, the previous, brief, good time for corporate profitability since the early 70s.

What's important is not "If profits THEN wages" but rather, "If wages THEN been had profits". Corporate profits can come from all kinds of places, including wage suppression. But wages growing over the longterm requires an economy that is investing, which historically comes from large margins of profit.

 

[innonimatu]

That it wrong and you should know it: why invest if there is no market for new production? No buying power?

If accumulated profits then investment only works if there is a market waiting: some other region or country where wages have already gone up and that is buying. "Free trade" used to provide that, new markets across the world... but it brought all the world into line in a "consensus" that exports are good, "competitiveness" (code word for wage suppression and maximizing profits, among other things) is good, and consumers can buy out of credit. And that last part, consumer credit, made this system work a little longer after the world trade system based on some markets running (state-financed) deficits collapsed in the late 90s (Asian crisis, etc). Then the credit patch failed also in 2008, as it was bound to. And that was patched over with zero interest rates and new lending, and more state financing. Now that is hitting political limits, failing too. Barring the martians showing up and starting to buy stuff, something is going to break. A lot is going to break, actually. The "globalization" model is collapsing, both economically and politically.

I would also argue that corporations don't raise wages out of the kindness of their overlord's hearts, they raise them because they are forced to, and that force is more often political in origin than economic. But that should be part of another discussion. My point here is that the textbook model of economics that was used to present and defend "globalization", "free trade", etc, is having its limits exposed now. Which is no surprise: these systems were never stable in the past, why should the neoliberal one be?

 

[Hygro]

Nonetheless, the major wage gains in America have come at times of high corporate profitability. This was most pronounced between 1890-1913 and 1948-1973. You can also see wage weakness in times of low corporate profitability, such as the 1980s.

 

[aelf]

@aelf: I'll quote something I said about this earlier in the thread. I admit I haven't done enough data analysis from the Gallup report to see how much truth there is to my claims above. I do remember that one of the things that is most predictive of Trump support is economic anxiety, which strangely doesn't correlate well at all with income. The result is that there are a lot of people who have incomes above the median, but are still anxious about their position and have a pessimistic view of the economy. These make up a substantial fraction of votes for Trump.

Social class here is likely to have as much if not more to do with education status than with income, as well. Plumbers and electricians often make more money than teachers or postdocs, but the former are considered working class while the latter are middle class. The college-educated/non-college-educated split among white voters is enormous in this election cycle, even though the income differences among white voters for Clinton vs. Trump are not significant.

Then the power in the narrative evaporates. People being economically anxious while having more money than average is even less of a license to turn towards intolerance and authoritarianism. While the choice might make some kind of psychological sense, there's not much of a mitigating factor morally speaking, which is pretty much the idea that the narrative is trying to sell - i.e. that we should be able to emphatise with them. What empathy can you expect when the reason for all your angst is simply because you are anxious or have read fewer books?

 

[BvBPL]

Those jobs are gone forever and they are not coming back.

For a long time, the middle class has been dismissive of the woes of the working poor. We’ve rationalized their ever-deepening spiral into destitution by saying that the world economy is changing and that jobs that were once the steady bedrock of the working class, jobs that could feed a family, are being washed away in that change.


What we missed is how those economic changes are also creeping in on the middle class. The fruits of the last thirty years of growth have gone to wealthy by a huge amount, and the middle class has gone crumbs. While those crumbs were sufficient for a long time, now the fallings from that rich table are looking thin. This making a lot of people very nervous and fearful.


There are many reasons why the fruits of economic expansion are falling one way and while the lower and middle classes are getting squeezed. Suffice it to note that there is a structural inequality inbuilt into our economy and our culture. While that can be changed, change at that level takes a fair bit of work and will be difficult. What form that will change take, if it occurs, is unknown at this time.


People gravitate towards Trump (and Sanders) because he represents change from the current status quo that isn’t working out for people. Many Trump voters are more interested in change for its own sake than what form the change takes.


This is an emotional reaction, not a logical one. The emotional reaction precedes the rational response. This explains why people are considering voting for Trump despite it not being in their self-interest and explains why the largely Apollonian CFCers can’t quite wrap their heads around Trump’s rise. To move forward with a rational response, we necessarily must work through the emotional reflex first. Trump is that reflex. This explains why every little thing the reflex does leaves you answered with a question mark.

 

[metalhead]

That's not a complete picture of what is happening, though. More of the shrinking middle class has actually gone up the economic scale as opposed to down. This is why Trumpism is set to be defeated big league at the polls in a couple of weeks. More middle class families are actually seeing their kids do better than they did, have a higher standard of living, etc. As always the focus is on the plight of the white working class, but there is good economic news out there that points to the fact that it doesn't have to all be doom and gloom.

There are obviously seismic changes in our country's economy that are still being wrung out. The biggest difference between the industrial revolution and today's revolution is that the evolution from an agrarian to an industrial economy didn't require people to acquire additional skills. For the most part you could move from farm to factory with a little training. These days it's different, and I think that is an integral part of the challenges we face in revitalizing these communities for the next economic paradigm.

 

[innonimatu]

Nonetheless, the major wage gains in America have come at times of high corporate profitability. This was most pronounced between 1890-1913 and 1948-1973. You can also see wage weakness in times of low corporate profitability, such as the 1980s.

Looking at the data I don't see any such correlation in the last 30 years, whatever may have happened before (also questionable , judging from the data). The point is, in living memory the correlation has been higher profits - lower wages. And that is bound to have consequences.

 

[Gori the Grey]

the reflex does leaves you answered with a question mark.

Wow. I'd always heard it as "is an answer with a question mark."

And "Apollonian"! Haven't heard that in a while!

 

[BvBPL]

More of the shrinking middle class has actually gone up the economic scale as opposed to down.

Show me.

Wow. I'd always heard it as "is an answer with a question mark."

And "Apollonian"! Haven't heard that in a while!

We aim to please. and CFC is certainly Apollonian.

 

[metalhead]

Show me.

538 did a story on this, using some Pew research which has concluded that while the majority of people are no longer middle class, the middle class has shrunk in response to more people being among upper-middle and wealthy, than are counted as lower-middle or working/poor. The money shot:



As you can see, the lower income levels have an additional 4% in them, but the higher income levels have an additional 7% in them. Now, this still means that we have more poor people and, probably most distressingly, a higher percentage of people living in poverty than we did in 1971. This chart also is a very clear indicator of how income and wealth inequality are continuing to get worse. But these trends have meaning beyond their negative aspects. For starters it means that globalization and increasing higher education rates really have produced positive results in pushing more people up the income ladder. The trick is figuring out how to get some of that newfound wealth and income back to people in the lower income brackets without providing too much of a drag on the ability of people to move upward.

 

[Gori the Grey]

while the majority of people are no longer middle class, more are now upper-middle and wealthy, than are lower-middle or working/poor.

Your chart does not support this claim, as you've phrased it. Only 21 percent are now upper-middle or wealthy, whereas 29 percent are lower-middle or poor. You mean to say that the upper-middle and wealthy categories have grown at a greater rate, over the time period covered by the chart, than have poor and lower-middle.

 

[metalhead]

More that have left the middle class, not more in absolute numbers is what I meant, but I worded that very poorly. Edit is forthcoming.

 

[GoodEnoughForMe]

In reading up on the economic/racial anxiety angle, I did find a couple large scale studies that display that one is much more prominent than the former.

https://research.hks.harvard.edu/publications/getFile.aspx?Id=1401

That's a multiple decade study of the far right in Europe, in which they test 5 racial factors and 5 economic factors, and find that all 5 of the racial factors correlate with far right support, but only one of the latter.

Then there was the 2016 American National Election Study, which found pretty strongly that drivers of Trump support were either traditional Republican alignment, or racial grievance, and found a much higher correlation of racial resentment among Trump supporters than economic anxiety. In fact, economic anxiety or fears of children being worse off scored much lower than the number one reason (party identification), the number 2 reason (racial resentment), the number 3 reason (conservative ideology), the number 4 reason (Obama is a Muslim), or the number 5 reason (Muslims are inherently violent).

 

[metalhead]

Yep, "economic anxiety" is a poorly thought out canard that is defeatable by the simplest exercise of logic.

 

[BvBPL]

538 did a story on this, using some Pew research which has concluded that while the majority of people are no longer middle class, the middle class has shrunk in response to more people being among upper-middle and wealthy, than are counted as lower-middle or working/poor.

I don’t dispute any of those findings, but I was thinking of the middle class as more of a qualitative assessment of economic security, rather than relative to the median national income as used by Pew. A general rise in the number of people falling within a range relative to the median national income is less meaningful to people if their purchasing power and economic security is diminishing.


The more relevant assessment of the middle class is not in how much money one makes, but in how well one lives. Where someone is able to save, able to take a certain amount of vacation, and is not subject to significant economic security then that person is middle class. Where someone is living paycheck to paycheck, feels unable to enjoy leisure activities, and is in fear of significant economic security then that person is not middle class. Obviously this is more difficult to track than income-based assessments and outliers within those criteria will exist. Self-reporting can certainly help:



Source.

 

[metalhead]

I could see a self-reporting of things like ability to save, ability to spend on vacation or leisure, etc., being useful, but the article itself notes that self-identifying in a particular economic class is likely a function of perceptions of inequality, rather than any actual purchasing power. I don't think a self-reported economic class is of any use, honestly. Relative earnings on its own is not that useful either, I'll concede, but it's a good starting point. And movements up I think do tend to indicate that the popular perception about where most people are heading economically may not match the reality that well. So while it is true that inequality is increasing, and that is a big problem, it isn't necessarily true that it's the same small group of fatcats just getting ever more wealthy. Increases in income and wealth are spreading downward, just not anywhere nearly as far down and as broadly as we want it to.

 

[BvBPL]

That’s not true.

A 1990 dollar had the purchasing power of what would now be $1.81, an 81% increase.

In 1990, the lowest quintile of Americans made a mean of $7,166 /yr. In 2014, that quintile made a mean of $11,676/yr, a 62% increase.

1990 second quintile mean of 18,030 versus 2014 of $31,082. A 72% increase.

1990 third, $29,781 v. 2014 $54,041, 81% increase.

1990 fourth, $44,901, 2014, $87,837, 95% increase.

1990 fifth, $87,137, 2014, $194,053, 122% increase.

The threshold income to be in the top 5% of earners in 1990 was $94,748, in 2014 it was $206,568, a 118% increase.

By 2014, about half the country was treading water or making less, relatively, than it was 24 years prior.

Source.

 

[metalhead]

I'm not sure what you're disputing with those stats. They tend to agree with my conclusion, that the top is doing comparatively better, and that the definition of "top" is broader than it was 40 years ago. That the bottom is relatively worse off is a separate issue.

 

[warpus]

Income is not the only litmus test of a healthy workforce either. You need to look at working hours, benefits, permanent vs temporary, commute time, etc. You can make more than someone in the same job 10 years ago and be worse off, even adjusted for inflation.