1. Wages Stagnation: Causes
Current Political Economy Issues
Wages Grew Consistently Until
2. Foreign Competition Was A Culprit
3. Profits Beat Wages in the Flat World
4. Slow Adjustment to Technological Change Competitive Adjustment Battle
4. Slow Adjustment to Technological Change
5. More College Solution Didn't Work
6. Low Employment Driven Job Movement Low
7. World Changed, Good Jobs Disappeared
Consistently Until 1972
Normality ended when Carter appointee FED Chairman Volker found higher
interest rates were not enough so he lowered commercial bank
reserves. This quickly pushed the Federal Funds Rate to 20%. Banks would not loan. Two recessions followed. The first cost
reelection and the second, though severe, was over so Reagan was
Began the Process
High Oil prices pushed Japan into more valued added exports like automobiles, machinery and computers. This competition caused a stagnate Rust Belt with lower wages and eventually lower employment. Japan's manufacturers got lucky from increased demand for gas efficient small green cars with catalytic converters. Detroit protected profit by seeking tariff protection. Investment needed to lower cost and increase product quality was ignored. Auto union leaders protected their positions. Current worker protected existing jobs and salaries by accepting a two-tier wage system. It minimized the need for new workers who would receive lower wages for a similar jobs. Feeling political pressure Japan built many modern U.S. plants often in the nonunion southern states offering the highest tax incentives. see How the U.S. Squandered Its Steel Superiority
US Companies have competed very well in a flat world using technology, outsourcing to Asia, Mexico...and by keeping wage increases low. Source
Total compensation has done better although Obama Care gave companies an opportunity to again lower compensation.
Question: What Happened in 1980?
Politics from 1865 to 1910 Had No Wage Adjustment as Politicians
Protected Business Oligarchs.
New Century Workers
Gained Fewer Required Hours and
Wages Down for All But the Best and BrightestCompanies figured out that in one department there were stars worth a lot more than the average Joe. These companies looked for stars and paid them bigger dollars. In finance, high tech, and management the spread began to widen between those in the middle and the STARS.
"In 2011, the top 30 percent of earners with a high-school degree earned more than what 50 percent of workers with an Associate’s degree earned. This same top-earning group of high-school-degree workers also made more than a quarter of workers with bachelor’s degrees. We find that higher-paid high-school-degreed workers are represented more heavily in occupations that require technical post-secondary education attainable through certificates or apprenticeships." clevelandfed.org See Economics of College Education
Economic Return Based Upon What You Learn Not Where
— the rate at which workers move to different occupations
Source Why a Stagnant Job Market?
A Flat World means
our best and brightest students are in a
competitive struggle with the best and brightest from around the world.
Their wealth creating innovations will
quickly spread around a
Destructive world. Intelligent computers have replaced
many middle skilled workers. This
job polarization has decreased the career opportunities for
average academic educational High School graduates.
Middle Prepared Student Jobs Have
Disappeared "As we [WSJ] reported in July, before, during and
after the recession,
demand for one sort of worker has been persistently stronger:
personal-service jobs that involve assisting or caring for other
people — from waiters
to home-health aides. Bureau of Labor Statistics says, 545,000 jobs
have been added in the past two years in what it quaintly
calls “food services and drinking places.” That is about 30% of the net increase in employment (1.84 million) between
July 2010 and July 2012." Editor's Note: Neither require an
academically oriented secondary education.