RE: [OPE] real wages and productivity growth

Date: Sun Nov 16 2008 - 12:06:50 EST

Key to Rick Wolff's explanation of the economic crisis
was the claim that there is a long-term gap between real wages
and productivity in the US (see, especially, his video lecture).
This association, however, had been called into question by
Daniel Sullivan in a _Chicago Fed Letter_ article entitled "Trends
in real wage growth" which is *attached*.
*Do you know of any critiques of this article?*
Sullivan is critical of the prior measures of real wages and
offered alternative real wage measures in which there is
substantial growth in real wages which tracks quite well
the growth in productivity over the same time period.
(NB: since the Sullivan article was published in March,
1997, it obviously doesn't tell us anything about the last
11+ years).
Besides objecting to the _Current Employment Survey_ statistics
on real wages only including "production and nonsupervisory
workers" and excluding workers at "newly opened establishments"
(the former objection seems to be ideologically-based and the
latter trivial, imo), his main "methodological problem" with the
CES measure is:
    "they cover only wage and salary compensation. Fringe
      benefits and contributions for social insurance programs,
      important parts of the workers' total compensation, are
      left out. Because these components of compensation have
      been increasing more rapidly than wages and salaries over
      most of the period covered ... average hourly earnings
      understate compensation growth".
There are a number of questions here including:
(1) which workers should be included in the survey?
(2) should the measure of real wages include employer
compensation for health benefits, pensions, etc.?
(3) even if we accepted (which I don't) Sullivan's
objections and used an alternative measure of
real wages, had real wages grown to the extent
that he claimed in the 1964-1996 period in the US?
(4) how have real wages changed - using different measures -
since 1997?
On (3) - and, to a lesser extent (4) - I wish to note the
Since the early 1980s and the concessions movement,
employers have rigorously attempted to shift the costs of
health and other social insurance programs to workers.
To a great extent, they succeeded. A larger percentage
of workers in the US pay for all or a portion of their health
insurance out-of-pocket or as a direct deduction from
wages than they did prior to that time. Additionally, less
US workers today are enrolled in company-paid pension
programs and most workers who used to have dental
insurance no longer have it. This is related, I think, to trends in
unionization: since the late 1970s the % of workers who are union
members has been steadily falling and unions have essentially
been on the defensive and in retreat over the entire period
(NB: ... and, the union 'leaderships' which largely bought into the
practice of 'labor-management cooperation' willingly made
these concessions in the name of job security - which often
proved illusory - and increasing corporate 'competitiveness'.)
It would also be interesting to see if/how part-time workers
are counted in the surveys on real wages since contingent
workers not only receive lower wages but also less (or no) social
insurance benefits ... yet they represent an increasing fraction
of the employed labor force. To the extent that they are not
adequately counted, then this would tend to under-state a
fall in real wages.
Thus, while it is true that the cost of social insurance costs
have risen it is not at all the case that the burden of this has
fallen all or even primarily on employers. It is entirely possible
if we re-calculate real wages to show employee contributions
for their own social insurance that real wages would have fallen
to an even greater extent than the amount suggested by _Current
Employment Survey_ statistics.
*Does anyone have any thoughts and/or statistics on this which
support or refute Sullivan's claims?*
In solidarity, Jerry

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Received on Sun Nov 16 12:09:17 2008

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