July 13, 2006
Why wages aren't rising
There's a lot of talk these days about how the current economic expansion isn't helping average Americans. I think this is less true than it's frequently made out to be, but having spent a year looking for and working low-end-ish jobs, I have to say I understand the reasons for the argument. TCS has an article suggesting that the reason GDP is rising but real wages aren't is because the growth is largely a growth in productivity, and that the growth in productivity is large enough to preclude a growth in demand for labor.
There's probably something to this. As companies figure out how to implement the efficiencies made possible by networked computers, they will be able to make more money with fewer employees. That makes sense to me.
But I think the article misses something.
I think the real reason "Joe Six-Pack" isn't seeing a rise in his wages is that though there are certain players in the economy who are becoming significantly more productive, he himself can't do any more than he could five years ago. The bottom end of the labor market - which probably includes half of the people in the labor market - isn't simply stagnant in terms of job skills, I'd argue that it's actually getting worse. The public school system is turning out worse and worse graduates every year, even among college-bound students (their grades may be good, but their general level of adult competency is woefully inadequate). Cleaning toilets and changing sheets haven't suddenly become more valuable just because companies have figured out ways of eliminating inefficiencies from their management and distribution operations.
The reason the average American isn't benefiting as much as well-educated, highly skilled American is because the average American brings nothing to the table. The same productivity boost which is helping your lawyers, engineers, executives, and etc. is hurting anyone who can't keep up. And most of America can't keep up. It's largely their fault too. Not wanting to work but wanting to get paid will not put food on your table. Not having the self-discipline to stay in school and learn how to do something for which people are willing to pay is not going to land you a job paying north of $30k a year.
A huge problem for our economy in the next fifty years is figuring out how to employ those who can't produce very much.
I recently talked with an uncle of mine who holds a managerial position at a factory in British Columbia, Canada. He told me that the number of recent Asian immigrants he employs continues to rise, as white North American males are almost impossible to bully or cajole into the minimum required level of productivity.
Finding jobs to employ those who don't produce very much isn't really the problem: the service industry, I suspect, is approaching its maximum level of mechanization - the decline in the gross number of jobs available stocking shelves, making burgers, etc., is going to be very incremental from here on out. But in terms of social unrest, we're faced with the difficult situation of a growing white underclass whose strong sense of entitlement endures even as its ability to achieve even a middle class standard of living is increasingly imperilled by a substandard and decaying educational system.
My suggestion is that we work on lowering economic expectations rather than attempting to clear out the Augean stables of North American education. Congress should pass a bill mandating that henceforth all reality television shows be set not in the airbrushed milieu of Hollywood but in Kansan trailer parks. That should calm everybody down.
Posted by: Julian at July 13, 2006 8:33 AMi hear what you are saying, but easy on the "not having the self-discipline" bit. some of these people can barely read. That's also beside that fact that socio-economoically speaking, a good chunk of these people don't understand where they would get the money to go to school, or even then, what to study, OR how this would effect paying for housing, etc., in meantime. Not everyone has the benefit of an upperly mobilular (word?) background to put the pieces together.
Posted by: jCave at July 14, 2006 7:07 AMAt this juncture, I'm not talking about getting your PhD, or even an undergrad degree. I'm talking about finishing high school and maybe, if you're really motivated, getting a certification or associates degree. The "barely read" part is the problem. Everyone in the country can attend a public school for free. Granted, the vast majority of them are colossal failures, but the opportunity does exist.
Not everyone is going to be an astronaut when they grow up. But very few people are literally forced to be illiterate dependants.
Posted by: ryan at July 14, 2006 7:39 AM