Unemployment may be the most important indicator in today’s economy, but wages and incomes are a close second. Today’s report that personal income rose 0.4 percent in April is largely meaningless. What matters is the long view — and it’s not pretty.
Median household incomes actually declined in the ’00s, and wages largely stagnated. Meanwhile, a USA Today analysis finds that private-sector paychecks have shrunk to their lowest level of personal income in history.
A look into suicide-plagued Foxconn, the Asian manufacturer for Apple, HP and Dell, finds more than 420,000 employees at two “campuses” in Shenzhen, China, alone. This one company’s total workforce in China is around 800,000. The workers make $32 for a regular work week. The equivalent of this work was once done in places such as Dayton, Muncie, Akron — all over America, and for good, middle-class wages. Pointing this out is not a call for protectionism. All God’s children should have a chance to enjoy rising living standards and American “consumers” have no doubt benefited from the inexpensive products created by two decades of off-shoring of production.
Unfortunately, tens of millions of Americans who once enjoyed secure jobs with rising incomes, good benefits and pensions are now working for less, holding on to their grip in the middle class. Millions more are out of work and some of these will never be able to recover their old earnings power. Most aren’t going to be able to retrain as stem-cell researchers or video-game developers. Manufacturing jobs simply generate more value, and earnings power, than most service jobs. And indications are, we’ll have deep structural unemployment and underemployment for years.
What’s the next wave? An article in Personnel Today reports, “Multinational firms saddled with huge people costs are considering downsizing their permanent workforce and hiring sub-contractors on a scale never seen before…” IBM wants to cut its nearly 400,000 employees to 100,000 by 2017.
D.C., we have a problem.
Today’s Econ Haiku:
Apple bit Ballmer
How will the drama turn out?
Google the answer