Robbing from the poor to give to the rich is bad economic policy, like killing the goose that lays the golden eggs. Most of us heard the story as a child, but someone should tell Bush II that you have to keep the goose alive and feed it well, or there will be no more eggs:
In Wages Lagging Behind Prices LA Times Staff Writer Nicholas Riccardi explains:
The effective 0.2-percentage-point erosion in workers’ living standards occurred while the economy expanded at a healthy 4%, better than the 3% historical average.
Meanwhile, corporate profits hit record highs as companies got more productivity out of workers while keeping pay increases down.
Some see climbing profits and stagnant wages as not only unfair but also ultimately unsustainable. “Those that are baking the larger pie ought to see their slices expanding,” said Jared Bernstein, an economist with the liberal Economic Policy Institute in Washington.
Riccardi blames the slack job market, which does not encourage employers to raise wages, and notes that “Although the unemployment rate has dropped to a relatively low 5.2%, that figure doesn’t count the hundreds of thousands of jobless people who’ve given up their searches and dropped out of the labor market at a greater rate than anytime since 1988.” Also to blame is the cost of health care:
“Healthcare has eroded the wage base,” said Janemarie Mulvey, chief economist with the Employment Policy Foundation, a business-funded think tank in Washington.
“In the long run, we can’t continue like this. If healthcare keeps crowding out wages forever, something’s got to give.”
The squeeze is especially intense on the 47% of the workforce whose employers don’t directly provide their health insurance. For lower-income workers, who are more likely to be uninsured, the falling value of their wages is even more serious because they’re more likely to live paycheck to paycheck. And rising food and energy prices take a proportionately higher toll on the poor than on the rich.