I had a question right then but did not ask. I was way too self-conscious about my accent and I worried that I might have to repeat the question in order to be understood. I stayed quiet. The question was this: What if people are working but the returns are next to nothing. You know, like slaves. Like hamsters running forever but not really going anywhere.
That question continues to bug me. I have forever worried that the automation means that owners of those digital abstractions will get to hoard way more money than ever before. This, in a political environment that discourages redistribution of income, will lead to workers working away but ...
The NY Times adds more to my worries, via this chart:
The message is straightforward. Only a few decades ago, the middle class and the poor weren’t just receiving healthy raises. Their take-home pay was rising even more rapidly, in percentage terms, than the pay of the rich.Megan McArdle, who is by no means left of the political-economic center, writes about the slow wage growth even though unemployment rate is at a low, low 4.3 percent:
In recent decades, by contrast, only very affluent families — those in roughly the top 1/40th of the income distribution — have received such large raises. Yes, the upper-middle class has done better than the middle class or the poor, but the huge gaps are between the super-rich and everyone else.
So this slow wage growth may simply be what the labor market now looks like. Earlier eras of tight labor markets produced big increases in wages, but those increases were matched by rising worker productivity. Today, employers striving for productivity may replace the worker altogether, either by outsourcing to a lower-wage country or by giving that job to a machine.It is no mystery to me--I have forever blogged about the need for a new social contract. If only this president and his minions, and the likes of Paul Ryan and Mitch McConnell who manically advocate tax-cuts for the wealthy, will honestly respond to these real trends, instead of inventing their own alternative facts!
So the biggest mystery is not why U.S. wage growth seems stuck even as unemployment falls. The biggest mystery is how we’re going to adjust our economy, our culture and our politics to the new normal.