More Great Economic News
February 26th, 2006 | by Ken Grandlund |Following the reports about the increase in hunger in America, the Federal Reserve issued a report yesterday noting that after adjusting for inflation, the median income for American families suffered a setback, decreasing 2.3% between 2001 and 2004. But despite the hemming and hawing from corporate America, overall, businesses aren’t doing nearly as bad their employees:
“What’s troubling about the economic recovery that we’ve been in is that all of the traditional indicators of employment, household income and poverty levels are lagging behind prior expansions,” said Jean Ross, director of the California Budget Project, an economic think tank in Sacramento.
“The only indicator that is doing better than in prior expansions is corporate profits, which indicates that businesses aren’t passing on what they are gaining to their workers,” she said.
Other economic indicators like net worth have risen, albeit very grudgingly, moving up only 1.5%- the weakest measured gain in a decade. By contrast, between 1995 and 1998 that increase was 12.3% and between 1998-2001 the increase was 17.3%. But those were years Clinton was in office, so while Bush II’s supporters like to give him credit for today’s economy, they say that the good times in the 90’s were inherited by Clinton from the Reagan/Bush I years. And now, of course, any bad news during Bush II’s term are remnants of Clinton’s economic policies. Nothing like having your cake and eating it too, I guess.
Oh yes, the net unemployment rate from early 2001 to August 2003 was negative- 2.7 million fewer working Americans. Damn that Clinton!
7 Responses to “More Great Economic News”
By steve on Feb 24, 2006 | Reply
Well… The stock market did peak in March 2000. Who was President at that time? Once you peak, you go backwards. 1996-2000 had the greatest increase in personal wealth we have ever seen in the United States. 2000 was when we started to loose. I know retired people that lost hundreds of thousands because they hung on to the stock market bubble way too long. That’s certainly not a President’s fault. It’s bad advice!
By icoman on Feb 26, 2006 | Reply
Steve, the two TV specials that discussed March 2000 both came up with the same analysis. That was the first month that Bush came up in the election polls with a possibility to win. Sophisticated investment software began selling immediately. As we all know, there’s been a Recession during the terms of every Republican President except Ford since the Great Depression under Republican H. Hoover. That’s what Republicans do. They cater to the wealthy and Recessions lower interest rates. slow down the economy while giving the dollar greater buying power which benefits those who have a lot o money.
Having taken college Economics, being familiar with investment software and having learned from experience what happens when Republicans get elected, I also yanked my money out of the market soon after March, 2000. Sure glad I did. Hopefully, Happy Days will be Here Again in 2008 and I can trust the markets after a Democrat takes office.
By icoman on Feb 26, 2006 | Reply
Ken, it is the MO these days of the Right to use their power to create poverty. The primary causes of poverty since the Industrial Revolution are: lack of job skills (directly related to education which the Repuvlicans have purposely underfunded), low productive (directly related to health care which the Republicans have opposed) and over-population (directly related to responsible family planning which the Repulicans have fought hard to defeat).
In the bestseller “What’s The Matter With Kansas?” by Thomas Frank he points this out when he describes the towns of Garden City, which is where the meat packing plant is located and the run down trailer park housing the workers from Southeast Asia and Mexico, to the town of Mission Hills where the wealthy owners live:
“Viewed from Mission Hills, this is a social order that delivers quaint slate roofs, copper gutters, and gurgling fountains in elegant traffic islands; viewed from Garden City, it is an order that brings injury and infection and death by the hundred forms of degradation; rusting playgrounds for the kids, shabby decaying schools, a lifetime of productiveness gone in a few decades, and depleted groundwater, too. The anthropologists caution us in their sober way about a recipe for “growth” that blandly accepts a permanent impoverished class, but the people of Mission Hills are unfazed. They may be too polite to say it aloud, but they know that poverty rocks. Poverty is profitable. Poverty makes stocks go up and labor come down.”
By GTL on Feb 26, 2006 | Reply
Ken:
“… after adjusting for inflation, the median income for American families suffered a setback, decreasing 2.3% between 2001 and 2004.
But you forgot to take our tax cuts into consideration when you calculate the median income. After all, we did get anywhere from a couple of hundred bucks, to $600+ or - back from those. But then, we need to take into account the SLIGHTLY higher price of oil and gasoline when we calculate our median incomes. Lessee… we used to fill our tanks for 20 bucks, NOW we fill our tanks for 50 bucks… so that eats into those tax cuts a bit, doesn’t it?
So we received 600 bucks (give or take) a year back from the IRS / Government, but then we pay an extra couple of hundred bucks more per month for our utilities and gasoline. Seems like we’re slipping into the red to me, but then again, I’ve never tried to suggest I am a mathemetician. I’d be all FOR those tax cuts if we weren’t being forced to pay them back to the frigging oil companies TENFOLD. “Tenfold”? Maybe an exaggeration, but close TO it.
So far, all THIS Government’s proven is that they can decrease the median income by lowering taxes. And that is sad when you consider we have way too many social programs and way too few oil companies and producers to actually COMPETE for our dollars.
Conservation is the KEY for now. I know I am driving as little as possible, and I am carpooling as much as possible, and I am cutting the power and the (gas) heat whenever I am not in the house, and running water at a drip. I’d rather pay the water company if I must overpay a utility than another frigging oil company, and that’s that.
Great post, Ken!
By Liberal Jarhead on Feb 26, 2006 | Reply
Another key indicator is the average ratio across corporations between the compensation of the CEO and that of the lowest-paid workers; in the best-run outfits, it should be between 5-1 and 10-1. Instead, we now have corporations who pay a lot of their workers minimum wage or close to it with marginal benefits, but pay their CEOs hundreds of millions of dollars a year and add hefty stock options and a lot of perks like use of company aircraft and “golden parachute” pensions, even though the average CEO now quits or is fired within 2 years of hiring. If we figure the ratio by giving the hypothetical average corporation credit for paying $10/hr as their lowest wage and using $100M as the figure for the CEO’s wages plus other compensation, that’s a CEO-to-janitor (or burger-flipper, or hotel-room-cleaner, or whatever) of 5,000-1. Now consider that very few corporations have a minimum salary of $10 per hour - look at how hard they fight to keep it from being raised from $5.15 to anything higher! - and that a lot of the Fortune 500 level businesses pay their CEOs a lot more than $100M, and you have some CEOs literally making as much in an hour as some of their employees make in a year.
By steve on Feb 26, 2006 | Reply
GTL… Oil prices we pay at the pump are more of a “correction” than anything else. Take a look at this <a href=”http://goeurope.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=goeurope&zu=http%3A%2F%2Fwww.nationmaster.com%2Fgraph-T%2Fene_gas_pri”>site</a> it shows the different prices people pay around the world for gas in correlation to the average price. We pay far lower than any Western economy for gas. It’s bound to keep going up from where it is at now. I would not be suprised to pay $3.50 a gallon this summer. We technically are paying that extra tax money for gas, but you have got to remember, gas is taxed and so are oil companies. If we have more to spend the government is getting more back in tax.
LJ,
No CEO earns 100 million annually year after year. Most of the very rich CEO’s run banks and technology companies as well, which don’t employ low wage workers as a huge labor force. The situation you are describing seems to demonize all fortune 500 companies. The CEO of the company I work for makes an annual salary of 1.5 million plus some stock options which take him much higher than that, but he ain’t selling a whole lot right now. We are a Fortune 500 company. So does he deserve it? Is that salary in line? Well you have to look at the industry the Fortune 500 company is in. We sell products to Fortune 500 companies down to mom and pop stores. We are sales driven and sales people make up a major part of the employee base. A good sales person can make $200K or more.
You cannot fault the business model some companies have that attracts or needs low wage workers to stay competitive. McDonalds CEO makes 5 million in salary and stock compensation. The man runs a business that has the second largest brand recognition next to Coca Cola. It employs thousands of people. It pays significant property and sales tax revenue and contributes to our society through the Ronald McDonald House. I just don’t see the big deal in a guy making 5 million bucks and paying all those taxes.
And your 5000:1 scenario truly does not exist in America. The CEO for Walmart is 871:1. But the Chinese really get hosed…
By Chris radulich on Feb 26, 2006 | Reply
Most CEO’s who run Americas corporations today are just thieves abetted by boards who see it as a chance to justify their thievery. Jack Welsh made money for GE by buying companies and firing people.
The ones who are worth everything they earn are the Steve Jobs and Bill Gates of the world. All the others are mere caretakers and compentent HS graduate could do as good a job.