Michael Mandel writes a great blog. Our masters are making more while large parts of the private sector lose ground.
This first chart shows the change in wage and salary payments by major industry from 2000-2009, adjusted for inflation, using BEA data. We see that healthcare and social assistance generated $210 billion in real wage gains from 2000 to 2009 (all in 2009 dollars). Next biggest was state and local government, which generated $151 billion in real wage gains. (The exact numbers change a lot if I change the end dates, but the pattern stays the same).
On the other hand, the big losers were manufacturing (-$245 billion), information (-$56 billion), retail trade (-$24 billion), and transportation and warehousing (-$6 billion). Itís interesting that the industries in the global supply chain were the big losers in real wages, but Iím not sure quite what to make of it.
Because some industries took it on the chin and experienced big losses the total dollar gain in private sector compensation from 2000 to 2009 was less than the total compensation gain among government workers. So federal government got 18% of total wage gains, state and local government got 37% and the private sector (which is of course far larger than state and local government) got only 45%. In the 2000 oughts the government became a bigger parasite on the private sector. Government and health care workers made out. Rich people did extremely well and their fates and interests are diverging from that of the bulk of the citizenry. The rest of us? Not so much.
At the state and local level I expect the rise in compensation for government employees to slow or even reverse. The unfunded retirement plans and public opposition to higher taxes combined with continued slow economic growth are squeezing state and local governments. The public has lost patience.
Another compensation pattern Mandel reported in a recent post: the gap between the most and least educated continues to rise. In a nutshell, the manual laborers are eating it. A huge influx of illegal aliens is swelling the ranks of the least skilled while much of the lower skilled manufacturing work is getting shipped abroad and eliminated by automation.
On a related note, I have just ordered Tyler Cowen's new Kindle book for $4: The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History,Got Sick, and Will (Eventually) Feel Better. He comments on it here and here.
|Share |||By Randall Parker at 2011 January 23 09:42 AM Economics Labor|