Sunday, October 10, 2010
America's amazing, incredibly squeezing labor market
My reply on Economist's View today:
US per capita GDP is 150% of typical OECD GDPs. 17% of 150% equals 25% -- presumably leaving 125% of our uniquely bulging GDP to pay for everything else. What's the problem paying?
Same problem that causes every other social disaster in this country: our amazing, incredibly squeezing US labor market.
Rare labor lawyer Thomas Geoghegan on what rare pro-labor (do I use "pro-labor" just because he focuses on labor -- which is so rare?) economist Richard B. Freeman said in his book "America Works" (right at the top of p. 266 in Geoghegan's new book "WERE YOU BORN ON THE WRONG CONTINENT":
"... if real wages had risen with productivity in roughly the same way it did in Germany and other countries, then the American worker would have been making $25 an hour ($28.12 in 2010 dollars) on the average in 2005 instead of just $16."
I have just figured out that the Gini coefficient may no longer be a valid measure of American so-called "inequality" (I prefer "Great Wage Depression" or at least "shanghaied") because 90 percentile income share did not balloon any behind the 15% shift in income share to the top -- that begins above 97 percentile -- AND the 10 percentile figure leaves the gutting of the 50 percentile unreported and probably unnoticed by most who read the Gini ratio (who mostly presume 50 percentile share to be more or less where it should be -- true enough in Europe and 40 years ago here).
Not an economist (I do labor -- not rare for a cab driver) but I suspect a new ratio should be added to current "inequality" measures which would compare 50 percentile income to average income in the different economies -- only way I can think of to squeeze that missing AMERICAN 15% in -- but maybe the rare pro-labor economist can come up with a better one (maybe not: markets are not rocket science; just buying and selling).