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A Living Wage? : WORK : Toiling Longer--But for the Same Pay

February 12, 1995|Guy Molyneux | Guy Molyneux, a public opinion pollster, is president of Next America Foundation, an educational organization founded by Michael Harrington

WASHINGTON — Reading the business pages these days is an increasingly surreal experience. Two weeks ago, the Federal Reserve Bank raised interest rates because of concern that "their six interest-rate increases in 1994 have not yet slowed economic growth." Obviously, you can't be too vigilant when it comes to fighting the scourge of economic growth.

Then last week, it appeared their fears were groundless when "stock and bond markets rallied on the news" of an rise in unemployment. This surely pleased the Fed also, for declining unemployment--more than economic growth--is "particularly worrisome to Fed officials." Why? Because "the competition for workers is so strong that . . . wages will start to increase more rapidly." Rising wages are a definite no-no.

In today's topsy-turvy language of economics, less is more and up is down. This extends far beyond the Fed and its obsession with avoiding inflation at any cost. The discourse of limits is ubiquitous--with constant calls for "streamlining" and "downsizing." But what are these words, if not euphemisms for a lower standard of living? Austerity dominates the public-policy debate as well, with most experts agreeing on the need for fewer government services to go with our low wages and job insecurity.

The truth is this: Most of the nation's leaders--including economists, politicians and the chattering classes--have concluded that the economy can only grow slowly, and that the standard of living for most families essentially cannot grow at all. What's more, they expect this to be true for many years to come, perhaps indefinitely.

It is hard to overstate what a profound change this represents for American society. And it has happened with extraordinarily little debate--or even real recognition--by the public. How did we get here?

Through the 1950s and '60s, a growing economy and shared prosperity were our nation's first principles. Democrats and Republicans, management and labor--whatever they might disagree on, broad prosperity was a common denominator. Walter W. Heller, chairman of the Council of Economic Advisers for Presidents John F. Kennedy and Lyndon B. Johnson, said economic growth is both "the pot of gold and the rainbow."

He meant that prosperity was not only a value in its own right, but was also necessary for addressing social problems. It was the political and economic prerequisite for tackling poverty and racism, because economic security is the best antidote to resentment. Heller and his peers would consider today's anti-growth policies bizarre, but would find the consequences--a nasty, zero-sum politics with powerful racial undercurrents--eminently predictable.

The economic realities have changed as radically as our expectations. For a quarter century after World War II, working-class and middle-class Americans experienced regular growth inwages and benefits. Productivity and total output grew, and all but the poorest saw their standard of living improve. An unemployment rate of 4%--well below what economists today consider "full employment"--was cause for alarm and rapid government response.

But starting in about the mid-1970s, the story has been far different. Average hourly wages have stayed flat, and have actually fallen significantly for large sectors of the work force. A young male high-school graduate, for example, earns 30% less today than his counterpart earned in 1979. Family incomes have risen somewhat--but only because of women's increased work hours.

Some would argue this transition was inevitable, that the rapid growth of the immediate postwar era was unsustainable once other nations emerged from the wreckage of World War II and competed with us. What's more, Americans needed to learn the reality of limits. We had deified economic growth in an unhealthy way, consumed vast resources and developed a sense of casual entitlement to ever-greater wealth. Perhaps these changes, if difficult, were for the better?

This is the dominant view today, and it can be seductive. It appeals both to liberal impulses, such as concern for the environment and the world's poor, and also to Americans' more Puritan instinct that suffering now is the best road to later reward. But it is seriously misleading.

Certainly, we cannot measure quality of life only in gross-national-product statistics. But we have not sacrificed economic growth in favor of green imperatives, or to spend more time with our children.

America has not decided that a rising standard of living is something we should not have; we have decided--or rather our leaders decided--it is something we cannot have.

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