“The Great Political Reality Of Our Time”

Compensation

Josh Marshall declares it’s “that Democrats don’t know (and nobody else does either) how to get wage growth and productivity growth or economic growth lines back into sync”:

Democrats have toyed (and I use that term advisedly) with the issue of rising inequality for the last two elections. But let me suggest that as a political matter inequality is a loser. What is driving the politics of the country to a mammoth degree is that the vast majority of people in the country no longer have a rising standard of living. And Democrats don’t have a policy prescription to make that change.

Here is a chart we’ve probably all seen some version of. The gist is that while productivity growth has been relatively consistent through the post-war period, productivity became unchained from wages in the early 1970s. Despite a modest bump up in the 90s and another small one in the aughts it’s really never come back.

He admits that populism isn’t going to fix this problem:

Fundamentally, most people don’t care particularly how astronomically wealthy people are living their lives. It is a distant reality on many levels. They care a great deal about their own economic circumstances. And if you are not doing any better than you were 5 years ago or a decade ago or – at least in the sense of the hypothetical median wage earner – 40 years ago, that’s going to really have your attention and shape a great deal of your worldview and political outlook. …

But what are the policies that would change this corrosive trend? And how do you run on them as a party if you don’t know what they are? Minimum wage increases help those at the very bottom of the income scale and they have a lifting effect up the wage scale as the floor gets pushed up. But it is at best a small part of the puzzle. Clamping down on tax dodges by the extremely wealthy claws back some resources for the treasury and sends an important message, as might some restrictions on ridiculously high CEO pay. But again, these are important changes at the margins that do not fundamentally change the equation. Economic populism or another comparable politics with a different tonality won’t get you very far if you can get beyond beating up on the winners to providing concrete improvements to those losing out in today’s economy.

Relatedly, McArdle contends that the “lack of a clear and stable career path is … a worse problem than the wages paid by firms that employ large amounts of low-skilled labor”:

You can do anything for a short period of time, including slave away for very low wages.  But for this to be true, your labors have to lead somewhere other than more slavery at very low wages.  … Consumer confidence remains depressed, and it will not get un-depressed just by raising the hourly wage.  Most people don’t want better unemployment benefits; they want to be able to stop worrying so much about losing their jobs. Nor do they want to spend the rest of their life working at McDonald’s for a better wage; they want to leave the hot kitchen for a better job.  That’s still what’s missing.