I'm amazed this must-read Leonhardt column hasn't gotten more traction. Its thesis is so counter-intuitive it's maybe hard to absorb. Is this recession actually giving average workers a bigger pay-boost than at any time since the Clinton boom? David:
Between the collapse of Lehman Brothers last September and this June, the average weekly pay of rank-and-file workers (who make up 80 percent of the work force) remained stuck at about $612. Hourly pay rose a bit, but the increase was canceled out by a shrinking workweek. Since June — with the economy apparently starting to grow again, as Ben Bernanke noted on Tuesday — the workweek has grown and hourly pay growth has accelerated. Last month, average weekly pay rose to $618…
The added wrinkle in this recession is that inflation has dropped below zero, thanks largely to a sharp fall in energy prices. In most recessions, inflation remains positive — indeed, higher than wage growth, which means that inflation-adjusted pay declines. In this recession, average prices have fallen 2 percent over the past year, while weekly pay has either been flat or risen 1 percent, depending on which data you believe.
So inflation-adjusted pay is up 2 to 3 percent. Amazingly enough, that’s almost as big as the peak increases during the late 1990s boom.
What are the political repercussions of a downturn that is brutal to those who lose their work but lucrative for the big majority who keep theirs'? Discuss.
The Dish 