Wednesday, August 30, 2006

The Decade of Retreat

If the 1990s is known as the Decade of Affluence because household incomes reached a peak, then these years may well be called the Decade of Retreat—especially for the American worker. Hardly a day goes by without more evidence of workers falling behind.

The Current Population Survey data, released yesterday, show a signficant decline in the earnings of men and women who work full-time (see post below). Wages and salaries now account for a smaller share of the gross domestic product than at any time since 1947, according to an analysis by the New York Times. Not only are wages falling, but the percentage of Americans with employment-based health insurance is slipping, and those with insurance must pay more for it. In fact, the value of employee benefits is failing to keep pace with inflation, according to the Times.

Americans are feeling the pain. According to a survey by the Pew Research Center, 59 percent of the public thinks today's workers must work harder to earn a decent living. Fifty-six percent say employers are less loyal to workers. Fifty-one percent think retirement benefits are not as good as they used to be. A comparison of the 2006 Pew results with surveys taken in 1989 and 1997 shows job satisfaction dropping sharply among workers aged 50 or older and growing discontent with employee benefits.

The quality of work life may not be alone in retreat. Tom Smith, director of the General Social Survey (GSS) at the University of Chicago's National Opinion Research Center, concludes in a study that "Americans on average are worse-off now than in the past." He came to this conclusion after comparing 2004 with 1991 GSS results. In both years, respondents were asked to identify the frequency and severity with which they encountered 66 different problems ranging from the death of a spouse to the loss of a job and the inability to pay for health insurance. The percentage of Americans experiencing at least one problem increased over the years from 89.1 to 91.5 percent. The average number of problems experienced grew from 4.03 to 4.34. Smith found significant increases in problems such as being unemployed, being pressured to pay bills, being unable to afford food, lacking medical insurance, and being hospitalized.

What factors might explain an erosion in the quality of life in the United States? One might be the aging of the population, which leads to more health problems. Another might be technological change and the consequent globalization of the workforce. The Pew survey shows how ambivalent Americans feel about these changes. Sixty-nine percent think email and other modern communication technologies have helped workers. But an even larger 77 percent think outsourcing—which is one consequence of the communications revolution—has hurt American workers.

Smith's study sheds some light on why things may be turning south, examining the demographic segments with the most and least troubles. The biggest change in the distribution of troubles was by education. In 1991, the lowest-educated group experienced 1.33 problems for every 1 problem experienced by the best-educated group. In 2004, the ratio had grown to 1.79 to 1. The growing gap between the haves and the have-nots in an increasingly competitive world may explain the Decade of Retreat.

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