The Endangered American Dream by Edward N. Luttwak

Author:Edward N. Luttwak
Language: eng
Format: epub
Publisher: TouchStone
Published: 1993-07-15T00:00:00+00:00

■ W AGES AND SALARIES IN AN UNDERCAPITALIZED ECONOMY

Against any one anecdote another can be cited, but in this case official statistics show that Caterpillar and Rubbermaid are not only typical but almost generous. These particular numbers, moreover, do not have the flaws of any international comparison. In 1970, the average hourly earnings of nonsupervisors employed in all industries, all forms of commerce, and all services other than agriculture or government amounted to $3.23; by 1980 they had more than doubled to $6.66; and by 1990 they had again increased greatly to $10.02, more than a threefold increase in twenty years, nothing to complain about it would seem. But those amounts take no account of inflation. If we look again at those earnings in constant 1982 dollars to strip away the false increases eaten away by rising prices, the numbers are dramatically different: those average “nonfarm, nongovernment, nonsupervisory” hourly earnings were $8.03 in 1970, $7.78 in 1980, and $7.53 in 1990. And those numbers are not contrived by statistical fiddling with inflation indices as some would claim. For example, the same earnings in 1978 came to $5.69 in 1978 dollars—and everyone old enough to remember working and shopping in those days will intuitively know from experience that $5.69 was worth much more in 1978 than $10.02 in 1990, after many years of inflation, both the 10% plus of 1979-1980, and the slower but steady erosion of the value of money that followed. 17

Averages conceal many tales of course, from the rising earnings of federal, state, and municipal employees and the pay raises still to be had in fortunate circumstances, to the degradation of $18 per hour industrial workers into $6 per hour warehouse janitors, or even their desperate poaching of minimum-wage jobs that once were the first and crucial stepping-stones of underclass achievement. It is a mixed picture, but the dark colors prevail, for the numbers show irrefutably that there has been more degradation than advancement.

Thus during the last twenty years—half a working lifetime—while real earnings were increasing substantially in much of Europe, and more than doubling in the high-growth countries of Asia headed by Japan, American rank-and-file employees actually earned slightly less, year by year. Only because inflation masked what was happening could the illusion of rising earnings be sustained. Actually real earnings had regressed to the 1965 level by 1990. Will they regress further—perhaps to the 1960 level by 1995, and then perhaps to the 1955 level by the year 2000? It seems distinctly probable.

I am not a “nonfarm, nonsupervisory” employee, and the chances are that whoever reads these words is not one either. So who are the poor unfortunates whose real earnings have been declining since 1965? Are they perhaps some small and peculiar minority? Not so: in November 1990, the last month for which those statistics are complete, they numbered some 74,888,000, or just over 81% of all nonfarm, nongovernment employees. That is more than eight out of ten of all privately employed Americans who are

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