The New York Times carried a very important news story today as its front-page lead. It revealed in devastating detail how American workers have lost ground on wage incomes during this so-called economic recovery. Only it's not news really. You might say, it represents an elaborate "correction" on Page One. Long overdue, but welcomed and I think of great significance.
Until now, the Times, like most leading newspapers, has stuck with the orthodox economist's view of what has occurred during the lopsided recovery engineered by George W. Bush and Alan Greenspan at the Federal Reserve. Profits booming, productivity improving smartly, robust GDP growth. What's not to like?
Times editors did not seem to notice the dark side of this story--the negative impact on the wages of Americans in non-supervisory jobs (that's 82 percent of the workforce). Their wages stagnated and even declined in real terms, discounted for inflation. This helps explain why typical Americans did not join the cheering--they are losing ground and borrowing more to keep afloat. Last year for the first time since 1933, the family balance sheet went negative, that is, negative savings.
I congratulate the two skillful reporters who produced the article-- Steven Greenhouse, who covers labor, and David Leonhardt, who covers economics--and congratulate the Times for giving it the play these facts deserve.
But I am left with this question: Why now? These facts have been visible for at least three or four years. I have written variations on the same theme numerous times in The Nation [see for example "The One-Eyed King," on the actual impact of Greenspan's long reign at the Fed. The Economic Policy Institute, probably the most respected think tank with a liberal-labor perspective, has expertly described what going on again and again. So have other voices.
What changed at the Times? I think we are witnessing an important "course correction" in the approved perspective shared and sanctioned among governing elites. "Correct thinking" is changing among the influentials. Nothing confirms this so much as the New York Times changing its view of things.
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The facts have been quite stark for years, but to recognize what was happening to wages would open a taboo subject--globalization's devastating impact on America's broad middle class. If elites acknowledged that connection, not to mention harsh disloyalties to workers practiced by the leading US corporations, the policy thinkers and politicians might have to address the larger political question: What, if anything, does the government intend to do to reverse this long-running trend of deterioration?
The mainstream press, as I have written more than once, mainly takes its cues from the top-approved authorities and orthodox experts. This season, reporters and editors could observe that several heavyweight influentials are beginning to acknowledge the wage reality, albeit in a cautious, euphemistic manner.
Former Treasury Secretary Robert Rubin of Citigroup, leading correct thinker for Democrats, launched the Hamilton Project to examine swelling inequality and related questions. Early this month, Bush's new Treasury secretary Henry Paulsen startled the press by also acknowledging the seriousness of the wage deterioration. Even the new Fed chairman Ben Bernanke took a swing at the problem last week.
In short, it's now okay to for the mainstream to talk about the subject. They won't be called heretics or protectionists or backward-thinking Luddites. This is genuine progress. We are not there yet, but the country is at least creeping slowly toward an honest debate about America's role in the global trading system.
If my analysis is correct, we may soon even see Times columnist Thomas Friedman write about the broad deterioration of US wages. He is the preeminent cheerleader for the global system that exists, but I have never seen him address the wage question frontally beyond telling workers they need to get better educated. I can't wait to hear what he has to say.