Monday, June 20, 2011

The challenge of declining worker incomes

David Frum has a post over at his web site (FrumForum) about the declining share of worker incomes.  He uses the following graph from the St. Louis Fed to illustrate this (click on it to enlarge).


Mr. Frum then poses the following two questions for "Republican presidential candidates"  (Frum is a Republican):

1.  Is this a problem?
2.  If yes, what can be done about it?

I think these questions should be posed to every candidate (regardless of party).  In fact, I would like to hear some state governors answer these questions.

The recent "skirmishes" in Wisconsin indicate that many people do not see unions as part of the answer.  OK.  But what is?  The data consistently show that the "working class" has not benefited economically nearly to the degree that the top 25% have over the past three decades.  While income disparity may be inevitable to some degree in capitalism (see previous posts on this), it surely can become so large that it is untenable.  I recently had lunch with a well-known economist who is a live-long Republican and served in some Republican administrations.  I asked him what concerns him about the national economy.  Of course, he mentioned the growing debt burden, but his second issue was growing income disparity.  This shouldn't be a partisan issue.

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