From: egl1@cunixf.cc.columbia.edu (Elizabeth G. Levy)
Newsgroups: alt.politics.elections
Subject: Re: Some truths about the economy
Date: 19 Aug 92 22:43:16 GMT
Reply-To: egl1@cunixf.cc.columbia.edu (Elizabeth G. Levy)
Organization: Columbia University

In article <1992Aug18.202059.2946@anasazi.com> best@anasazi.com (Mike Best) writes:
>In article <1992Aug13.175646.26950@news.columbia.edu> egl1@cunixf.cc.columbia.edu (Elizabeth G. Levy) writes:
>>In article <16842BFB1.JHARTLEY@cmsa.gmr.com> JHARTLEY@cmsa.gmr.com writes:
>
>>> a) the poorest 20% of households mean income, adjusted for inflation,
>>>    rose 5% during the 80's
>>
>>Does this mean that the wife now has to work to keep _family_ income
>>at the same level it was before Reagan?
>
>Is it possible that more people in the work force (women) has a certain
>effect on wages?  I wonder ( I do not know ) if more people equates to
>lower overall wages due to that old supply/demand argument.

I assume you mean a reverse-causation argument: women entering the
workforce drove down men's wages, which keeps family income at
around the same level.

According to the Cato Institute's Policy Analysis #172, p.15, the average
hourly wage of production workers without supplements (such as insurance,
etc) was at 1.28 in 1973, after a steady rise since 1959 (wages in 1959
were indexed at 1.00 on this chart), dipped a bit during the '70s, and
rose again to around 1.25 in 1978.  Wages have since declined to 1.10 in
1990, with most of the decline occuring from '78 to '82. This is a
decline of about 8.3% since '78, so real wages for production workers
have declined during Reagan (wages with supplements for production
workers peaked in 1978 at 1.45, and have declined since then to 1.33, a
decline of 5.5%)

In regard to women's entry into the work force, some general facts first.
Women tend to work in "women's jobs", the secretarial pools, low level
civil service, nursing, food preparation, etc. "The already huge
proportion of working women holding down menial clerical jobs climbed to
nearly 40 percent by the early '80s, higher than it had been in 1970.  By
the late '80s, the proportion of women consigned to the traditionally
female service industries had grown, too." (Faludi, _Backlash_, p.365)
Further, "After 1983, as a Labor Deparment study reported...women made
_no_ progress breaking into the blue-collar work force with its better
salaries.  By 1988, the tiny proportions of women who had squeezed into
the trades were shrinking in a long list of job categories from
electrician and plumbers to auto mechanices....  Where women did improve
their toeholds in blue-collar jobs, the increments were pretty
insubstantial. The proportion of women in construction, for example, rose
from 1.1 to 1.4 percent between 1978 to 1988." (Faludi, p.367)  "Women
steadily increased their representation in teh work force in the 1980s --
from 51 to 57 percent for all women, and to more than 70% for women
between twenty-five and forty-five.  And the increase in working mothers
was the steepest." (Faludi, p.84.  Unfortunately, she doesn't include the
statistics for working mothers, which may be the category we're
interested in for this discussion.  She cites "The American Woman"
1990-91, Table 14, p.376 as her source.)

OK, after the long preamble :-)

I think it's questionable that the increased supply of workers led
to the lower wages.  For one thing, women were not competing directly
with men, so the supply of labor is more or less unchanged for male,
blue collar jobs.  The declining wages were due to other things,
particularly the globalization of the economy.  Interestingly, I think
Faludi note that the wage gap between women and men decreased by 3%
during the 1980s, despite the increase in the labor force for women
(this 3% includes factoring for declining wages among men).

Actually, we could have started with some sort of Keynsian efficiency
wage argument.  An increased labor supply has some downward pressure
on wages, but not all that much.  I suppose empirical data is important,
though :-)

>>
>>> b) the average income , again adjusted fro inflation, is 40% higher for
>>>    25-35 year olds compared to that age group 30 years ago.
>>
>>Note, 30 years ago (1962) was the start of the largest post-war
>>economic expansion.  Where did the income rise take place?  Back
>>then or during Reagan?  The WSJ stats are incomplete without this
>>information.
>
>Not at all, the claim by the Leftists is that the 80s were not all
>they were cracked up to be.  As an answer to the specific question
>the editorial is more than sufficient.  Have we not been hearing the
>opponents of the Rightists claim that the last 12 years have been
>a disaster?

I still stand by my assertion.  Refering to the same Cato Institute
study, wages increased dramatically from 1959 to 1973 (unfortunately, the
chart does not break down workers by age groups).  For all workers wages
with supplemental income, this was from 1.00 to 1.52.  Thereafter, wages
went up to 1.73, then down to 1.69.  By this, 2/3 of the increase
happened under JFK-LBJ-RMN.  Wage increases during the 1980s are from
around 1.65 in 1981 to 1.73 in '87, and down again to 1.69 in 1990.

>>
>>The only way a Republican can keep the office is to misrepresent
>>stats.
>
>I honestly do not understand this blind-spot, either intentional or not,
>regarding the 80s.  It must be plainly obvious in comparison to the 70s
>that the 80s were a great success EXCEPT that the congress continued to
>spend more than it took in and thus the deficit.  The taxers and the
>takers approach to governance is not freedom oriented.  The only truly
>free people are the independently wealthy, this is a fact.  When the
>government takes your money they limit your freedom to live as you see
>fit.  A Clinton tax increase would fly in the face of the factual success
>of the 80s which leads me to wonder the reason behind their motives for
>taking more of my earned income.

Yes, the '80s were better than the '70s, but it was a debt-financed
prosperity.  We're starting to pay for all the fun we had.  Arguably,
it was only through deficit spending in the early '80s that caused
the boom (a Keynsian twist).  Prof. Benjamin Friedman argues that
the deficit was fine until '84 or so, when the economy returned to
full employment.  After that, the the deficit was detrimental, as
it reduced savings, investment, etc, and has put us in the pickle
we're in right now because of the conspicuous lack of infrastructure
investment in the late '80s.

I'm not sure how taxing part of the income of someone making, say,
$200K puts all that much of a crimp on his consumption.  Yes, I
suppose his freedom is limited because he can't buy the 100' yacht
and has to settle for the 75' one.  Still, we may consider the
situation of the poor.  By investing some of the tax revenue
in, say, education, we can greatly increase _their_ freedom of
opportunity.

I think the motives for any tax rise proposed by Clinton is closer to
economic necessity than any conspiracy aimed at you, Mr. Best.  (A little
paranoia, there? :-)  We need more money for investment right now.

--
But this is.