Productivity Without Wage Gains

It's always something, isn't it? Now, the strong dollar restrains economic growth… Exports are off, imports are up… The trade gap widens... Savings from lower gasoline and heating prices offers some offset, but since a majority of Americans have little cushion in their bank accounts or retirement plans with many living pay check to pay check, spending is better but not off the charts.  After lagging in the post-recession malaise, car sales finally spurt. But this welcome activity results from a questionable rise in subprime lending, encouraged by securitizers. And we know where that will lead eventually. In addition, suddenly layoffs mount in recently surging, but now fading energy belt regions.

The “economic experts”, meanwhile, seem confounded by why wages have stagnated despite the significant drop in the unemployment rate. Are they just caught up in sclerotic paradigms like productivity always leads to growth and more jobs or is it just too inconvenient to point out the consequences of the significant structural shifts well under way caused by globalization and technology?

No question, technology has led to significant jumps in productivity and to major gains in profits for corporate players—Apple has just taken quarterly earnings into unexplored stratospheric reaches. But why do we not recognize that technology also is robbing the economy of jobs and that we are not replacing them in new industries the way we did when a farm-based economy turned into a manufacturing-based one more than a century ago? In our new Era of Less, productivity translates into greater corporate profitability by using fewer and on average lower compensated workers to do business. 

Robots take over assembly line jobs… Smart phones subsume myriad tasks once done by people… Apple, Microsoft and most multi-national corporates can offshore work to lower cost places thanks in large part to tele-digital-internet advances… And the wage rates for new jobs in the U.S. are tamped down by the global competition. Playing into the trend, right-to-work states smartly batter once union-friendly labor bastions---workers in new Sunbelt factories have jobs, making a fraction of what they would have under formerly fat union contracts and without the generous retirement and medical benefits. Now old Rustland states like Wisconsin and Indiana have no choice, but to follow suit to stanch further company outflows—unions are in full retreat.

Today forget about the guy replaced by a robot, the operator shoved into oblivion by a virtual voice, or the postman eliminated because email and texts have replaced letters. Where do all the out-of-work journalists, secretaries, messengers, and travel agents go? Do they try inventing another app? Drive a car for Uber? Find borders for the spare bedroom through Airnb? Join a band that can't make money, because music is freely downloaded? Or hope the U-tube video of their kids goes viral and a casting agent will call?

And should I be reassured that those commercials have resumed for seminars on how to buy and flip homes with little money down?