"The State of Working America". Prepared biennially since 1988, Economic Policy Institute's flagship publication sums up the problems and challenges facing American working families, presenting a wide variety of data on family incomes, taxes, wages, unemployment, wealth, and poverty — data that enables the book's authors to closely examine the impact of the economy on the living standards of the American people. The State of Working America 2006/2007, published by Cornell University Press, is an exhaustive reference work that will be welcomed by anyone eager for a comprehensive portrait of the economic well-being of the nation.
The State of Working America remains unrivaled as the most-trusted source for a comprehensive understanding of how working Americans and their families are faring in today's economy.
—Robert B. Reich
Starting in 1995, a new and important change occurred in the U.S. economy: productivity—the output of goods and services per hour worked—began to grow more quickly. After growing 1.4% per year since the mid-1970s, productivity accelerated to 2.5% a year from 1995 to 2000, and then jumped to 3.1% a year from 2000 to 2005. The post-1995 shift in productivity growth, partly attributed to the diffusion and more efficient use of information technology, has sometimes been labeled the “new economy.” Because productivity growth provides the basis for rising living standards for everyone, its acceleration is an unequivocally positive development for the economy.
Yet, despite this unequivocally beneficial development, many Americans report dissatisfaction with where the economy seems to be headed, and many worry about their own and their children’s well-being. These concerns have led some policy makers and economists to ask: why aren’t people happier about the economy? The question seems reasonable to those who follow the top-line numbers of the economy, such as the growth of the total economy (e.g., gross domestic product), the stock market, or corporate profits. The question is easily answered, however, for those who follow and report on the data that fill the chapters in this book.
Our findings show that while faster productivity growth creates the potential for widely shared prosperity, if that potential is to be realized, a number of other factors have to be in place. Those factors include labor market institutions (such as strong collective bargaining), an appropriate minimum wage, and, importantly, a truly tight labor market, all of which are necessary to ensure that the benefits of growth reach everyone, not just those at the top of the wealth scale.
When these institutions are weakened or absent, growth is likely to bypass the majority of working families. The chapters that follow elaborate this story in greater detail by examining trends in incomes, mobility, wages, jobs, wealth, and poverty, and by placing recent developments in their historical, regional, and international context.
"The American Dream vs. The Gospel of Wealth: The Fight for a Productive Middle-Class Economy" by Norton Garfinkle. This book is a crystal-clear explanation of supply-side economics, why it represents a departure from American tradition, and what we should do about it. Norton Garfinkle paints a disquieting picture of America today: a national increasingly divided between economic winners and losers, a nation in which the middle-class American Dream seems more and more elusive. Recent government policies reflect a commitment to a new supply-side winner-take-all Gospel of Wealth. Garfinkle warns that this supply-side economic vision favors the privileged few over the majority of American citizens striving to better their economic conditions. Garfinkle employs historical insight and data-based economic analysis to demonstrate compellingly the sharp departure of the supply side Gospel of Wealth from an American ideal that dates back to Abraham Lincoln--the vision of America as a society in which ordinary, hardworking individuals can get ahead and attain a middle-class living, and in which government plays an active role in expanding opportunities and guarding against economic exploitation. Supply-side economic policies increase economic disparities and, Garfinkle insists, they fail on technical, factual, moral, and political grounds. He outlines a fresh economic vision, consonant with th4e great American tradition of ensuring strong economic growth while preserving the middle-class American Dream. NOrton Garfinle is the chairman of The Future of American Democracy Foundation. He taught economics and economic history at Amherst College and is a former chairman of the George Washington University Institute for Communitarian Policy Studies. He is coeditor, with Daniel Yankelovich, of United America: Restoring the Vital Center to American Democracy, published by Yale University Press, and is also editor of the Press's Future of American Democracy Series.
"America Works" by Richard B. Freeman. The U.S. labor market is the most laissez faire of any developed nation, with a weak social safety net and little government regulation compared to Europe or Japan. Some economists point to this hands-off approach as the source of America's low unemployment and high per-capita income. But the stagnant living standards and rising economic insecurity many American now face take some of the luster off the U.S. model. In America Works, noted economist Richard B. Freeman reveals how U.S. policies have created a labor market remarkable both for it dynamism and its disparities. America Works takes readers on a grand tour of America's exceptional labor market, comparing the economic institutions and performance of the United States to the economies of Europe and other wealthy countries. The U.S. economy has an impressive track record when it comes to job creation and productivity growth, but it isn't so good at reducing poverty or raising the wages of the average worker. Despite huge gains in productivity, most Americans are hardly better off than they were a generation ago. The median wage is actually lower now than in the early 1970s, and the poverty rate in 2005 was higher than in 1969. So why have the benefits of productivity growth been distributed so unevenly? One reason is that unions have been steadily declining in membership. In Europe, labor laws extend collective bargaining settlements to non-unionized firms. Because wage agreements in America only apply to firms where workers are unionized, American managers have discouraged unionization drives more aggressively. In addition, globalization and immigration have placed growing competitive pressure on American workers. And boards of directors appointed by CEOs have raised executive apy to astronomical lev3els. Freeman addresses these problems with a variety of proposals designed to maintain the vigor of the U.S. economy while spreading more of its benefits to working Americans. To maintain America's global competitive edge, Freeman calls for increased R&D spending and financial incentives for students pursuing graduate studies in science and engineering. To improve corporate governance, he advocates licensing individuals who serve on corporate boards. Freeman also makes the case for fostering worker associations outside of the confines of traditional unions and for establishing a federal agency to promote profit-sharing and employee ownership. Assessing the performance of the U.S. job market in light of other developed countries' recent history highlights the strengths and weaknesses of the free market model. America works provides a compelling plan for how we can make markets work better for all Americans.
"THE BIG CON: The True Story of How Washington Got Hoodwinked and Hijacked by Crackpot Economics" by Jonathan Chait. According to Chait, American politics has been hijacked. Over the past three decades, a fringe group of economic hucksters has corrupted and perverted our nation's policies. With dark, engaging wit, the author reveals how3 these canny zealots first took over the Republican Party and then gamed the political system and the media so that once unthinkable policies - without a shred of academic, expert, or even popular support - now drive the political agenda, regardless of which party is in power. Why have these ideas succeeded in Washington? How did a clique of extremists gain control of American economic policy and sell short the country's future? And why do their outlandish ideas still determine policy despite repeated electoral setbacks? Chait tells the outrageous and eye-opening story, expertly explaining just how politics and economics work in Washington. With wry analysis, Chait gives us the tools to understand what's really behind economic policy debates in Washington.
"The Squandering of America" by Robert Kuttner. According to Mr. Kuttner, a senior editor at the New Republic, there is a common threat to the widening inequality and insecurity affecting American families and the catastrophic risks afflicting America's financial markets. That is the steady dismantling of the managed form of capitalism that served both opportunity and security-and economic dynamism--in the decades after World War II. The wreckage of the mixed economy reflects the power of conservative ideology and financial elites, who exercise disproportionate influence on both political parties. As a consequence, the instruments of broadly distributed prosperity are largely outside mainstream legislative debate. Instead, too many leaders of both parties are focused on such elite issues as budget balance, the alleged financial crisis of Social Security, further deregulation of finance and trade - policies that will do nothing to relieve the economic stress on ordinary voters. When politics does not deliver for people, the people give up on politics. So, if the Democrats are once again to be champions of regular Americans rather than a second party of Wall Street, they need to again embrace a progressive economics. And for that to occur, the people need to take back our democracy from financial elites.
