Sunday, March 26, 2006

Rising Tide Not Lifting All Boats In Indiana

The Star's business columnist John Ketzenberger takes to task recent comments made by Treasury Secretary John Snow that everyone's doing better in the current economy. Specifically, Ketzenberger uses the following quote Snow gave in a Wall Street Journal report:

"Look at the Harvard economics faculty, look at doctors over here at George Washington University . . . look at baseball players, look at football players," Snow told the Journal. "We've moved into a star system for some reason which is not fully understood."

The market, Snow explained, is rewarding the nation's most productive people with the highest compensation. And the rising tide, he argued, is lifting all boats.

"A rising tide lifts all boats" is an often used quote, most often by Republicans, although it was John F. Kennedy who first used it in a political sense to argue for tax cuts during his presidency. Ketzenberger points out that income figures for Indiana don't bear out Snow's claim. Citing median income figures showing an actual decline for Indiana over the past several years, he writes:

The median income for a Hoosier household fell 5.5 percent from 2000 to 2004, according to Jerry Conover, director of the Indiana Business Research Center at Indiana University. That means half of Indiana incomes are above that level and half sit below.

And that means a household here is not making as much as it was in 2000. "I don't think Secretary Snow's statement is fully reflective of the marketplace," said Conover. Snow relied on averages to make his case, Conover noted, so significant jumps in income among high-end households will skew those averages.

It almost sounds like Snow is suggesting the solution for Indiana's lagging income is for the Pacers or Eli Lilly and Co. to sign more high-priced free agents.

"It reinforces the notion that the people in charge don't know what the hell's going on," said Willard Witte, an IU economics professor.

It's a long way from Washington to Kokomo, that's for sure.

Ketzenberger's comments highlight just how out of touch someone like Snow is. He is a multi-millionaire former executive of CSX, and he obviously doesn't know what it's like for the average American trying to earn a decent wage.

Just from personal observation, it certainly seems to me that the divide between the haves and have nots in America has changed dramatically in my lifetime. There are so many more super rich in this country than there were when I was growing up. But the vast majority of people are having to work harder and look for income from second jobs just to keep their heads above water. In the case of married couples, it's nearly impossible for one spouse to stay at home if they want any decent standard of living for their family. It wasn't that way when I was growing up.


Anonymous said...

"In the case of married couples, it's nearly impossible for one spouse to stay at home if they want any decent standard of living for their family. It wasn't that way when I was growing up."

But if you think about it, your time of growing up was an anomaly in America. When my grandmother was growing up during the Great Depression, both her mother and father worked. Same for most Americans before the end of World War II.

Until the 20th century, the largest segment of workers were farm labor; mom worked on the family farm as did dad and the children. Same in factory areas of Massachusetts during the height of the industrial revolution with mothers, fathers and children working, sometimes in the same factory.

What changed things was the rise of unions, which successfully pushed for higher wages with benefits, World War II -- which led to the creation of healthcare plans offered by companies in lieu of wage increases -- and the post-war economy in which the U.S. was the only functioning economic power and could support the reconstruction of Europe through the Marshall Plan.

Essentially the stay-at-home mom was unsustainable in a normal economy. The post-World War II era wasn't by any means a normal period. Nor would a stay-at-home mom world be sustainable in a society where women's rights were finally fully recognized, allowing women to exercise control over their reproductive and social destinies. And stay-at-home moms isn't sustainable when longtime human behavior -- including holding on to the outdated notion that one can obtain a middle-class income just by working unskilled labor and accepting high dropout rates -- in an age where knowledge isn't a commodity, but a key to economic and social advancement.

In general, rising economic tides do raise all boats, but it doesn't exactly help everyone in exactly the same way. A single mother without a diploma and some college education is simply going to make fewer gains than an MBA who doesn't have children out of wedlock, exercises some measure of thrift and constantly improves their knowledge base. It isn't fair, but save for a few areas of life, fairness doesn't really exist.

Gary R. Welsh said...

The job that a husband had in modern American time up through the 1970s was typically sufficient to support the family without the mother having to work outside the home, unless it was her preference. Your comment about family farms in earlier days is true--everyone worked, including mom and kids. As to factories, many would not even hire women to work until the first World War when they were short of labor because of all the men in the service.

Anonymous said...

Actually women were working in factories long before World War II. During the 1800s in Massachusetts towns such as Malden and Lowell, they were a major presence, often the majority of the workforce. The women of Lowell in particular, were in part responsible for the rise of the modern labor union movement in this country; their discontent with factory conditions led them to protest those conditions throughout the 1830s and 1840s.

By the mid 1840s in England according to James Kay-Shuttleworth, two-income households in factories -- women and men -- were common in Manchester and other English cities. And don't forget the tenements of New York City in the late 1800s: It was the conditions in the garment factories that the women and men worked in that helped create a predecessor of the UNITE! union, the International Ladies Garment Workers' Union and its famed "union label" radio jingles.

The reality, Gary, is that there has always been two-income households. The post-World War II period in which you grew up, whose after-effects lasted into the 1970s, was a historic anomaly

Anonymous said...

i think the difference between now and the 70's is this. If I had demanded my mom and dad buy me $100 nike's, a cell phone (which they pay the bill on), tommy clothes, and now, my favorite, an H2 for Mom to drop me off at school in so I don't get beat up (new commercial that I hate), I would have been wearing no name everything, grounded from the regular phone, and walked my butt to school.

So much of the American Dream has morphed into some sort of American Fantasy that if I just buy enough "stuff" I can be everything I want to be.

The problem with that logic is that most people can't afford that fantasy, but our economy is now addicted to it.

If everyone woke up and figured out that who you are comes from within, not from Macy's or Neiman Marcus or even WalMart (for the working poor in all of us) - the economy would tank in a heartbeat.

Corporate America has banked on two things, selling that fantasy so hard that nobody questions it anymore, and the myth of the "rising tide". Sure, there is a grain of truth in it, but in order to satisfy the boats on the top of the water, more and more profit needs to be made. To make more profit, make more cutbacks. More often than not, the people treading water in the "rising tide" are the first to feel those cuts, while the people driving the boats just go get a larger yacht.

Yeah, Yeah, I know, then the yachtmaker makes money who pays his workers, etc. The key word in the phrase "Trickle Down Economy" is Trickle - v trickle, dribble, filter
run or flow slowly, as in drops or in an unsteady stream; "water trickled onto the lawn from the broken hose"; "reports began to dribble in"