Sometimes real people and abstractions collide in striking ways. Sitting at my computer, I am immersed in the world of Big Ideas and Important Subjects for Syndicated Columnists. Ideas like the progressive indexing of Social Security benefits to make the system solvent for the next 900 monthly checks.
But my thoughts are interrupted by e-mail from a friend.
A marginally employed friend, a fairly desperate friend, a friend who now has a visceral understanding of what Karl Marx called "the reserve army of the unemployed."
A publicist and onetime executive speechwriter with a razor sharp wit and more brains than you'd think could fit in such a tiny body, she sends an update of her ongoing job quest, starting with a survey of the economic landscape, all in one Faulkner-like sentence:
"On the heels of yesterday's announcements from United and Blockbuster, the public may suddenly become even more keenly aware of what has been happening for the past 40 years -- top execs have been gleaning huge personal gains despite the dismal performance of the companies they lead; pension funds are almost all under funded; more corporations will file for bankruptcy, sticking the public with the bill as we did in the S&L bailout while Congress, under pressure from its financial institution contributors, has made it increasingly difficult for individuals, who may be the very victims of Enrons, to file for personal bankruptcy."
Then she describes what she is doing for food after returning from an ill-fated venture to Mexico to become a language teacher.
"After two months of slogging through every website on earth and applying on-line to every job posted, I am reminded anew of why I left in the first place: I cannot get a job here."
"I'm working part-time at a home furnishings store, which is making money because no one in any store other than the manager is a full-time employee with benefits. We work 15 hours a week in five hour shifts, doing everything from unloading trucks, stocking shelves, selling the merchandise and toting tables, chairs and other heavy objects to customers' vehicles. I'm way too old for this but I must buy groceries while I continue to look for a real job."
Which brings us back to grand ideas like progressive indexing.
The benign assumption behind progressive indexing is simple. Index future benefits to prices rather than wages and most of the four trillion dollar revenue shortfall expected over the next 75 years will disappear.
Wages, it is writ, rise faster than prices.
In fact, the multitudes will respond with hysterical laughter.
According to the Department of Labor, "Average gross weekly earnings" for private nonagricultural workers rose from $267.26 a week in 1982 to $536.17 a week in February 2005--- doubling in 23 years. The same figure, adjusted for the consumer price index for urban wage earners and clerical workers, otherwise known as CPI-W, rises from $267.26 to $276.95.
That's a purchasing power gain of $9.69 over two decades. In today's money, it's about 20 bucks, enough for two people to go to a movie if they don't eat much.
That's a total gain of 3.6 percent over the period, an annualized gain of 0.16 percent over half a working lifetime.
In other words, the "average worker" has been going nowhere. In 13 of the 23 years, the average worker lost purchasing power.
Twenty-three Years of Real Wages
|Average weekly wages from 1982 to 2005 adjusted for inflation, expressed in 1982 dollars.|
|Year||Average Weekly Wage ($1982)||Gain or Loss in %|
|Source: Economic Indicators|
Of course, no individual is an "average worker." We all have job histories so we can get raises for experience, skill, responsibility, tenure, and tenacity. We climb steps, clamber over job slots, and do what it takes to advance. So our individual history isn't likely to be like the painfully repetitious experience of the "average worker." It may show a steady progression of merit and experience raises.
With all that, our wages rise faster than inflation.
Or do they?
It's just possible that inflation indexed benefits will rise faster than wage indexed benefits in the future. It's possible that millions of part time and temporary workers will have such uneven work lives that their wages will be flat or declining.
Is that the future?
I don't know.
Of course, the technocrats who propose solving 75-year problems with formula changes don't know either.
On the web:
Earlier columns on progressive indexing
Sunday, May 15, 2005: Avoiding a bad day in 2041