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April 13, 2013

'How to Achieve Shared Prosperity Even if Wages aren't Rising'

Quick post, then off to the airport. This is from Lane Kenworthy:
How to achieve shared prosperity even if wages aren't rising, by Lane Kenworthy: Many of the rich countries, when they return to reasonably robust economic growth, will face two potential obstacles to shared prosperity. One is a shortage of jobs. The other is stagnant (or falling) wages for those in the lower half.
The quantity of jobs is easier to solve, as there is considerable scope for expansion of employment in helping-caring services. These jobs will be valuable to society; we will benefit from having more people educate children, keep us healthy and care for us when we are ill, and give us personalized assistance in transitioning from school to work, switching from one type of work to another in middle age, improving our family life, transitioning into retirement, flourishing during retirement years, and much more. There will be plenty of demand for these services. As we get richer, most of us are happy to outsource tasks that we lack the expertise and/or time to perform ourselves. And we will likely be able to afford them as the cost of food, manufactured items, and possibly also energy falls[1].

But some of these jobs, maybe many of them, will be low paying. Moreover, an array of economic shifts coupled with likely weakening of unions and collective bargaining may cause pay for workers in the lower half to stagnate or even decrease. The potential result: a replication of the American experience since the 1970s, featuring decoupling between growth of the economy and growth of household incomes for those in the middle and below (see figure 1). The economy will grow, but little of the gain will trickle down to the bottom half. ...

What can we do to ensure that the incomes and living standards of lower-half households more closely track growth of the economy? ...
As Lane notes, "This is a framing essay I prepared for a conference on progressive governance organized by Policy Network and Global Progress. The full set of conference essays is here."

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