Economists aren’t a lot of fun to listen to, but if you’re feeling uncomfortable and can’t seem to figure out why (given that the economy is now officially on the mend!) the video clip above is worth watching. University of Massachussetts Economics Professor Richard Wolff explains what has been happening to the American worker for the past 30 years more clearly than anyone else I’ve seen anywhere thus far. 

But you don’t have to take Wolff’s word for it or mine. His statistics are drawn straight from the U.S. Bureau of Labor Statistics (I downloaded the PDF file right to my desktop and you can do the same if you’re interested. Or, you can check out this brief distillation written by a University of Chicago economics PhD candidate that’s a bit more readable).

These increasing productivity/declining wage trends have been verified and underscored by U.S. economic think tanks of all political persuasions and none of it is really news. Basically, productivity—the measure of how much work is done by any given worker in a single hour—has been going up for thirty years running, but during that same thirty years, wages for that work have been steadily getting smaller.

In other words, if it feels like you’ve been working harder and harder for less and less money lately, it’s probably because you are.

During this thirty year period of declining wages and harder and harder work, employers also all but eliminated the guaranteed pension plan as part of a standard full time wage and benefit package, replacing it in some cases with 401K plans that could easily vanish overnight (as many people unhappily discovered after the dot com crash of the 90s and again after the mortgage loan crash of 2008).

Another development that began about 12 years ago and is escalating rapidily even as I write this is increasing health insurance costs. This happened alongside a dramatic increase in the share of health expenses employees have been expected to pick up.

Most of the personal bankruptcies in the U.S. today are tied to a parallel personal health crises, and most of the people involved were insured when they got sick. Sometimes they were kicked off their insurance policies by the carrier, sometimes they lost their jobs due to their illnesses, but more often their out-of-pocket expenses simply exceeded their capacity to pay—even with expensive private health insurance coverage.

So, just as paychecks were already being stretched to the breaking point by rising costs accompanied by declining wages and benefits, health care expenses were rocketing off the chart, and they continue to do so.

Today, lucky employees who still have group health plans for their families through a job can expect those plans to cost an average of $13,375 per year—up from $6,438 per year in 2000. In fact, in 2008 alone the cost of an average health care plan went up 5% while wages increased an average of only 3%.

Even a family of four with a yearly household income of $70,000-$100,000 (the smallest group of wage earners in the country, statistically speaking, and $20k-$50K above the average household) would be hard pressed to pay $13,375 for an insurance policy PLUS all out-of-pocket expenses, non-covered costs, and deductibles if required to do so. 

Wage erosion in the U.S. has been swift, steady, and devastating over the past three decades, even without taking into account the rapidly increasing costs associated with basic living expenses like food, energy, and shelter. (None of this data takes cost of living increases into effect—a set of statistics which, by the way, has been monkeyed with so severely over this same period that it is fodder for its own separate post.)

I put these numbers out here to show that the problems working Americans face right now (or maybe it is more accurate to say the problems non-working Americans face) have been in building for a very, very long time. What we witnessed recently with the mortgage crash and the nearly 13 million jobs that have been lost since then is akin to end stage cancer: the disease was active for many, many years before it started to kill the patient in dramatic and painful ways.

You might think that since employers were working their employees harder and harder for less and less pay during these three decades, those employers must have struggling mightily themselves—but no! Turns out this same historical period was one of unprecedented corporate profitability; a time during which CEO pay increased almost 400 TIMES over what it was in the early 1970s. Mergers and acquistions were announced on a seemingly hourly basis and profit was concentrated into fewer and fewer hands.

The problem with all of this is fairly straightforward:

We currently have a ‘consumer economy’ driven by the spending of working people who basically have no money. Many of them are no longer even working. For awhile, they were able to keep spending by using unsecured credit and tapping their home equity—those days are over. So if we are waiting for ‘consumers’ to get out there and ‘consume’ again so that jobs can come back, we may be waiting a really, really long time. 

I bring this all up here because I don’t think we can formulate serious solutions to U.S. employment problems if we stay focused on outdated political ideologies and assigning blame. At some point, we will have to face the problems themselves, and it seems to me we’ve already waited 30 years too many.

I do think some hopeful trends are emerging. None of it will be easy, but I think there are opportunities mixed in with all the damage and mess.

I promise to talk more about those in future posts.