Written by Paul Craig Roberts; Originally appeared at paulcraigroberts.org
Do the Wall Street Journal’s editorial page editors read their own newspaper?
The frontpage headline story for the Labor Day weekend was “Low Wage Growth Challenges Fed.” Despite an alleged 4.4% unemployment rate, which is full employment, there is no real growth in wages. The front page story pointed out correctly that an economy alleged to be expanding at full employment, but absent any wage growth or inflation, is “a puzzle that complicates Federal Reserve policy decisions.”
On the editorial page itself, under “letters to the editor,” Professor Tony Lima of California State University points out what I have stressed for years: “The labor-force participation rate remains at historic lows. Much of the decrease is in the 18-34 age group, while participation rates have increased for those 55 and older.” Professor Lima points out that more evidence that the American worker is not in good shape comes from the rising number of Americans who can only find part-time work, which leaves them with truncated incomes and no fringe benefits, such as health care.
Positioned right next to this factual letter is the lead editorial written by someone who read neither the front page story or the professor’s letter. The lead editorial declares: “The biggest labor story this Labor Day is the trouble that employers are having finding workers across the country.” The Journal’s editorial page editors believe the solution to the alleged labor shortage is Senator Ron Johnson’s (R.Wis.) bill to permit the states to give 500,000 work visas to foreigners.
In my day as a Wall Street Journal editor and columnist, questions would have been asked that would have nixed the editorial. For example, how is there a labor shortage when there is no upward pressure on wages? In tight labor markets wages are bid up as employers compete for workers. For example, how is the labor market tight when the labor force participation rate is at historical lows. When jobs are available, the participation rate rises as people enter the work force to take the jobs.
I have reported on a number of occasions that according to Federal Reserve studies, more Americans in the 24-34 age group live at home with parents than independently, and that it is those 55 and older who are taking the part time jobs. Why is this? The answer is that part time jobs do not pay enough to support an independent existence, and the Federal Reserve’s decade long zero interest rate policy forces retirees to enter the work force as their retirement savings produce no income. It is not only the manufacturing jobs of the middle class blue collar workers that have been given to foreigners in order to cut labor costs and thus maximize payouts to executives and shareholders, but also tradable professional skill jobs such as software engineering, design, accounting, and IT—jobs that Americans expected to get in order to pay off their student loans.
The Wall Street Journal editorial asserts that the young are not in the work force because they are on drugs, or on disability, or because of their poor education. However, all over the country there are college graduates with good educations who cannot find jobs because the jobs have been offshored. To worsen the crisis, a Republican Senator from Wisconsin wants to bring in more foreigners on work permits to drive US wages down lower so that no American can survive on the wage, and the Wall Street Journal editorial page editors endorse this travesty!
The foreigners on work visas are paid one-third less than the going US wage. They live together in groups in cramped quarters. They have no employee rights. They are exploited in order to raise executive bonuses and shareholder capital gains. I have exposed this scheme at length in my book, The Failure of Laissez Faire Capitalism (Clarity Press, 2013).
When Trump said he was going to bring the jobs home, he resonated, but, of course, he will not be permitted to bring them home, any more than he has been permitted to normalize relations with Russia.
In America Government is not in the hands of its people. Government is in the hands of a ruling oligarchy. Oligarchic rule prevails regardless of electoral outcomes. The American people are entering a world of slavery more severe than anything that previously existed. Without jobs, dependent on their masters for trickle-down benefits that are always subject to being cut, and without voice or representation, Americans, except for the One Percent, are becoming the most enslaved people in history.
Americans carry on by accumulating debt and becoming debt slaves. Many can only make the minimum payment on their credit card and thus accumulate debt. The Federal Reserve’s policy has exploded the prices of financial assets. The result is that the bulk of the population lacks discretionary income, and those with financial assets are wealthy until values adjust to reality.
As an economist I cannot identify in history any economy whose affairs have been so badly managed and prospects so severely damaged as the economy of the United States of America. In the short/intermediate run policies that damage the prospects for the American work force benefit what is called the One Percent as jobs offshoring reduces corporate costs and financialization transfers remaining discretionary income in interest and fees to the financial sector. But as consumer discretionary incomes disappear and debt burdens rise, aggregate demand falters, and there is nothing left to drive the economy.
What we are witnessing in the United States is the first country to reverse the development process and to go backward by giving up industry, manufacturing, and tradable professional skill jobs. The labor force is becoming Third World with lowly paid domestic service jobs taking the place of high-productivity, high-value added jobs.
The initial response was to put wives and mothers into the work force, but now even many two-earner families experience stagnant or falling material living standards. New university graduates are faced with substantial debts without jobs capable of producing sufficient income to pay off the debts.
Now the US is on a course of travelling backward at a faster rate. Robots are to take over more and more jobs, displacing more people. Robots don’t buy houses, furniture, appliances, cars, clothes, food, entertainment, medical services, etc. Unless Robots pay payroll taxes, the financing for Social Security and Medicare will collapse. And it goes on down from there. Consumer spending simply dries up, so who purchases the goods and services supplied by robots?
To find such important considerations absent in public debate suggests that the United States will continue on the country’s de-industrialization, de-manufacturing trajectory.
This is the outcome of short sighted Wall Street decisions to sell the country for their self benefit.
Wow.took my breath away.everything i have been saying for ages yet so many people cant see the writing on the wall!
The article doesn’t address the unemployment rate as being inaccurate. Is it 4.4% of employable workers, or is it 4.4% of a labor force that only counts a fraction of the employable workers? And if it’s only a percentage of employable workers. What are all of the employable workers who aren’t considered as being in the labor force doing? Are they dependents of others or the government?
He pointed out what you said in a different way by discussing the ‘labor participation rate’ in the different age categories along with the lack of wage increases. Keep in mind that Roberts was commenting on the shills who write for the Wall Street Journal. He knows how the system is gamed.
A by-product of a morally corrupt society..
I hate the guys at the Wall Street Journal, they are so smug and their answer to everything is always, ‘we need more foreign labor’. They are stuck in a time warp and think it’s the 1980’s or 1950’s. So many of them manage to speak with these Greenwich Connecticut accents, it’s amazing. I’d like to see foreign labor start displacing their jobs.
Artificial intelligence! The robots will pay the taxes, the robots will buy the stuff other robots will make, the robots will buy entertainment, etc. I.e. the economy will survive and go on.
But you will be left out jerk………LOL.
UN Agenda 21: Sustainable world population 2 billion to save the environment, and you jerks are not in that pool……LOL.
Detailing the successes of the corporate kleptocracy.
My economics is rusty but it is plain that the assumptions of the field are false and many things are decided from the political side or are manipulated. Participation rate is different from employment rate, hence, there is no contradiction in the articles. Maybe, attractiveness of a job could also be a factor. For example, people dont want to get very menial jobs or low paying jobs. It could also be that the jobs that needed to be filled by foreigners could be from ones that need high technical skills. In sum, there is an excess of labor in the rest of the world and with economic interconnectedness, this leads to pressures of declining wage rates. While Americans are feeling that they are becoming slaves, at the bright side, the dollar can buy more of any other good than the rest of the world.
My trouble with economic prediction is this. I live in the UK and over the period of my life, which extend back nearly to WW2, there have been many economic crises . None I would say brought about any real social revolution. Certainly nothing that I would consider to be an improvement. I know some will disagree and perhaps say something about Mrs Thatcher or ever Clement Attlee ( I lived through both). I just have to disagree with this. All I see is just a varying pace on the road to hell. May be this is something to do with my own desires which admittedly seem orthogonal to most people’s thinking. All in all whatever happens I only see more gynocentrism and a suffocation of everything which defines what I am.