LONGMONT, Colo. — Matt Miller makes a provocative assertion in his year-old book, The Tyranny of Dead Ideas. He argues that Americans need to get over the idea that future generations will earn higher incomes than their parents and grandparents. All the evidence suggests, Miller argues, that we will experience several decades of downward pressure on wages.
Household incomes (after adjusting for inflation) have steadily climbed over the past four decades. But the additional income is the result of more people in each household working rather than an increase in wages. In other words, more women work outside the home.
Forty percent of women over sixteen were part of the labor force in 1970. Now, sixty percent of women work outside the home. And, more than seventy percent of women with children under the age of eighteen work outside the home.
That’s the source of new money for families. Medium income (adjusted for inflation) for women has nearly doubled over the past forty years. Medium income for men has been flat during that same period.
The downward pressure on wages makes sense. We live in an information or knowledge based economy. Information can be shipped around the globe in a matter of seconds. Thus, work literally can be done anywhere. For instance, a radiologist in India can read a patient’s x-rays just as quickly as a radiologist down the hall.
In short, labor for a vast number of professions — accounting, medical information, architecture, customer service calls, to name just a few — is now a commodity. One person’s labor is indistinguishable from another’s just as one farmer’s wheat is indistinguishable from another’s.
I remember listening to an interview of former GE CEO Jack Welch some years ago. He said GE’s goal is to buy commodities but never sell commodities. Profits are unreliable in a commodity business. Just ask any farmer. Labor as commodity is not good news for the American worker, including many, if not most, professionals.
Our score card for happiness in America is income. We say we value family and friends more than money. But, politicians, pundits and every day Americans focus much attention on income. It makes sense. Money helps.
But, is ever increasing wages the best way to measure happiness and prosperity? We’ve used our extra household income to accumulate stuff. (Our dollars go further in the past because most stuff costs less than it did forty years ago.) The size of our houses have doubled. There are more cars than licensed drivers. And, how many electronics do we really need? I certainly need to ask myself this last question.
If Mr. Miller’s assertion — Americans will make less in the future than they do now — is true, what will prosperity look like in the future? Will prosperity exist? How will this affect our collective psyche? To what extent will we still be willing to help one another if we feel constant strain on our own incomes?
America may be facing it’s greatest leadership challenge. It is easier to be a leader when the coffers are full and growing. It is toughest to lead when times are lean.
How can and should America show leadership if our incomes don’t grow? Are there ways for America to be a role model for better living — to do more with less?
These are the questions we face at a household, community, state and national level. Are we up to the challenge?
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John Creighton can be found on Twitter @johncr8on and on Facebook.
Picture credit: stuartpilbrow (Flickr)










