Power of Story
Send a Tweet        
- Advertisement -

Share on Google Plus Share on Twitter 3 Share on Facebook 2 Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend 1 (6 Shares)  

Printer Friendly Page Save As Favorite View Favorites (# of views)   2 comments
OpEdNews Op Eds

Stock Tip: Be Worried. Workers are Consumers.

By       Message Robert B. Reich     Permalink
      (Page 1 of 1 pages)
Related Topic(s): ; ; , Add Tags Add to My Group(s)

Must Read 1   Well Said 1   Inspiring 1  
View Ratings | Rate It

opednews.com Headlined to H3 8/20/11

Author 47089
Become a Fan
  (121 fans)
- Advertisement -

Repeat after me: Workers are consumers. Consumers are workers.

We're slouching toward a double dip, and the stock market is imploding, because consumers -- whose spending is 70 percent of the economy -- have reached their limit.

It's not just the jobless who can't spend. It's mainly people with jobs. Median wages continue to fall. Weekly wages in July for Americans with jobs were 1.3 percent lower than eight months before.

America's median earners are now earning less (adjusted for inflation) than they earned 10 years ago.

- Advertisement -

Every CEO of every company that continues to squeeze payrolls (Verizon, are you listening? Ford?) needs to understand they're shooting themselves in the feet. Where do they expect demand for their products and services to come from?

They're doing the reverse of what Henry Ford did back in 1914 -- paying his workers three times what the typical factory employee earned at the time. The Wall Street Journal called his action "an economic crime" but Ford knew it was a cunning business move. With higher wages, his workers became his customers, snapping up Model-Ts and generating huge profits.

Many on Wall Street are scratching their heads, trying to understand why the stock market is plummeting. After all, they tell themselves, corporate earnings are still near record highs.

- Advertisement -

But it's becoming clear those earnings can't be sustained. Corporate earnings are the highest they've been relative to worker wages and benefits since just before the Great Depression. And the richest 1 percent of Americans are getting a higher percent of total income since just before the Great Depression.

Get it? It was only a matter of time before the boom on Wall Street turned into a bust. Economic booms cannot continue without American workers participating in them.

Foreign consumers have helped sustain earnings, but that won't continue, either. The European economy is sinking and China is pulling in the reins on growth.

What will happen to the Dow Jones Industrial Average when corporate earnings revert to their historic average relative to American wages? I've seen various estimates. They're not pretty.


- Advertisement -

 

- Advertisement -

Must Read 1   Well Said 1   Inspiring 1  
View Ratings | Rate It

http://robertreich.org/

Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.


Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon



Go To Commenting
/* The Petition Site */
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

The Republican's Big Lies About Jobs (And Why Obama Must Repudiate Them)

Paul Ryan Still Doesn't Get It

What Mitt Romney Really Represents

What to Do About Disloyal Corporations

The Gas Wars

The Minimum Wage, Guns, Healthcare, and the Meaning of a Decent Society