Studies find us 'running in place' Clinton and Dole said to offer workers little help

September 16, 1996|By KNIGHT-RIDDER NEWS SERVICE

WASHINGTON -- Even as Bob Dole and Bill Clinton promise to put more cash in consumer pockets, two new studies suggest the American family is working harder and earning less, and the treadmill they're on isn't likely to slow any time soon.

American families are "running in place," economically, squeezed by lower wages and having to work harder to make ends meet, according to studies commissioned by the Competitiveness Policy Council, a bipartisan federal advisory group set up by Congress.

Despite a strong economy, average hourly wages, after accounting for inflation, are still $1.20 below their peak of $8.50 in 1973, the group says.

While a recent uptick in average income has been touted by President Clinton as evidence that the wage slide has halted, the increase does little to reverse a 23-year deterioration in wages, according to the studies.

And American workers can find little solace in the promises of the presidential candidates, members of the Competitiveness Council said.

"Neither candidate is addressing these issues," said C. Fred Bergsten, chairman of the council and an economist for the Economic Policy Institute, a liberal research group. He called the candidates' tax-relief and education credit proposals "of marginal benefit" to workers.

And one campaign proposal -- Dole's 15 percent across-the-board tax cut -- could make matters worse for workers, said Rep. Amo Houghton Jr., a Republican from New York.

"People are skeptical about a 15 percent tax cut," Houghton said. "A lot of us worry about a repeat of the 1980s, when a cut in taxes led to an increase in consumption rather than investment."

Increased investment in manufacturing, productivity, education, and the creation of high-skilled jobs that pay more is the key to turning around the decline in real wages, Bergsten said.

The studies -- "Is Anxiety About Living Standards Justified?" by Frank Levy of MIT and "Trouble in Paradise: Eroding Wages and Growing Income Inequity" by Larry Mishel and Jared Bernstein of the Economic Policy Institute -- are contained in a report, "Running In Place: Recent Trends in U.S. Living Standards."

Among the conclusions:

Wage declines over the past 20 years have resulted in stagnant incomes and a deterioration in the distribution of income for all but the wealthiest 5 percent of the population. Only people who owned real estate, stocks, bonds and other assets that appreciated considerably enjoyed improvements in incomes -- despite the overall decline in wages.

Workers with less than a four-year college degree, now three out of every four U.S. workers, have experienced the greatest declines in income. Also most affected are women, younger and blue-collar workers.

The $36,959 in median family income after inflation in 1993 was only $66 higher than it was in 1973, even though many more families are supported by two breadwinners.

While these statistics are bleak, statistics can be misleading.

"Real median family income is lower now, but the size of the family today is generally smaller, too, vs. 20 years ago, so the money may go further," said Jim Bills, an economist with Comerica Bank of Detroit, not involved in the studies.

And statistical averages don't reflect whether an individual family is better off today than it was a decade ago.

It is true, however, that many families are better off financially only because both the husband and wife now work.

As a result, American families are working at "full economic capacity," with little to protect them from a job layoff, medical emergency or to pay for big costs such as college educations, said Frank Levy, one of the studies' authors.

Pub Date: 9/16/96

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