Going Down in an Up Economy

In the typical economic downturn, Americans thrown out of work make a deal with Euthenia, the Greek goddess of prosperity. They say (in their heads): We will get through this. We'll move in with family, find any part-time job. All we want is an assurance that good times will eventually return for hardworking people like us.  

In the past, Euthenia delivered. A recession would run its course like the flu, then the economy would become its old self again, a welcoming place for anyone with a work ethic.  

This downturn may be different. Yes, the high fever has passed. And the wealth machine is functioning again ... for stock investors, anyway. But for the jobless lacking special skills, there are no assurances -- not this time. And for members of this group still working, the prospects for economic advancement seem dim.  

Rarely since the Great Depression have wages fallen so far and so fast. Forces older than the 2008 financial meltdown added to the downward pull in mass affluence. Many workers, especially in manufacturing, were already racing up a down escalator in pay and benefits -- their situation masked by a housing bubble and easy credit that spun an illusion of wealth.  

Globalization and technological change march on. True, the economy has begun adding jobs again. True, employment usually lags behind economic growth. But the jobs that are coming back pay less than they did before, and many are gone for good.  

From 2007 to 2009, over half the unemployed who had previously worked for at least three years found full-time employment at lower wages than they were paid before, according to The Wall Street Journal. Over a third reported wages at least 20 percent lower.  

For example, an executive at the South Sea Islands Resort in Captiva, Fla., told the Journal that he's beginning to replace some positions that were cut, but at less pay than before. Lots of senior people want the work, he added, noting, "We have been able to re-evaluate some of our starting wages."  

Re-evaluate indeed. Accelerating this downward mobility has been a further plunge in health care security. The number and percentage of Americans without health coverage have hit record levels, according to new Census data.  

And so how does a sophisticated country used to rewarding people with grit and brawn keep the fires of ambition glowing? The answer is not to erect trade barriers against countries competing fairly. That's futile.  

What makes most sense is retraining those lacking the hot skills. Another smart approach is funding research that races the American economy toward the next big thing. And building an infrastructure that moves people and goods around in a time- and fuel-efficient manner.  

All these answers require an active government willing to spend money and carefully target tax incentives. Yet many in our political culture don't want to pay for this spending or replace the revenues lost to the tax incentives, if that requires asking more of high-income people. It doesn't want the government to put order in a wasteful health care system that drains our economic resources.  

The idea seems to be that Euthenia subcontracts her work to the rich. It assumes that the wealthy, when not investing in China or Brazil, will send some coins down the down escalator. And that the government of the people has little role to play in making the economy a nurturing place for ordinary folk.  

Euthenia may be more democratic in her choice of favorites than many think. But the people will have to -- pardon the expression -- collectively deal with her through their government.

COPYRIGHT 2011 THE PROVIDENCE JOURNAL CO.

DISTRIBUTED BY CREATORS.COM

See Other Political Commentary.

See Other Commentaries by Froma Harrop.

Views expressed in this column are those of the author, not those of Rasmussen Reports.