More on Poverty and Class... (The Hidden Krugman and Frank)

Following up on Old Fogey's post below, which points to E.J. Dionne's WaPo column, I'll counter with Paul Krugman's Friday column, "The Big Disconnect" (fully available to Times Select subscribers), which discusses the variance between the happy economic talk from the Republicans and polling data from working Americans who don't feel so happy.

The disconnect between overall economic growth and the growing squeeze on many working Americans will probably play a big role this November, partly because President Bush seems so out of touch: the more he insists that it’s a great economy, the angrier voters seem to get. But the disconnect didn’t begin with Mr. Bush, and it won’t end with him, unless we have a major change in policies.

The stagnation of real wages — wages adjusted for inflation — actually goes back more than 30 years. The real wage of nonsupervisory workers reached a peak in the early 1970’s, at the end of the postwar boom. Since then workers have sometimes gained ground, sometimes lost it, but they have never earned as much per hour as they did in 1973.

Meanwhile, the decline of employer benefits began in the Reagan years, although there was a temporary improvement during the Clinton-era boom. The most crucial benefit, employment-based health insurance, has been in rapid decline since 2000.

[...]

In 1997, a plurality of workers said that employment benefits were better than they used to be. That made sense: in 1997, the health care crisis, which had been a big political issue a few years earlier, seemed to have gone into remission. Medical costs were relatively stable, and in a tight labor market, employers were competing to offer improved benefits. Workers felt, rightly, that benefits were pretty good by historical standards.

But now the health care crisis is back, both because medical costs are rising rapidly and because we’re living in an increasingly Wal-Martized economy, in which even big, highly profitable employers offer minimal benefits. Employment-based insurance began a steep decline with the 2001 recession, and the decline has continued in spite of economic recovery.

The latest Census report on incomes, poverty and health insurance, released this week, shows that in 2005, four years into the economic expansion, the percentage of Americans with private insurance of any kind reached its lowest level since 1987. And Americans feel, again correctly, that benefits are worse than they used to be.

Why have workers done so badly in a rich nation that keeps getting richer? That’s a matter of dispute, although I believe there’s a large political component: what we see today is the result of a quarter-century of policies that have systematically reduced workers’ bargaining power.

The important question now, however, is whether we’re finally going to try to do something about the big disconnect. Wages may be difficult to raise, but we won’t know until we try. And as for declining benefits — well, every other advanced country manages to provide everyone with health insurance, while spending less on health care than we do.

The big disconnect, in other words, provides as good an argument as you could possibly want for a smart, bold populism. All we need now are some smart, bold populist politicians.

And I'll raise her with Thomas Frank's last shot as a guest columnist for the NYT, Rendezvous with Oblivion, which exhorts Democrats to start talking more about class.

When you view the world from the satisfied environs of Washington — a place where lawyers outnumber machinists 27 to 1 and where five suburban counties rank among the seven wealthiest in the nation — the fantasies of postindustrial liberalism make perfect sense. The reign of the “knowledge workers” seems noble.

Seen from almost anywhere else, however, these are lousy times. The latest data confirms that as the productivity of workers has increased, the ones reaping the benefits are stockholders. Census data tells us that the only reason family income is keeping up with inflation is that more family members are working.

Everything I have written about in this space points to the same conclusion: Democratic leaders must learn to talk about class issues again. But they won’t on their own. So pressure must come from traditional liberal constituencies and the grass roots, like the much-vilified bloggers. Liberalism also needs strong, well-funded institutions fighting the rhetorical battle. Laying out policy objectives is all well and good, but the reason the right has prevailed is its army of journalists and public intellectuals. Moving the economic debate to the right are dozens if not hundreds of well-funded Washington think tanks, lobbying outfits and news media outlets. Pushing the other way are perhaps 10.

The more comfortable option for Democrats is to maintain their present course, gaming out each election with political science and a little triangulation magic, their relevance slowly ebbing as memories of the middle-class republic fade.

[posted with ecto]