Footnote to the Footnote

This is the real takeaway from the article linked in the preceding post, the buried comment that reveals much more than the naked numbers do:

With the inflation rate stagnating at only 1.2% and hourly wages rising 1.6%, employers have little incentive now to add jobs, [Kenneth] Goldstein[, a labor economist at the Conference Board,] says. "If it's going to cost you 1.6% more to hire that person and you're only going to get back 1.2% on whatever you sell, even with a productivity dividend it's awfully hard to see where you're going to make money on the deal," he says.

Okay, two things. The first, less important one, is that the math is screwy. You can't directly compare percentages like that unless the original quantities were equal - which here the two (labor cost and unit sale price) obviously are not. It just makes no sense. Just consider that if your labor costs are 50% of your total unit cost and they have gone up 1.6%, then the unit cost has gone up 0.8%. So if the unit price goes up 1.2%, than yes, you are making money on the deal. Maybe not as much as you want, but you are making money. (Yes, I know other unit costs might have increased which could change the final answer, etc., etc., but that's irrelevant to the point that you can't simply say that if wages go up faster than prices you are losing money. It is mathematically absurd.)

The second is much more important because it reveals the attitude driving the decisions, the attitude of the bosses, the attitude, bluntly, of capitalism. What Goldstein is saying, when you strip it down to its real on-the-gound meaning, is that unless prices are going up faster than wages, that is, unless workers are losing ground, seeing their real wages shrink, then there won't be jobs. Your long-term choice as a worker is to be unemployed and lose ground rapidly or be employed and lose ground less rapidly. The idea of real gains is denied you and your only hope of getting such gains is to get them at the expense of others increasingly discouraged, increasingly marginalized, increasingly left to their fates.

You think that's overstated? You think I'm reading too much into it? Think again.

Goldstein predicts that unemployment will remain above 6% as late as 2014 or 2015. In fact, employment may never return to earlier levels, he forecasts, because businesses found it was profitable to cut jobs. "Some of those folks in their 40s and 50s may not realize it, but they are not going back to work, period," he says.

And those workers, those people who have hoped, planned, and worked to support themselves and their families and dreamed of leaving a better life for their children will be denounced by the caterwauling chorus of the comfortable as lazy lay-abouts, a drain on society, as good-for-nothings, as demonstrating the "need" for more "discipline" for workers and as "proof" that "wasteful" programs like welfare, food stamps, unemployment, subsidized health care, public housing, and all the rest have only bred "indolence" and "destroyed self-reliance." We will be asked - indeed, there are already those who are in effect asking - "Are there no prisons? Are there no workhouses?" And more and more, the response to an answer of "No" will be "Why not?"

All because, I keep saying it, we know who must be protected.