The Near Future: Big Raises Coming for Those with Certain Skills

I started writing this blog over two years ago in an attempt to better understand why wages were not increasing like they were in the 1990s. It seemed like there were several good years of production in the US, but the every man wasn’t benefiting. Very early on I realized the US was headed for a significant downturn in the economy. I said we were half asleep in a fake empire.

My theory is, and was, that the psychological affect of the boom times of the 1990s was still permeating the minds of many workers. Everyone wanted a bigger house, boat, and the perception of importance. It was rationalized that it was earned, and to a degree it was. Productivity soared throughout this decade and corporate profits were way up, so employees wanted to be rewarded for their hard work and innovative offerings. But during this decade the pay structure had stalled out and people began to borrow to keep up their lifestyle – all with the idea that the reward was just around the corner. Well something was just around the corner, the economic crash of a generation.

What went wrong?
How could productivity be so high, consumption be so high and pay be idle? I blamed the uber-rich. I even did some research to show how even though we knew income levels were disproportionate, it was worse than we thought. But blaming the ultra-rich is somewhat of a lazy answer. So I started to think about other aspects of it. I came back to globalization and outsourcing. There is the idea that wages were kept low for fear of outsourcing. There is some truth to that, but still only a smallish part of the story.

The reality is the emerging economic powers of China, India, Brazil,and others had finally reached a threshold of productivity themselves.The best practices of manufacturing were all well known by now, the raw materials needed were all easily shipped, the communication chain was available through the internet, and the education required for these ideas was sufficiently taught. Many of the advantages the US built over the last 100 years were flattened in less than 10 years.

Productivity is and was up, but it’s total rise is obscured by the affects of a foreign labor market. If it were the same environment as the 1980s then pay would have shot up. Corporations can make more stuff cheaper than ever and there was a buying US public that believed they earned it.

Where do we go from here?
In the long run, this economic situation is great for the US. For too long the US was the wealthiest nation and it consumed a disproportionate amount of the worlds goods and services. Countries like China are now earning their way into the establishment of a middle class, which has great buying power. If and when these countries start consuming their share of goods and services (as long as trade is open) the US will be a supplier of particular goods and services.

Although items like toys and shoes are made elsewhere, the US is still the best at the knowledge economy. Movies and music are largely US dominated and just look at Apple and Coca-Cola, their products are not significant in and of themselves. They sell an association as much as anything else.

There is a type of employee of the 2010s who will get big raises. It’s the worker who engages the market with ideas and transforms easy to assemble goods and services into something with personal meaning.


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