Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

10 September 2008

The American Dream is Slip, Slipping Away - Not

Before every election in which a Republican President holds the reins of the Executive Branch of the Federal Government, the Democrats claim that the American Dream is dying. Both Senators Biden and Obama made the claim that it was "slipping" away. Biden said it directly, while Obama said that many Americans felt that it was slipping away.

I have posted on aspects of such Democrat claims in these prior posts:
Of these, the "Benefits versus Wages" post is must reading. I have recently come across another very essential commentary on the subject of American worker well-being. James Sherk, Bradley Fellow of Labor Policy at the Heritage Foundation wrote an article called "The American dream lives," which was published on 7 September 2008 in the Washington Times.

Sherk says we are "enduring trying economic times." Gas is expensive, some homeowners have lost considerable home equity, growth has slowed, and there are some job losses. But the American Dream cannot be said to be lost every time the American economy enters a downward business cycle. We should remember how slight today's problems are compared to say the stagflation of the 1970s, which was not enough to end the American Dream.

He says good jobs are easier to find in recent times than they were in the past. Repetitive, brawny work has been replaced with creative, brainy work. "The share of Americans working in what the Census Bureau calls 'professional specialty' jobs (such as nurses or engineers), as well as executive or managerial, and technical or sales positions, has expanded 10 percent since 1980." "Between 1993 and 2006, the median annual earnings of American born workers rose by one-sixth."

By contrast, the Democrats, as in Obama's acceptance speech, like to point out that workers have lost earnings in the last 8 years. This ignores the fact that Americans take a much larger fraction of their compensation as benefits to avoid taxes. It also ignores the affect of many immigrants and many illegal workers, who are commonly paid less than native Americans.

Sherk points out that 401(K)-style defined contribution pensions have freed many workers to make more frequent job changes, which gives them more opportunities to seek jobs at higher pay and that they enjoy. Employees are more than one-third more likely to voluntarily change jobs now than they were in the 1970s. Contrary to the anecdotal claims, employers are much less likely to fire or lay off employees than in the past.

One of the problems often noted today is the rising cost of health care costs. This puts some downward pressure on take-home income as employers pay more for health insurance plans. Despite this pressure, the fraction of the work force receiving company provided health care insurance is the same as in the mid-1990s, provided a correction is made for illegal immigrants.

When the present slow growth moment ends, Americans will have many opportunities to get ahead. It is a sad business to underestimate the long-term strength of the American economy and the productivity of its workers.

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