New York Times Labor Reporter Greenhouse Pushes Higher Taxes, Stronger Unions, Wage Subsidies on Economy

New York Times labor reporter Steven Greenhouse celebrates Occupy Wall Street ideas like the "Robin Hood tax" in his reporting, so it's no surprise his Sunday Review "news analysis," "Productivity Climbs, But Wages Stagnate," pushed unvarnished left-wing ideas from economists who want a much higher minimum wage, strengthening unions, and higher taxes (in Greenhouse's euphemism, "a more progressive tax system") in the name of spurring higher wages for workers.

Federal income tax rates will rise for the wealthiest Americans, and certain tax loopholes might get closed this year. But these developments, and whatever else happens in Washington in the coming debt-ceiling debate, are unlikely to do much to alter one major factor contributing to income inequality: stagnant wages. For millions of workers, wages have flatlined. Take Caterpillar, long a symbol of American industry: while it reported record profits last year, it insisted on a six-year wage freeze for many of its blue-collar workers.

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Some economists say it is wrong to look at just wages because other aspects of employee compensation, notably health costs, have risen. But overall employee compensation -- including health and retirement benefits --has also slipped badly, falling to its lowest share of national income in more than 50 years while corporate profits have climbed to their highest share over that time.

Greenhouse cited a left-wing French economist popular among Times reporters.

Emmanuel Saez, an economist at the University of California at Berkeley, found that the top 1 percent of households garnered 65 percent of all the nation’s income growth from 2002 to 2007, when the recession hit. Another study found that one-third of the overall increase in income going to the richest 1 percent has resulted from the surge in corporate profits.

Many economists say the stubbornly high jobless rate and the declining power of labor unions are also important factors behind the declining wage share, reducing the leverage of workers to demand higher wages. Unions represent just 7 percent of workers in corporate America, one-quarter the level in the 1960s.

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Jared Bernstein, who served in the Obama administration as executive director of the White House Task Force on the Middle Class, said many steps should be taken to increase labor’s income share, including raising the minimum wage, pushing down the jobless rate, enacting laws that make it easier for workers to unionize and increasing wage subsidies for those on the bottom. He also said the federal government, in spending hundreds of billions on health care, might insist that providers pay home-care aides or lab technicians $20 an hour rather than $10. “There’s no reason why a lab technician with a few years of community college shouldn’t be able to find her way into some segment of the middle class,” he said.

Professor Katz of Harvard said it would make sense to create a more progressive tax system when corporations and the top 1 percent are commanding more of the economic pie. He said those on top should agree to some redistribution and to invest in the next generation.

“We’ll end up with a larger pie, and they’ll be better off -- even though they may think it clashes with their own self-interest,” he said.