Here is something interesting. As we reported elsewhere, there is a McKinsey study showing that median wages have been stagnating in much of the developed world since the turn of the century, with some notable exceptions like Sweden.
How did Sweden do it?
Hmm, government intervention, the stuff market-fundamentalist don't like. But here is the catch. While not as successful as Sweden, government intervention also mitigated the erosion of median incomes in the US..
By the way, the rest of the article also makes a few interesting points..
How did Sweden do it?
Quote:Sweden, where median households received a larger share of the gains from output growth in the 2005-2014 period, has bucked this negative trend. In response to the growth slowdown of the last decade, Sweden’s government worked with employers and unions to reduce working hours and preserve jobs. Thanks to these interventions, market incomes fell or were flat for only 20% of households. And generous net transfers meant that disposable incomes increased for almost all households.The Great Income Stagnation by Laura Tyson and Anu Madgavkar - Project Syndicate
Hmm, government intervention, the stuff market-fundamentalist don't like. But here is the catch. While not as successful as Sweden, government intervention also mitigated the erosion of median incomes in the US..
Quote:To be sure, the US also intervened after the crisis, implementing a fiscal stimulus package in 2009 that, along with other transfers, raised median disposable income growth by the equivalent of five percentage points. A four-point decline in median market income thus became a one-percentage-point gain in median disposable income. But that did not change the fact that, from 2005 to the end of 2013, market incomes declined for 81% of US households.
By the way, the rest of the article also makes a few interesting points..
Quote:Similarly, recent research by Berkeley’s Emmanuel Saez shows that real market income for the bottom 99% in the US grew in both 2014 and 2015 at rates not seen since 1999. Nonetheless, by the end of 2015, real market incomes for that group had recovered only about two-thirds of the losses borne during the 2007-2009 recession. In other words, while disposable income did not fall in either Sweden or the US, the US approach was to compensate for a decline in market incomes, which Sweden had managed to head off.
The consequences of such failures are far-reaching. Stagnating or falling real incomes do not just act as a brake on consumption demand and GDP growth; they also fuel social and political discontent, as citizens lose confidence in existing economic structures.
MGI surveys in France, the United Kingdom, and the US have found that people whose incomes are not growing, and who do not anticipate an improvement, tend to view trade and immigration much more negatively than those who are experiencing or foresee gains. The Brexit vote in the UK and bipartisan opposition to trade agreements in the US are clear signs of this.