St. Louis Speaker Series: Robert Reich

Tonight we heard Robert Reich, former Labor Secretary under Bill Clinton, economist, professor, and CNBC contributor, speak about the U.S. economy. Although the last speakers we heard (Pervez Musharraf and Laura Bush) were great politicians and delivered great speeches, you could clearly tell that Robert Reich has been a university professor and TV personality for quite some time. For starters, instead of standing behind a podium and reading a scripted lecture, the podium had been moved to the side of the stage as he held a microphone and paced the floor. He was an entertaining lecturer.

Here are the key points as I remember them:

From the time of World War II until 1980, the median (not average) income of Americans steady increased. However, starting in 1980, the median income has stagnated, which is supported by the most recent data before the recession struck. In spite of this, current Americans consume considerably more than they did in 1980. How? He cited three things:

• Women entered the workforce.
• Americans started working longer hours.
• Americans went into debt.

However, as he pointed out, each of these three things has an upper limit:

• About 60% of women with small children work. That number will never go much higher, because there comes a point in time in which it costs less for a woman to be at home, than for her to work and the family to have to pay for child care while she's gone.
• There are only so many hours in a day to work.
• Well, we all know how the "debt" plan worked out.

Although we've reached the end of these three "coping mechanisms" in the last decade, why is that we still had 5-6% unemployment?

• "Globalization" and advanced technology has actually reduced the number of "good", or "middle class" jobs. (In terms of globalization, manufacturing has moved elsewhere. However, even in manufacturing, nearly everything is automated, so even if we still had more manufacturing domestically, it wouldn't employ people the way it did a hundred years ago.)
• These higher paying jobs have been replaced by service industry jobs: restaurants, transportation, retail, health care, etc. These are jobs that involve human interaction and can't be shipped abroad or replaced by technological advances.
• Unfortunately, these service industry jobs pay less than the jobs of yore.

The bottom line is that even though unemployment has remained low, wages have not increased. We need to stop looking at just the unemployment rate, but we need to look at income.

He had a staggering statistic: 10 years ago, the top 1% of the country had 8% of the wealth. Now, the wealthiest 1% of the country have 24% of the wealth. Money is not going into the hands of the majority of the people.

Although he did talk about some things that could be solutions to the problem, addressing things like education, medicare, health reform, taxation, Wall Street regulation, etc., I felt like the purpose of the speech was not to introduce a way to solve everyone's problems. That being said, though, it was an interesting look at the last 30 years and why things are the way they are.