Greenspan frets over disparity in wages

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Federal Reserve Chairman Alan Greenspan weighed into the political debate on jobs yesterday, saying the disparity between top income-earners and hourly workers is getting worse.

Mr. Greenspan also argued passionately for action to address chronically high joblessness among blacks, which he called a "failure of our society" that is partly due to discrimination, in testimony before the House Financial Services Committee.

The answer to problems of joblessness, the focus of a partisan war all year, is to increase education and skills so that workers can qualify for the good-paying but highly technical jobs being created in the economy, he said.

"We do have problems with the distribution of income," he said. "The skill premium for skilled workers versus lesser-skilled continues to widen.

"Real wages have been rising," he said, but "there's been a disproportionate rise in the 20 percent of payrolls which were supervisory workers," who have higher qualifications, while the wages of hourly workers have "barely budged."

Mr. Greenspan lent credibility to the Democratic argument that employers have had to devote much of their increase in compensation in the past year to skyrocketing health insurance premiums and pension costs -- leaving workers with few real gains.

Adding fuel to the Democrats' fire, Mr. Greenspan noted that corporations have been devoting an unusually large share of their income to profits rather than wages, though he predicted that would not continue.

Mr. Greenspan disputed Democratic arguments, however, that the 1.4 million jobs created in the past year are of lower quality and offer lower pay and benefits than the 3 million jobs lost during the recession, saying he has seen no "meaningful" evidence of that.

The problem, Mr. Greenspan said, is the skills of workers who have lost jobs in manufacturing and other areas do not match the increasingly "technological" requirements for better-paying jobs, such as in health care and education, so many of them have had to take lower-paying service jobs.

"This I believe is an education issue," he said, urging Congress to address the problem "as quickly and broadly as we can."