Treas Sec Paulson U-Turned on Wages. Or Did He?

Treasury Secratery Paulson gave his first big speech yesterday. His bipartisan tone and policy priorities were, i thought, encouraging. He comes accross as engaged and thoughtful. And significantly he made stangant incomes one of his four top priorities, along with reform of social security, energy, and protecting open trade. This is a big switcheroo, and backs up what Rob and Simon said in their memo last week. Pressure from progressive organizations is helping to put the issue up the agenda. This change of emphasis was picked up by Ed Luce in the FT, and the Times.

But is it a change of heart? Not really. Last month Olympia Snowe asked Paulson about wages at his confirmation hearings. He said nothing was going on that further rises in productivity wouldn't fix. That sentiment did not change yesterday, as you'll see if you read the full remarks. Key quote:

"But we still have challenges, and amid this country's strong economic expansion, many Americans simply aren't feeling the benefits. Many aren't seeing significant increases in their take-home pay. Their increases in wages are being eaten up by high energy prices and rising health-care costs, among others."

The explanation in the rest of the passage - wage growth will follow economic growth, wages rises below productivity rises is a long-term trend, lots of factors are responsibile - doesn't show much of a change of thining. The only switch is a more New Dem style focus on helping people get access to training. Two bottom lines. First, while its nice to see the change of emphasis, there hasn't been a change of analysis. Second, on wages, free trade and the deficit, it isn't enough to say you are on the right side. You actually have to do something about it too.