>Of course Greenspan and monetary policy play a role in economic prosperity,
>but I do not believe that Greenspan is some how more uniquely smart nor
>solicitious of Clinton than Volcker was of Reagan in the 1980s, yet
>lower-income folks were royally screwed in the 1980s and have seen some real
>gains in the 1990s. So what explains the difference in how the respective
>booms affected economic inequality and the wage gains of lower-income folks?
One answer: the unemployment rate didn't break below 7% until August 1986 - and it popped back up again, only staying decisively below after November. It didn't break decisively below 6% until a year later - 5 years into the expansion. The cycle low was 5.0% in March 1989, only about a year before the recession set in.
In the current cycle, the U rate broke 7% in July 1993; 6% in August 1994; 5% in July 1997. It's been hugging close to 4% for a year and a half. So, three years into the 90s expansion (which began in March 1991), the U rate was where it was five years into the 80s expansion, and the 1980s expansion never saw anything like a sustained sub-5% U rate.
Tight labor markets raise wages, and can compress the distribution; loose labor markets keep down wages, and can expand all the premia of privilege.
Doug