I love it when someone writes a post so I don’t have to. Yesterday, Fed chairman Ben Bernanke was in town for a luncheon. He rightly noted that there isn’t much the Fed can do these days to stimulate the economy–lending isn’t where the problem is. The problem is in spending, by corporations and by individual consumers.

Bernanke focused on consumers, leading to a remarkable statement. After noting some of the pressures on the U.S. working class, he said, “Even taking into account the many financial pressures that they face, households seem exceptionally cautious.” The New York Times interpreted that statement for us: “Consumers, in other words, are behaving as if the economy is even worse than it actually is.”

I did not actually scream “Worse than it is for whom?!?” at my computer. It probably wasn’t even close. It was the sort of thing that would probably eat at me until I could write about, however, which is why I was so happy to see this post at naked capitalism.

Not only is making comparisons to past recoveries wrongheaded, Bernanke completely misses fundamental, structural changes in the workplace:

1. Much lower labor participation in economic growth. Did Bernanke somehow miss that corporate profits are at a record high percentage of GDP? That pattern started in the weak Bush upturn. As we noted in 2005:

Part of the problem is that companies have not recycled the fruits of their growth back to their workers as they did in the past. In all previous postwar economic recoveries, the lion’s share of the increase in national income went to labor compensation (meaning increases in hiring, wages, and benefits) rather than corporate profits, according to the National Bureau of Economic Analysis. In the current upturn, not only is the proportion going to workers far lower than ever before—it is the first time that the share of GDP growth going to corporate coffers has exceeded the labor share.

So the outlook for labor has been permanently diminished due to the change in how much goes to workers v. profits.

2. Shorter job tenures. Does anyone other than tenured professors have job security? I’m sure you can add to that list (members of the armed forces) but even so, the incumbents will account for a small slice of the job market. Shorter job tenures mean: high odds of periods of unemployment (which means running down savings just to get by) and greater risk of downward mobility (as in difficulty of maintaining one’s earning level, assuming one ever had a good paying job).

There is quite a bit more, all of it relevant. The world has changed dramatically for the working and investment classes over my lifetime, and not in any ways that should inspire confidence in the average worker/consumer. Nothing about the current political situation is aimed at reversing any of those changes, and almost no one is effectively fighting those who want to make the changes more drastic and permanent.

Bernanke and the Fed may not be able to help this situation, since all they do is muck about with interest rates, but maybe he should refrain from making things any worse. If we want to fix the economy, we first have to accept the fact that it is stratified. And when recovery is predicated on the economy of the consumer, it won’t help anything to claim from above that it’s not so bad down there. We have to actually make it better for them–who, incidentally, are us.