“In 2010, 93 percent of income growth went to the wealthiest 1 percent of American households, while everyone else divvied up the 7 percent that was left over.” — University of California economist Emmanuel Saez
Harold Meyerson penned a cautionary tale in the Washington Post last week for any who will listen:
Occupy Wall Street is not known for the precision of its economic analysis, but new research on income distribution in the United States shows that the group’s sloganeering provides a stunningly accurate picture of the economy. In 2010, according to a study published this month by University of California economist Emmanuel Saez, 93 percent of income growth went to the wealthiest 1 percent of American households, while everyone else divvied up the 7 percent that was left over. Put another way: The most fundamental characteristic of the U.S. economy today is the divide between the 1 percent and the 99 percent.
It was not ever thus. In the recovery that followed the downturn of the early 1990s, the wealthiest 1 percent captured 45 percent of the nation’s income growth. In the recovery that followed the dot-com bust 10 years ago, Saez noted, 65 percent of the income growth went to the top 1 percent. This time around, it’s reached 93 percent — a level so high it shakes the foundations of the entire American project.
[...] How has the top 1 percent been able to decouple itself from the nation beneath it? To begin, much of its income comes from investments in funds and firms that are raking in profits from overseas ventures in economies like China’s, which weathered the downturn better than ours. Much of those firms’ profits also derive from their reduced labor costs — the result of layoffs and paycuts. Finally, as Saez points out, there has been “an explosion of top wages and salaries” since 1970. In that year, 5.1 percent of all wages and salaries paid in the United States went to the wealthiest 1 percent. In 2007, the share going to the wealthiest 1 percent had more than doubled, to 12.4 percent.
[...] Most proposals to restore a modicum of balance to the American economy focus on making the tax code more progressive. Raising the tax on investments to the level of the tax on wages, for instance, and increasing the inheritance tax would help start reconstruction of a more viable economy.
But changes to the tax code, indispensable though they would be, aren’t remotely sufficient to the challenge of restoring the broadly shared prosperity that Americans enjoyed in the mid-20th century. That would require changing some laws to give stockholders and other corporate stakeholders the power to diminish the share of corporate revenue routinely claimed these days by top executives — at the expense of everyone else. It would require revitalizing unions.David Madland and Nick Bunker of the Center for American Progress recently found that in 1968, when 28 percent of the workforce was unionized, 53 percent of the nation’s income went to the middle class. In 2010, when 11.9 percent of the nation’s workers were unionized, the share claimed by the middle class had fallen to 46.5 percent.
Capitalism can create prosperity, but left unfettered it doesn’t create broadly shared prosperity — and never will… Continue reading
And here’s the very uncomfortable reality about 21st century America, the land of “opportunity,” in the post-Teaparty, Corporate-sponsored, Republican Home of the Brave:
In 1979, more than a quarter of low-wage workers were teenagers. By 2011, it was cut by more than half, down to 12 percent. The only other age group that lost even a tiny a share of low-wage workers in those years was people 65 and over, who went from 4.6 percent of the low-wage workforce to 4.2 percent. Every other group—meaning people in their prime working years—grew as a percentage of the low-wage workforce. People ages 35 to 64, in particular, shot from 30.8 percent to 38.1 percent of workers earning $10 an hour or less.
Low-wage workers today are not just older than in 1979, they’re also better educated.
[...] Each of these statistics points to a single fact: The American low-wage workforce has gotten older and better educated during three decades in which the value of the minimum wage has dropped. These statistics are signs of the increasing difficulty of even making a sustainable living, never mind getting ahead or living the American Dream. Yet we still constantly hear Republicans invoking the group in that workforce that’s shrinking—inexperienced teenagers. The reason is simple: Republicans aren’t concerned with reality. They’re just concerned with keeping wages low so companies can squeeze higher profits out of workers.
This isn’t our fathers (or mothers) land of opportunity anymore, unless our last name is Trump or Hilton… or Romney. We can thank Reagan, trickle-down, deregulation, and those who have successfully lobbied the establishment politicians who write and pass our tax laws (and start wars) to benefit the avarice of the wealthiest among us.