Overworked and Underpaid? Productivity Increases, But Wage Growth Declines
As Labor Day approaches, many Americans are breathing a sigh of relief for the extra day off. On a day that celebrates unions and the eight-hour work day, many workers are feeling like their hard work isn’t exactly paying off the way it used to.
Even as productivity has continued to climb, wages have been either stagnant or declining. Household income for the average working family has continued to fall, but men, latinos and those without a college education have experienced an especially sharp deceleration of wage growth since the recession, according to a new briefing paper by the Economic Policy Institute.
The Washington, D.C.-based think tank says that from 2002 to 2007, productivity rose 11 percent but the hourly wage for high school and college educated workers fell. In fact, the average median household income (adjusted for inflation) actually earned $2,000 less during that period, going from $60,804 to $58,718. For the first time, family income levels sunk below what they had been at the beginning of the economic cycle.
Typically, an era of higher productivity would also cause wages to rise as workers receive compensation for harder work. Instead, the opposite has been happening. As many companies have reduced staff to cut costs, employees have been squeezed to work longer and produce more. And with productivity falling slightly for the first time in more than a year, many workers have likely reached their threshold this past Spring.
That's because the labor isn't transferring to the employee paychecks. Nominal wage growth in the private sector was 3.4 percent before the economic crisis, but fell to 1.6 percent by the recession’s third year. Similarly, wage compensation dropped from 3.1 percent to 1.8 and most of the benefits went to the upper class. From 1989 to 2007, the top one percent of households earned 56 percent of the total income growth. The bottom 90 percent received a total of 16 percent.
This isn’t surprising since the trend has actually been ongoing for the last 30 years. The reasons wages have continued to stagnate are varied. But could the lack of wage growth be also tied to labor’s declining membership? Workers who belong to unions enjoy better pay and benefits than non-unionized employees. In a Washington Post column by Katrina vanden Heuvel, The Nation magazine editor and publisher, describes how unions were able to raise American living standards:
“But when unions represented over 33 percent of all private workers in the 1940s, they drove wage increases for everyone -- non-union firms had to compete for good workers. Now, unions struggle just to defend their members' wages and benefits. Over the past decade before the Great Recession, productivity soared, profits rose and CEO pay skyrocketed, but most workers lost ground.”
The wage stagnation and its correlation to unionization is not far fetched. Change to Win, a coalition of several union organizations, points out that the peak of real wages was in 1972 when private sector union membership was 28 percent. They write:
Workers are now earning only 83 cents of every dollar they earned more than 35 years ago, while their productivity has increased a dramatic 80%. This is the central explanation for the explosion in corporate profits and the growing income gap in America, and the reason workers in America still believe the economy is moving in the wrong direction.
Still, with less than 13 percent of the workforce belonging to a union, it’s difficult to get the same strength in numbers to raise the standard of living for everyone. The power of collective bargaining has been a central tenet to negotiating a living wage. But the small union numbers, coupled with companies invoking the current economic climate to justify concessions, has eroded the negotiating power of the average worker.
The workplace has been getting tighter to the employer’s advantage. The tight job market makes it difficult to negotiate a better wage. For every job opening, there are five unemployed people vying for that spot. In a job market like today where there is a big pool of applicants and a small number of openings, companies are able to leverage the pay and benefits on their terms.
Flexible pay scales are also on the rise, where workers have a smaller base salary in exchange for big single payment bonuses. According to Businessweek, more than 90 percent of U.S. corporations now use this plan for non-executive employees. In the early 1990s, it was less than 50 percent. And to top it off, with rising healthcare costs, companies have also shifted the burden onto workers by reducing their wages.
As a result, many are still feeling financially vulnerable despite having a job. A Gallup poll from August 16 found that 26 percent of Americans were worried about pay reductions. Not as many workers are concerned as last year but the statistic is still high compared to previous surveys. Another polls says consumer confidence is also falling to the lowest levels all year and many are saying the economy is only getting worse.
The growing anxiety is because workers have not been able to benefit from the productivity. Spurring median wage growth is a big policy concern. If households are not able to keep up with the cost of living, the decline in consumer spending could further prolong the economic recovery.
But as EPI suggests, raising the minimum wage or nudging the federal government to create job growth are some short-term solutions.
On Monday, though, workers across America will be enjoying a much-needed holiday before going back to the grind.
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Top 10 Reasons for Higher Taxes on the Top 1%
by Paul Buchheit
Funding for our country's children is being cut, but we allow a hedge fund manager to make enough money to pay the salaries of every public school teacher in New York City. Most of his earnings are taxed at a rate less than that of his secretary.
We haven't been able to do anything about it because the cry of 'socialism' from the top generates fear in the minds of average Americans. It's a meaningless cry. Here are ten reasons why the wealthiest 10% of us, and especially the richest 1%, should be paying higher taxes.
1. Benefits to the rich (and everyone else)
Americans with land and expensive houses have the most to lose by failing to support national security and a clean environment and infrastructure repair. And they have a lot to lose from the growing levels of crime and violence. Researchers Richard Wilkinson and Kate Pickett have documented numerous studies that correlate economic inequality with shorter life expectancies, increased disease and health problems, and higher rates of murder and other forms of violence.
About their book "The Spirit Level: Why Equality is Better for Everyone," Wilkinson says: "We quote a prison psychiatrist who spent 25 years talking to really violent men, and he says he has yet to see an act of violence which was not caused by people feeling disrespected, humiliated, or like they've lost face. Those are the triggers to violence, and they're more intense in more unequal societies, where status competition is intensified and we're more sensitive about social judgments."
2. Correcting the redistribution of income to the rich
The richest 1% took $7 of every $100 of America's income in 1980. They have increased that to $20 of every $100 today. In just one generation they've TRIPLED their cut of the pie. Most of the gains by the rich were not 'earned' in the sense of production, innovation, inventiveness. They didn't work 3 times harder than everyone else as they tripled their share. They benefited from tax cuts and deregulation.
3. Correcting the redistribution of income from the poor
Since 1980 our country's productivity has steadily risen, with total income doubling approximately every 10 years. If the bottom 90% of America, most of whom have not been lazy, had shared in this prosperity at a level consistent with 1980 incomes, they would be making $45,000 a year instead of $35,000.
Change to Win, a coalition of union organizations, notes that the high point for wages was in 1972 when union membership reached 28%. Workers are now "earning only 83 cents of every dollar they earned more than 35 years ago, while their productivity has increased a dramatic 80%."
4. Outmoded tax brackets
Our tax system is stuck at 1980s levels. As noted by The New Yorker economist James Surowiecki, "Our system sets the top bracket at three hundred and seventy-five thousand dollars, with a tax rate of thirty-five per cent...This means that someone making two hundred thousand dollars a year and someone making two hundred million dollars a year pay at similar tax rates. LeBron James and LeBron James's dentist: same difference."
5. Inequality to instability
As explained by Time's economics writer Stephen Gandel, "Consider what [money held by the very rich] is doing now. It is adding to our economic problems not helping. For the most part it is not money being spent and trickling down. Instead it just adds to that global pool of money that sloshes around our financial markets and creates all types of bubbles...it actually makes our economy prone to booms and busts, and less stable."
6. Instability to catastrophe
The current level of inequality is equivalent to that of the years just before the Great Depression. There is reason to suspect that this level of income inequality is dangerous to our economy. The only other year since 1913 that the wealthy claimed such a large share of national income was 1928, when the top 1% share was 23.9%. The following year, the stock market crashed, which led to the Great Depression. After peaking again in 2007, the U.S. stock market crashed in 2008, leading to what some are now calling the "Great Recession."
7. The Tax Myth
The belief that the "rich pay most of the taxes" is incorrect. The truth comes from the U.S. Congressional Budget Office and the Internal Revenue Service. It's true that the top-earning 1% of Americans pay 23% of their incomes in federal income taxes, while the lowest-earning half of Americans pay only 3%. But top earners pay 5% of their incomes in state and local taxes (sales, property, and income taxes), while low earners pay 10%. Top earners pay 2% of their incomes toward social security, compared to 9% for low earners. Top earners pay 0% (i.e., a negligible portion) of their incomes in federal excise taxes (e.g., tobacco, alcohol and gasoline), while low earners pay 2%. Top earners save another 1% through the Bush tax cuts, while low earners see little benefit. So total taxes for top earners are 29% of their incomes. Total taxes for low earners are 24% of their incomes.
Beyond this, the US Department of Housing and Urban Development and the American Gas Association concur that low-income households pay over 20% of their incomes for utilities, while high-income households pay less than 4%. As a result, total taxes and utilities for top earners consume 33% of their incomes. Total taxes and utilities for low earners consume 44% of their incomes.
8. The Consumption Myth
The belief that rich stimulate the economy is another myth. If anything, the poor stimulate the economy. Low-income earners have a higher "Marginal Propensity to Consume," which means that they spend a greater percentage of their overall income on consumption. High-income earners, on the other hand, will hold more in investments. A University of California study showed that from 1980 to 2003 the share of capital income (stocks, interest, dividends) owned by the richest 1% grew from 37% to 57%.
It's not just rich individuals holding the money. The 500 largest non-financial corporations are currently sitting on $1.8 trillion in cash.
9. Wealth with Honor
Although our country is built on capitalism, wise American business leaders have recognized the danger of the "free hand" of unregulated open markets. Adam Smith, the father of capitalism believed that unrestricted businesses tend to engage in "conspiracy against the public." John Kenneth Galbraith said "Capitalism left to its own devices, doesn't work properly; it excludes the poor, ruins the environment, and fails to deliver enough collectively produced goods, such as roads, reservoirs, schools and hospitals."
Teddy Roosevelt (in 1910, exactly 100 years ago) criticized the "small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power...We grudge no man a fortune in civil life if it is honorably obtained and well used...We should permit it to be gained only so long as the gaining represents benefit to the community...I think we have got to face the fact that an increase in governmental control is now necessary."
Taxes were raised on the rich shortly after Roosevelt's speech, and the United States gradually became a middle class nation.
More recently, Warren Buffett and Bill Gates have been trying to convince the rich of their responsibility to society. "Responsible Wealth," a project of United for a Fair Economy, is a network of over 700 business leaders and wealthy individuals in the top 5% of income and/or wealth in the US who advocate for fair taxes and corporate accountability.
(10) As the Tea Party argues, there should be no new taxes. On 90% of us.
Paul Buchheit is a faculty member in the School for New Learning at DePaul University.
Can You Say, Fascism? The Political Consequences of Stagnation
by Walden Bello
My apologies to T. S. Eliot, but September, not April, is the cruelest month. Before 9/11/2001, there was 9/11/1973, when Gen. Pinochet toppled the Allende government in Chile and ushered in a 17-year reign of terror. More recently, on 9/15/2008, Lehman Brothers went bust and torpedoed the global economy, turning what had been a Wall Street crisis into a near-death experience for the global financial system.
Two years later, the global economy remains very fragile. The signs of recovery that desperate policymakers claimed to have detected late in 2009 and early this year have proven to be mirages. In Europe, four million people are unemployed and the austerity programs imposed on highly indebted countries such as Greece, Spain, Italy, and Ireland will add hundreds of thousands more to the dole. Germany is an exception to the dismal rule.
Although technically the United States isn't in recession, recovery is a distant prospect in the world's biggest economy, which contracted by 2.9 percent in 2009. This is the message of the anemic second-quarter GDP growth rate of 1.6 percent and a real unemployment above the 9.6 percent official rate if one factors in those who have given up looking for work. Firms continue to refrain from investing, banks continue not to lend, and consumers continue to refuse to spend. And the absence of a new stimulus program, as the impact of the $787 billion Washington injected into the economy in 2009 peters out, virtually ensures that the much-feared double-dip recession will become a reality.
That the American consumer does not spend has implications not only for the U.S. economy, but for the global economy. The debt-fuelled spending of Americans was the motor of the pre-crisis globalized economy, and nobody else has stepped in to replace them since the crisis began. Consumer spending in China, fuelled by a government stimulus of $585 billion, has temporarily reversed contractionary trends in that country and East Asia. It has also had some impact in Africa and Latin America. But it has not been strong enough to pull the United States and Europe from stagnation. Moreover, in the absence of a new stimulus package in China, a relapse into low growth, stagnation, or recession is very real in East Asia.
To Cut or to Stimulate
Meanwhile, the debate in western policy circles has divided into two camps. One group sees the threat of government default as a bigger problem than stagnation and refuses to countenance any more stimulus spending. The other thinks stagnation is the greater threat and demands more stimulus to counter it. At the G20 meeting in Toronto in June, the two sides collided. Germany's Angela Merkel advocated tightening, pointing to the threat of a default by Germany's debt-laden satellite economies in southern Europe, particularly Greece. President Obama, on the other hand, facing an intractably high unemployment rate, wanted to continue expansionary policies, though he lacked the political clout to sustain them.
To the pro-spending people, the anti-deficit people don't have much of an argument. At a time when deflation is the big threat, fear of government spending stoking inflation is misplaced. The idea of burdening future generations with debt is odd since the best way to benefit tomorrow's citizens is to ensure that they inherit healthy, growing economies. Deficit spending now is the means to achieve this growth. Moreover, government default is not a real threat for countries that borrow in currencies they control, like the United States, since, as a last option, they can repay their debts simply by having their central bank print more money.
Perhaps the most vocal pro-stimulus advocate is Paul Krugman, the Nobel laureate, who has become the bête noire of many on the right. For Krugman, the problem was that the original stimulus was not big enough. Yet how big is the extra stimulus needed, and what other anti-stagnation measures can the government take? On these questions Krugman betrays some unease, perhaps realizing that traditional Keynesianism has its limits: "Nobody can be sure how well these measures would work, but it's better to try something that might not work than to make excuses while workers suffer." The stark alternative to more aggressive deficit spending is "permanent stagnation and high unemployment," says Krugman.
Krugman may have reason on his side, but reason has taken a backseat to ideology, interests, and politics. Despite high rates of unemployment, the anti-big government, anti-deficit forces have the initiative in three key Western countries: in Britain, where the Conservatives won on a platform of reducing government; in Germany, where the image of spendthrift Greeks and Spaniards financed with loans from hardworking Germans became the powerful horse Merkel's party rode to maintain power; and in the United States.
The Obama Debacle
The anti-deficit perspective has gained ascendancy in the United States despite high unemployment for a number of reasons for this. First of all, the anti-deficit stand appeals to the anti-big government sentiments of the American middle class. Second, Wall Street has opportunistically embraced anti-deficit policies to derail Washington's efforts to regulate it. Big government is the problem, it screams, not the big banks. Third and not to be underestimated is the reemergence of the ideological influence of doctrinaire neoliberals, including those who, as Martin Wolf puts it, "believe a deep slump would purge past excesses, and so lead to healthier economies and societies." Fourth, the anti-spending economics has a mass base, the tea party movement. In contrast, the stimulus position is advocated by progressive intellectuals without a base or whose potential base has become disillusioned with Obama.
Still, the triumph of the hawks was not foreordained. According to Anatole Kaletsky, the economic commentator of the Times of London and someone not exactly sympathetic to the progressive point of view, the ascendancy of the anti-deficit forces stems from a major tactical mistake on the part of Obama coupled with the progressives' failure to offer a convincing narrative for the crisis. The blunder was Obama's taking responsibility for the crisis in a gesture of bipartisanship, in contrast to Ronald Reagan and Margaret Thatcher, who "refused to take any blame for the economic hardships." Reagan and Thatcher devoted "the early years of their government to convincing voters that economic disaster was entirely the responsibility of previous left-wing governments, militant unions, and liberal progressive elites."
But even more problematic, says Kaletsky, was the Obama narrative, which was a contradictory one that put the blame on greedy bankers while maintaining that the banks were too big to fail. "With banks recovering from the crisis more profitably and quickly than voters had been led to expect," he argues in his book Capitalism 4.0, "politicians of all parties have been branded by public sentiment as stooges of the very bankers they tried to blame." Indeed, the Democrats' finance reform package that recently passed in Congress can only reinforce this public perception of their being coopted or intimidated by the very people they denounce. It lacks provisions with teeth : a Glass-Steagall type of provision preventing commercial banks from doubling as investment banks; the banning of trading in derivatives, which Warren Buffett called "weapons of mass destruction;" a global financial transactions tax or Tobin Tax; and a strong lid on executive pay, bonuses, and stock options.
For Kaletsky, Obama should have portrayed the economic crisis as one created "by the polarized and oversimplified philosophy of market fundamentalism, not by bankers' and regulators' personality flaws. By offering such a systemic account of the crisis, politicians could capture the public imagination with a post-crisis narrative than the lynching of greedy bankers - and ultimately more dramatic." But with aides like Treasury Secretary Tim Geithner and National Economic Council Director Larry Summers, neither of whom had broken completely with neoliberalism, such a systemic account was simply not in the cards.
Toward a Progressive Strategy
The right wing has the momentum now and will probably win big in the U.S. elections in November. They will tie Obama and the Democrats so firmly to the crisis that people will forget it exploded during the reign of market fundamentalist George Bush. But with their primeval market economics, the fiscal hawks and tea partiers are unlikely to provide an alternative to what they have caricatured as Obama's "socialism." Allowing the economy to implode in order to be ideologically correct will invite an even greater repudiation from an economically insecure population.
But progressives should not take comfort from the dead end offered by tea party economics. They should try to understand what has led to the failure of Obama's pallid Keynesianism. Beyond the tactical mistake of taking responsibility for the crisis and the failure to advance an aggressive anti-neoliberal narrative to explain it, the central problem that has plagued Obama and his team is their failure to offer an inspiring alternative to neoliberalism.
The technical elements of a progressive solution to the crisis have been thrashed out by Keynesian and other progressive economists: a much bigger stimulus, tighter regulation of the banks, loose monetary policies, higher taxes on the rich, rebuilding the national infrastructure, an industrial policy promoting green industries, controls on speculative capital flows, controls on outward bound foreign investment, a global currency, and a new global central bank.
The Obama administration has tried to enact some of these measures. But owing to its eagerness for bipartisanship, the ties of some of its prominent people to the economic elites, and the failure of key technocrats like Summers and Geithner to break with the neoliberal paradigm, it failed to present them as elements of a broader program of social reform aimed at democratizing control and management of the economy.
For progressives, the lesson to be derived from the stalling of Obamanomics is that technocratic management is not enough. Keynesian moves must be part of a broader vision and program. This strategy must have three key thrusts: democratic decision-making at all levels of the economy, from the enterprise to macroeconomic planning; second, greater equality in the distribution of wealth and income to make up for lower growth rates dictated by economic and environmental constraints; and third, a more cooperative, as opposed to competitive ethic, in production, distribution, and consumption.
Moreover, such a program cannot simply be dished out from above by a technocratic elite, as has been the fashion in this administration, one of whose greatest mistakes was to allow the mass movement that brought it to power to wither away. The people must be enlisted in the construction of the new economy, and here progressives have a lot to learn from the Tea Party movement that they must inevitably compete against in a life-and-death struggle for grassroots America.
Nature Abhors a Vacuum
Krugman predicts that the likely electoral results in November "will paralyze policy for years to come." But nature abhors a vacuum, and the common failure of both market fundamentalists and technocratic Keynesians so far to address the fears of the unemployed, the about-to-be unemployed, and the vast numbers of economically insecure people will most likely produce social forces that would tackle their fears and problems head-on.
A failure of the left to innovatively fill this space will inevitably spawn a reinvigorated right with fewer apprehensions about state intervention, one that could combine technocratic Keynesian initiatives with a populist but reactionary social and cultural program.There is a term for such a regime: fascist. As Roger Bootle, author of The Trouble with Markets, reminds us, millions of Germans were disillusioned with the free market and capitalism during the Great Depression. But with the failure of the left to provide a viable alternative, they became vulnerable to the rhetoric of a party that, once it came to power, combined Keynesian pump-priming measures that brought unemployment down to 3 percent with a devastating counterrevolutionary social and cultural program.
Fascism in the United States? It's not as far-fetched as you might think.
Walden Bello, a Foreign Policy In Focus columnist, is professor of sociology at the University of the Philippines and senior analyst at the Bangkok-based research and advocacy institute Focus on the Global South. He is the author of, among other books, Dilemmas of Domination: The Unmaking of the American Empire (New York: Henry Holt, 2005).
Socialism? The Rich Are Winning the US Class War
Facts Show Rich Getting Richer, Everyone Else Poorer
by Bill Quigley
The rich and their paid false prophets are doing a bang up job deceiving the poor and middle class. They have convinced many that an evil socialism is alive in the land and it is taking their fair share. But the deception cannot last – facts say otherwise.
Yes, there is a class war – the war of the rich on the poor and the middle class – and the rich are winning. That war has been going on for years. Look at the facts – facts the rich and their false paid prophets do not want people to know.
Let Glen Beck go on about socialists descending on Washington. Allow Rush Limbaugh to rail about “class warfare for a leftist agenda that will destroy our society.” They are well compensated false prophets for the rich.
The truth is that for the several decades the rich in the US have been getting richer and the poor and middle class have been getting poorer. Look at the facts then make up your own mind.
Poor Getting Poorer: Facts
The official US poverty numbers show we now have the highest number of poor people in 51 years. The official US poverty rate is 14.3 percent or 43.6 million people in poverty. One in five children in the US is poor; one in ten senior citizens is poor. Source: US Census Bureau.
One of every six workers, 26.8 million people, is unemployed or underemployed. This “real” unemployment rate is over 17%. There are 14.8 million people designated as “officially” unemployed by the government, a rate of 9.6 percent. Unemployment is worse for African American workers of whom 16.1 percent are unemployed. Another 9.5 million people who are working only part-time while they are seeking full-time work but have had their hours cut back or are so far only able to find work part-time are not counted in the official unemployment numbers. Also, an additional 2.5 million are reported unemployed but not counted because they are classified as discouraged workers in part because they have been out of work for more than 12 months. Source: US Department of Labor Bureau of Labor Statistics October 2010 report.
The median household income for whites in the US is $51,861; for Asians it is $65,469; for African Americans it is $32,584; for Latinos it is $38,039. Source: US Census Bureau.
Fifty million people in the US lack health insurance. Source: US Census Bureau.
Women in the US have a greater lifetime risk of dying from pregnancy-related conditions than women in 40 other countries. African American US women are nearly 4 times more likely to die of pregnancy-related complications than white women. Source: Amnesty International Maternal Health Care Crisis in the USA.
About 3.5 million people, about one-third of which are children, are homeless at some point in the year in the US. Source: National Law Center on Homelessness and Poverty.
Outside Atlanta, 33,000 people showed up to seek applications for low cost subsidized housing in August 2010. When Detroit offered emergency utility and housing assistance to help people facing evictions, more than 50,000 people showed up for the 3,000 vouchers. Source: News reports.
There are 49 million people in the US who live in households which eat only because they receive food stamps, visit food pantries or soup kitchens for help. Sixteen million are so poor they have skipped meals or foregone food at some point in the last year. This is the highest level since statistics have been kept. Source: US Department of Agriculture, Economic Research Service.
Middle Class Going Backward: Facts
One or two generations ago it was possible for a middle class family to live on one income. Now it takes two incomes to try to enjoy the same quality of life. Wages have not kept up with inflation; adjusted for inflation they have lost ground over the past ten years. The cost of housing, education and health care have all increased at a much higher rate than wages and salaries. In 1967, the middle 60 percent of households received over 52% of all income. In 1998, it was down to 47%. The share going to the poor has also fallen, with the top 20% seeing their share rise. Mark Trumball, “Obama’s challenge: reversing a decade of middle-class decline,” Christian Science Monitor, January 25, 2010. http://www.csmonitor.com/USA/2010/0125/Obama-s-challenge-reversing-a-dec...
A record 2.8 million homes received a foreclosure notice in 2009, higher than both 2008 and 2007. In 2010, the rate is expected to be rise to 3 million homes. Sources: Reuters and RealtyTrac.
Eleven million homeowners (about one in four homeowners) in the US are “under water” or owe more on their mortgages than their house is worth. Source: “Home truths,” The Economist, October 23, 2010.
For the first time since the 1940s, the real incomes of middle-class families are lower at the end of the business cycle of the 2000s than they were at the beginning. Despite the fact that the American workforce is working harder and smarter than ever, they are sharing less and less in the benefits they are creating. This is true for white families but even truer for African American families whose gains in the 1990s have mostly been eliminated since then. Source: Jared Bernstein and Heidi Shierholz, State of Working America. http://www.stateofworkingamerica.org/swa08_00_execsum.pdf
Rich Getting Richer: Facts
The wealth of the richest 400 people in the US grew by 8% in the last year to $1.37 trillion. Source: Forbes 400: The super-rich get richer, September 22, 2010, Money.com
The top Hedge Fund Manager of 2009, David Tepper, “earned” $4 billion last year. The rest of the top ten earned: $3.3 billion, $2.5 billion, $2.3 billion, $1.4 billion, $1.3 billion (tie for 6th and 7th place), $900 million (tie for 8th and 9th place), and in last place out of the top ten, $825 million. Source: Business Insider. “Meet the top 10 earning hedge fund managers of 2009.” http://www.businessinsider.com/meet-the-top-10-earning-hedge-fund-managers-of-2009-2010-4
Income disparity in the US is now as bad as it was right before the Great Depression at the end of the 1920s. From 1979 to 2006, the richest 1% more than doubled their share of the total US income, from 10% to 23%. The richest 1% have an average annual income of more than $1.3 million. For the last 25 years, over 90% of the total growth in income in the US went to the top 10% earners – leaving 9% of all income to be shared by the bottom 90%. Source: Jared Bernstein and Heidi Shierholz, State of Working America. http://www.stateofworkingamerica.org/tabfig/2008/01/19.pdf
In 1973, the average US CEO was paid $27 for every dollar paid to a typical worker; by 2007 that ratio had grown to $275 to $1. Source: Jared Bernstein and Heidi Shierholz, State of Working America. http://www.stateofworkingamerica.org/tabfig/2008/03/SWA08_Wages_Figure.3AE.pdf
Since 1992, the average tax rate on the richest 400 taxpayers in the US dropped from 26.8% to 16.62%. Source: US Internal Revenue Service. http://www.irs.gov/pub/irs-soi/07intop400.pdf
The US has the greatest inequality between rich and poor among all Western industrialized nations and it has been getting worse for 40 years. The World Factbook, published by the CIA, includes an international ranking of the inequality among families inside of each country, called the Gini Index. The US ranking of 45 in 2007 is the same as Argentina, Cameroon, and Cote d’Ivorie. The highest inequality can be found in countries like Namibia, South Africa, Haiti and Guatemala. The US ranking of 45 compares poorly to Japan (38), India (36), New Zealand, UK (34), Greece (33), Spain (32), Canada (32), France (32), South Korea (31), Netherlands (30), Ireland (30), Australia (30), Germany (27), Norway (25), and Sweden (23). Source: CIA The World Factbook: https://www.cia.gov/library/publications/the-world-factbook/fields/2172.html
Rich people live an average of about five years longer than poor people in the US. Naturally, gross inequality has consequences in terms of health, exposure to unhealthy working conditions, nutrition and lifestyle. In 1980, the most well off in the US had a life expectancy of 2.8 years over the least well-off. As the inequality gap widens, so does the life expectancy gap. In 1990, the gap was a little less than 4 years. In 2000, the least well-off could expect to live to age of 74.7 while the most well off had a life expectancy of 79.2 years. Source: Elise Gould, “Growing disparities in life expectancy,” Economic Policy Institute. http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_20080716/
Conclusion
These are extremely troubling facts for anyone concerned about economic fairness, equality of opportunity, and justice.
Thomas Jefferson once observed that the systematic restructuring of society to benefit the rich over the poor and middle class is a natural appetite of the rich. “Experience declares that man is the only animal which devours his own kind, for I can apply no milder term to…the general prey of the rich on the poor.” But Jefferson also knew that justice can only be delayed so long when he said, “I tremble for my country when I reflect that God is just, that his justice cannot sleep forever.”
The rich talk about the rise of socialism to divert attention from the fact that they are devouring the basics of the poor and everyone else. Many of those crying socialism the loudest are doing it to enrich or empower themselves. They are right about one thing – there is a class war going on in the US. The rich are winning their class war, and it is time for everyone else to fight back for economic justice.
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