Private, Public, Union, or Management: Who Takes All the Money?

by Paul Buchheit

It's not public workers..

Start with local government, whose 14 million employees make up almost two-thirds of the public payroll, according to Census Department data. They make up 11% of the total U.S. workforce but receive only 10% of the total compensation. Their average salary is $43,000.

State government employees make up 3.6% of the U.S. workforce and receive 3.9% of the total compensation.

Federal employees, who make up just two percent of the total U.S. workforce, do considerably better, earning an average of $68,000. Their pay advantage is largely due to higher education levels and more advanced professional skills. The Economic Policy Institute, Bureau of Economic Analysis, the Congressional Research Service, and Congressional Budget Office all acknowledge this. 44% of federal jobs are professional positions (lawyers, economists, engineers), compared with 32% in the private sector. Close to 50% of full-time federal and state and local government employees have college degrees, compared to 35% for private employees.

Overall, Census Department data reveals that government employees earn about 1% more than private sector employees. With all retirement benefits included, the 21.4 million government employees make up 16.7% of U.S. employees and receive 20% of the total compensation.

It's not union members..

After years of declining numbers, union employees make up about 12% of the workforce, but their total pay (14.8 million union employees with a $47,000 median salary) amounts to less than 12 percent of wages, as reported by the Census Department.

Unions are sometimes accused of excess, when in fact they keep employees from falling into substandard wage conditions. According to the State of Working America, the union wage premium exists, but it's a modest 13.6%.

Unions also provide a degree of stability for a shrinking middle class. Retirement funding, however, is actually much less than perceived by union critics. The Pew Center notes that the latest available annual pension contribution by the 50 states amounted to just under $60 billion, which is about 1% of wages as reported by the Census Department.

Finally, unions promote equal opportunity. A recent study at Harvard and the University of Washington concluded that "the decline of organized labor explains a fifth to a third of the growth in inequality."

It's not, for the most part, even the private sector..

The average private sector worker makes about the same salary as a state or local government worker. But the MEDIAN salary for U.S. workers, 83% of whom are in the private sector, is almost $14,000 less, at $26,363.

This striking difference reveals the degree of inequality in private industry, and leads us to the conclusion:

CEOs and Financial Managers take much more than their share.

Corporate executives and financial employees make up just one-half of 1% of the workforce, but with nearly a trillion dollars of annual income (11.3% of $8.12 trillion), they make more than ALL 15 million unionized workers in the United States, and almost as much as ALL 21 million government workers. Much of their income derives from minimally-taxed capital gains. Meanwhile, the great majority of their private company employees toil as food servers, clerks, medical workers, and domestic help at below-average pay.

While unions and government jobs promote stability and security, private industry, which is driven by the profit motive, leads to a "winner-take-all" philosophy that is steadily splitting our country in two.

Have they earned it?

Again, consider the facts:

They've destroyed jobs. According to Newsweek, "the CEOs of the 50 firms that laid off the most workers since the onset of the economic crisis took home 42 percent more pay in 2009 than their peers did -- largely because cutting workers boosts short-term profits."

They've made the country less productive. As noted by Frontline's Money, Power, and Wall Street, the financial industry is almost double the size of the manufacturing sector.

They've taken massive bonuses for their failures. Again from Frontline's Money, Power, and Wall Street: Since the crash of 2008, banks have paid out more than $80 billion in bonuses.

As an analyst pointed out on the Frontline documentary, the rise of financial derivatives led banks to start trading for their own gain, and not for their customers. So yes, they've earned something. Our lasting contempt.

http://UsAgainstGreed.org

Paul Buchheit is a college teacher, an active member of US Uncut Chicago, founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org.

To Move Forward, We Must Learn from Our Progressive Past

Yesterday's ideas about curbing the ultra-rich's power remain just as relevant as ever.
by Sam Pizzigati

Our contemporary billionaires, most Americans would agree, are exploiting our labor and polluting our politics. Can we shrink our super rich down to a less powerful — and more democratic — size? Of course we can. We Americans, after all, have already done that before.

Between 1900 and the 1950s, average Americans beat down plutocrats every bit as dominant as ours. A century that began with huge private fortunes and most Americans living in poverty would come to see sweeping suburban developments where grand estates and mansions once stood.

Most of us today, unfortunately, have no inkling that this huge transformation even took place, mainly because that exuberantly middle class America of the mid-20th century has disappeared. Those grand mansions have come back.

Does this super-rich resurgence make failures out of our progressive forebears, the men and women who fought to limit the wealth and power of America's wealthiest? Our forebears didn't fail, as I explain in my new book. They just didn't go far enough.

In The Rich Don't Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class (http://catalog.sevenstories.com/products/rich-dont-always-win), I sum up the incredible feats those progressives accomplished. They "soaked the rich" at tax time. They built a union movement that acted as a real check on corporate greed. They even tamed Wall Street.

But these great victories have long since faded. How can we get back on a plutocracy-busting track? We could start by revisiting those struggles of years past that came up short, those proposals that, had they become law, might have lastingly leveled down our super rich.

The Rich Don't Always Win explores many of these proposals. Here are three.

One: Require the rich to annually disclose how much they actually pay in taxes.

Eighty years ago, just like today, America's rich evaded taxes massively. If wealthy taxpayers knew their returns would be open to public inspection, reformers argued, they might think twice about this evasion.

In 1934, progressives actually added a disclosure requirement to the tax code. But Congress, after a swift super-rich counterattack, repealed it. Even so, the basic idea behind disclosure remains as powerful as ever. Just ask Mitt Romney.

Two: Leverage the power of the public purse against excessive CEO pay. Congress can't directly set limits on corporate compensation, and yesterday's progressives understood that. But Congress could impose limits indirectly by denying federal government contracts to firms that overpay their top executives.

In 1933, then-senator and later Supreme Court justice Hugo Black won congressional approval for legislation that denied federal airmail contracts to companies that paid their execs over $17,500, about $300,000 today.

The New Deal never fully embraced Black's perspective. We could now, by denying federal contracts to any companies that pay their CEOs over 25 times what their workers are making.

Three: Cap income at America's economic summit. In 1942, President Franklin Roosevelt proposed a 100 percent tax on individual income over $25,000. That would amount to $355,000 in today's dollars.

Congress balked. But lawmakers did set the top tax rate at 94 percent on income over $200,000, and top federal rates hovered around 90 percent for the next two decades, years of unprecedented middle class prosperity.

America's rich fought relentlessly to curb those rates. They saw no other way to hang on to more of their income. But what if we restructured the top tax rate of America's postwar years to give the rich a new incentive?

We could, for instance, tie the threshold for a new 90 percent top tax bracket to our nation's minimum wage. The higher the minimum wage, the higher the threshold, the lighter the total tax bite on the nation's highest incomes.

Our nation's wealthiest, under this approach, would suddenly have a vested interest in enhancing the well-being of our poorest. Years ago, progressives yearned to create an America that encouraged just that sort of social solidarity. They couldn't finish the job. We still can.

http://www.toomuchonline.org/

Sam Pizzigati edits Too Much, the Institute for Policy Study's online weekly newsletter on excess and inequality.

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