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Capitalism is a great system to amass wealth but a horrible one for distributing it.
I read those words many years ago and the thought stuck with me. Unfortunately for millions of Americans it’s not the thought, but rather the ever-increasing truth—and reality—of those words that continues to plague them.
I’m assuming that if you’re reading a column like this, your stock portfolio has done well, if not exceedingly well, over the past several years. Since early 2009, when the Dow Jones Industrial Index was at 7,063, the value of the stock market measured by the Dow has risen three-fold to over 22,000 today.
However, nearly half of Americans currently don’t own stock, according to the Federal Reserve. And of course the wealthiest among us have realized the greatest gains during that time because they’re the most heavily invest in the market.
But there are many other factors in play that make the wealth divide so great.
Yes, the unemployment rate is 4.3 percent, according to the latest US Labor Department report. For the past seven years, job creation has average about 200,000 a month, a far cry from the double-digit unemployment during the worst of the Great Recession.
But sadly workers’ wages remain flat.
Millions of full-time American workers, some working more than one job, still can’t make ends meet for themselves or their families.
“The U.S. labor share of income has been on a secular downward trajectory since the beginning of the new millennium”, according to a recent International Monetary Fund (IMF) report.
The report goes on to say: “In particular, the fall (in income) was largest, on average, in industries that saw: a high initial intensity of “routinizable occupations” (which translates into jobs most easily automated); steep declines in unionization; a high level of competition from imports; and a high intensity of foreign input usage.” (Whatever the hell that means.)
The clear fact is that after adjusting for inflation, compensation for some 80 percent of the American labor force has only gone up 10% since the 1970s. Today, nearly half of the nation’s workforce earns less than fifteen dollars an hour, or less than $30,000/year. Think about that for a moment.
“About a third of men in their prime don’t make enough to keep a family of four out of poverty or are altogether unemployed—double what it was thirty years ago,” writes Rick Wartzman in his new book, “The End of Loyalty, The Rise and Fall of Good Jobs in America.”
The IMF report failed to highlight another unassailable fact when it comes to the plight of wage earners. A 2014 study, reported by The Washington Post, found that Americans thought the gap between executives and unskilled workers was about 30 to 1. Were they ever wrong!
Since 1978, CEO pay is up 997 percent, according to the Economic Policy Institute, a fact we now know many in the working class seem unaware.
Income and wealth inequality will only continue to widen if Republican lawmakers have their way.
The reason Congressional Budget Office (CBO) Director Mick Mulvaney is so eager to get another vote on the Senate’s health care bill, in hopes that it will pass, is so conservative Republicans can claim a trillion dollars in healthcare savings, which they will distribute mostly to already wealthy Americans in their forthcoming tax reform effort, regardless of how many Americans get hurt in the process.
Talking about wealth distribution is akin to touching the third rail in some circles. But it’s high time we took a look at how wealth is really being distributed in this country through government tax policies and the now-broken social contract between employers and employees.
Believe it or not, there was a time in this country when tax rates were more equitable and companies treated their employees with loyalty and respect.
According to Wartzman, back in the day companies like General Electric codified expectations between labor and capital. It was a time when executive salaries fell within the realm of reasonable and companies realized the value of good labor relations, a time when they were more concerned with keeping their employees happy than their stockholders.
In GE’s own words, the primary corporate objectives were “...to provide good jobs, wages, working conditions, work satisfactions, and opportunities for advancement conducive of most productive performance and also the stablest possible employment, all in exchange for loyalty, initiative, skill, care, effort, attendance, and teamwork on the part of employees.”
Now that would work!
Content Copyright © 2017 by Larry Checco - All Rights Reserved