On December 28, 2014, David Lazarus writes in the Los Angeles Times:
Laurie Chisum works as a manager for a small office-equipment company in Orange County. She puts in about 30 hours a week on the job and spends much of her time at home caring for her mother, who is afflicted with Alzheimer’s disease.
She’s not complaining — she’s thankful to have a steady paycheck. But no matter how hard she works, it feels as if she just can’t get ahead.
“It’s been six years since anyone at our company has had a raise,” said Chisum, 52. “It seems like I just keep falling further into a hole. The price of gas has gone down, but nothing else has.”
It’s a refrain we’ve heard throughout the year: wealth gap, income inequality, wage stagnation.
No matter how you say it, the upshot is the same. The rich are getting richer and everyone else is feeling squeezed.
The wealth gap in this country is now the widest it’s been in decades, according to a report this month from the Pew Research Center.
The median net worth of upper-income families reached $639,400 last year. That’s nearly seven times as much as for those in the middle and almost 70 times what people at the lower end of the economic spectrum are making.
That’s not just a data point. It’s sad proof of a system that grossly favors the rich over ordinary working families — even when the economy is improving.
“Far too many people simply aren’t feeling the benefits of this economic growth,” said U.S. Labor Secretary Thomas Perez. “People are working harder and smarter, but their sweat equity hasn’t translated into financial equity.”
David Neumark, director of the Center for Economics and Public Policy at UC Irvine, said that “people at the top have had phenomenal wage growth,” whereas “people at the lower end of the spectrum have seen their real purchasing power decline.”
Corporate profits are at or near record levels. So’s the stock market. Chief executives are doing just fine, thank you very much. A recent report found that some of the biggest U.S. companies pay their CEOs more than they pay in federal income taxes.
For ordinary working stiffs, the numbers are more sobering. Average hourly wages rose an itsy-bitsy 0.4% in November, according to the Labor Department. And this was seen as good news because average wages increased a pitiful 0.1% in October and didn’t budge in September.
For the year, average hourly earnings through November rose 1.7%, according to the Bureau of Labor Statistics. Since the end of the recession in 2009, they’ve gained about 11%.
At the same time, though, the consumer price index — the cost of living — has increased 1.3% since the beginning of the year and about 11% since the end of the recession.
Wages, in other words, are barely keeping pace with overall inflation. That’s why many people feel as if they’re stuck in a financial rut.
“You wonder from month to month what else you’re going to have to cut back on,” said Chisum, a single mom who also is caring for a grown son with Down syndrome.
Things look even tougher when you tighten the focus on specific expenditures, such as food and rent.
Average food costs have climbed 12.5% since the end of the recession, according to the bureau. Average residential rents have risen 12%. The average cost of healthcare has jumped nearly 17%.
In that context, the 11% gain in wages since 2009 means that each of these necessities has taken a bigger bite out of family budgets and has left fewer dollars for other expenditures, such as the occasional restaurant meal or movie.
“There’s no evidence I can see that this is going to change in the near future,” said Edward Lawler, a professor at USC’s Marshall School of Business. “These are tough times for workers.”
One key issue, he said, is that labor unions have less clout than they once enjoyed. This denies workers a unified voice at the bargaining table.
Improvements in technology have boosted productivity and allowed employers to limit hiring. And it’s become easy to ship jobs abroad, where people are willing to work for a fraction of the cost of American workers.
All these factors conspire to keep wages down while profits and the compensation of senior managers skyrocket.
Earlier this month, Microsoft shareholders approved an $84-million pay package for the company’s new chief executive, Satya Nadella, making him one of the country’s highest-paid corporate leaders. He’s run the company for less than a year.
Boeing, Ford, Chevron, Citigroup, Verizon Communications, JPMorgan Chase and General Motors each paid their CEOs more last year than they paid in income taxes to Uncle Sam, according to a report from the Center for Effective Government and the Institute for Policy Studies.
A recent study by Harvard Business School found that most Americans believe chief executives make roughly 30 times what the average U.S. worker makes. That was indeed the case in the 1960s. Nowadays, CEOs pull down more than 350 times the average worker.
Chief executives are important people, to be sure. But is their importance to a company 350 times that of their employees? I doubt most people — other than CEOs — would think so.
More effective unions would help, as would programs to give workers the skills they need to compete better in the 21st century workplace.
Chris Tilly, director of UCLA’s Institute for Research on Labor and Employment, said a key step would be establishing a national minimum wage of $10 to $12 an hour, and then indexing that wage to consumer prices so that paychecks automatically rise with inflation.
“That way you wouldn’t have to wait for Congress to act every year,” he said. “This would be a basic decision that wages would keep up with the cost of living.”
Perez, the labor secretary, also called for a higher minimum wage, plus “strengthening overtime protections” and “ensuring that workers have a strong voice in the workplace.”
A rising tide lifts all boats. At least that’s how we’re told things are supposed to work.
The reality is that the tide is rising in a big way for some, and they’re comfortably sunning themselves on the decks of their yachts.
For most others, that rising tide is more like a stormy sea threatening to swamp the family lifeboat.
We’ll likely hear a lot in the coming year about how the economy is improving and businesses are thriving. Chief executives will point toward fast-rising stock prices as proof that they’re worth every million they’re paid.
And everyone else will try to make their 0.4% hourly pay hike go as far as they can.
http://www.latimes.com/business/la-fi-lazarus-20141228-column.html
The focus on jobs and wage growth is a dead end as solution to greed hoggism and the continued accumulation of concentrated wealth-creating, income-producing capital assets. The vast bulk of productive capital assets are owned by corporations, which are owned by individuals as stock share holders. It is this extremely small group of people who elect and control the corporation’s Board of Directors, who intern retain the CEO and upper level managers to oversee and direct the operation of the corporation. The salaries and benefits, which also include significant stock options, put these managers’ incomes shamelessly and substantially greater than even the highest paid non-management workers, which results in resentful income inequality among the work force.
Additionally, full employment and paying more than absolutely necessary to employee workers is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. They strive to minimize marginal cost, the cost of producing an additional unit of a good, product or service once a business has its fixed costs in place in order to stay competitive with other companies racing to stay competitive through technological innovation. Reducing marginal costs enables businesses to increase profits, offer goods, products and services at a lower price, or both. Increasingly, new technologies are enabling companies to achieve near-zero cost growth without having to hire people. Thus, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 235 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advance amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.
Also, there are the small stock holders (which number in the millions among all the corporate stock held) with comparatively little in stock ownership who are denied the payout of the full earnings of the company, which they share ownership in. Thus, corporations continue to expand and operate more efficiency through technological invention and innovation with less and less workers while simultaneously concentrating more ownership in the hands of those who already own the corporation, using retained earnings and/or debt financing, while NEVER creating any new capital owners. This is the scenario that persists and that results in enormous income and wealth (capital ownership) inequality.
In the meantime, while all the ownership concentration is occurring, the stock market exchanges provide a gambling service for those betting the up and down prices of stock trading. This is nothing short of risky business and one should be prepared to lose their “past savings” pledge in the betting game.
Why is this happening and what can be done to abate the situation and put our nation on the path to prosperity, opportunity, and economic justice?
The problem is in the design and operation of the SYSTEM. The system of investment finance fundamentality requires one to have substantial savings to participate and grow richer and richer. (The saying is essentially true in todays financial sector that “it’s takes money to make money.”) Thus, in a nutshell, investment finance is based on the requirement of “past savings” invested or pledge as security in the event than a capital loan does not produce the return expected to pay off the bank or lender. As one should realize, this results in the reality that ONLY those with substantial income, property holdings, or capital assets, can participate in the system to accumulate wealth-creating, income-producing capital asset ownership.
One may think, well that is how it has always been, and I would have to agree. But is this what we should want and expect for our future and for our children and grandchildren? There is a more just way. We can reform the system so that the capital ownership concentration mechanism is disabled and replaced with a new system whereby new capital asset formation is created using financial mechanisms that provide asset-backed new money extended to EVERY citizen to acquire personal ownership shares in the FUTURE growth capital assets of the economy. This would take the form of extending insured, interest-free capital credit to EVERY child, woman and man to acquire newly issued shares of full-dividend paying stock by the viable corporations growing the economy. The capital credit loans would be paid back with the earnings produced by the investments. There would be no requirement for “past savings” or equity pledges or reductions in current income and benefits. Either private capital credit insurance and/or government reinsurance would substitute for the “past savings” security requirement.
If you would like to learn more about the proposals for such a system reform and dive deeper into the specifics and the supporting economic policies to completely eliminate the concentration of capital ownership wealth, see the proposed Capital Homestead Act and the agenda of the Just Third Way. These are the nucleus ideas supported in the platform of the Unite America Party.
Support the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/.
Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/, http://www.cesj.org/wp-content/uploads/2014/02/jtw-graphicoverview-2013.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.
Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.
