Each year we spend billions of dollars subsidizing profits at large international corporations because they refuse to pay their workers a living wage. It is not fair that taxpayers are footing the bill because these companies’ full-time workers are paid poverty wages and require public assistance just to be able to afford their rent and feed their families.

If these corporations won’t take action, then we will fight for their workers. Click here to tell Congress to raise the minimum wage: http://afsc.me/1nJkgBK

The Great U-Turn

Do you recall a time in America when the income of a single school teacher or baker or salesman or mechanic was enough to buy a home, have two cars, and raise a family? 

I remember. My father (who just celebrated his 100th birthday) earned enough for the rest of us to live comfortably. We weren’t rich but never felt poor, and our standard of living rose steadily through the 1950s and 1960s. 

That used to be the norm. For three decades after World War II, America created the largest middle class the world had ever seen. During those years the earnings of the typical American worker doubled, just as the size of the American economy doubled. (Over the last thirty years, by contrast, the size of the economy doubled again but the earnings of the typical American went nowhere.)  

In that earlier period, more than a third of all workers belonged to a trade union – giving average workers the bargaining power necessary to get a large and growing share of the large and growing economic pie. (Now, fewer than 7 percent of private-sector workers are unionized.) 

Then, CEO pay then averaged about 20 times the pay of their typical worker (now it’s over 200 times). 

In those years, the richest 1 percent took home 9 to 10 percent of total income (today the top 1 percent gets more than 20 percent). 

Then, the tax rate on highest-income Americans never fell below 70 percent; under Dwight Eisenhower, a Republican, it was 91 percent. (Today the top tax rate is 39.6 percent.)

In those decades, tax revenues from the wealthy and the growing middle class were used to build the largest infrastructure project in our history, the Interstate Highway system. And to build the world’s largest and best system of free public education, and dramatically expand public higher education. (Since then, our infrastructure has been collapsing from deferred maintenance, our public schools have deteriorated, and higher education has become unaffordable to many.)

We didn’t stop there. We enacted the Civil Rights Act and Voting Rights Act to extend prosperity and participation to African-Americans; Medicare and Medicaid to provide health care to the poor and reduce poverty among America’s seniors; and the Environmental Protection Act to help save our planet. 

And we made sure banking was boring. 

It was a virtuous cycle. As the economy grew, we prospered together. And that broad-based prosperity enabled us to invest in our future, creating more and better jobs and a higher standard of living.  

Then came the great U-turn, and for the last thirty years we’ve been heading in the opposite direction. 

Why?

Some blame globalization and the loss of America's  manufacturing core. Others point to new technologies that replaced routine jobs with automated machinery, software, and robotics. 

But if these were the culprits, they only raise a deeper question: Why didn’t we share the gains from globalization and technological advances more broadly? Why didn’t we invest them in superb schools, higher skills, a world-class infrastructure?

Others blame Ronald Reagan’s worship of the so-called “free market,” supply-side economics, and deregulation. But if these were responsible, why did we cling to these ideas for so long? Why are so many people still clinging to them? 

Some others believe Americans became greedier and more selfish. But if that’s the explanation, why did our national character change so dramatically? 

Perhaps the real problem is we forgot what we once achieved together. 

The collective erasure of the memory of that prior system of broad-based prosperity is due partly to the failure of my generation to retain and pass on the values on which that system was based. It can also be understood as the greatest propaganda victory radical conservatism ever won.

We must restore our recollection. In seeking to repair what is broken, we don’t have to emulate another nation. We have only to emulate what we once had.

That we once achieved broad-based prosperity means we can achieve it again – not exactly the same way, of course, but in a new way fit for the twenty-first century and for future generations of Americans. 

America’s great U-turn can be reversed. It is worth the fight.

This inequality shows the unjustifiable difference between CEO pay and their workers’ pay. This is why we need #wageratio legislation. This will limit CEO pay based on how well they pay their workers. Sign the petition and reblog to spread awareness!

https://www.causes.com/campaigns/77701-tie-companys-workers-highest-earnings-to-lowest-salaries

Here’s everything women could buy without the wage gap

By now, you’ve probably heard depressing statistics like this one: For every dollar a man earns, a woman makes 77 cents. You might even be sick of hearing it. But here’s another way of thinking about it: If you add all those pennies up, the gender gap will cost the average American woman more than $400,000 over the course of her professional life.

Even the useful 77 cents-to-the-dollar statistic is partially misleading because it looks at the median earnings of all full-time employed women against the earnings of full-time employed white men, leaving race and ethnicity out of the equation. Here’s the granular breakdown. White men in the United States make:

  • 47% more than Hispanic and Latina women
  • 40% more than American-Indian and Alaskan Native women
  • 36% more than African-American women
  • 34% more than Native Hawaiian and Pacific Islander women
  • 21% more than white women and
  • 13% more than Asian women.

Read more | Follow policymic

The Rise of the Working Poor and the Non-Working Rich


Many believe that poor people deserve to be poor because they’re lazy. As Speaker John Boehner has said, the poor have a notion that “I really don’t have to work. I don’t really want to do this. I think I’d rather just sit around.”

In reality, a large and growing share of the nation’s poor work full time – sometimes sixty or more hours a week – yet still don’t earn enough to lift themselves and their families out of poverty. 

It’s also commonly believed, especially among Republicans, that the rich deserve their wealth because they work harder than others. 

In reality, a large and growing portion of the super-rich have never broken a sweat. Their wealth has been handed to them. 

The rise of these two groups – the working poor and non-working rich – is relatively new. Both are challenging the core American assumptions that people are paid what they’re worth, and work is justly rewarded.

Why are these two groups growing?

The ranks of the working poor are growing because wages at the bottom have  dropped, adjusted for inflation. With increasing numbers of Americans taking low-paying jobs in retail sales, restaurants, hotels, hospitals, childcare, elder care, and other personal services, the pay of the bottom fifth is falling closer to the minimum wage.

At the same time, the real value of the federal minimum wage is lower today than it was a quarter century ago. 

In addition, most recipients of public assistance must now work in order to qualify.

Bill Clinton’s welfare reform of 1996 pushed the poor off welfare and into work. Meanwhile, the Earned Income Tax Credit, a wage subsidy, has emerged as the nation’s largest anti-poverty program. Here, too, having a job is a prerequisite.

The new work requirements haven’t reduced the number or percentage of Americans in poverty. They’ve just moved poor people from being unemployed and impoverished to being employed and impoverished.

While poverty declined in the early years of welfare reform when the economy boomed and jobs were plentiful, it began growing in 2000. By 2012 it exceeded its level in 1996, when welfare ended.


At the same time, the ranks of the non-working rich have been swelling. America’s legendary “self-made” men and women are fast being replaced by wealthy heirs. 

Six of today’s ten wealthiest Americans are heirs to prominent fortunes. The Walmart heirs alone have more wealth than the bottom 40 percent of Americans combined.

Americans who became enormously wealthy over the last three decades are now busily transferring that wealth to their children and grand children.

The nation is on the cusp of the largest inter-generational transfer of wealth in history. A study from the Boston College Center on Wealth and Philanthropy projects a total of $59 trillion passed down to heirs between 2007 and 2061.

As the French economist Thomas Piketty reminds us, this is the kind of dynastic wealth that’s kept Europe’s aristocracy going for centuries. It’s about to become the major source of income for a new American aristocracy.

The tax code encourages all this by favoring unearned income over earned income. 

The top tax rate paid by America’s wealthy on their capital gains  – the major source of income for the non-working rich – has dropped from 33 percent in the late 1980s to 20 percent today, putting it substantially below the top tax rate on ordinary income (36.9 percent).

If the owners of capital assets whose worth increases over their lifetime hold them until death, their heirs pay zero capital gains taxes on them. Such “unrealized” gains now account for more than half the value of assets held by estates worth more than $100 million.

At the same time, the estate tax has been slashed. Before George W. Bush was president, it applied to assets in excess of $2 million per couple at a rate of 55 percent. Now it kicks in at $10,680,000 per couple, at a 40 percent rate.

Last year only 1.4 out of every 1,000 estates owed any estate tax, and the effective rate they paid was only 17 percent.

Republicans now in control of Congress want to go even further. Last Friday the Senate voted 54-46 in favor of a non-binding resolution to repeal the estate tax altogether. Earlier in the week, the House Ways and Means Committee also voted for a repeal. The House is expected to vote in coming weeks.

Yet the specter of an entire generation doing nothing for their money other than speed-dialing their wealth management advisers is not particularly attractive.

It puts more and more responsibility for investing a substantial portion of the nation’s assets into the hands of people who have never worked.

It also endangers our democracy, as dynastic wealth inevitably and invariably accumulates political influence and power.

Consider the rise of both the working poor and the non-working rich, and the meritocratic ideal on which America’s growing inequality is often justified doesn’t hold up. 

That widening inequality – combined with the increasing numbers of people who work full time but are still impoverished and of others who have never worked and are fabulously wealthy –  is undermining the moral foundations of American capitalism.

New York state recently announced an increase in the minimum wage for fast food workers, to $15 an hour. It’s the fruit of a three-year labor campaign.

But there’s another group of workers out there that hasn’t had a real wage increase in decades. Right now, at preschool programs around the country, teachers are tapping infinite reserves of patience to keep the peace among children at various stages of development and need. They’re also providing meals, wiping noses and delivering a curriculum in math and reading that will get the kids ready for school.

What Do We Value More: Young Kids Or Fast Food?

Illustration credit: LA Johnson/NPR

Last week the New York Times ran a long piece calling attention to school districts across the country that are having a difficult time attracting new teachers. The piece reported that many school districts are relaxing standards in order to get teachers, in some cases hiring teachers who have not yet completed their training. Others have increased the intensity of recruiting, making more effort to court good applicants. It also reported on some districts going to Puerto Rico or even Spain in search of teachers.

The one tactic that is not mentioned is higher pay. While the piece notes that many recent college grads are opting for higher-paying alternatives to teaching, it does not discuss why school districts are not raising wages as a way to pull some of these people back into teaching.

This is not the first time that we have seen assertions about labor shortages even though wages don’t appear to be growing. It is a regular theme in reporting on the economy. Times columnist Thomas Friedman has repeatedly complained that employers can’t get qualified workers due to inadequate training. Last year Slate told its readers there is a shortage of truck drivers. And The Wall Street Journal ran a long piece on the shortage of skilled workers in manufacturing.

The traditional way to attract qualified workers is to offer higher wages. This is the basic logic of supply and demand. If the price rises, or in this case the wage, then it will also increase the supply.

Labor Day 2028

In 1928, famed British economist John Maynard Keynes predicted that technology would advance so far in a hundred years – by 2028 – that it will replace all work, and no one will need to worry about making money.

“For the first time since his creation man will be faced with his real, his permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”

We still have thirteen years to go before we reach Keynes’ prophetic year, but we’re not exactly on the way to it. Americans are working harder than ever.

Keynes may be proven right about technological progress. We’re on the verge of 3-D printing, driverless cars, delivery drones, and robots that can serve us coffee in the morning and make our beds.

But he overlooked one big question: How to redistribute the profits from these marvelous labor-saving inventions, so we’ll have the money to buy the free time they provide?

Without such a mechanism, most of us are condemned to work ever harder in order to compensate for lost earnings due to the labor-replacing technologies.

Such technologies are even replacing knowledge workers – a big reason why college degrees no longer deliver steadily higher wages and larger shares of the economic pie.

Since 2000, the vast majority of college graduates have seen little or no income gains.

The economic model that predominated through most of the twentieth century was mass production by many, for mass consumption by many.

But the model we’re rushing toward is unlimited production by a handful, for consumption by the few able to afford it.

The ratio of employees to customers is already dropping to mind-boggling lows.

When Facebook purchased the messaging company WhatsApp for $19 billion last year, WhatsApp had fifty-five employees serving 450 million customers.

When more and more can be done by fewer and fewer people, profits go to an ever-smaller circle of executives and owner-investors. WhatsApp’s young co-founder and CEO, Jan Koum, got $6.8 billion in the deal.

This in turn will leave the rest of us with fewer well-paying jobs and less money to buy what can be produced, as we’re pushed into the low-paying personal service sector of the economy. 

Which will also mean fewer profits for the handful of billionaire executives and owner-investors, because potential consumers won’t be able to afford what they’re selling.

What to do? We might try to levy a gigantic tax on the incomes of the billionaire winners and redistribute their winnings to everyone else. But even if politically feasible, the winners will be tempted to store their winnings abroad – or expatriate.

Suppose we look instead at the patents and trademarks by which government protects all these new inventions.

Such government protections determine what these inventions are worth. If patents lasted only three years instead of the current twenty, for example, What’sApp would be worth a small fraction of $19 billion – because after three years anybody could reproduce its messaging technology for free.  

Instead of shortening the patent period, how about giving every citizen a share of the profits from all patents and trademarks government protects? It would be a condition for receiving such protection.

Say, for example, 20 percent of all such profits were split equally among all citizens, starting the month they turn eighteen.

In effect, this would be a basic minimum income for everyone.

The sum would be enough to ensure everyone a minimally decent standard of living – including money to buy the technologies that would free them up from the necessity of working.

Anyone wishing to supplement their basic minimum could of course choose to work – even though, as noted, most jobs will pay modestly.

This outcome would also be good for the handful of billionaire executives and owner-investors, because it would ensure they have customers with enough money to buy their labor-saving gadgets.

Such a basic minimum would allow people to pursue whatever arts or avocations provide them with meaning, thereby enabling society to enjoy the fruits of such artistry or voluntary efforts.

We would thereby create the kind of society John Maynard Keynes predicted we’d achieve by 2028  – an age of technological abundance in which no one will need to work.

Happy Labor Day.