Top 1.0% Of Earners See Wages Up 157.8% Since 1979

[source]

From Each According To His Ability, To Each According To His Needs

[source]

The chart above, again, is a startling reminder of why the federal government (along with states and cities) keeps saying they don't have enough money to fund public programs.

Enough of this talk about being broke, we can't afford this and we can't afford that.

Follow the money and tax those who have it!

We've gone from a country that built the best products, roads, trains, infrastructure, and had pride in having the best education and health care.

A country where the well-to-do and the wealthy felt an obligation to give back, to help build this country and to invest in the future of infrastructure and citizens.

Now we're defunding these initiatives while simultaneously cutting taxes on the richest individuals and corporations, building sports stadiums for billionaire owners, and being blackmailed by billionaire companies to fund part of their operations under the guise of job creation.

Taxes are being pushed, more and more, onto the income of workers, and less and less on - corporations, investments and capital gains - the income of the wealthy.

Inequality is greater than ever before. The richest .01% are modern-day kings and queens. We allowed an oligarchy to purchase our democracy and subvert the will of the people.

We've heard this trickle-down story for decades. Let the rich have more of the pie and somehow, someday it will work its way back to the rest of us and a better life for us.

But that hasn't happened and it's not going to happen. The more the richest of the rich have, the more they want to have. And that's exactly what they've done.

The United States has more than enough money to support parks, clean
air and water, the arts, and to provide world-class education, transportation and health care options, to name a few.

Taxes are the price of a civilized society. To continually erode the tax base, is to continually undermine the foundation and fabric of the American experiment.

It's time to tell the "winners" they need to give back to the country that's given them so much.

Read my lips: more taxes on the rich!

For Further Reading:
Corporate profits are way up, corporate taxes are way down

Who Pays

A Guide to Statistics on Historical Trends in Income Inequality

$18.30 Minimum Wage

Real value of the federal minimum wage, 1968–2013 and 2013–2016 under proposed increase to $10.10 by 2016, compared with its value had it grown at the rate of productivity or average worker wages (2013 dollars)

* Productivity and average wage projections from 2013 to 2016 do not include the Harkin-Miller proposal. [source]

"If the minimum wage had grown at the same rate as productivity, it would be $18.30 today," reports David Cooper of the Economic Policy Institute.

Inequality Was Created

As Union Membership Declines, Inequality Rises

[source]

Minimum Wage Readings

Buying power of minimum wage at 51 year low.
Economic research supports raising the minimum wage.
Minimum wage issue guide.
Raising the minimum wage benefits children.

State & Local Austerity Hurting Job Growth

Three years into recovery, just how much has state and local austerity hurt job growth?

Republican Scapegoat Politics or Demeaning Government: Cutting Off Our Nose To Spite Our Face

Austerity!

Shrink government!

Make those teachers sacrifice!

Those labor unions have too much power! 

Medicare, Social Security, pensions, unemployment insurance, public services, parks ... they're things of the past.

Our ultra efficient, ultra market, ultra conservative post-Reagan paradigm is allocating capital in a much different fashion.

Much more efficiently!

[Wink. Wink.]

No longer do we use government as a tool for mass investment and mass benefit. Instead, we funnel seemingly endless streams of money into private, for lack of a better word, schemes. Government has stepped aside based on the (empirically disproven) belief that less regulation and less taxation are some panacea.

This is a Republican political concoction which caused Thomas Frank, in 2004, to ask, What's The Matter With Kansas? Why do people vote against their own economic interest? The question, perplexingly, still applies today.

Look around you. You can already count ten things that government does for you. Roads, street lights, sewers, stops signs, police, parks, water, the broadcasting airwaves, libraries, waste management, schools, recycling...

Whatever! They're overpaid hacks! I refuse to allow those positive societal outcomes to change my political opinions!

Yes, the level of discourse has sunk to new depths. And, as Thomas Mann and Norman Ornstein affirm, The Republicans Are The Problem.

La, la, la, I can't hear you!

As the Economic Policy Institute shows, "The passage in 1935 of the National Labor Relations Act, which protected and encouraged unions, sparked a wave of unionization that led to three decades of shared prosperity and what some call the Great Compression. The “countervailing power” of labor unions (not just at the bargaining table but in local, state, and national politics) gave them the ability to raise wages and working standards for members and non-members alike. Both median compensation and labor productivity roughly doubled into the early 1970s. Labor unions both sustained prosperity, and ensured that it was shared; union bargaining power has been shown to moderate the compensation of executives at unionized firms. However, over the next 30 years—an era highlighted by the filibuster of labor law reform in 1978, the Reagan administration’s crushing of the PATCO strike, and the passage of anti-worker trade deals with Mexico and China—labor’s bargaining power collapsed. The consequences are driven home by the figure below, which juxtaposes the historical trajectory of union density and the income share claimed by the richest 10 percent of Americans. Union membership has fallen and income inequality has worsened—reaching levels not seen since the 1920s."

Cate Long, of Reuters, found, "Benjamin Landy writes eloquently in his Blog of the Century about the outstanding work being done by the Project on Government Oversight (POGO). POGO calculated the cost differential between work done by government workers versus private contractors, and the data is strinking. It may be time to rethink the conventional wisdom that says outsourcing equals cost savings. Here is the money quote and graph." That's right...the public sector actually does a lot of things more cheaply than the private sector. And, the jobs are family-supporting. WOW! What a concept!

Ezra Klein writes, "I don’t think anyone disputes that it’s harder to unionize in the modern economy. This chart shows unionization rates in the United States, the United Kingdom, Germany, France, Japan and Canada since 1960. It also shows average unionization across the 34 countries in the Organization for Economic Cooperation and Development — that’s the highlighted red line with the gray dots* — most of which are much friendlier to labor unions than we are. The decline is sharpest in the United States, but evident in all the included countries, and in the aggregate of all OECD countries."

But, for Republicans, it's just a coincidence that when workers have a weaker voice they tend to see a weaker paycheck. 

Move along, nothing to see here.

As E.J. Dionne laments, "And the events of recent weeks suggest that if progressives do not speak out plainly on behalf of government, they will be disadvantaged throughout the election-year debate. Gov. Scott Walker’s victory in the Wisconsin recall election owed to many factors, including his overwhelming financial edge. But he was also helped by the continuing power of the conservative anti-government idea in our discourse."

Dionne adds, "One of the reasons I wrote my book “Our Divided Political Heart” was to show that, from Alexander Hamilton and Henry Clay forward, farsighted American leaders understood that action by the federal government was essential to ensuring the country’s prosperity, developing our economy, promoting the arts and sciences and building large projects: the roads and canals, and later, under Abraham Lincoln, the institutions of higher learning, that bound a growing nation together...permitting federal action to serve the common good. A belief in government’s constructive capacities is not some recent ultra-liberal invention."

But why stop going to the well if it hasn't run dry? Thus, Republicans continue their Phony War On Public Employees. Yet, as John Perr finds, "Over 44% of federal employees have a college degree, compared to about 19% of private sector workers. More importantly, an assessment of salaries (excluding benefits) by the Office of Personnel Management found that on average comparable federal civilian workers are paid 22 percent less than private workers. The disparities, even including incentive pay, are even greater in some metropolitan areas."

Ben Polak and Peter Schott explain, "There is something historically different about this recession and its aftermath: in the past, local government employment has been almost recession-proof. This time it’s not. Going back as long as the data have been collected (1955), with the one exception of the 1981 recession, local government employment continued to grow almost every month regardless of what the economy threw at it. But since the latest recession began, local government employment has fallen by 3 percent, and is still falling. In the equivalent period following the 1990 and 2001 recessions, local government employment grew 7.7 and 5.2 percent. Even following the 1981 recession, by this stage local government employment was up by 1.4 percent...Without this hidden austerity program, the economy would look very different. If state and local governments had followed the pattern of the previous two recessions, they would have added 1.4 million to 1.9 million jobs and overall unemployment would be 7.0 to 7.3 percent instead of 8.2 percent."

David Cooper, Mary Gable and Algernon Austin detail how the austerity taking place amongst state and local government is disproportionately hurting minorities and women.

With some historical perspective, Bruce Western and Jake Rosenfeld state, "As unions started to make concessions to big business in the lean days of the early 1980s, however, the Treaty of Detroit formula was abandoned. In an influential 2009 paper, "Institutions and Wages in Post-World War II America," the MIT economists Frank Levy and Peter Temin described the emergence in the 1980s of what they called "the Washington Consensus," an era of deregulation in which earnings inequality increased. As the decline of unions accelerated in those years, wage bargaining became more defensive. New union workers were given less favorable contracts, and lump-sum payments commonly replaced regular wage increases. As the fraction of all income captured by the top one percent of earners more than doubled, middle-class pay stagnated for the first time in decades; from 1973 to 2009, the median hourly wage increased by less than ten percent, even though nonfarm productivity ballooned by about 70 percent."

Zaid Jilani recounts, "Strong unions have traditionally been the free-market solution to income inequality, allowing people to get higher salaries without government intervention. Unionization has allowed middle class and working-class Americans to have the ability to bargain for stronger wages and benefits and a larger share of national income. Highly-unionized countries tend to have far less income inequality."

One of the few economists, before the last bubble burst, to warn that the economy was a house of cards, Nouriel Roubini commented on the detrimental outcomes from undervaluing labor, "Karl Marx had it right. At some point, capitalism can destroy itself. You cannot keep on shifting income from labor to capital without having an excess capacity and a lack of aggregate demand. That's what has happened. We thought that markets worked. They're not working. The individual can be rational. The firm, to survive and thrive, can push labor costs more and more down, but labor costs are someone else's income and consumption. That's why it's a self-destructive process."

Lee Sustar points to research from David Rosenburg which found, "The 'labor share of national income has fallen to its lower level in modern history,' 57.5 percent in the first quarter of 2011, compared to 59.8 percent when the recovery began. While that might seem like a small change, given the $14.66 trillion size of the U.S. economy, it's huge."

In the real world, Labor's numbers are diminishing, government size and spending are shrinking, and, simultaneously, income inequality is increasing. If one were to actually delve into the data, he/she would find that reality doesn't support the idea of a growing, recklessly-spending government, full of do-nothing, overpaid public workers.

Paul Krugman observes, "We haven’t seen spending cuts like this since the demobilization that followed the Korean War."

Let's simply look at the promises of Republican doctrine contrasted with their actual results.

"Like Ronald Reagan, President Bush began his term in office with big tax cuts for the rich and promises that the benefits would trickle down to the middle class. Like Reagan, he also began his term with an economic slump, then claimed that the recovery from that slump proved the success of his policies. And like Reaganomics — but more quickly — Bushonomics has ended in grief. The public mood today is as grim as it was in 1992. Wages are lagging behind inflation. Employment growth in the Bush years has been pathetic compared with job creation in the Clinton era. Even if we don’t have a formal recession — and the odds now are that we will — the optimism of the 1990s has evaporated. This is, in short, a time when progressives ought to be driving home the idea that the right’s ideas don’t work, and never have," declares Krugman.

So, to recap, we're blaming the wrong people (government, public workers) for the wrong things (recession, bailouts, debt), while letting the true culprits (financial engineers and their political operatives - primarily Republicans) responsible for our recurring bubbles and economic calamities off the hook. Our conservative leaders also want us to double-down on the same policies that got us into this mess - tax cuts and deregulation. And, while we're at it, let's elect more jokers, like Scott Walker and Mitt Romney, to keep pushing the same hollow policies. 

What's the matter with America?

Productivity & Compensation

Paul Krugman comments on Larry Mishel's (of the Economic Policy Institute) latest research, "Larry Mishel has a systematic breakdown of the reasons for worker income stagnation since 1973. He starts with the familiar divergence: productivity up 80 percent, the compensation (including benefits) of the median worker up only 11 percent. Where did the productivity go?

The answer is, it’s two-thirds the inequality, stupid. One third of the difference is due to a technical issue involving price indexes. The rest, however, reflects a shift of income from labor to capital and, within that, a shift of labor income to the top and away from the middle.

What this says is that widening inequality makes a huge difference. Income stagnation does not reflect overall economic stagnation; the incomes of typical workers would be 30 or 40 percent higher than they are if inequality hadn’t soared."

The Right To Have Your Labor Exploited

37 state legislatures are attempting to pass anti-union, anti-labor right-to-work bills. The race to the bottom continues. This -- right-to-work legislation -- will lead to lower wages, less health care coverage, and more retirement volatility.

For Further Reading:
Does Right-To-Work Create Jobs?
Right To Work For Less
Right To Work Lowers Wages
What's Wrong With Right-To-Work?
Working Hard To Make Indiana Look Bad

Federal Employee Compensation

Unionized workers with only a high school diploma earn, roughly, 20 percent more than their private sector counterparts. When we consider age, education, and experience, public sector workers with at least an Bachelors degree, earn less than their private sector counterparts. These are the conclusions of three recent studies (here, here and here). The Congressional Budget Office's latest research on the topic (looking at Federal employees) has found similar results.

"CBO's study compares federal civilian employees and private-sector employees with certain similar observable characteristics. This analysis focuses on wages, benefits, and total compensation between 2005 and 2010."

• Federal civilian workers with no more than a high school education earned about 21 percent more, on average, than similar workers in the private sector.
• Workers whose highest level of education was a bachelor's degree earned roughly the same hourly wages, on average, in both the federal government and the private sector.
• Federal workers with a professional degree or doctorate earned about 23 percent less, on average, than their private-sector counterparts.

For Further Reading:

Right-Wing Assault on State Employee Pensions Based on Falsehoods

Our Underpaid Teachers

Building a high-quality teaching profession
The teaching penalty

Midweek Reading

Are Wisconsin Public Employees Over-Compensated?
Child Poverty Rose Dramatically In Wisconsin Last Year
Does Right-To-Work Create Jobs?
Jim DeMint's Race To The Bottom
Milwaukee Income Drops 22% As Jobs Threats Continue
Smart Growth Law Would Be Gutted By Proposed Legislation
Tax Cuts Break The Bank
What's Wrong With Right-To-Work?
Wisconsin Has Lean Public Sector
Wisconsin Public Servants Already Face A Compensation Penalty

Uncertainty?

Jared Bernstein (with the help of Lawrence Mishel) dispels the right-wing talking-point of "uncertainty":

"Larry Mishel, president of the Economic Policy Institute, has an extremely useful piece up collecting all the reasons -- with evidence -- why the conservatives' "uncertainty" talking point is shovel-ready nonsense.

First, "uncertainty" in this context refers to the Republicans argument that it's government and central bank actions -- taxes, regulation, fiscal/monetary policy, health care/financial regulation reforms -- that are holding back the economy, not any of that ill-begotten Keynesian stuff, like lack of customers, orders, investors.

So how might you test for something like that?

Well, what about actual investment?

Investment in the current recovery has increased more than in it had at the same time period in the prior two recoveries and roughly the same as it did during the 1980s recovery [see figure]. In other words, this recovery is far more investment-led than the recovery under the pro-deregulation George W. Bush administration.

Private sector jobs, you ask?

...private sector job growth in this recovery looks much like job growth in recent recoveries, suggesting that businesses are not reacting to a new threat of potential regulations and taxes (the difference with this recovery is actually the loss of public sector jobs.

And then, of course, there's what the business folks, as opposed to their DC reps, actually say about what's bugging them:

...the regular National Federation of Independent Business (NFIB) surveys of small businesses found that the most common answer to the question, "what is the single most important problem your business faces?" was "poor sales." And while a number of businesses also cited regulation, the numbers were not substantially higher than under Presidents George W. Bush or Ronald Reagan and were lower than under Presidents Bill Clinton and George H.W. Bush.

None of this is to say "uncertainty" is not a problem. But while conservative politicians are busy jamming their perennial tax cut/deregulate agenda into the current context, the thing that businesses are truly uncertain about is when they're going to start seeing some customers again."