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Monday, December 09, 2019 {{ new Date().getDay() }}

Income Inequality

Reprinted with permission from Alternet.

President Donald Trump hasn’t been shy about citing economic data, pointing out how much unemployment has decreased in the U.S. and insisting that he is responsible — never mind the fact that unemployment was already down to 4.7 percent in December 2016, President Barack Obama’s last full month in office. Trump inherited an economic recovery; he didn’t create one singlehandedly.

But while the 3.7 percent unemployment rate the Bureau of Labor Statistics (BLS) gave for June is certainly an improvement over the financial misery and devastation that Obama coped with in 2009 and 2010 during the worst of the Great Recession, there are some troubling signs in current economic data — and those signs are examined in recent articles published by the Washington Post, the New York Times, and Bloomberg News.

Sen. Elizabeth Warren and Sen. Bernie Sanders have both been complaining that most of the economic gains of the Trump era have gone to Americans at the top — and Heather Long, in the Washington Post, notes that 40 percent of Americans still say they are struggling to pay their bills. Long notes that although the “stock market is at record levels” and the current “economic expansion” is the longest in U.S. history, this is a “two-tier recovery.”

And the lower tier, according to Long, is seeing “paltry or volatile wage growth, rising expenses for housing, health care and education, and increased levels of personal debt.”

Long observes that according to Matthew Mish (head of credit strategy for the investment bank UBS) the 40 percent of Americans Mish considers the “lower tier” is struggling to make ends meet.

Neil Irwin, in the New York Times, cites some good news: “Employers added a robust 224,000 jobs, the Labor Department said, up from a revised 72,000 in May.” But Irwin goes on to cite some bad news as well — for example, Irwin writes, “average hourly earnings have risen only 3.1 percent over the last year.”

Irwin reports, “Even as low as the unemployment rate is, employers don’t seem to be bidding up the wages to get workers.” The Times reporter stresses that although “the American job market is steady and solid,” wages aren’t increasing enough for “the average American worker.”

He also noted the financial markets are sending “ominous signs about the global economy.”

The Great Recession was the worst economic downturn since the Great Depression of the 1930s. When Obama was sworn in as president in January 2009, he inherited the worst economy of any president since Democrat Franklin Delano Roosevelt (who took office in 1933 after his landslide victory over Republican incumbent President Herbert Hoover in 1932).

The Great Recession left millions of Americans financially scarred. And Karl W. Smith (a former economics professor at the University of North Carolina) explains in Bloomberg News that although “the job market is still going strong,” the U.S. economy still isn’t “fully healed” in 2019.

“For most workers,” Smith warns, “wages are rising only modestly. That implies there has been an ample supply of people outside the job market who can be pulled back in not because they are being offered more money, but because now, employers are giving them the opportunity.”

In other words, those workers are being underpaid, but being underpaid is a step up from the extended unemployment of the Great Recession.

“The job market is still going strong,” Smith reports. “But until we see labor’s share of income rising and increasing numbers of people choosing work over school and retirement, the job market won’t be fully healed.”

IMAGE: Fast-food workers and their supporters join a nationwide protest for higher wages and union rights outside McDonald’s in Los Angeles, California. REUTERS/Lucy Nicholson

 

 

 

Congratulations on that nice pay raise you got last year, a seven percent hike — wow!

Seven percent might not sound all that big, but after 40 years of stagnant wages, even a small uptick can help cover some of your old credit card bills or get an upgrade on your 10-year-old pickup.

Oh, wait … You say you didn’t get seven percent? Oops, my mistake. It was the CEOs of corporate giants who reported to the Associated Press that they enjoyed a median jump of seven percent last year. And as their paychecks were already king-size, that uptick amounted to an extra $800,000 in their take-home, for a median yearly income of $12 million each. Bear in mind that “median” means half of the corporate bosses grabbed more than seven percent. For example, David Zaslav, honcho of the Discovery television network, had a 207 percent boost in pay, raising his total take in 2018 to $130 million.

These lavish payouts to top-floor bosses — combined with a miserliness toward rank-and-file employees who actually produce the corporate wealth — is creating an untenable income disparity in corporate America, stretching inequality in our Land of Egalitarianism to the snapping point. The pay gap between aloof CEOs and typical employees nearly doubled last year at a range of corporate giants, from PayPal to CVS Pharmacy, and it tripled at Discovery. AP’s recent survey of 340 major corporations found that compensation inequality is now so extreme that a middle-wage employee would have to work 158 years to make as much as his or her chief executive was given last year alone. This separation is widening at warp speed, propelled by the boundless greed and narcissism of so-called leaders like Zaslav. To amass as much pay as he pocketed in 2018, a typical Discovery employee would have to work 989 years.

When you hear corporate chieftains and such corporate cheerleaders as Donald Trump gloat that our economy is “booming,” ask yourself: A boom for whom?

We have a president who mistakes price for value. Thus, to measure America’s economic health is simple for him: Just check the price of corporate stocks and any fool can see that he’s the best president ever at running the economy. After all, since he’s been in office, Wall Street has been whizzing! Unfortunately, though, it’s whizzing on you and me.

Wall Street is an inequality machine. It encourages top executives to jack up their own wealth by artificially inflating their corporation’s stock prices. Then it rewards executives who offshore jobs, cut wages, monopolize markets, bust unions, gouge consumers and dodge taxes. Far from reining in Wall Street’s destructive plutocratic power, Trump has juiced it up with new tax advantages for big investors and the removal of rules to restrain banker scams.

Meanwhile, the guy who pretended in his campaign to be a champion for America’s workers has been a one-man working-class wrecking crew, systematically destroying employee rights and protections against the abuses of corporate bosses. On everything from overtime pay and minimum wage to workplace safety and the right to form a union, Trump & Company has sided with corporate interests over working stiffs, essentially saying to workers: “You’re on your own. Adios, chumps.”

So, the economic “boom” that he so vaingloriously talks about is actually the sound of the middle class crashing. That thunderous boom-boom-boom represents millions of Americans who’re living paycheck to paycheck, who have little to no savings and inadequate health coverage, who can’t afford the rip-off drug prices Big Pharma is being allowed to charge, who’re sinking in debt. And all they’re getting from Trump are his vapid political rallies, shouting “MAGA” — “Make America Great Again.”

Inequality doesn’t just happen; it’s caused by the deliberate actions of power elites. Far from reducing inequality, Trump has intentionally escalated the corporate war on working-class Americans. Under his regime, nearly half of all new income today is going to the wealthiest one percent.

Populist author, public speaker and radio commentator Jim Hightower writes The Hightower Lowdown, a monthly newsletter chronicling the ongoing fights by America’s ordinary people against rule by plutocratic elites. Sign up at HightowerLowdown.org.