American workers earn about half of what they deserve |
Her voice barely rose above a whisper.
The middle-aged guy with the puckered forehead and hunched shoulders said, “I can’t believe I’m doing this.” He was spreading mayonnaise on my oven-roasted chicken foot sub.
I had pulled out of the freeway outside of Fairfield, Connecticut, and into a subway franchise for a quick dinner to go and wasn’t really in the mood to talk.
But her story attracted me. “I used to work in marketing – nice office, good benefits – and then they fired my division,” he sighed.
“Now I’m here, I earn $ 12 an hour, I work a double [shift], and I have to come back tomorrow morning.
In America today, such stories of quiet desperation are all around us: the neighbor who hasn’t had a raise for a decade and seems perpetually behind on rent, the older uncle with an advanced degree who works at Safeway’s check-out, the college friend who put his business plan on hold to take a “secure” (read: boring) job with perks.
I have seen it in my own profession. When I was a novice journalist at the new York Daily News in 1997, I was making $ 40,000 a year. Almost 20 years later, as editor-in-chief of a major online media outlet, company budgets dictated that I should offer only $ 30,000 in salaries to recruits for a similar position. So, despite two decades of rising cost of living, for every dollar I made, we were only paying 75 cents to similar journalists.
At some level, we are all experiencing our crisis of income inequality. The signs of stagnation or clear decline in working class and middle class wages are all around us, even as the richest Americans are far richer than ever.
Still, it’s hard to understand just how out of balance the situation really is. Last fall, the RAND Corporation released a groundbreaking study that documented the full extent of income transfer since the early 1970s for wealthier Americans.
A full-time worker who currently earns the national median salary of $ 50,000 would now earn nearly $ 100,000 – if the country’s economic growth had continued to be shared over the past 45 years as it was in the decades that followed. the Second World War.
This income transfer has had a devastating impact on working people at all levels – the poor, the working class, the middle class and even part of the upper middle class – making it harder to pay rent, shop for money. the table and family. It has also left tens of millions of Americans vulnerable to surprise expenses such as vehicle breakdown or unforeseen medical expenses. Overall, the loss of relative income has affected people’s ability to pay rapidly rising housing costs, buy a home, pay off old mortgages, or even delay bankruptcy.
If it weren’t for this drastic shift in income distribution that began in the early 1970s, the poorest 90% of working Americans would each bring in tens of thousands of dollars more each year, enough to help. to pay for the growing university of their children. tuition or feed their own retirement accounts.
In this series, we will examine the severity of this crisis, explore the real human impact of income inequality, and draw attention to corporate lobbyists and politicians whose decisions and policies have helped to exacerbate this huge divide. . We’ll also explore what an economy that works for all of us could look like.
Income inequality may have been the subject of much debate over the past decade – grim titles and bestselling books have made celebrities once obscure economists like Thomas Piketty and Gabriel Zucman – but the phenomenon continues. to get worse.
Despite the damage it has done to so many lives, it can feel like a runaway train that we are unable to stop. Adding to this sense of helplessness is confusion over the real causes, with many attributing the crisis to inexorable forces like globalization or blaming struggling people for their own plight, claiming that they could have made different choices.
A Pew 2020 survey found that roughly the same proportion of Americans blamed “the different lifestyle choices people make” as those who said outsourcing or the tax system contributed “a lot” to the business. economic inequality.
While globalization impacted from 1980 to 2011 by increasing competitive pressures on American manufacturers, many of whom once exported middle-class jobs overseas, this trend has slowed considerably over the past decade.
In contrast, many European countries that were also shaken by globalization during this time suffer much less income inequality than the United States today. Why? Because they have responded to the problem in a way that supports and strengthens their workforce, increasing their wages and, in some cases, giving them a role in business decision-making.
Ironically, foreign companies like BMW and Toyota are now outsourcing jobs to America, where employment costs – wages and benefits – for factory workers are much lower than in countries like Germany and Japan. because their employees at home enjoy universal health care, relatively generous pensions, and more job security – things many Americans can only dream of.
Technological innovation is one of the other factors that have had a significant impact on income inequality in recent decades. This has helped drive down wages at all levels for everyone from fast food cashiers and factory workers to accountants and travel agents, creating many low-paying jobs and a relatively small number of jobs. well paid.
At the same time, the purchasing power of the federal minimum wage has plummeted, and union membership has grown from one in five Americans in 1983 to one in 10 in 2019.
The lack of understanding of the issue is clear from the fact that minimum wages and rapidly declining unionization were not cited by respondents in the Pew survey at all as contributing to economic inequality.
Other key factors include under the radar policy changes that have undermined workers’ ability to secure jobs with good benefits and pay increases, and that have made it easier to lay off workers and create barriers. unionization.
This economic decline for so many American workers was not inevitable. It was the result of deliberate choices and decisions on the part of decision-makers. Many of them have been pressured into action by industry groups, donors and complicit economists, and this has added to the depressed wages for the poor and middle class, both white and of color – and to the strong increase in wealth for the richest. the past four and a half decades.
The result: a hollow out of financial security and retirement prospects for generations of workers. In other words, we have lived through a time when the sustained prosperity of the middle class has become increasingly illusory for most people, no matter how hard they work.
A striking illustration of this generational decline is that so many daughters and sons have less purchasing power and financial security than their parents at a similar stage of life – even, for the most part, if they work in industries. and similar regions of the country. .
For generations, Americans could count on a materially better life than their parents for their children. This is part of the reason we work so hard.
“The 50-100 Pay Gap” will explore the restructuring of the US economy and the place of workers in it, to better understand why the American Dream is more like a mirage to many hardworking workers.