Even with sweeping changes in compensation packages for those with specialized training and education, fully one third of working Americans earn less than $15/hour, which in itself is not a living wage in most larger cities. That the federal minimum wage has not changed since for well over a decade reflects the power of either a congressional GOP majority or the GOP’s ability to filibuster a rational increase. As the money from the 2017, Trump-era corporate tax cut was used mostly for corporate stock buybacks, increasing the share value to shareholders (obviously benefitting the biggest shareholders the most), and as the pandemic allowed companies (those not predicated on mass public in-person attendance) to shed workers and replace them with AI-driven automation, the rich got so much richer.
The United States has the widest income/wealth gap in the developed world, where upward social mobility has pretty much been relegated to the history books. Our metrics are also misleading. The stock market reeled from the market instability resulting from Putin’s war… but share prices for all American oil companies have skyrocketed. Wars always benefit arms manufacturers and those who deal in basic natural resources. Indeed, that segment of the rich really do get richer.
Wall Street has done a magnificent job of setting national performance metrics – how economically weak or strong the entire country is – using the stock market and gross domestic product (GDP – the sum total of economic value in the country) as the basic success metrics. A rarified few Americans make their livings from owning stock, and the GDP gets heavily weighted by soaring income earned by those at the very top. Here’s a very simple example: if out of ten people, one makes a billion dollars a year, and nine make thirty thousand, that mini-GDP is $1,000,270,000, and the average per capita annual income for that set is $100,0270,000. If that seems profoundly distorted, you understand how our economy is measured substantially by how well the rich are doing. Once you pick you success metrics, then politicians will favor policies that make them look good under those measurements. Not by how most of us fare.
While I have nothing against folks getting rich – that has indeed made America great – we need to be careful that rewarding the richest in our nation at the expense of the rest has powerful consequences for our entire political system, one that seems to be a substantial impetus to misguided populism. When the rich sense that they may be saddled with a greater share of the costs of servicing the American people, they use that catchy description, “creeping socialism.”
The term actually means government ownership of the means of production and wealth, but it is used to defeat efforts to help most of us, like national healthcare. Instead, a disproportionate burden is layered on to most of us. For example, that massive corporate tax cut noted above made the rich vastly richer but increased our deficit (a burden foisted on all Americans) by literally trillions of dollars.
With two companion articles written for the March 24th FastCompany.com, the impact of these policies becomes much clearer. Michael Grothaus tells us: “The federal minimum wage in the United States has not risen since 2009. It was set at $7.25 an hour that year, and remains so today in 2022. Wall Street bonuses, on the other hand, have risen steadily. And now a report from Inequality.org shows that if the federal minimum wage rate increased at the rate of the bonuses traders get, the starting wage for Americans would be set at $61.75.
“In 2021, the average Wall Street bonus was a staggering $257,500–that’s on top of their annual salary, according to New York State Comptroller bonus data. But back in 1985, the average Wall Street bonus was ‘just’ $13,970 (non-inflation adjusted). That means Wall Street bonuses have increased 1,743% over the last 36 years.
“But the comparison gets even more depressing. The average Wall Street bonus of $257,500 in 2021 was a 20% increase from only the year before, which was well above the 7% annual inflation rate. But, the average weekly earnings for U.S workers only rose only 2% between 2020 and 2021, meaning the average worker’s earnings lost buying power.
“These numbers show two failings by the government, according to Inequality.org: the failure to raise the federal minimum wage for 13 years in a row and the failure to implement provisions in the 2010 Dodd-Frank Act that prohibit financial institutions from rewarding their traders for taking risks that are deemed inappropriate.” Equally harsh is that most Americans will not see wage and salary increases necessary to compensate for our staggering inflation rate. For many, with skills in sufficient demand, that’s just one more reason to find a new job.
Shalene Gupta writes: “Food prices are up, rent prices are up, and gas prices are so high that Uber and Lyft drivers are considering quitting. Inflation is 7.5%, the highest it’s been since 1982. Yet it’s unlikely that wages will rise correspondingly.
“According to a March 2022 study by Mercer, a human resources consulting firm, 45% of employers don’t factor inflation into salaries and less 25% said they will be making changes to their salary budgets because of inflation. Yet the same survey found that 77% of respondents cited compensation as their main reason for turnover. Meanwhile, corporate profits are the highest they’ve been in 70 years. Given that we’re also in the midst of the Great Resignation—where record numbers of employees are leaving their jobs—why aren’t more employers raising wages?
“Mainly because employers just aren’t used to factoring inflation into wages. In the 1970s and 1980s, when inflation rates were in the 3-14% range, wages were closely linked to inflation, says Jason Furman, a professor of economic policy at the Harvard Kennedy School. Starting in the 1970s, labor unions pushed for contracts had clauses that included cost-of-living adjustments. However, as inflation rates stabilized, 3% salary increases for cost-of-living became the norm.”
Blame is often the political answer, not understanding. Prestigious political metrics entity, FiveThirtyEight.com, aggregates the more credible polling sites to create “average” result. As of the end of March, they note that President Biden’s approval ratings have fallen to 41%, that 35% of Americans blame Putin for our skyrocketing oil and gas prices (reflected across almost every market sector), but Biden shoulders 34% of the blame… even as more than 70% of Americans approve of harsh measures against Russia, knowing that this will only increase prices.
The reality is that Putin’s war takes two of the major grain producers out of the market (Ukraine and Russia), removes Russian fossil fuels from its European market as other major oil and gas producing countries have so far refused to up their production. In short, inflation is hardly within Biden’s control, but that does not stop his administration from getting the bulk of the blame here. And that, simply, augurs badly for Democratic congressional prospects in November, as current polling confirms. Which returns Congress to control of what should be labeled the “income/wealth inequality” Republican Party. It is so much easier to find blame, usually allowing politicians to manipulate their electability, than to understand what is really happening.
I’m Peter Dekom, and America has turned from being “the land of opportunity” to becoming “the land of opportunists.”
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