David Cay Johnston is one of my favorite writers on economics. He presents complex issues in language that is easy to follow and compelling to read. In a commentary published by Al Jazeera, Johnston notes that the recent growth in the U.S economy has not led to a growth in income reported on income taxes. In fact, average income reported dropped from $63,297 in 2012 to $61,668 in 2013. Johnson also presents a chart that tracks labor’s share of income since WWII. Since 2001, capital has been taking a bigger and bigger piece of the pie. He points to political factors, such as the outsourcing of factory jobs due to trade deals. He cites President Obama’s 2011 deal with South Korea as costing “thousands of manufacturing jobs.” He also demonstrates that all working people have been losers recently. While those making $250,000 or more a year did see a 4.8% increase in their reported income in 2013, their total income fell by 8.6% and average income by 12.8%.
What’s the moral of the story? The investor class is king. Workers are more productive than ever. Unemployment is down. Somehow, reported income is declining for all working people. As Johnston warns at the end of his commentary, “The American economy is getting bigger, but average incomes are shrinking. If that trend continues, it will eventually spell economic, social and political trouble for the country.” Johnston’s words frighten me more than ISIL. The real terror is economic.
Buzzfeed reports on an interview between Goldman Sachs CEO Lloyd Blankfein and Andrew Ross Sorkin of the New York Times. The good news is that Blankfein recognizes the problem of inequality. The bad news is that he implies that it will get worse. He talks about a new economy that will employ labor in “new ways.” From capital’s perspective, that means the best return for investors, which has traditionally result in process improvements, automation, and offshoring. I’m not condemning Blankfein. As a leading investment banker, he is saying what he should. Working people and unions need to walk up to this reality, or the current good news on the job market will be temporary. We need a real workers’ bill of rights that provides realistic security for labor as well as capital.
Ralph Nader has been trying to keep Americans safe for over 50 years. He has written an essay for Common Dreams that considers the gap between CEO compensation and pay for working people. Today CEOs make 340 times average worker pay. In 1980, that figure was only 42 times average worker pay. Nader suggests that this difference is a good reason to increase the minimum wage. As Nader says, that’s a good “first step.” However, we need to look beyond the minimum wage. Whether we change the income tax structure or add a wealth tax, those who have the most – including very profitable corporations – need to contribute more to the common good. We need to move beyond the greed ethic and think more about how to preserve our common culture.