David Cay Johnston

Posted: February 1, 2015
By: Clay Cerny

 

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.

 

Posted: December 4, 2013
By: Clay Cerny

I frequently blog about income inequality because it is a vital issue that affects all working people, not just those in low wage jobs.  Today, President Obama called income inequality, “the defining challenge of our time.”  The President referred to specific types of low wage workers in calling for an increase in the minimum wage.  More importantly, he addressed the issue of decreased mobility:  not only are more Americans being born into poverty, they seem to be stuck there.  The President’s words are good and inspiring.  However, during his first campaign, he told labor that he would stand with them and put on his walking shoes to be with them in the picket line.  Did Obama march in Wisconsin or Ohio?  No.  Did he push through passage of the Employee Free Choice Act?  No.  Hopefully, these good words will lead to some positive action.  Let’s remember Jesse Jackson motto:  “Keep hope alive.”

There is nothing hopeful about the situation in Detroit.  Judge Steven W. Rhodes, a federal bankruptcy judge, ruled that all should be for the creditors, nothing for retired workers who paid into pension funds.  David Cay Johnston describes the situation as “stealing from the workers.”  His reasoning is clear:  Pensions are deferred wages.  Would anyone think of taking money from an employee’s paycheck?  That would clearly be theft.  How is a promised pension any different?  Johnson lists several examples of how politicians have played this game in the past.  Detroit is just the latest, ugliest example of a trend that is also taking place in my state, Illinois, which is run by Democrats.

As Johnston examines the economic impact of Detroit’s bankruptcy, John Nichols considers the political impact.  Citing a study by Demos, Nichols argues that Detroit’s serious financial problems should not have led to bankruptcy.  Why did the city go bankrupt?  So the Governor could appoint an unelected manager to strip assets that range from pension funds to the great collection in the city’s art museum.  Nichols quotes Detroit’s new mayor Mike Duggan, who admits that he will only have power to the degree that it is given by the governor and his manager.  The elected mayor is powerless.  Nichols captures the problem in these words:  “There is a lot more at stake in Detroit, and in Michigan, than one city’s balance sheet.  Our understanding of democracy, itself, is being subverted.” 

If President Obama is serious about addressing income inequality and mobility, he should start in Detroit.  Turn the Justice Department loose on Governor Snyder and his “Emergency Managers,” who lord over cities that are populated mostly by poor African Americans.  Clearly American citizens in the cities under Governor’s Snyder’s Emergency Manager system are not enjoying the rights promised under the XV Amendment.  Detroit is a good starting point, Mr. President.  Save democracy and promote opportunity in that great city.

P.S.  David Sirota calls out the fraud in Detroit by discussing funds that can be found for a new hockey arena and $6 billion in subsidies, also known as corporate welfare.

Posted: November 4, 2013
By: Clay Cerny

David Cay Johnston, reporting for Aljazeera America, documents that the median wage in the U.S. is at its lowest rate since 1998.  The median wage for 2012 was $27, 519.  In 1998, that rate was $26, 984.  Workers’ wages are going in the wrong direction.  Or, as Aljazeera America puts it:  “Half of America is being left behind.”

How could this problem be fixed?  Raise the minimum wage.  Defend the rights of workers to organize.  Repeal NAFTA and pass no more international trade schemes that pull jobs out of the U.S.  Tax companies that pull jobs out of the U.S. (currently those companies get a tax benefit).  These are just a few ways that the federal government could help stressed American workers earn a little more money.  Given what we seen out of Washington, don’t hold you breath waiting for solutions.