by Bill Onasch
There’s upward movement of income in the USA–from Us in the bottom ninety percent to Them in the top ten. That’s not exactly breaking news–that trend has been mostly unbroken for four decades. But, according to analysis of Internal Revenue Service data compiled since its launching in 1913, economists at the University of California Berkeley, the Paris School of Economics and Oxford University, determined a new record has now been set.
48.2 percent of total U.S. earnings last year went to the top ten percent of American households–an all-time high. Nineteen percent of income went to the top one percent–the most since the Golden Twenties when President Calvin Coolidge famously declared, “the business of government is business.”
Did all of our boats rise along with their yachts in a swollen tide of income? Not quite. Last year the incomes of the top one percent rose nearly twenty percent compared with one percent for everybody else. For decades, the inflation adjusted real wages of the working class have been falling.
Of course, annual taxable income doesn’t tell as much as personal accumulated wealth. And our population size means even the one percent encompasses millions. To get in to the ten percent last year your household only needed 114,000 dollars–a figure earned by some rank-and-file union members and many union officials. Some of our labor statespersons even qualified for the one percent which starts at 394,000.
(In Canada, the entry levels for the upper crust are somewhat lower–80,400 Canadian dollars for the top ten, 191,100 for the top one. Greater union density and a labor party are likely factors in moderating income inequality compared to their southern neighbor.)
A well rewarded ten percent provides a mass base of influence for the inner circle of the ruling class that really calls the shots. To get anywhere close to their deliberations you have to be at least one of the 442 billionaires in the USA–about a third of the world’s total.
A few weeks ago, before the release of the study cited above, a briefing paper from the union-backed Economic Policy Institute said,
“The revived discussion of strengthening the middle class, however, has so far failed to drill down to the central problem: The wage and benefit growth of the vast majority, including white-collar and blue-collar workers and those with and without a college degree, has stagnated, as the fruits of overall growth have accrued disproportionately to the richest households. The wage-setting mechanism has been broken for a generation but has particularly faltered in the last 10 years, once the robust wage growth of the late 1990s subsided. Corporate profits, on the other hand, are at historic highs. Income growth has been captured by those in the top 1 percent, driven by high profitability and by the tremendous wage growth among executives and in the finance sector.”
As usual with EPI papers, not a single word of this densely packed paragraph can be disputed. They have some smart folks turning out a lot of useful material and the quoted paper is chock full of stats, graphs, and charts we can utilize.
But, like all subsidized researchers, they need to be mindful of the sensitivity of their sponsors. This briefing paper was an attempt to latch on to and flesh out support for President Obama’s “A Better Bargain for the Middle Class” initiative, announced at a July speech in Galesburg, Illinois–and promptly forgotten.
Just what is the “wage-setting mechanism” to which the EPI authors refer–and why is it broken? Is it like a beloved family car that has reached the end of its useful service life and must be consigned to the bone yard? Or can we restore it with more durable parts that, with a prudent plan of preventive maintenance, can again provide safe, reliable transportation for at least another generation?
While the EPI definition may be more nuanced, to me the wage-setting mechanism that lifted many American workers from the depths of poverty and despair to the comfort level of the semi-mythical Middle Class was without a doubt the trade union movement. From the Depression days of 1934 right in to the Seventies unions won steady, solid gains for their own members and were also the pace setters for millions of other workers–even though their peacetime density never exceeded 30 percent.
The UAW long had a wage formula at the Big Three automakers of an annual three percent productivity raise plus cost-of-living. With assured real wage growth they went on to break new ground on pensions, health insurance, and paid time off. Their new norms were used by others, even unorganized, to often successfully argue for similar improvements.
Those salad days for unions resulted in a dramatic narrowing of income inequality. The share of the top one percent bottomed out at 7.7 percent in 1973–during the Nixon administration–before soon resuming spectacular recovery under regimes of both boss parties, reaching lofty record heights on Obama’s watch.
A lot of toxic sludge has flowed under the bridge since the 1970s. Technology, outsourcing, runaway plants, transplants, and offshoring have slashed union membership rolls and density by over half. Union workers still do better than those without a union–but within the context of a steady decline of the working class as a whole with no end yet in sight.
Unions are still pace setters–but now too often in reverse. Most mainstream unions have bargained away huge concessions in wages, benefits, and working conditions while some have had their contracts overturned by bankruptcy courts. Other employers, nonunion and organized alike, now gladly impose these same new givebacks to stay “competitive.”
I’m convinced organized labor can be restored as the vehicle for wage and benefit increases–but only if refitted with a new engine and drive train. And, since unions now only represent about one-in-eight workers, additional heavier vehicles are required for building alliances in the community, and action in the political arena, as well as in the workplace.
More about how we can get back on the road to our fair share of the wealth we create next time in the WIR.
* It wasn’t as bloody as the government’s Tlatelolco Massacre that killed dozens, perhaps hundreds, of student protesters shortly before the 1968 Mexico City Olympics but the tear gas and water cannons flowed freely, and clubs swung wildly on Friday as the Federales cleared the Zocalo of occupiers. This time it was teachers instead of students. They are protesting union-busting educational “reforms” imported from north of the Rio Grande. President Enrique Pena Nieto hopes this will be the last he sees of the troublemakers. In any case, el Presidente needed the massive square cleared so he could use it as his platform to lead today’s national celebration of Independence Day.
* It’s coming up on three years since the FBI raided seven homes and subpoenaed 23 anti-war and international solidarity activists to a Grand Jury in Chicago. Assistant US Attorney Barry Jonas has yet to announce the end of the “ongoing investigation.” An anniversary solidarity rally has been called by the MN Committee to Stop FBI Repression, in Minneapolis Tuesday, September 24, 4:30-6:00PM, at the Minneapolis Federal Building, 300 South 4th Street.
* I’m still sorting through reports of the recent AFL-CIO convention before organizing some comments but my fellow retiree Steve Early was early with a comprehensive if controversial take on the conclave that’s worth reading.
* Congratulations to the California Nurses Association/National Nurses United on a hard-won representation election involving 725 RNs at Providence Little Company of Mary Medical Center in Torrance, California. The vote is believed to be the single largest RN election win where there was no previous union in the U.S. since a 2006 election victory by CNA at Doctors Medical Center in Modesto, California. Fiercely anti-union Providence is one of the biggest Catholic national hospital chains.
* As a terrible economic crisis grips the entire Spanish State, a million residents of Catalonia formed a 250-mile long human chain reasserting their historic demand for independence. The leader of the nation’s regional government, based in Barcelona, has promised to hold a referendum on independence next year. The Madrid government says this would violate the Spanish State constitution. While there is division on the question of independence, nearly all Catalans defend the right to a referendum to determine their own future. So should we.
* A Federal judge, responding to treaty rights and environmental concerns of the Nez Perce Indian tribe and an environmental group, Idaho Rivers United, ordered a halt Friday, pending a broad review of effects on the route, to more gigantic shipments of equipment destined for Alberta’s tar-sands through a National Forest in north-central Idaho. Known as megaloads, they are more than 250 feet long and weigh over 600,000 pounds. The supplier, Resources Conservation Company International, an affiliate of General Electric, cynically blasted the ruling as doing environmental damage. They argued their new equipment would reduce water usage in what many believe is the single most environmentally destructive operation in the world. This would be the source for the Keystone XL pipeline seeking approval in Washington.
* Speaking of Keystone. Next Saturday, September 21, there will be Draw the Line events against the pipeline across North America organized through 350.org. In Kansas City we’ll be gathering at 10AM at City Market Park and will move from there to span the Missouri River on the Heart of America Bridge. To find events in other areas click here.
* From the New York Times, “The federal government on Friday rejected pleas from labor unions for a dispensation from President Obama’s health care law. The decision, likely to infuriate some of Mr. Obama’s closest political allies, denies federal tax credits to workers who receive health coverage under employee benefit plans sponsored by more than one employer. Such plans are common in construction and other industries….The administration’s decision was made by the Treasury Department, but almost surely approved by the president….Labor leaders criticized the health care law at a convention of the AFL-CIO in Los Angeles this week. They said the law could destabilize the employer-based system of health insurance and encourage some companies to dump workers into the newly created health insurance exchanges. Richard Trumka, the president of the AFL-CIO, had conveyed those concerns directly to Mr. Obama and other White House officials.” More on this soon.
Reminder: a digest of links to stories of class and climate concerns is posted Monday-Friday, by 9AM Central, on our companion Labor Advocate Blog.
That’s all for this week.