Economic reality is sinking in for many Americans. Newspapers report people are ‘tightening their belts’ and retailers bemoan shoppers who are ‘sitting on their wallets’.
But in retrospect, today’s problems are a train that’s been on the track since at least the 1970’s.
Trends in real family income, distribution of wealth, personal savings rates and other economic indicators reveal burgeoning inequality affecting 95% of Americans.
For example, between 1949 and 1979, the inflation-adjusted average hourly wage for production workers rose 75 percent, from $9.00 to $15.78. Since 1979, despite increases in productivity of over 60%, that same wage has risen only 2 percent, from $15.78 to $16.11.
Or take wealth distribution, which now heavily favors those at the top. In 2004, the top 1% controlled 34.3% of the wealth in the United States, while the bottom 90% controlled just 28.7%. And the personal savings rate fell to an astonishing -1.1% in 2006 from 11.2%, in 1982.
But perhaps the single most destructive blow to middle- and lower-class has been the restructuring of the tax code to benefit corporations and wealthy citizens.
Loopholes and exemptions have changed the rules of taxation to benefit a select few. In 2006, households in the bottom 20 percent received just $23 due to the Bush tax cuts. Households in the middle 20 percent received $448. Families in the top 1 percent received $39,020. And households in the top 0.1 percent received $200,523.
The headlines report on CEOs who make millions for mere weeks of work, and investment banks bailed out despite (at best) incompetence and (at worst) outright avarice. But strictly speaking, that isn’t news – that kind of inequality has been commonplace for decades in this country.
Nonetheless, the other 99% are footing the bill, and paying dearly for it: defunct retirement accounts, underwater mortgages, job losses and other indications of vast economic insecurity threatening millions of ordinary people.
It’s time our democratic institutions respond to the needs of the people – all of them – by removing the inequity of our tax structure, promoting a livable minimum wage for every worker, and encouraging personal savings. In other words: help Main Street; then Wall Street will have a chance to get better.