Why Middle America Can't Get Ahead
A report from Gerald W. McEntee, International President
Every member of AFSCME knows what it’s like to live from paycheck to paycheck. No matter how hard you work and how many raises you bargain you still can’t get ahead. Why is that? Well, here are a few facts that help explain what’s appening.
Since 1980, the cost of college has gone up 260 percent, the cost of auto insurance is up 186 percent, the phone bill up 118 percent, haircuts are up 80 percent, new cars are up 55 percent. Paychecks are up, too, but they haven’t come anywhere near keeping up with inflation. Since 1975, the average worker’s real income—that is, what your paycheck can buy in food and clothing, and other necessities—the real value of a worker’s paycheck (raises and all) has fallen 11 percent. In other words, a big, fat pay cut.
In the past 20 years the income of most middle-class families has been stuck in a rut, and the 50 million or so in the poorest fifth of the population have seen their share of personal income shrink 17 percent. But income for the cream of the cream, the top one percent, has nearly doubled.
Income inequality—the gap between rich and poor—is now greater in America than in any other industrial nation. The Wall Street Journal and Business Week magazine (and neither has ever been accused of being liberal) have both reported that wealth and income are being increas-ingly concentrated. The Internal Revenue Service says that, since 1979, real household income has increased an average of $2,000 a year. That sounds pretty good, but the fine print reveals that the richest fifth of the population has gotten 97 percent of the increase. The remaining four-fifths, the other 200 million Americans —and they include just about everybody in AFSCME—get to share what’s left: three percent.
Since 1981, when Americans were told that supply-side economics was the ticket to a new prosperity, it has been bonanza times for America’s rich. They have been walking all over working people—squeezing wages, downsizing (2.9 million jobs cut since 1990), exporting the livelihoods of millions, busting unions, killing regulations.
The plant that kept a town alive moves to Mexico with its $5-a-day workers, and to hell with the loyal employees, the town, the state, and the nation itself. The other day Coca Cola’s chief executive officer said Coke is no longer an American company—”it just happens to be headquartered in the United States.”
America’s rich, whether they live on trust funds or run big corporations, are rolling in money. While working families worry about paying the mortgage and hanging on to their jobs, profits and stock prices are booming to new records. As a banker told the Wall Street Journal the other day: “We’ve rewoven the tapestry of the economy. The consumer is no longer king. Corporations are.”
These days, with enough money you can buy just about anything you want: justice, respectability, a favorable newspaper column... One zillionaire is even trying to buy the presidency of the United States. And talk about gall: he wants the people to pay him for doing it!
Conservatives tell us over and over that when business benefits, all Americans benefit. Give business people a free hand, they say, free the wealthy from the crushing burden of taxes and regulations and we’ll see a new Golden Age. The record is a little different. The record shows that corporations and rich individuals are stingy. When they give something away they make sure it gets a lot of attention, but overall they don’t give away very much.
Between 1980 and 1988, while life was a daily struggle for ordinary working families, those earning $25,000 to $30,000 a year increased their annual donations to charity 62 percent, from $665 to $1,075. They gave to help others even though it hurt, even though it meant that they would have to do without something that they wanted or needed.
In the same eight supply-side years, the tax rate on big in-comes was cut from 70 percent to 28 percent. As a result, the top one percent of the population, people like Steve Forbes and Ross Perot and Lee Iacocca, saw their after-tax income soar an average of 86 percent higher.
The rich had tons of extra money, but what did they do with it? Those making from $500,000 a year to $1 million cut their annual giving to charity from $47,432 to $16,062. Those making over a million dollars cut their donations from $207,089 to $72,784. What did they do with all their money? They put it out to make more money.
Thus we have a handful of the very rich riding a wave of prosperity, a middle-class that has to stretch every paycheck, and the poor and near-poor sinking out of sight. It is a formula for social and economic disaster.
