“Falling Further Into A Hole”: Wage Stagnation Puts The Squeeze On Ordinary Workers
Laurie Chisum works as a manager for a small office-equipment company in Orange County. She puts in about 30 hours a week on the job and spends much of her time at home caring for her mother, who is afflicted with Alzheimer’s disease.
She’s not complaining — she’s thankful to have a steady paycheck. But no matter how hard she works, it feels as if she just can’t get ahead.
“It’s been six years since anyone at our company has had a raise,” said Chisum, 52. “It seems like I just keep falling further into a hole. The price of gas has gone down, but nothing else has.”
It’s a refrain we’ve heard throughout the year: wealth gap, income inequality, wage stagnation.
No matter how you say it, the upshot is the same. The rich are getting richer and everyone else is feeling squeezed.
The wealth gap in this country is now the widest it’s been in decades, according to a report this month from the Pew Research Center.
The median net worth of upper-income families reached $639,400 last year. That’s nearly seven times as much as for those in the middle and almost 70 times what people at the lower end of the economic spectrum are making.
That’s not just a data point. It’s sad proof of a system that grossly favors the rich over ordinary working families — even when the economy is improving.
“Far too many people simply aren’t feeling the benefits of this economic growth,” said U.S. Labor Secretary Thomas Perez. “People are working harder and smarter, but their sweat equity hasn’t translated into financial equity.”
David Neumark, director of the Center for Economics and Public Policy at the University of California, Irvine, said that “people at the top have had phenomenal wage growth,” whereas “people at the lower end of the spectrum have seen their real purchasing power decline.”
Corporate profits are at or near record levels. So’s the stock market. Chief executives are doing just fine, thank you very much. A recent report found that some of the biggest U.S. companies pay their CEOs more than they pay in federal income taxes.
For ordinary working stiffs, the numbers are more sobering. Average hourly wages rose an itsy-bitsy 0.4 percent in November, according to the Labor Department. And this was seen as good news because average wages increased a pitiful 0.1 percent in October and didn’t budge in September.
For the year, average hourly earnings through November rose 1.7 percent, according to the Bureau of Labor Statistics. Since the end of the recession in 2009, they’ve gained about 11 percent.
At the same time, though, the consumer price index — the cost of living — has increased 1.3 percent since the beginning of the year and about 11 percent since the end of the recession.
Wages, in other words, are barely keeping pace with overall inflation. That’s why many people feel as if they’re stuck in a financial rut.
“You wonder from month to month what else you’re going to have to cut back on,” said Chisum, a single mom who also is caring for a grown son with Down syndrome.
Things look even tougher when you tighten the focus on specific expenditures, such as food and rent.
Average food costs have climbed 12.5 percent since the end of the recession, according to the bureau. Average residential rents have risen 12 percent. The average cost of healthcare has jumped nearly 17 percent.
In that context, the 11 percent gain in wages since 2009 means that each of these necessities has taken a bigger bite out of family budgets and has left fewer dollars for other expenditures, such as the occasional restaurant meal or movie.
“There’s no evidence I can see that this is going to change in the near future,” said Edward Lawler, a professor at the University of Southern California’s Marshall School of Business. “These are tough times for workers.”
One key issue, he said, is that labor unions have less clout than they once enjoyed. This denies workers a unified voice at the bargaining table.
Improvements in technology have boosted productivity and allowed employers to limit hiring. And it’s become easy to ship jobs abroad, where people are willing to work for a fraction of the cost of American workers.
All these factors conspire to keep wages down while profits and the compensation of senior managers skyrocket.
Earlier this month, Microsoft shareholders approved an $84-million pay package for the company’s new chief executive, Satya Nadella, making him one of the country’s highest-paid corporate leaders. He’s run the company for less than a year.
Boeing, Ford, Chevron, Citigroup, Verizon Communications, JPMorgan Chase and General Motors each paid their CEOs more last year than they paid in income taxes to Uncle Sam, according to a report from the Center for Effective Government and the Institute for Policy Studies.
A recent study by Harvard Business School found that most Americans believe chief executives make roughly 30 times what the average U.S. worker makes. That was indeed the case in the 1960s. Nowadays, CEOs pull down more than 350 times the average worker.
Chief executives are important people, to be sure. But is their importance to a company 350 times that of their employees? I doubt most people — other than CEOs — would think so.
More effective unions would help, as would programs to give workers the skills they need to compete better in the 21st century workplace.
Chris Tilly, director of the University of California, Los Angeles’ Institute for Research on Labor and Employment, said a key step would be establishing a national minimum wage of $10 to $12 an hour, and then indexing that wage to consumer prices so that paychecks automatically rise with inflation.
“That way you wouldn’t have to wait for Congress to act every year,” he said. “This would be a basic decision that wages would keep up with the cost of living.”
Perez, the labor secretary, also called for a higher minimum wage, plus “strengthening overtime protections” and “ensuring that workers have a strong voice in the workplace.”
A rising tide lifts all boats. At least that’s how we’re told things are supposed to work.
The reality is that the tide is rising in a big way for some, and they’re comfortably sunning themselves on the decks of their yachts.
For most others, that rising tide is more like a stormy sea threatening to swamp the family lifeboat.
We’ll likely hear a lot in the coming year about how the economy is improving and businesses are thriving. Chief executives will point toward fast-rising stock prices as proof that they’re worth every million they’re paid.
And everyone else will try to make their 0.4 percent hourly pay hike go as far as they can.
By: David Lazarus, Columnist, The Los Angeles Times; The National Memo, December 29, 2014
“The Real Deadbeats”: You’re Not The Deadbeat. The Waltons Are The Deadbeats
If you are tired of your taxpayer dollars being used to pay Wal-Mart employees the money that the Waltons refuse to pay them, then you might be interested in the large Black Friday protests that are occurring at 1,600 Wal-Mart stores in 49 states throughout the nation right now.
“I have to depend on the government mostly,” says Fatmata Jabbie, a 21-year-old single mother of two who earns $8.40 an hour working at a Walmart in Alexandria, Virginia. She makes ends meet with food stamps, subsidized housing, and Medicaid. “Walmart should pay us $15 an hour and let us work full-time hours,” she says. “That would change our lives. That would change our whole path. I wouldn’t be dependent on government too much. I could buy clothes for my kids to wear.”
The nation’s largest employer, Walmart employs 1.4 million people, or 10 percent of all retail workers, and pulls in $16 billion in annual profits. Its largest stockholders—Christy, Jim, Alice, and S. Robson Walton—are the nation’s wealthiest family, collectively worth $145 billion. Yet the company is notorious for paying poverty wages and using part-time schedules to avoid offering workers benefits. Last year, a report commissioned by Congressional Democrats found that each Walmart store costs taxpayers between 900,000 and $1.75 million per year because so many employees are forced to turn to government aid.
This isn’t complicated. If you have a job at Wal-Mart and you still need Medicaid, food stamps and subsidized housing, then you aren’t just getting shafted by the Waltons. You’re also being paid your missing wages by the federal government. You’re not the deadbeat. The Waltons are the deadbeats.
By: Martin Longman, Political Animal, The Washington Ponthly, November 28, 2014
“Work And Worth”: What Someone Is Paid Has Little Or No Relationship To What Their Work Is Worth To Society
What someone is paid has little or no relationship to what their work is worth to society.
Does anyone seriously believe hedge-fund mogul Steven A. Cohen is worth the $2.3 billion he raked in last year, despite being slapped with a $1.8 billion fine after his firm pleaded guilty to insider trading?
On the other hand, what’s the worth to society of social workers who put in long and difficult hours dealing with patients suffering from mental illness or substance abuse? Probably higher than their average pay of $18.14 an hour, which translates into less than $38,000 a year.
How much does society gain from personal-care aides who assist the elderly, convalescents, and persons with disabilities? Likely more than their average pay of $9.67 an hour, or just over $20,000 a year.
What’s the social worth of hospital orderlies who feed, bathe, dress, and move patients, and empty their ben pans? Surely higher than their median wage of $11.63 an hour, or $24,190 a year.
Or of child care workers, who get $10.33 an hour, $21.490 a year? And preschool teachers, who earn $13.26 an hour, $27,570 a year?
Yet what would the rest of us do without these dedicated people?
Or consider kindergarten teachers, who make an average of $53,590 a year.
That may sound generous but a good kindergarten teacher is worth his or her weight in gold, almost.
One study found that children with outstanding kindergarten teachers are more likely to go to college and less likely to become single parents than a random set of children similar to them in every way other than being assigned a superb teacher.
And what of writers, actors, painters, and poets? Only a tiny fraction ever become rich and famous. Most barely make enough to live on (many don’t, and are forced to take paying jobs to pursue their art). But society is surely all the richer for their efforts.
At the other extreme are hedge-fund and private-equity managers, investment bankers, corporate lawyers, management consultants, high-frequency traders, and top Washington lobbyists.
They’re getting paid vast sums for their labors. Yet it seems doubtful that society is really that much better off because of what they do.
I don’t mean to sound unduly harsh, but I’ve never heard of a hedge-fund manager whose jobs entails attending to basic human needs (unless you consider having more money as basic human need) or enriching our culture (except through the myriad novels, exposes, and movies made about greedy hedge-fund managers and investment bankers).
They don’t even build the economy.
Most financiers, corporate lawyers, lobbyists, and management consultants are competing with other financiers, lawyers, lobbyists, and management consultants in zero-sum games that take money out of one set of pockets and put it into another.
They’re paid gigantic amounts because winning these games can generate far bigger sums, while losing them can be extremely costly.
It’s said that by moving money to where it can make more money, these games make the economy more efficient.
In fact, the games amount to a mammoth waste of societal resources.
They demand ever more cunning innovations but they create no social value. High-frequency traders who win by a thousandth of a second can reap a fortune, but society as a whole is no better off.
Meanwhile, the games consume the energies of loads of talented people who might otherwise be making real contributions to society — if not by tending to human needs or enriching our culture then by curing diseases or devising new technological breakthroughs, or helping solve some of our most intractable social problems.
In 2010 (the most recent date for which we have data) close to 36 percent of Princeton graduates went into finance (down from the pre-financial crisis high of 46 percent in 2006). Add in management consulting, and it was close to 60 percent.
Graduates of Harvard and other Ivy League universities are also more likely to enter finance and consulting than any other career.
The hefty endowments of such elite institutions are swollen with tax-subsidized donations from wealthy alumni, many of whom are seeking to guarantee their own kids’ admissions so they too can become enormously rich financiers and management consultants.
But I can think of a better way for taxpayers to subsidize occupations with more social merit: Forgive the student debts of graduates who choose social work, child care, elder care, nursing, and teaching.
By: Robert Reich, The Robert Reich Blog, August 2, 2014
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