“Deregulation And Worker’s Bargaining Power”: New Insight Into The Decline Of The Middle Class
The recently released 2012 Organisation for Economic Co-operation and Development Employment Outlook provides new insights into the decline of the middle class. The report documents the global shift from labor income to profits. Across the Organisation for Economic Co-operation and Development, known as OECD, the share of income going to wages, salaries, and benefits—labor’s share—declined over the last 20 years. The median labor share in OECD countries fell from 66.1 percent to 61.7 percent of national income. However, the decline in labor compensation was not equally shared by all employees; the wage share of top income earners increased while low-paid workers were hardest hit. On average, the wage share of the top 1 percent of income earners increased by 20 percent over the past two decades.
In the United States, where labor’s share began its decline in the 1980s, it fell a further 2.5 percentage points over the past 20 years. Excluding top earners’ income, the decline in the adjusted labor share was 4.5 percentage points.
The decline in labor’s share of national income did not result from a shift away from labor intensive industries to industries that employ a low share of labor. The OECD’s analysis found overwhelmingly that it is within-industry declines in labor’s share of industry value added that explains the fall in labor’s share. On average, the OECD found, real wage growth within industries did not keep pace with productivity growth.
Examining the causes of the decline in labor’s share, the OECD found that labor-saving technical change across most industries was associated with greater investment in capital and higher productivity growth as machines replaced workers in some jobs. The OECD found a strong association between technical change and the decline in labor’s share. It is important not to be hasty and jump to the conclusion that technological unemployment is to blame for the decline in labor’s share. In fact, the OECD did not find fewer jobs overall for less-educated workers.
Rather, what they found is not a decline in low-skill jobs, but a decline in jobs that pay middle-class wages. The share of the high-skilled in occupations such as manager or IT engineer increased as did jobs at the bottom of the wage distribution, typically low-paid precarious jobs. Unfortunately, this increase in demand and employment of workers in low-paying occupations did not improve the earnings of these workers. Increasingly, better-educated workers who in the past would have found middle-class jobs ended up low-paid employment. The OECD found that educational requirements increased quickly in low-pay occupations and that “workers in these jobs tend to be overqualified” (p. 124). A recent report from the Center for Economic and Policy Research found this to be true in the United States, where 43 percent of low-wage workers have some college or a college degree, 27 percent have a high school degree, and only 20 percent did not graduate from high school.
What, then, explains the failure of real wages to grow in line with productivity growth, and for increased educational attainment to translate into middle-class earnings? The evidence points to the negative effects of deregulation of some industries and increased globalization on workers’ bargaining power.
Deregulation of industries such as energy, transportation, and communication in which union density had traditionally been high opened these industries to new enterprises staffed by non-union workers. Increasing globalization—the delocalization of some parts of the supply chain as well as import competition from low-wage countries for blue-collar workers (but, notably, not for doctors, lawyers, and other high-paid workers) has led to the loss of well-paid unionized jobs. Both of these developments have led to a reduction in workers’ bargaining power vis a vis employers and have weakened unions, leaving workers to fend for themselves and employers to fix wages individually. The result according to the OECD has been to “decrease the bargaining power of workers, particularly those who are low-skilled, and thus their ability to appropriate their share [of productivity gains].”
The unequal distribution of labor income—with nearly all the gains in wages going to the top 1 percent while earnings stagnated or declined for the 99 percent—has gone hand-in-hand with the decrease in the share of national income going to labor and the shift from labor income to profits. Absent a countervailing force that enables workers to share fairly in the economy’s productivity gains, the decline in labor’s share appears likely to continue.
By: Eileen Appelbaum, Washington Whispers, U. S. News and World Report, August 25, 2012
“Mitt’s 13% Tax”: Romney’s Embodiment Of The Principle Of Equal Sacrifice
Mitt Romney says “every year I’ve paid at least 13 percent [of my income in taxes] and if you add in addition the amount that goes to charity, why the number gets well above 20 percent.”
This is supposed to be in defense of not releasing his tax returns.
Assume, for the sake of the argument, he’s telling the truth. Since when are charitable contributions added to income taxes when judging whether someone has paid his fair share?
More to the point, Romney admits to an income of over $20 million a year for the last several decades. Which makes his 13 percent — or even 20 percent — violate the principle of equal sacrifice that lies at the core of our notion of tax fairness.
Even Adam Smith, the 18th century guru of free-market conservatives, saw the wisdom of a graduated tax embodying the principle of equal sacrifice. “The rich should contribute to the public expense,” he wrote, “not only in proportion to their revenue, but something more in proportion.”
Equal sacrifice means that in paying taxes people ought to feel about the same degree of pain regardless of whether they’re wealthy or poor. Logically, this means someone earning $20 million a year should pay a much larger proportion of his income in taxes than someone earning $200,000, who in turn should pay a larger proportion than someone earning $50,000.
But Romney’s alleged 13 percent tax rate is lower than that of most middle class Americans who earn a tiny fraction of what he earns.
At a time when poverty is increasing, when public parks and public libraries are being closed and when public schools are shrinking their offerings and their hours, when the nation’s debt is immense, and when the 400 richest Americans have more wealth than the bottom 150 million of us put together — Romney’s 13 percent is shameful.
By: Robert Reich, Robert Reich Blog, August 17, 2012
“Oh So Good, But Oh So Wrong”: A Well Respected Man For Those Who Are Already Wealthy
Whenever I hear about U.S. Rep. Paul Ryan (R-Wis.), I can’t help thinking of the lyrics from the old Kinks song “A Well Respected Man.” Yes, a number of people seem to think that Ryan is “oh so good, and he’s oh so fine and oh so healthy in his body and his mind.” Indeed, Mitt Romney must have chosen Ryan as his running mate because “he’s a well respected man about town, doing the best things so conservatively.”
Ryan certainly looks the part, doesn’t he? What’s not to love about this kind-looking, young man, with the warm smile, twinkling blue eyes and thick head of hair? His serious demeanor at just the right photo moment shows us how much he cares for all of those struggling middle-class families. He even looks the part of the working-class man when he rolls up his sleeves.
Sadly, this nice-looking and apparently very respectable guy is getting it all wrong when it comes to his vision for the United States. He draws from the same old, worn-out Republican playbook. How many times do we have to hear about reducing taxes on the wealthy so they can be “job creators” before it just becomes a joke? Honestly, we already have lower taxes for the wealthy, so why haven’t the jobs been created?
The only jobs that seem to be created are the ones for the accountants and the attorneys as they broker deals so the wealthy can buy up even more oceanfront property. Seriously, people, how out of control are the tax laws in this country when someone like Romney can pay $12 million in cash for a home, demolish that home, rebuild on the site and then insist on having his property taxes reduced? Is anyone buying this “job creator” lunacy anymore?
Of course, if wouldn’t be the good old Republican Party line if Ryan didn’t redirect the public’s attention away from the wealthy and directly onto some poor, single parent just trying to get by. Oh, no, we can’t have any “entitlements” for the working poor.
I mean, Ryan wants people to pull themselves up by their bootstraps. It doesn’t matter if they don’t have any boots; that’s just too bad for them. I’ve always thought it was odd that even though Republicans are notorious for their suspicions about evolution, they do seem to embrace that whole survival-of-the-fittest thing.
Even if you worked all of your life, paid into Social Security and expect to get on Medicare, you’re just asking too much of America, according to Ryan. Balancing the budget on the backs of working-class men and women is the overriding philosophy behind Ryan’s plan for America.
The bottom line is that Ryan is the choice for those who are already wealthy. I guess he is “A Well Respected Man” for that crowd. For everyone else, he’s oh so wrong.
By: Rose Locander, JSOnline, August 13, 2012
“Simply A Number Decreed As Necessary”: Romney’s Budget Plan Requires Even Deeper Cuts Than Ryan’s
Rep. Paul Ryan (R-WI) will hit the campaign trail today in his first week as Mitt Romney’s running mate. Deservedly, much of the attention on Ryan so far has been regarding his radical budget, which hugely shifts taxation down the income scale and guts important government investments.
But Romney’s budget also includes substantial reductions to key federal investments and the social safety net, in order to cut taxes for the wealthy and maintain sky-high defense spending. In fact, as the Center on Budget and Policy Priorities noted, Romney’s budget would require even deeper cuts to spending that Ryan’s, in order to keep defense spending at an arbitrarily set percentage of the economy:
– Under the Ryan plan, core defense spending (the defense budget other than war costs and some relatively small items such as military family housing),[11] would total about $5.7 trillion over the ten-year period 2013-2022. The Romney plan would increase core defense spending to $7.9 trillion. The Ryan plan increases core defense funding modestly relative to the existing BCA caps, but core defense would nevertheless decline to 2.6 percent of GDP by 2022. In contrast, Governor Romney would increase core defense to 4 percent of GDP.
– The Ryan plan would cut entitlement and discretionary programs (outside of core defense and net interest) by $5.2 trillion over ten years.[12] The Romney proposal would cut this spending by between $7.0 trillion and $9.6 trillion, depending upon whether the budget is balanced. Thus, Governor Romney’s ten-year cuts would range from one-third deeper than those in the Ryan budget to almost twice as deep as the Ryan cuts.
These cuts would have severe consequences for individual programs, including potentially throwing 13 million people off of the food stamp program.
As Bloomberg News noted, Ryan’s tax plan involves giving slightly more away to the wealthy than does Romney’s, but Romney more than makes up for it with his budget’s gutting of programs that aid the middle-class and low-income Americans. And he does it in order to preserve a level of defense spending that has nothing to do with defense priorities, but is simply a number that Romney decreed is necessary.
By: Pat Garofalo, Think Progress, August 13, 2012
“Sham Plan For The Privileged Elite”: Mitt Romney’s Cruel Joke On The Middle Class
The Republican presidential nominee has stopped trying to hide his allegience to the wealthy and privileged.
In response, it seems, to criticism of his economic plan—which will raise taxes on the vast majority of Americans in order to cut taxes for the wealthiest taxpayers—Mitt Romney has released a one-page “plan for a stronger middle-class.” The provisions are what you would expect:
- Increase domestic drilling, reduce regulations on the coal industry, and complete the Keystone XL pipeline.
- Sign new trade agreements and “curtail the unfair trade pracices of countries like China.”
- Devolve federal programs, like Medicaid, to the states, cut spending on an existing agencies and social programs, and institute a larger, long-term cut by capping federal spending at below 20 percent.
- Cut taxes, repeal the Affordable Care Act, reduce regulations, and make it more difficult for unions to organize.
Romney’s cuts to Medicaid, Pell Grants and other social services—the inevitable outcome of capping federal spending while drastically reducing revenue—would shred the social safety net and make financial security an impossible prospect for millions of Americans. His promise to repeal the Affordable Care Act would deprive countless people of health insurance, and force them to shoulder the burden of an expensive and dysfunctional health care system. His promise to drastically reduce regulations would allow unscrupulous corporations to mislead consumers, and pollute our air, water, and soil with dangerous chemicals. His promise to take on unions—which are already in decline—would make it even harder for workers to negotiate and stand up for themselves.
It’s a cruel joke to describe this as a plan to strengthen the middle class, when in reality, it would destroy opportunity, eliminate security, and place vulnerable Americans at the mercy of employers who lack a commitment to anything other than profits.
Even more galling than the plan itself is the fact that it’s wrapped in a promise to create 12 million jobs over the next four years. As Greg Sargent points out at the Washington Post, the economy is already projected to create 12 million jobs.
In other words, Romney is peddling a sham plan that does nothing for the economy and nothing for ordinary people. Instead, it drains our shared resources, and diverts them to “job creators”—the privileged elite that has jettisoned any and all concern for the public good.
By: Jamelle Bouie, The American Prospect, August 3, 2012
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