PEP, December 2011-January 2012: The World of Work: The 1 percent and the rest of us

Public Employee Press

THE WORLD OF WORK
The 1% and the rest of us

By GREGORY N. HEIRES

The Occupy Wall Street protesters have put the spotlight on the great economic divide between the top 1 percent and the rest of us.

Their "We are the 99 percent" rallying cry resonates deeply with middle-class workers and the working poor, who have seen their wages stagnate and decline for decades.

In the United States economic inequality is at its highest since before the Great Depression, and income distribution is the worst among industrialized countries. The economic gains of the last three decades have gone overwhelmingly to the already-rich:

From 1979 to 2007, the after-tax income of the top 1 percent of households soared by 275 percent, according to the Congressional Budget Office. The income of the middle 60 percent of households grew 40 percent and, as usual, the bottom 20 percent - the poor -got the least, gaining a paltry 18 percent.
The rapidly increasing inequality has basically turned the United States into a plutocracy - a country run by the rich for the rich. The top 1 percent got 8 percent of all income in 1979 but 17 percent by 2007.

Inequality in wealth - assets like houses, cars, stocks and bonds, and savings - is even worse. The wealthiest 1 percent of Americans own half of the entire country's wealth, according to a study by Harvard and Duke University economists.

How did we arrive at this new Gilded Age?

Gertrude Schaffner Goldberg, chair of the National Jobs for All Coalition, which pushes for full employment, cites political and economic developments that moved the United States toward this obscene inequality, which ultimately threatens the nation's democracy.

Bad policies fuel inequality

The cost of the Vietnam War, increased competition from Germany and Japan, the oil crisis of the 1970s and rising agricultural prices laid
the groundwork for an economic and political realignment, she says.

Instead of rising to these challenges, conservatives developed policies that promoted finance over making things, reduced the minimum wage and supported outsourcing to raise profits and weaken labor, Goldberg said. Since the 1970s, the wages of the middle class have declined and stagnated as conservatives chipped away at the post-World War II consensus in which the workers' wages grew with increasing productivity. As unions and workers lost power, CEOs and managers have taken a greater share of the economic pie.

Trade policies hurt the manufacturing sector, wiping out millions of good, union jobs; federal and state tax policies favor the wealthy; deregulation was used as a tool to undermine unions, and conservative politicians led the attack on the welfare state. All of these changes deepened inequality.

A key development is the "financialization" of the economy, with the banking and financial sector increasing its share of the economy's profits and enlarging its political influence. The Wall Street power elite pocketed a growing share of income through "casino capitalism," which eventually led to the 2008 stock market crash and the unemployment crisis.

Tragically, millions of the unemployed are unlikely to find work that matches the pay they earned in their old jobs.

"Unemployment is a cruel form of inequality," Goldberg said.