{"id":8330,"date":"2018-08-31T00:37:19","date_gmt":"2018-08-31T04:37:19","guid":{"rendered":"http:\/\/marcstier.com\/blog2\/?p=8330"},"modified":"2020-06-02T10:51:27","modified_gmt":"2020-06-02T14:51:27","slug":"its-labor-day-weekend-lets-talk-about-unrigging-the-economy-for-workers","status":"publish","type":"post","link":"https:\/\/marcstier.com\/blog2\/?p=8330","title":{"rendered":"It\u2019s Labor Day Weekend: Let\u2019s Talk About Unrigging The Economy for Workers"},"content":{"rendered":"\n

During the Labor Day holiday when we celebrate working men and women \u2014 and at a time when we are entering a critical election season \u2014 let\u2019s stop and ask how we can give those working Americans what they most want and need: higher wages and better jobs in a growing economy.<\/p>\n\n\n\n

That is a question for which there are two starkly different answers.<\/p>\n\n\n\n

Since the dawn of the Reagan era, right-wingers have claimed that cutting taxes on corporations and the rich will spur economic growth and raise wages. That theory is embodied in the tax cuts Trump and Congressional Republicans enacted this year. The corporate tax rate was slashed from 35% to 21%. Income tax cuts were heavily weighted to the to the top 5%, who receive half of the tax reduction, and the top 1%, who receive over 25%.<\/a><\/p>\n\n\n\n

What has been the consequence for working people? Only 4.3% of America\u2019s 155 million employees<\/a> are seeing any benefit, according to an analysis by Americans for Tax Fairness. And most of the increases in pay were one-time bonuses, not permanent raises. Very few American workers are getting the $4,000 wage increase promised by Trump.<\/a> And once one takes into account the rising price of prescription drugs, health insurance, gas and other necessities, living standards for an average worker is actually down<\/a> over the past year.<\/p>\n\n\n\n

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Corporations, on the other hand, are doing very well. Corporate tax receipts fell by over 40%, from $264 billion to $149 billion, from 2017 to 2018.<\/a> And corporate profits have thus surged by 8%, to nearly $2 trillion<\/a>. Corporations have responded with more than $700 billion worth<\/a> of stock buybacks \u2014 100 times more than the $7 billion workers got in bonuses and raises. Stock buybacks benefits the very rich, including Corporate CEOs, who own most shares of stock.<\/p>\n\n\n\n

We have also seen very little new investment by corporations in productive capacity beyond what they had already planned<\/a>. There is no surprise in this result. With corporate profits soaring, stock prices already high, and interest rates low before the tax cut, corporations already had access to all the capital they needed to make investments. More importantly, there is little incentive for corporations to invest in additional productive capacity when stagnant wages make it impossible for the vast majority of Americans to buy more than they already do.<\/p>\n\n\n\n

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The consequence is that the vast majority of Americans work harder for little more in pay and benefits than they received in 1973 while corporations and the very rich prosper beyond any economic \u2014 let alone moral \u2014 justification.<\/p><\/blockquote>\n\n\n\n

That basic fact points us to the liberal alternative to right-wing economic policies: If we want our economy to grow not only faster but in a way that benefits most Americans we need to start by raising living standards for working people and the middle class and by investing in education and training. Higher wages and benefits, both private and public, will generate the consumption needed to spur business investment. And that investment, together with a more highly-educated and trained population, will create the productivity growth that makes broadly shared prosperity possible.<\/p>\n\n\n\n

This, approach, unlike the tax cuts proposed by the right, has a track record of success \u2014 America between 1947 and 1973.<\/p>\n\n\n\n

During that period, public policy in America directly sought to increase not only wages but the living standards of Americans. The minimum wage was increased. Government supported labor unions. Federal and state governments invested heavily in infrastructure \u2014 roads, bridges, airports, water and sewer works, schools, universities, and libraries \u2014 and prevailing wage laws to keep wages high in the building trades. The public sector, especially but not only in education, was expanded, and the wages and benefits of public sector workers were increased. And the social safety net was expanded as Social Security benefits were increased, and food stamps, Medicare, and Medicaid were created.<\/p>\n\n\n\n

These efforts raised wages and benefits for everyone \u2014 not only those receiving the minimum wage, but those with much higher wages; not only unionized workers but all workers; not only public sector workers but private sector workers who compete with them; not only those who benefitted from the social safety net at any one moment, but the vast majority of Americans who at one time or another in their lives need some help.<\/p>\n\n\n\n

The result was not only an unprecedented period of economic growth but growth that benefitted everyone as inequality declined in America. Productivity increased by an average of 3.7% a year as opposed to 2.3% between 1973 and 2013. Hourly compensation of private sector non-supervisory workers grew 3.5% per year in the earlier period in contrast to the .25% per year since 1973. <\/a>And inequality fell during the earlier period as the share of all income going to the top 1% declined from 23.4% in 1928 to 9.2% in 1973.<\/a> Inequality has grown rapidly since 1973; by 2015 the top 1% captured 21% of all income.<\/p>\n\n\n\n

So, at a time when we celebrate the working men and women of this country, let\u2019s not mince words about where they stand in today\u2019s economy. All the public policies that supported broadly shared prosperity in the period between 1947 and 1973 have been reversed. The consequence is that the vast majority of Americans work harder for little more in pay and benefits than they received in 1973 while corporations and the very rich prosper beyond any economic \u2014 let alone moral \u2014 justification.<\/p>\n\n\n\n

It\u2019s long past time for we the people<\/a> to insist on economic policies that serve us all.<\/p>\n\n\n\n

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