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The State of Working America: Yesterday, Today, Tomorrow April 4, 2007

Posted by Daniel Downs in economics, family, freedom, Income, justice, liberalism, politics, work.

In the State of Working America, Economic Policy Institute reveals the increasing economic inequality in America. Since President Bush has been in office, fewer people are working, family income and wealth has decreased, and corporate profits have increased. Income and wealth inequality has increased. Several examples will suffice to demonstrate this inequality:

“Between 1979 and 2000, for example, the real income of households in the lowest fifth grew 6.1%; the middle fifth was up 12.3%; the top fifth grew 70%; and the average income of those in the top 1% grew by 184%.

“Over the 1992-2005 period the median CEO saw pay rise by 186.2%, while the median worker saw wages rise by just 7.2%. In 1965, U.S. CEOs in major companies earned 24 times more than an average worker; this ratio grew to 300 at the end of the recovery in 2000.

“In 2004, those in the top 1% of the wealth scale held over one-third of all wealth. The top-fifth controlled 84.7% of all wealth in the United States, while the bottom 80% could claim only 15.3% of the country’s total wealth in 2004. Over the 1962-2004 period, the wealth share held by the bottom 80% shrunk by 3.8 percentage points, and that 3.8% share of wealth shifted to the top 5% of households.

Other factors contributing to the decrease in wealth of most Americans are greater unemployment, slow labor market growth, reduction of labor unions, and employees paying more for benefits.

Economic Policy Institute made several other interesting observations. One was what I will call an economic caste system. Empirical evidence shows that members of low income families are more likely to remain stuck in the same economic level. About 20% have a chance of escaping this type of stratification. Other industrialized nations in Europe have significant more likely to exceed family economic stratification. Besides surpassing Americans economically, those Europeans also work less. Another observation was the fact that our government’s definition of poverty levels and current minimum wage level are important factors of increased poverty. Consider the following excerpts:

“The government has an official definition, but it is widely considered to be an outdated benchmark (the 2005 threshold for a family of four was $19,961). The official thresholds have fallen well behind income growth among middle and higher income families, creating a situation wherein the poor are by definition more economically isolated. For example, the poverty line for a family of four was 48% of median family income in 1960; now it is 29%.

“Those affected by the lower minimum wage make important contributions to their family’s economic well-being. For instance, minimum wage earners contribute 58% of their family’s weekly earnings; in 43% of the affected families the minimum wage earner generated all of the family’s earnings. Moreover, there are 7.3 million children living in the families that would benefit from a modest minimum wage increase. While minorities are disproportionately represented among minimum wage workers, 60% are white. These workers also tend to be women (59% of the total) and concentrated in the retail and hospitality industries (46% of all minimum wage earners are employed in those industries, compared to just 21% of all workers).”

The implied solution presented by the authors of The State of Working America is a return to liberal-democratic policies with universal health care included. However, I disagree. As they pointed out, the disparity of wealth distribution is cause of millions of parent and children living in poverty. It seems to me that liberal policies also perpetuate the problem. The necessary social policy is one that will correct the inequities of income and wealth. Indicated in the report—mothers having to work, single parents, racial inequities, children living in poverty are all results of liberalism as well as greed.

Thomas Jefferson promoted economic equality to a point. So did other founders and their generation. They hated the idea of Americans worked for slave wages—low wages. If Americans had to work for wages, they counseled let it me high wages. Why? So that all Americans can enjoy their God-given freedom. Low wages meant certain misery not any resemblance of happiness. Liberal socialism is not the path to great benefit. Our founding moral traditions are, and its biblical roots justified it. President Bush at least attempts to honor those traditions.

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