Let’s Change The System
The Target near me is hiring — starting at $12 an hour. Fed Ex is too, as the sign on Beekmann Road pointed out. Pay rate: $12.60 an hour. In general, warehouse and other manual labor jobs listed for the area (Central Jersey) on Craig’s List are paying the same — $12 an hour. Or there is a job for a machine set-up operator — $15 an hour, entry level.
People are hiring and the economy, one might assume, is taking flight. But the key thing these jobs share, aside from their availability, is that they do not pay enough to keep a Central Jersey household afloat.
The average hourly wage a single person needs to “survive” in New Jersey, according to the United Way’s ALICE report, was $12.15 in 2014 — a figure that jumps to $32.10 if there are two adults and two kids in the household. The ALICE — Asset Limited, Income Restricted, Employed — report attempts to calculate how much a family needs to earn to make ends meet in a given county or state, a figure that often is double the national poverty line. It factors in housing costs, food, child care, healthcare, transportation, taxes, and a small amount for incidentals. These figures vary by region — even by town — depending most on market rents, which the biggest expense most of us have.
According to the 2016 report, 37 percent of New Jerseyans live below the ALICE threshold, a figure that is expected to be 41 percent when the new report is released this year. That means four in 10 are living what can best be described as precarious lives. A report earlier this year said that four in 10 also had little to no savings, meaning that, should an emergency arise — like Hurricane Florence just did in the Carolinas — they would have no cushion.
And yet, the macro-economic signs apparently tell a different tale. As Fox reports, we have 4 percent growth, the unemployment rate is at a 40-year low, and U.S. stocks reach have “record highs on the Dow, Nasdaq and S&P.” Republicans want to claim economic victory, but they are gaining little traction with voters. And while half of Americans, according to Gallup, think he’s managing the economy well, nearly as many say the opposite, which should be an indication that the economic good news is not being distributed to all.
The Washington Post reported last month that he modest wage gains we have seen have been offset by rising prices — leaving most Americans farther behind the eight ball than before.
Cost of living was up 2.9 percent from July 2017 to July 2018, the Labor Department reported Friday, an inflation rate that outstripped a 2.7 percent increase in wages over the same period. The average U.S. “real wage,” a federal measure of pay that takes inflation into account, fell to $10.76 an hour last month, 2 cents down from where it was a year ago.
The stagnation in pay defies U.S. growth, which has increased in the past year and topped 4 percent in the second quarter of 2018 — the highest rate since mid-2014.
Average wages are a notoriously poor indicator of economic equality. Gains at the top drive the average up more quickly than those at the bottom, giving the impression that all benefit. (If you have nine workers each making $10 an hour and one worker making $60 an hour, the average wage would be $15 an hour — even though 90 percent of those workers earn just two thirds of that figure.)
The Post made it clear that “most benefits of the strong economy appear to have gone to high-paid workers, stock market investors and corporations,” a relatively small portion of the work force.
The stock market hit record highs this year. Corporations, benefiting from a historic Republican cut to the corporate tax rate passed in December, have seen profits soar. Second-quarter earnings are up more than 20 percent over last year among companies that have reported so far, according to FactSet, a financial data tracker.
But gains elsewhere in the workforce “have been uneven, even as unemployment fell from a peak of 10 percent in October 2009 to the current 3.9 percent in July.”
Workers in the top 10th of the U.S. pay scale saw their wages jump 6.7 percent from 2009 to 2017, according to the left-leaning Economic Policy Institute. Workers in the bottom 10 percent saw a boost of 7.7 percent, largely the result of a slew of minimum-wage increases passed on the city and state level. But for those in the middle, wages have been flat or even slightly down. African American workers, male workers and people who graduated from high school but never completed college have had an especially hard time.
This is not about Donald Trump, though his hyperbole on the economy presents an easy target. Barack Obama touted similar gains. He issue is the structure of our economy, which since the end of the Carter years has been redistributing more and more money from workers to corporate boards, thanks to an array of tax cuts, program cuts, and deregulation. Wages have been relatively stagnant over the last four decades, though productivity has risen dramatically. The economic gains have gone to those in the upper reaches of the economy, in the form of stock dividends, buybacks, and other financial instruments, in profits, and in bonuses.
The Trump tax cuts, for instance, triggered an epidemic of stock buybacks. CNN reported in July, for instance, that companies made $436.6 billion in stock buybacks during the second quarter of 2018 — which comes on top of $242.1 billion during the first quarter. These are the two largest totals in American history.
Stock buybacks are just what their name says — a move by companies to buy stocks back from stockholders. As CNN explains,
The buyback boom is terrific news for shareholders — and corporate executives. When companies repurchase vast amounts of stock, they provide persistent demand that tends to boost share prices. Buybacks also artificially inflate a closely watched measure of profitability known as earnings per share.
This puts money in the pockets of the already well-off. CNN attaches the conditional modifier “arguably” to its explanation, but then points out that. “the top 10% of households owned 84% of all stocks in 2016.”
So, we may be seeing higher than expected growth in our economy, but the lion’s share of the gains are going to those who already have.
This may be one reason for the supposed economic boom. And it may also explain why, despite the expansion in employment and the tightening of the labor market, we are still seeing jobs being advertised that fall far short of a living wage and even of the $15 an hour figure at the center of much progressive organizing.
As the Economic Policy Institute points out, wages have risen across the board, but much of that growth has gone to upper-end wage earners. “From 2016 to 2017, strong growth continued at the top (1.5 percent at the 95th percentile), but the 10th percentile saw the strongest growth at 3.7 percent. Median wages grew only 0.2 percent.”
Median wages — the point at which half the wage earners earn more and have earn less — have seen nominal growth in recent years, even as the economy stated to rebound.
But the rebound — touted and claimed as their own by both Barack Obama and Donald Trump — was never complete, with some sectors benefiting more than others. Atossa Araxia Abrahamian, an editor at The Nation, writes in the current issue that “the contours of an unequal nation — and an even more unequal world — were coming into focus” as early as he Clinton years.George W. Bush’s tax and spending cuts only accelerated this, so that by the time we were first starting to dig out from the Great Recession, we were looking at a massive gulf between he rich and the poor.
“Between 1993 and 2010,” she writes, “the top 1 percent in the United States saw their incomes grow by 58 percent, compared with 6.4 percent for everyone else; in 2010, 388 people owned fully half of the world’s wealth.” That’s 3.4 percent annually for the top 1 percent — who already were earning 25 times the wages of the rest of us — compared with 0.4 annual wage growth for the bottom 99 percent.
Abrahamian cites anthropologists David Graeber and David Wengrow, who tie economic inequality to political inequality and a failure of elites
to address “any of the factors that people actually object to about such ‘unequal’ social arrangements: for instance, that some manage to turn their wealth into power over others; or that other people end up being told their needs are not important, and their lives have no intrinsic worth.”
Abrahamian adds that
What those without wealth need, even before wealth, is power — through unions, through political parties, and through the state. That might mean pressuring governments to take from the few to give to the many. It might mean more cooperative models of ownership. It might involve burning the whole thing down.
This is a scary proposition for some, but it is fairly clear that we will not grow our way out of this, not without further damaging the planet, and we cannot continue to generate wealth for only a few. Something drastic is needed, a broad systemic fix driven by those who have been left out of the debate so far.
Comments and claps are always welcomed, as are tips at Ko-Fi or subscribers at Patreon. Sign up for email updates from Hank Kalet to get the latest on his poetry and journalism.