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Monday, September 18, 2006

CEOs Get The Pie, Workers Crumbs - by David Moberg

When workers produce more during each hour they work, the nation's economic pie grows bigger. Economists argue that wages will then go up as well. But that's not what's happened the past five years. America's workers have been eating a smaller piece of the bigger pie they've baked.

Productivity grew dramatically in the past decade, especially the past five years, as companies took advantage of the computer revolution. But the typical U.S. family is losing ground.

A new report from the Economic Policy Institute shows that a family in the middle of the income distribution lost about 3 percent of its income from 2001 to 2004, while productivity was growing by an average of more than 3 percent a year. By contrast, from 1995 to 2000, the same family gained income only slightly less than the growth in productivity.

Where did the added pie go these past five years? Mainly to corporate profits, rich families who own a majority of corporate stock and to chief executives' salaries.

Continued on "Print Article and/or Read More" below >>>
So far this year corporate profits have taken the largest share of national income since 1950, according to Commerce Department figures. The Institute for Policy Studies, a think tank devoted to strengthening social movements, recently calculated that chief executives make 411 times the pay of the average worker; in 1980 they made 42 times as much.

But the share of national income going to wages and salaries this year is the smallest since the Commerce Department started keeping records in 1929, continuing a trend of the past five years.

The Economic Policy Institute calculates that income in 2004 for the top one-one hundredth percent of households shot up 27.5 percent. But income for the bottom 90 percent rose just 1.4 percent. Most of even that small gain was concentrated in better-off households. Economic inequality has been growing for more than three decades, but this is a radical escalation.

It's true, the super-rich pulled away from the rest of America in the late 1990s as executive salaries and stock values boomed. But the poorest workers also gained for the first time in decades, thanks to a tight labor market that forced employers to pay more for scarce workers, a higher minimum wage and larger earned income tax credits.

Some analysts argue that changing technology and premium pay for higher-level degrees explain the growing inequality, but education and technology trends aren't much different in other developed countries whose economies remain more economically equal.

American workers have been more exposed to forces of globalization that drive down wages, usually with less government help in adjusting than in other advanced countries. Also, job growth in this recovery has been the slowest of any comparable period since the end of World War II.

Why hasn't this growing inequity fomented more of a rebellion among the vast majority of Americans? Mainly because nobody has mobilized them around a compelling explanation of what's happening and what can be done about it.

Unions try, but they've been shrinking to one in eight workers. Democratic politicians, too often dependent on business campaign contributions, don't have a coherent, compelling message. Individual Democrats push worker issues, but the party doesn't consistently fight for globalization rules that raise living standards around the world or for a straightforward domestic health insurance solution, like Medicare for everyone.

Many working people have grown skeptical that government can help them gain economic security and opportunity. They simply work longer hours and go deeper in debt. They may still believe that it's easy to rise economically in the United States, even though social mobility has declined.

But there are signs that working- and middle-class Americans are fed up. Recent polls, such as one taken for CNN, show that a growing number of people - nearly three out of five - think the economy is in poor shape and disapprove of President George W. Bush's economic policies. In March, 80 percent of respondents in a Bloomberg survey said most chief executives are paid too much.

Roughly 70 percent of Americans in a Pew Labor Day poll said there's more job stress now than 20 years ago. And a Lake Research survey for the Change to Win Labor Federation reported that nearly eight out of 10 workers say they would be better off if their industry were unionized.

Other surveys show that many voters see the main problem with government as favoring big corporations, not as taxing and spending too much.

Maybe Americans are in a more rebellious mood about growing inequality than most politicians recognize. We will know more about that after the November elections.

David Moberg is a senior editor at In These Times, a monthly newsmagazine.

© 2006 Newsday, Inc.
CEOs Get The Pie, Workers Crumbs


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