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A Simple Guide to American Capitalism
- Give a starving man a fish and you’re a sucker.
- Teach a starving man how to fish and you’re a socialist.
- Sell a fish to a starving man for profit and you’re a capitalist.
- Tax a starving man for the fish he catches and you’re the government.
- Buy the lake, sell off all the fish in it for a quick profit and you’re a “private equity” capitalist (What man? I didn’t see a man!).
- Rent the lake for $1 from the Department of the Interior, sell all the fish in it to an international fish cartel that sells a fish back to a man for more than he can pay and you’re a petro-capitalist.
- Stock the lake with GM “franken-fish”, then sue a man when he accidentally catches one and you’re an agro-capitalist.
- Ignore a man trying to fish, pump all the lake water into plastic bottles, sell it by the case and you are a “Nestles” capitalist.
- Buy up all the shoreline around the lake, sell dock space through an owners association to a man so he can fish and you are a real-estate capitalist.
- Buy up the prettiest shoreline, sell fancy dock space to a man, charge him to fish from his fancy dock space and you’re a time-share capitalist.
- Buy and sell a man’s fish before he catches it (call it “fish futures”) and you’re a commodities trader.
- Sell insurance policies (call it “swaps”) to those who buy “fish futures” so they make money even if a man’s fish are tainted and you’re a hedge fund manager.
- Bundle a man’s tainted fish into “fish-backed” securities, disguise the smell, sell the bundles to pension fund managers, invest heavily in “swaps” payable to you when everyone discovers the fish are bad and you are WALL $TREET.
Do Business Friendly Policies Reduce Poverty?
Do Business Friendly Policies Reduce Poverty?. A look at the numbers.
Wealth Redistribution Begins with A Fair Wage
When America’s wealthy elite talk of the redistribution of wealth it is a derisive term applied to federal aid to the working poor paid out of federal tax revenues. The rich are unhappy that some of their compensation goes to support low wage earners. But the growing need for federal aid to support working families is really a consequence of the unfair redistribution of wealth that takes place every working day.
Beginning around 1978 and continuing today, hourly employees have not received a fair wage for a days work. More specifically, hourly wages stopped keeping pace with the rise of hourly productivity (or GDP). Workers continued generating new wealth but they were no longer receiving a share in the additional wealthy they were creating. This simple fact, compounded over the decades, is the single most relevant factor behind our economic difficulties today. Below are some key findings from a report regarding how America’s wage earners are doing. It is from a report put out by the Economic Policy Institute.
THE STATE OF WORKINGAMERICA
Policy-driven inequality blocks growth for low- and middle-income Americans
http://stateofworkingamerica.org/fact-sheets/key-findings/
Daily stock indices, monthly employment reports, and even quarterly data on the gross domestic product are insufficient indicators for answering this vital question:
How well is the American economy providing acceptable growth in living standards for most households?
EPI’s The State of Working America, 12th Edition looks broadly at available data and concludes that the answer is simply “not well at all.”
This is not because the economy has failed to grow, on average. National income has grown enough to substantially improve the fortunes for all. As the data reveal, however, it is the top 5%, the top 1%, and fractions of the top 1 percent that have received almost all the benefits of the economy’s growth.
America’s low- and middle-income families have suffered a lost decade
22% – Despite an increase in productivity of more than 22 percent [between 2000 and] 2010, typical wage earners made roughly the same amount per hour as in 2000.
↓ 6% – Median family income was 6 percent lower in 2010 than in 2000.
This lost decade of no wage and income growth began well before the Great Recession—which started in Dec. 2007—battered wages and incomes. In the historically weak economic expansion following the 2001 recession, hourly wages and compensation failed to grow for either high school– or college-educated workers.
Another lost decade ahead?
Consensus forecasts predict that unemployment will remain high for many more years, suggesting that typical Americans are in for another lost decade of living standards growth. For example, as a result of persistent high unemployment, the incomes of families in the middle fifth of the income distribution in 2018 will likely still be below 2000 levels.
A generation of rising inequality.
156% – From 1979–2007, wages for the top 1 percent of wage earners grew 156 percent, compared to 17 percent for the bottom 90 percent.
60% – From 1979–2007, the top 1 percent of tax units claimed 60 percent of the cash, market-based income growth, compared to 9 percent for the bottom 90 percent.
38.3% – From 1983–2010, 38.3 percent of the wealth growth went to the top 1 percent and 74.2 percent to the top 5 percent. The bottom 60 percent, meanwhile, suffered a decline in wealth.
Rising inequality prevented wage growth for low- and middle-income workers
0.6% – From 1979–2007, incomes for the middle fifth of households grew, but the annualized rate of growth (0.6 percent) reflects a deep economic failure. This middle-fifth growth lagged far behind average growth over the same period, and pales in comparison to growth during earlier periods of history; between 1947 and 1979, for example, cash incomes (not even including expanded employer-provided and government in-kind benefits like health care) for the middle fifth of American families grew at an average annual rate of 2.4 percent—or four times as fast as what was achieved by the middle fifth of households between 1979 and 2007. If the middle fifth of the income distribution had grown at the average rate of income growth overall, these households would have had income $18,897 higher in 2007.
7% – The typical worker has not gained from improvements in the ability to produce more goods and services per hour worked (productivity growth). Between 1979 and 2011, productivity grew 69 percent, but median hourly compensation (wages and benefits) grew just 7 percent.
Policy choices generated inequality
Policy decisions made over the last several decades have caused this explosive rise in inequality. These decisions include: lowering individual and corporate tax rates; deregulating industries; failing to maintain the value of the minimum wage; failing to protect the right of workers to obtain collective bargaining; and failing to prevent asset bubbles.
Additional findings.
These sobering data could be mitigated by the ability of Americans to move freely up and down the income or wealth ladders (mobility). There is no evidence, however, that mobility has increased to offset rising inequality.
Further examination of the data through the lenses of race and ethnicity finds the overall data obscure the dramatically worse outcomes minorities face.
Gender gaps have been reduced in many of our labor market analyses. While due in large part to substantial gains for women, part of the closing of the gap has occurred because men have lost significant ground.
U.S. Drops to 12th Place on Global Prosperity and Well Being Index
How prosperous is the United States compared with other nations? The latest Prosperity Index is out, and the news for America is disappointing. The U.S. fell to 12th place in the world, just behind Luxembourg and Ireland. Partisan and ideologically driven arguments should to be set aside for the moment as we analyze and assess this data. We should take this finding as a challenge to be solved by appealing to our strengths as a nation. In the coming months I will be exploring various aspects effecting our national prosperity. I invite the readers of this blog to check back periodically to see what I uncover.
The 2012 Legatum Global Prosperity Index of Wealth and Well Being
The just released Global Prosperity Index finds the United States has fallen to 12th place in the world. This is the first time the US has not been in the top 10 group. The Index is based on the Dubai-based Legatum Institute’s assessment of prosperity based on both material wealth and personal wellbeing in 142 different countries, in eight categories ranging from the economy and entrepreneurship to health and personal freedom. The top 25 nations ranking is as follows:
Prosperity Index
1 – Norway
2 – Denmark
3 – Sweden
4 – Australia
5 – New Zealand
6 – Canada
7 – Finland
8 – Netherlands
9 – Switzerland
10 – Ireland
11 – Luxembourg
12 – U.S.
13 – UK
14 – Germany
15 – Iceland
16 – Austria
17 – Belgium
18 – Hong Kong
19 – Singapore
20 – Taiwan
21 – France
22 – Japan
23 – Spain
24 – Slovenia
25 – Malta
There are eight categores by which national prosperity is judged. The United States scored as follows on these eight categories:
Ranking Catigory
20 Economy
12 Entrepreneurship /Opportunity
10 Governance
5 Education
2 Health
27 Safety/Security
14 Personal Freedom
10 Social Capital
Half of All Full-time Employees Earn Less Than $19/hr.
Bureau of Labor Statistics
For release 10:00 a.m. (EDT) Thursday, October 18, 2012 USDL-12-2072
Technical information: (202) 691-6378 • cpsinfo@bls.gov • www.bls.gov/cps
Media contact: (202) 691-5902 • PressOffice@bls.gov
USUAL WEEKLY EARNINGS OF WAGE AND SALARY WORKERS THIRD QUARTER 2012
Median weekly earnings of the nation’s 103.6 million full-time wage and salary workers were $758 in the third quarter of 2012 (not seasonally adjusted), the U.S. Bureau of Labor Statistics reported today.
This was 0.7 percent higher than a year earlier, compared with a gain of 1.7 percent in the Consumer Price Index for All Urban Consumers (CPI-U) over the same period.
Data on usual weekly earnings are collected as part of the Current Population Survey, a nationwide sample survey of households in which respondents are asked, among other things, how much each wage and salary worker usually earns. (See the Technical Note.) Data shown in this release are not seasonally adjusted unless otherwise specified. Highlights from the third-quarter data are:
- Seasonally adjusted median weekly earnings were $765 in the third quarter of 2012, little changed from the previous quarter ($773). (See table 1.)
- On a not seasonally adjusted basis, median weekly earnings were $758 in the third quarter of 2012. Women who usually worked full time had median weekly earnings of $685, or 82.7 percent of the $828 median for men. (See table 2.)
- The female-to-male earnings ratio varied by race and ethnicity. White women earned 83.4 percent as much as their male counterparts, compared with black (93.2 percent), Hispanic (87.5 percent), and Asian women (73.1 percent). (See table 2.)
- Among the major race and ethnicity groups, median weekly earnings for black men working at full-time jobs were $633 per week, or 74.1 percent of the median for white men ($854). The difference was less among women, as black women’s median earnings ($590) were 82.9 percent of those for white women ($712). Overall, median earnings of Hispanics who worked full time ($556) were lower than those of blacks ($606), whites ($780), and Asians ($915). (See table 2.)
- Usual weekly earnings of full-time workers varied by age. Among men, those age 45 to 54 and 55 to 64 had the highest median weekly earnings, $976 and $980, respectively. Usual weekly earnings were highest for women age 35 to 64; weekly earnings were $740 for women age 35 to 44, $754 for women age 45 to 54, and $766 for women age 55 to 64. Workers age 16 to 24 had the lowest median weekly earnings, at $437. (See table 3.)
- Among the major occupational groups, persons employed full time in management, professional, and related occupations had the highest median weekly earnings—$1,300 for men and $948 for women. Men and women employed in service jobs earned the least, $530 and $440, respectively. (See table 4.)
- By educational attainment, full-time workers age 25 and over without a high school diploma had median weekly earnings of $464, compared with $648 for high school graduates (no college) and $1,170 for those holding at least a bachelor’s degree. Among college graduates with advanced degrees (professional or master’s degree and above), the highest earning 10 percent of male workers made $3,448 or more per week, compared with $2,311 or more for their female counterparts. (See table 5.)
Revision of Seasonally Adjusted Usual Weekly Earnings Data The Usual Weekly Earnings news release for the fourth quarter of 2012 will incorporate annual revisions to seasonally adjusted data for the number of full-time wage and salary workers and median weekly earnings in current dollars. (See table 1.) Estimates for constant (1982-84) dollar median weekly earnings also will be affected by revisions to the current dollar series. Seasonally adjusted estimates back to the first quarter of 2008 will be subject to revision.
Go to Tables: http://www.bls.gov/news.release/pdf/wkyeng.pdf
Paul Ryan’s Mentor: Ayn Rand, the Mother of Modern Conservatives
On April 30, 2012, The Atlas Society published a piece called “Paul Ryan And Ayn Rand’s Ideas: In The Hot Seat Again.”
In it they talked about the close association then vice presidential candidate, Rep. Paul Ryan, had drawn between Ayn Rand and his own political philosophy. Publicity surrounding his views were prompted by a National Review article entitled, “Ryan Shrugged” which characterize as an “urban legend Ryan’s alleged connections to Rand’s Objectivist philosophy. While Rep. Ryan may never have expressly indicated he embraces her Objectivist philosopy, he is clearly a fan of Ayn Rand‘s ideas and requires his staff to read Atlas Shrugged. (See National Review’s “Ryan Isn’t a Randian” for more along these lines.)
How closely Paul Ryan and other conservative associate themselves with Ayn Rand’s Objectivism is important because it shines a light on the heart and soul of their political objectives. Ayn Rand, a staunch believer in individualism and foe of collectivism in any form, believed altruism and any form of self-sacrifice was evil. She meant this literally, and any institutions based on such collectivist notions were also evil. This included churches and all major religions. Ayn Rand was obviously an atheist. This is an inconvenient truth for Ryan and many evangelical Christians who have adopted Rand’s ideology with respect to the behavior of corporations and the formulation of government business policies. Rand’s Objectivism philosophy has become, ex-post-facto, the underpinning for today’s very aggressive brand of capitalism. In fact, the incompatibility of Rand’s value systems applied to business behavior and Christian values applied to human behavior is the great paradox of our time. Objectivism and Religion antithetical belief systems. (To hear a little more about Ayn Rand in her own words, listen to her interviewed on the Phil Donahue Show back in 1979.)
In the article the Atlas Society released an audio recording of a 2005 speech mand by Paul Ryan at the organizations “Celebration of Ayn Rand” event. That audio file is posted here below along with the following excerpts [highlights are mine].
Congressman Paul Ryan on Ayn Rand
(1:45) I just want to speak to you a little bit about Ayn Rand and what she meant to me in my life and [in] the fight we’re engaged here in Congress. I grew up on Ayn Rand, that’s what I tell people. You know everybody does their soul-searching, and trying to find out who they are and what they believe, and you learn about yourself.
(2:01) I grew up reading Ayn Rand and it taught me quite a bit about who I am and what my value systems are, and what my beliefs are. It’s inspired me so much that it’s required reading in my office for all my interns and my staff. We start with Atlas Shrugged. People tell me I need to start with The Fountainhead then go to Atlas Shrugged [laughter]. There’s a big debate about that. We go to Fountainhead, but then we move on, and we require Mises and Hayek as well.
(2:23) But the reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand. And the fight we are in here, make no mistake about it, is a fight of individualism versus collectivism.
(2:38) In almost every fight we are involved in here, on Capitol Hill, whether it’s an amendment vote that I’ll take later on this afternoon, or a big piece of policy we’re putting through our Ways and Means Committee, it is a fight that usually comes down to one conflict: individualism vs. collectivism.
(2:54) And so when you take a look at where we are today, ah, some would say we’re on offense, some would say we’re on defense, I’d say it’s a little bit of both. And when you look at the twentieth-century experiment with collectivism—that Ayn Rand, more than anybody else, did such a good job of articulating the pitfalls of statism and collectivism—you can’t find another thinker or writer who did a better job of describing and laying out the moral case for capitalism than Ayn Rand.
(3: 21) It’s so important that we go back to our roots to look at Ayn Rand’s vision, her writings, to see what our girding, under-grounding [sic] principles are. I always go back to, you know, Francisco d’Anconia’s speech (at Bill Taggart’s wedding) on money when I think about monetary policy. And then I go to the 64-page John Galt speech, you know, on the radio at the end, and go back to a lot of other things that she did, to try and make sure that I can check my premises so that I know that what I’m believing and doing and advancing are square with the key principles of individualism… [To better understand Ryan’s references here go to David Weigel’s commentary in Slate from August 13, 2012 ]
(6:53) Is this an easy fight? Absolutely not…But if we’re going to actually win this we need to make sure that we’re solid on premises, that our principles are well-defended, and if we want to go and articulately defend these principles and what they mean to our society, what they mean for the trends that we set internationally, we have to go back to Ayn Rand. Because there is no better place to find the moral case for capitalism and individualism than through Ayn Rand’s writings and works.
TO LISTEN TO AUDIO, PLEASE CLICK ON THE ORIGINAL ATLAS SOCIETY LINK ABOVE
U.S. Global Business Competitiveness Slipping
The World Economic Forum published a study on global business competitiveness that ranks 144 nations according to indicators in 12 categories. We American’s sometimes inflate our greatness among nations. With respect to our Militarily this is justified. The United States represent nearly half of the worlds total military capability. But on measures of national well being, ecology, human rights, health care, press freedom and many other critical areas we often fall short in comparison to other advanced nations.
Given how highly our politics regards U.S. business interests, you might assume our global business competitiveness makes us number one in the world. Keep in mind as you read on that many of the specific measures that make businesses competitive are not in the best interest of ordinary citizens. Business interests and social interests are sometime opposed.
The business competitiveness study categories and where the United States ranks:
CATIGORY RANK (Out of 144)
| 1. Institutions | 42 |
| 2. Infrastructure | 14 |
| 3. Macroeconomic Environment | 111 |
| 4. Health and Primary Education | 34 |
| 5. Higher Education and Training | 8 |
| 6. Goods Market Efficiency | 23 |
| 7. Labor Market Efficiency | 6 |
| 8. Financial Market Development | 16 |
| 9. Technological Readiness | 11 |
| 10. Market Size | 1 |
| 11. Business Sophistication | 10 |
| 12. Innovation | 6 |
Overall, the United States is very competitive, ranking 7th out of 144 nations. This is a decline from last year, however, when we were 5th out of 142 countries. Major reasons for the overall low marks can be found in our Macroeconomic situation, primarily our government budge imbalance and huge national debt on which we were ranked 140th and 136th respectively . Our gross national savings is also very low, with a rank of 114th in the world. Still, confidence in America’s credit rating remains high, 89.4%, or 11th among the nations.
Looking at our strengths and weaknesses, in the Institutions category our top ranking was 5th in investor protections. Our next highest rankings were in efficiency of corporate boards (23rd), intellectual property protection and ethical behavior of firms (both ranked 29th). Our lowest ranking was on the business cost of terrorism (124th). Next lowest rankings were in the business cost of crime and violence, and the business cost of organized crime (86th and 87th).
We did better in Infrastructure. We ranked 1st in available airline seats and 15th in telephone land lines. Interestingly, mobile phone subscriptions were our lowest indicator (72nd) followed by the quality of our electric supply (33rd in the world). Our transportation infrastructure didn’t fair much better (30th).
In the category of Health and Primary Education we had no malaria impact on businesses (1st) but the prevalence and business impact of HIV was high ranking the US 92nd and 90th in the world. Also surprising was our low ranking on primary school enrollments (58th), infant mortality (41st) and the quality of our primary education (38th).
In Higher Education and Training we are doing well in post-secondary education (2nd) and the availability of research and training opportunities (9th). We ranked 47th in secondary school enrollment and the quality of our math and science education.
In Goods and Market Efficiency we rank 9 and 10 in market dominance and buyer sophistication. Our worst ranking is on the business tax rate to profit ration (103rd).
In the area of Labor Efficiency we apparently have the lowest labor redundancy costs in the world (1st) and our hiring and firing practices are also great for business (8th). The labor redundancy variable estimates the cost of advance notice requirements, severance payments, and penalties due when terminating a redundant worker. We also ranked 5th in the brain drain measure and 8th in the efficiency of our hiring and firing practices. Our low rankings here were in the women to men ratio in the work force (we ranked 44th) and our cooperation in labor-employer relations (42nd) , perhaps no surprise give our ease and thrift in firing people).
In the Financial Market Development category we are very competitive in the availability of venture capital (10th) but weak on the strength of our banking institutions (80th). Regarding the regulation of security and exchange, we also ranked low (39th) although it is unclear if this means we are over or under regulated.
In the area of Technological Readiness we ranked 8th in the number of internet subscribers yet 20th in the percentage of individuals using the internet. We rank lowest, (43rd) on foreign direct investment and technology transfer.
Market Size, we remain number one in domestic market size (we buy more things) and number two in foreign market size.
In the category of Business Sophistication we are third in the extent of marketing and ranked in the low teens on other measures, such as production process (13th) and local supplier quality/quantity (14th).
When it comes to Innovation, The United States is still doing very well. We are ranked in the single digits on most measures, including University-industry collaboration in R&D (3rd), Availability of scientists and engineers (5th), Quality of scientific research institutions (6th), Capacity for innovation and Availability of scientists and engineers (both ranked 7th). Our lowest ranking in this area was in government procurement of advanced tech products (15th).
Read more at: http://reports.weforum.org/global-competitiveness-report-2012-2013/
Income Taxes Then and Now – Why All the Fuss?
I came across a 1963 tax return the other day that belonged to a 63-year-old, self-employed tradesman named Edward. For context, that was the year John F. Kennedy was assassinated. Historically speaking, it wasn’t that long ago. In 1963 Edward’s income was $6,806. He paid $933 in income tax plus $259 in self-employment tax for a total of $1,192 dollars.
My own father was a Sears repairman and my mother a bookkeeper back then. Together they made around $5,000 and paid about $1,020 in taxes. But what struck me most about Edward’s income tax return were the rate tables for that year. The top income listed was only $400,000. The tax on that was a whopping $313,640 while income over that amount was taxed at a rate of 91% . Did the rich really pay that much more back then? (Imagine the stir today if we called for a return to the 1963 tax rate.)
It’s hard to put this into perspective because inflation rose by over 700% since then. What wondered what these numbers would look like in today’s dollars? How does the tax rates today compare with the tax rates back then?
The Inflation Adjustment
When we adjust for inflation, Edward made $ 50,247 in todays dollars and paid $8,800 in taxes. He paid $1,912 in self-employment taxes and $6,888 in income taxes (a 13.7% income tax rate, close to what Presidential candidate Mitt Romney paid in 2010).
My parents, with two children, made $ 36,956 in today’s dollars, and paid $ 7,531 in taxes (a 20% income tax rate).
Someone making only $700 then would make $4,988 in today’s dollars and pay about $28.50 in taxes (a 0.6% income tax rate).
The guy who made $400,000 in 1963 was making $2,850,405 in today’s dollars. He paid $2,235,003 in taxes (a 78% tax rate). That sounds like a lot, yet it seems the rich in American some how always seem to getting richer.
(Bureau of Labor Statistics Inflation Calculator at: http://www.bls.gov/data/inflation_calculator.htm)
The Tax Rate Adjustment
Today, someone making $4,988 is taxed at 10% , or $49.88, That’s $16.88 more than in 1963.
Both Edward, and my parents would be taxed at 15% today. Edward would also pay a 15.3% self-employment tax for a total of $14,087. That’s an increase of $5,287 from the ‘63 tax rates. Edward would pay slightly lower income taxes, $6,384 vs. $6,888, but self-employment taxes rose dramatically. Since 1963, Edward’s self-employment tax jumped from $1,912 to $7,703. So much for helping the small business man.
My folks would have to paid $5,344 in taxes at today’s rate, or $1,924 less than the 1963 rate. That’s surprising. We keep hearing how high our taxes are, yet we are paying less now than we did 46 years ago.
The top income tax rate today is 35%. President Obama wants to raise the top marginal income tax rate on salaries and other ordinary income from 35 percent to 39.6 percent by letting the extended temporary Bush tax cuts expire at year-end. The income tax rates on millionaires has already been cut in half for some. Someone making $2,850,405 pays $997,642 in taxes at today’s rates. That is $1,237,361 less than they would pay at the 1963 rate.
(US 2010 tax rates: http://taxes.about.com/od/preparingyourtaxes/a/tax-rates_2.htm)
So what’s the point?
America is still a very wealthy nation. There is plenty of wealth. We can afford to be a much better country than we are. When the income tax code was first implemented in 1913 it was intended to tax only people who were financial well off. Adjusted for inflation, the bottom rate at which a person had to start paying income taxes was about $100,000 in today’s dollars. It was because the income tax rates weren’t indexed to inflation that income taxes eventually reached the middle and lower income households. Our financial crisis has a lot to do with the decline of income taxes for the richest Americans. We are asking those who have benefited most from this great American system to pay a tiny fraction more. It is hard to see how so much resistance to this small ask is justified. What’s all the fuss?
Take the Labor Quiz
How much to you know about economic changes in America’s labor force over the last 30 years? Apart from the occasional new article on Labor Day, few of us give much thought to the extraordinary sacrifices that were required of prior generations in order to bring us the level of comfort and dignity so many of us enjoy today. But the blessing our grand parents and great grand parents fought so hard to bring us are beginning to disappear. America, once the leader in raising up the middle class, has fallen behind many other advanced nations.
An article entitled “The Speedup” in the July-August, 2011 edition of Mother Jones, written by Monika Bauerlein and Clara Jeffery, takes a look at this issue. I created a pop quiz based on some of the facts in the article. Take the quiz to see how well you are doing as an American worker. There are only 7 questions, so it won’t take long. The answers are below. If you score very high you should take the afternoon off, maybe.
1. What does the USA have in common with Papua New Guinea, Sierra Leone, Liberia, Samoa and Swaziland?
a. We all celebrate the Fourth of July
b. Like us, baseball is their national pass-time.
c. We are the only six nations on earth that don’t have mandatory paid maternity leave.
2. In the last 30 years, American worker productivity (which can be measured as the amount of work we accomplish per hour) has:
a. Declined by 75%
b. Increased by 140%
c. Increased by over 240%
3. Increased productivity means more company profits since the labor costs per item is lower. So, given your answer to question number 2 above, in the past 30 years the average overall wages in the US has:
a. Decreased by 20%
b. Increased by over 50%
c. Increased by only 16%
4. Over this same 30 year period, the average income of the top 1% of Americans:
a. Increased by 20%
b. Increased by 40%
c. Increased by over 80%
5. The number of hours everyone works in a given week is something that impacts our family life, and the nations GDP. Germany has the highest GDP in Europe. So how many more hours per year (actual time on the job) do American’s work compared to German workers?
a. We work 80 hours, or almost two weeks more per year.
b. We work 198 hours, or almost five weeks more per year.
c. We work 378 hours, or almost 10 weeks more per year.
6. In this current recession the GDP of every nation initially plunged, but no nation was hit harder than Japan. Japan’s GDP dropped twice as much as did ours. So when it comes to jobs lost, which nation has the worst unemployment rate?
a. Canada
b. Japan
c. USA
7. One last question. In 1950 nearly 35% of all wage or salary earners in America were in a union. What percentage of this group were union members as of last year?:
a. About 25%
b. Almost 20%
c. Less than 15%
If you answered each of the above question with option C you are well informed. Congratulations!
If you didn’t answer C to any of the questions, you really should read the article in Mother Jones.
In fact, we all need to be better informed so we can come together to restore a measure of economic justice in America. Here are a few additional details regarding each of the quiz questions:
1. Not only is the US only one of 6 countries that don’t have paid maternity leave, we are one of 16 nations that don’t require our workers to have time off each week. We are one of only 9 nations that don’t require businesses to offer a paid annual leave. Every one of our competitor nations provide this for their citizens.
2. While productivity has soared in the last 30 years by over 240%, the real value increase in the minimum wage since 1990 went up by just 21%. The increase in the cost of living rose 67% since 1990. Our output of goods and services in most sectors of the economy far outstrips the employment that most of these sectors create.
3. While income for the wealthiest 1% of American’s rapidly rises every year, the wealth owned by the rest of us actually declined slightly during the Regan years until about 1997. The increase since then is anemic compared to the enormous amount of wealth created by our great American labor force.
4. The rise in income among the wealthy, as large as it is, pales in compared to their rise in wealth. The top 20% of the wealthiest Americans today own almost 85% of everything leaving just 15% of the remaining wealth for the rest of us to share.
5. Not only do American’s rack up more time on the clock than our competitor nations (almost 10 weeks per year more than Germany) this doesn’t include the time we work off the clock. For example, half of us check emails on weekends and 46% of us even check work emails on days we are home sick.
6. Japan was hit twice as hard by the recession in terms of their drop in gross domestic product (GDP), yet our employment rate dropped more than twice their rate. Canada’s decline in GDP and employment initially mirrored our own (not quite as bad) but today their employment rate is higher than it was before the recession while we are worse off than all our competitor nations. Mean while, many American corporations are reporting record high profits.
7. The declining trend in union membership in America is in lock step with the decline of the middle class. The poor have faired even worse. Union workers today make about $10,000 more per year than non-union workers, yet the working public would rather trash unions than join one. The tensions between private sector employees and public sector workers is largely the result of envy by private sector workers who lost higher wages and many of their benefits when they lost their union.
How do you think we are doing as Americans? Most Labor Day articles remind us of the social battles and sacrifices prior generations have faced to bring a little dignity into our lives. We are doomed to repeat the mistakes of history if we don’t learn from them. I hope this quiz highlights where America may be headed and prompts you to consider what it will take to save the middle class. This is the real purpose for celebrating Labor, especially on Labor Day.
Note: First published in 2011, little has changed for the better since.
Data Driven Viewpoints 