As President Obama said in his inaugural address last week, America "cannot succeed when a shrinking few do very well and a growing many barely make it."
Yet that continues to be the direction we're heading in.
A newly-released analysis by the Economic Policy Institute shows that the super-rich have done well in the economic recovery while almost everyone else has done badly. The top 1 percent of earners' real wages grew 8.2 percent from 2009 to 2011, yet the real annual wages of Americans in the bottom 90 percent have continued to decline in the recovery, eroding by 1.2 percent between 2009 and 2011.
In other words, we're back to the widening inequality we had before the debt bubble burst in 2008 and the economy crashed.
But the President is exactly right. Not even the very wealthy can continue to succeed without a broader-based prosperity. That's because 70 percent of economic activity in America is consumer spending. If the bottom 90 percent of Americans are becoming poorer, they're less able to spend. Without their spending, the economy can't get out of first gear.
That's a big reason why the recovery continues to be anemic, and why the International Monetary Fund just lowered its estimate for U.S. growth in 2013 to just 2 percent.
Almost a quarter of all jobs in America now pay wages below the poverty line for a family of four. The Bureau of Labor Statistics estimates 7 out of 10 growth occupations over the next decade will be low-wage -- like serving customers at big-box retailers and fast-food chains.
At this rate, who's going to buy all the goods and services America is capable of producing? We can't return to the kind of debt-financed consumption that caused the bubble in the first place.
Get it? It's not a zero-sum game. Wealthy Americans would do better with smaller shares of a rapidly-growing economy than with the large shares they now possess of an economy that's barely moving.
If they were rational, the wealthy would support public investments in education and job-training, a world-class infrastructure (transportation, water and sewage, energy, internet), and basic research -- all of which would make the American workforce more productive.
If they were rational they'd even support labor unions -- which have proven the best means of giving working people a fair share in the nation's prosperity.
But labor unions are almost extinct.
The decline of labor unions in America tracks exactly the decline in the bottom 90 percent's share of total earnings, and shrinkage of the middle class.
In the 1950s, when the U.S. economy was growing faster than 3 percent a year, more than a third of all working people belonged to a union. That gave them enough bargaining clout to get wages that allowed them to buy what the economy was capable of producing.
Since the late 1970s, unions have eroded -- as has the purchasing power of most Americans, and not coincidentally, the average annual growth of the economy.
Last week the Bureau of Labor Statistics reported that as of 2012 only 6.6 percent of workers in the private sector were unionized. (That's down from 6.9 percent in 2011.) That's the lowest rate of unionization in almost a century.
What's to blame? Partly globalization and technological change. Globalization sent many unionized manufacturing plants abroad.
Manufacturing is starting to return to America but it's returning without many jobs. The old assembly line has been replaced by robotics and numerically-controlled machine tools.
Technologies have also replaced many formerly unionized workers in telecommunications (remember telephone operators?) and clerical jobs.
But wait. Other nations subject to the same forces have far higher levels of unionization than America. 28 percent ofCanada's workforce is unionized, as is more than 25 percent of Britain's, and almost 20 percent of Germany's.
Unions are almost extinct in America because we've chosen to make them extinct.
Unlike other rich nations, our labor laws allow employers to replace striking workers. We've also made it exceedingly difficult for workers to organize, and we barely penalized companies that violate labor laws. (A worker who's illegally fired for trying to organize a union may, if lucky, get the job back along with back pay -- after years of legal haggling.)
Republicans, in particular, have set out to kill off unions. Union membership dropped 13 percent last year in Wisconsin, which in 2011 curbed the collective bargaining rights of many public employees. And it fell 18 percent last year in Indiana, which last February enacted a right-to-work law (allowing employees at unionized workplaces to get all the benefits of unionization without paying for them). Last month Michigan enacted a similar law.
Don't blame globalization and technological change for why employees at Walmart , America's largest employer, still don't have a union. They're not in global competition and their jobs aren't directly threatened by technology.
The average pay of a Walmart worker is $8.81 an hour. A third of Walmart's employees work less than 28 hours per week and don't qualify for benefits.
Walmart is a microcosm of the American economy. It has brazenly fought off unions. But it could easily afford to pay its workers more. It earned $16 billion last year. Much of that sum went to Walmart's shareholders, including the family of its founder, Sam Walton.
The wealth of the Walton family now exceeds the wealth of the bottom 40 percent of American families combined, according to an analysis by the Economic Policy Institute.
But how can Walmart expect to continue to show fat profits when most of its customers are on a downward economic escalator?
Walmart should be unionized. So should McDonalds. So should every major big-box retailer and fast-food outlet in the nation. So should every hospital in America.
That way, more Americans would have enough money in their pockets to get the economy moving. And everyone -- even the very rich -- would benefit.
As Obama said, America cannot succeed when a shrinking few do very well and a growing many barely make it.
ROBERT B. REICH, Chancellor's Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest is an e-book, "Beyond Outrage," now available in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
When O didnt support the Wisc.public unions it showed his stance clearly.
DEms used to be the party of labor,but have wandered from that mantra.
Its all part of a plot to return the US to the Gilded age.
Poverty or unemployment for workers.Vast wealth for the few.
Wages have stagnated while Corp profits soared.
No wonder the economy is tanking.Average folks are broke.
Middle class creates huge demand.The rich have the $,but dont consume anywhere near as much.
Labor violence during strikes was common.
Govt always lined up with business to suppress workers efforts.
Only during WW1 did unions make headway.
FDR was prolabor and unions flourished.
Unions were mostly in MFg.
That is in decline.Robots will eliminate workers too.
As long as Govt is neutral ,indifferent,or against labor unions will decline.
Reich is correct.Big box stores and fast food are the ideal jobs to unioinize.They are local and cant be automated or out sourced.
The solution even for the President is add organic sulfur to your diet and the rich, the wealthy, the Royals will not longer have unhealthy slaves, we will be citizens and stop giving our money to the one percent. The power of the purse, is our purse.
Got sulfur?
After reading through some of the lame-brained comments challenging you here, I recalled a genetics class from years ago in which the Hardy-Weinberg Equilibrium Principle was vividly demonstrated with a large jar filled with black and white beans, which after a series of removals and replacements showed to any skeptics that the principle was valid and worked -- always.
I think the same sort of thing could be done to prove your principle, albeit it might take more than just black and white beans. And I'm sure all the beanheads out there would find great solace and trust from the use of beans, as opposed to, say, marbles (given their predisposition towards losing them).
And why put us in a jar? Is that some kind of metaphor for government control? Who decides which beans get to be removed? The government I am sure. This whole idea of beans and jars smell of tyrany and anarchy.
Over recent years, unfortunately, our society has taken much collateral damage from these management-style failures. And, regrettably, our collective ignorance of the late W. Edwards Deming’s wisdom, vision, and methods for proper sustainable management leaves those so unenlightened no alternative but to try the same failed adversarial labor/management approach again and again.
Why is it that we so proudly join together for our collective wellbeing when we vote for candidates seeking office and on issues that impact us on a local, state, and national level. But we fail so miserably at using our right of assembly to create a collective voice in our workplaces?
Although history has proven that we will all take some lumps by organizing human labor into one collective voice, these lumps will be a small price to pay once we have pressured those in charge of creating profits to expand their theory of management. Only then will they be able to finally castoff this failed adversarial labor/management approach and learn to employ a sustainable method of management, provided by Deming, that had been in front of them all along.
The system might benefit from adding a third party: labor, management, and Facilitator (unbiased, neutral with special knowledge of the salaries under negotiation).
The elite overpaid greedy government bureaucratic state and other local union government employees in Wisconsin were protesting in Madison last year demanding that the State Government take more money from the wealth creating taxpaying businessmen, the taxpaying non-government workers, and the property owners to then give that tax collected money to the Elite Government Bureaucratic union workers that do not create any wealth but only consume national wealth in the form of more government worker pay and retirement benefits.
What happens if the businesses leave that state to escape these additional taxes, and take their non-government jobs with them?
When the costs of US federal, state, and municipal Union Bureaucratic Salaries and Benefits in the USA get to be too bloated, then riots by the US taxpayers might also occur as they were occurring in the Middle East during the Arab Spring of 2011.
Alon Ben-Meir, Senior Fellow, NYU's Center for Global Affairs said, “When university graduate turned street vendor Mohamed Bouazizi set himself on fire in front of a government building in Sid Bouzid, Tunisia he unleashed a torrent of long-repressed political expression in the Middle East.
Through his brave self-immolation, he sent a clear message to his generation: die with dignity rather than continue to live and suffer the daily indignities that amount to an unfulfilled life. It is that message that empowered Egyptians, Yemenis, Libyans, Syrians and others to protest and die in the hope that their sacrifices would bring an end to their daily injustices…..”
It all started on 17 December 2010 when Tunisian fruit-seller Mohamed Bouazizi set himself on fire outside the building of the local officials who had abused him. With that extraordinary act of protest, the Arab Spring began.
Driven to despair after his unlicensed fruit and vegetable cart -- bought on credit -- was confiscated by the police, Bouazizi expressed his refusal to submit to those who abuse their power the only way he could, by paying the supreme price.
If only there had been another way.
What you need to focus on Gerald, instead of envying their salary, is perhaps how you can make yourself more competitive to be able to qualify for one of those government jobs.
In any case, the GASB accounting of pensions and benefits vastly understates the costs relative to FASB accounting of corporate pensions and benefits.
Here's a link to some studies that indicate public employees get paid more and work less than their private sector peers
http://bluecravat.blogspot.com/2012/11/government-employees-love-their-country.html?m=0
Which Companies left the USA? When did they leave? Did the COMPANIES actually leave the USA? Or did the Companies you reference outsource jobs to other Nations, where local worker's incomes are dramatically less than those of American Workers?
There is a BIG difference! I would encourage ANY Corp that wants to leave the USA to go!
AND these Companies need to move their ENTIRE BUSINESS (Corp Hdqtrs & Operations) to the various emerging locales: e.g., China, S/E Asia, Etc., Etc........Also, OWNERS, EXECS, and any residual American employees need to relo & live in the Emerging Nations/locales that best serve the Business' financial interests.
How do you think US CEOs would like China? Consider the following:
In China, on Aug 31 2011, Li Hua, former chairman and general manager of the Sichuan division of China Mobile was sentenced to death for accepting more than $2.5 million in bribes. (Hua had an option for reprieve - life in prison - but I don't know whether that was successful).
Do you see the fundamental inequity?