There’s another chapter to add to the narrative my colleague Dave Johnson sketched out some weeks ago about how the Reagan revolution has come home to roost, based on sobering statistics uncovered this morning by David Cay Johnston at Tax.com about how The Great Recession has harmed working families while worsening income inequality.
New data compiled by the Social Security Administration reveals that the total wages earned by American workers fell by a total of $313 billion from 2007 to 2009, Johnston writes. That’s a 5 percent cut, and is measured in 2009 dollars.
In one year alone, from 2008 to 2009, wage income declined $215 billion.
One major reason for the wage declines is that in 2009 one out every 34 working Americans earned zero income in 2009. In fact, there were fewer people collecting a paycheck in 2009 than there were in 2005. Plus, those who did collect a paycheck earned on average less, Johnston says: $39,269, down $243 or 0.6 percent, compared with the previous year in 2009 dollars.
But that’s only 99 percent of the story.
Johnston also points out that while working-class people on average are demonstrably poorer, the super-rich are getting super-richer:
The number of Americans making $50 million or more, the top income category in the data, fell from 131 in 2008 to 74 last year. But … the average wage in this top category increased from $91.2 million in 2008 to an astonishing $518.8 million in 2009. That’s nearly $10 million in weekly pay!
You read that right. In the Great Recession year of 2009 (officially just the first half of the year), the average pay of the very highest-income Americans was more than five times their average wages and bonuses in 2008. And even though their numbers shrank by 43 percent, this group’s total compensation was 3.2 times larger in 2009 than in 2008, accounting for 0.6 percent of all pay. These 74 people made as much as the 19 million lowest-paid people in America, who constitute one in every eight workers.
Johnston in his article makes it clear that these conditions aren’t simply unfortunate aftereffects of the Wall Street crash. This was a long time in the making:
The story the numbers tell is one of a strengthening economic base with income growing fastest at the bottom until, in 1981, we made an abrupt change in tax and economic policy. Since then the base has fared poorly while huge economic gains piled up at the very top, along with much lower tax burdens.
The story can’t be repeated enough: Starting with the Reagan administration and continuing through the calamitous George W. Bush administration, conservatives rammed through a combination of tax and regulatory policies that slashed taxes on the wealthiest (and critical investments that could have been paid for with those taxes), upset the balance of power between workers and corporations in favor of corporations, encouraged the movement of jobs overseas and set the foundation for the Wall Street casino, which diverted capital from investment in job-creation to bubble-creating speculation.
The result is an economic crisis for millions of working-class people, to be sure, but it is also a moral crisis that strikes at the heart of what we have become as a nation. Johnston writes:
The American economy in the three decades before Ronald Reagan’s election did not produce a mass audience for celebrating wealth. In that era, books that emphasized character sold better than today.
During the years from 1950 to 1980, the share of total income going to those at the top declined, and the real incomes of the vast majority grew much more quickly than did nearly all incomes at the very top.
In those years, America had the money, and vision, to invest in the future through education, research, and infrastructure.
In nearly three decades of Reaganism, however, we have become a society of mine-here-and-now. Now what we hear from Washington is about today, not tomorrow. War without sacrifice (or a congressional declaration). Savings without interest. More government services while lowering taxes.
This is what the 2010 election should be about: how we create an economy where people who don’t have jobs can get one and in which people who do have jobs can begin to see their income grow. On Sunday, “60 Minutes” aired a story about the millions of well-educated, highly skilled and once high-earning people who are rapidly reaching the ends of their economic ropes because conservatives in Congress keep blocking measures that would help them. Stories such as that one and Johnston’s post should make you angry—make that thoroughly disgusted—that the legitimate economic fears of working-class voters are being manipulated by deep-pocketed right-wing, corporate interests into voting for the very politicians whose ideologies will deepen their economic pain, while making the anonymous benefactors of those politicians even more obscenely wealthy.
That’s one reason to vote on November 2, with a message that we are not going to sit still and allow the working class to keep falling behind while a handful of people at the very top grow financially obese.