The US is More Unequal Than Ever

By SETH SANDRONSKY

Late is better than never for policy changes to reverse unequal income distribution. It is no recent development, yet became news when President Obama called to increase the federal minimum wage, now $7.25 an hour, to $10.10.

Away from political rhetoric heading into midterm elections this fall, income inequality is a broad measure of social relations, or class struggle. In “The Increasingly Unequal States of America: Income Inequality by State”, Estelle Sommeiller and Mark Price present staggering data on the US laboring class’ falling share of the economic pie. Their report, published Feb. 19 by the Economic Analysis and Research Network, and Economic Policy Institute in Washington D.C., details the descent of American workers. The top 1% of income earners in the US (averaging $1,040,506 annually) grabbed 200.5% of real income growth from 1979 to 2007, versus the bottom 99% (average annual income of $42,694) receiving 18.9%.

“Lopsided income growth characterizes every state between 1979 and 2007,” according to Sommeiller and Price. Is class bludgeoning too strong a term to describe this near 30-year process?

US society reeled from the 2007-2008 real estate crash, driving down all income levels, a fleeting pause. The widening divide of unequal income distribution picked up steam in no time, aggravating the underlying trend. From 2009 to 2011, recovery from the Great Recession, the top one percent snagged 140.9% of real income growth, as the bottom 99%’s share fell 0.7%.

Sommeiller and Price’s data is from IRS filings. Their methodology is the same as that of economist Thomas Piketty and Emmanuel Saez (2003) on the incomes of the US’ top 1%. What drives this trend of US income inequality? The answer is straightforward.

“Unionization and collective bargaining levels are at historic lows not seen since before 1928,” while the federal minimum wage stagnates and corporate CEOs (think AIG, Bear Stearns and Lehman Brothers) get taxpayer bonuses “after bankrupting their companies.”

Political capitalism is the name of this game. The one percent flexes money power over national government on several fronts. One way is the weakening of labor law. A union-free workplace with employees who bargain individually instead of collectively for wages is an employer’s wet dream. A second is neutering federal wage law. Yet a third is the “too big too fail and go to jail” for financial fraudsters. Instead of losing their jobs, the banking geniuses get raises, while scores of ordinary folks receive mortgage foreclosures. Wall Street gets a bailout, as Main Street reaps a sellout. This is not the Invisible Hand of Adam Smith’s marketplace with entrepreneurs competing on level playing fields for the public’s benefit. We see big bank-friendly policy, from the (Federal Reserve Bank and Treasury Dept.) to bipartisan politics (Congress and the White House) to feather the nests of the top 1%, driving lopsided income growth.

The US economy was more equal in terms of income distribution once upon a time, while “by no means a golden age (as evidenced, for example, by the perpetuation of gender, ethnic, and racial discrimination in the job market),” Sommeiller and Price write. “The share of income held by the top 1% declined in every state but one between 1928 and 1979.”

For more, visit http://www.epi.org/publication/unequal-states/

Seth Sandronsky is a Sacramento journalist and member of the freelancers unit of the Pacific Media Workers Guild. Email sethsandronsky@gmail.com.

From The Progressive Populist, April 1, 2014