What Good Is a Recovery That Only Benefits the Rich?
The wealthy are still taking home pretty much all of the economic gains the United States has managed to reclaim since the recession took hold in late 2008 and early 2009. The rich are enjoying the spoils of economic expansion, while wages and wealth fall for the bottom 90 percent of earners, according to The New York Times.
This has resulted in the top 10 percent of earners in America capturing 116% of all economic gains over the past three years, since the end of the recession.
The wealthy, under the guise of job creation and creating prosperity, continue to push the middle and lower class public to support measures that would loosen regulations, lower tax rates and generally help put more money back into their own pockets. All the while, failing to follow through on any promises of increased employment figures and wage spikes.
After a while, the question become all too obvious: If the game is rigged, then how long do you actually plan to keep on playing?
In other words, if economic gains are only going to the rich, why are people supporting policies that advocate for them? Why should middle class Americans clamor for tax cuts to the nation’s top earners when they don’t see anything ‘trickle-down’ as a result? This is a question that is going to hit very close to home for many politicians in coming years, if current trends aren’t reversed. A perfect example would be with Gov. Sam Brownback in Kansas, who slashed tax rates for the wealthy and businesses in an effort to create a hiring frenzy, only to have his state budget thoroughly wiped out and cause undue suffering to the state’s residents. This has resulted in more than 100 Kansas Republicans — many of whom are officeholders — to switch their allegiance to the state’s Democratic challenger.
Now, there is a legitimate argument that sweeping economic changes and reforms take a long time — sometimes up to a decade — to actually have a quantifiable effect. But that doesn’t help the people who need a job right now, and have rent to pay, or student loans, or day care centers. Holding a carrot on a stick in front of the voting public, with the promise that they’ll receive the prize in a decade likely isn’t a winning strategy.
What is repeated from government officials, and heavily touted by the Obama administration, is that the nation has fully recovered from the recession, and the unemployment rate has reached all the way down below six percent for the first time in many years. At the beginning of October, the Bureau of Labor Statics set the mark at 5.9%, which was considered a big victory for the president and his policies.
Again, the problem is that that number is misleading. Yes, people are back to work, but they’re working in part-time positions for considerably less pay than they were before. And that’s not all, wage growth is now officially going backward, not simply stagnating. From 1970 to 2010, median earnings for working men between 25 and 64 have fallen 4%, according to The New York Times.
Now, contrast that with what is happening in the top tax brackets. Between 2010 and 2013, the time when the recession ended, only the richest ten percent of American saw their incomes rise. Only families at the very top of the income distribution saw widespread income gains between 2010 and 2013,” reads a report from the Federal Reserve. “Families at the bottom of the income distribution saw continued substantial declines
in real net worth between 2010 and 2013, while those in the top half saw, on average, modest gains.”
Those “modest gains” are exactly the kinds of things everyday Americans were hoping to see as a result of the economic sacrifices many were forced to endure following the recession, be it a cut in hours, losing health care or even taking a lower-paying job. Of course, that could be a relative phrase as well, as “modest” could hold a certain meaning to a wealthy individual, and have an entirely different meaning to someone from the bottom of the economic food chain.
Also, as a result of those gains and all of the effort put into putting the American economy back together, corporations are profiting more than ever. The graph above, displaying data from the U.S. Department of Commerce and the Bureau of Economic Analysis, clearly shows how big the leaps in corporate profits have been, just even over the past four years. For the second quarter of 2014, corporate profits reached more than $1.8 trillion.
Basically, businesses are making more money than ever.
Not only that, but the calls for corporate tax cuts seem unfounded as well. While the argument is constantly made that America has the highest corporate tax rate in the world, it is still relatively low compared to historical markers. According to historical tax rate data from The Tax Policy Center, the current 35% tax rate looks pretty good compared to the 46% to 52% companies were paying during the 1950s, ’60s, and ’70s (which were also America’s most prosperous times).
So, with record profits, manageable tax rates and an extremely business-friendly slate of policymakers, why is it that the wealthiest among us, and the companies they work for, still beg for more and more? And at what point will the remaining 95% of Americans stop listening?
Yes, corporate profits are good for their owners and shareholders, managers are fulfilling their duties by providing huge returns, but how is it any good if it comes at the expense of nine out of ten people? Why can’t big businesses give people raises, bring on new employees or even support really simple measures like minimum wage increases, when it will really only set them back by a very insignificant percentage of their profits?
And again, how long will Americans want to continue to play the game, by supporting austerity measures, calls for gutting regulations (despite the CBO saying that it probably wouldn’t help) and to cut taxes on businesses and the wealthy?
It’s clearly not paying off. So how are business leaders going to maneuver once they lose the faith and trust of the public, by never delivering on the promises of shared prosperity? That’s the real question, and it looks as though the answers are going to come sooner rather than later.