During the last eight years. almost all of the nation's income growth went to executives and investors. As a result, while the productivity increased and the economy grew to more than $13 trillion a year, most Americans fell further and further behind.
Between 1976 and 2006, the numbers of hours worked by the median two-parent household increased by 400 hours per year.
Productivity increased by 18% between 2000 and 2007 alone. Yet middle-income, working-age households—those headed by someone less than 65—lost ground over these years. Their median income, after adjusting for inflation, fell by $2,000 from $58,500 to $56,500 (2007 dollars).
In Wisconsin per capita income has fallen $2500 behind the national average and the gap is growing as Wisconsinites experience the first sustained period of decline in our median wage since the early 1980s.
All real income gains in the last eight years have gone to the richest 5%, those making more than $150,000.
There are several reasons for the growth in economic inequality.
Three of the most important are:
- the Bush era tax cuts that went almost entirely to the very richest Americans (52% went to the richest 1%, averaging $1.5 million a year);
- the systematic dismantling of institutions, public and private, that ensured shared prosperity;
- the Federal Reserve's one-sided focus on fighting inflation which helped keep prices low until recently by maintaining artificially high unemployment particularly in the nation's inner cities.
Republican Presidential candidate John McCain, who acknowledges he knows little about economics, promises to continue these policies. This is not surprising since his chief economic advisor and odds on favorite to be named Secretary of the Treasury, Senator Phil Gramm, recently denied the country was in a recession, arguing that Americans are "a nation of whiners" and that the recession is a figment of their imagination.
Despite McCain and Gramm's assertions, America and Wisconsin's economic problems are real!
Over 600,000 workers have lost their jobs since January. In Wisconsin major employers like Delphi, Midwest Express, GE Medical, General Motors and the New Page Corporation (Kimberly) are laying off thousands.
The nation's 6.1% unemployment rate, the highest since the recession of 1991, actually undercounts the number of unemployed because it does not include those who are working part time because they can't find full time work. If they are included the unemployment jumps to almost 11%.
Nine million Americans have lost their health insurance since President Bush took office. During the first six months of 2008, 343,000 Americans lost their homes, a 136% increase from the year before.
Gasoline, food, college education, heating and health care prices are soaring, increasing 2% faster than wages. The Bush administration's economic policies, including the high income tax cuts which McCain says he will make permanent, are imposing a 2% tax on the nation's working people.
Democratic Presidential nominee, Barack Obama, has proposed an economic program that includes federal aid to state and local governments, public works jobs programs and passing the Employee Free Choice Act. The former would ensure that budget cuts by state and local government, mandated by balanced budget statutes, won't reduce aggregate spending and make the recession worse. The latter would make it easier for workers to form unions which will ensure that productivity gains and economic growth, when they resume, are shared broadly. Public works investment is required to fix the nation's deteriorating infrastructure, a prerequisite to growth and prosperity.
McCain's economic program of more of the same will mean more layoffs, more rising prices, tax breaks for the very wealthy and greater inequality.
American workers and their families, contrary to McCain and Gramm, don't need a psychiatrist, they need jobs and a raise!