ECONOMICS - LOOKING GLASS NEWS | |
Carving up Our Economic Pie |
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by Holly Sklar Common Dreams Entered into the database on Friday, November 25th, 2005 @ 18:09:19 MST |
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Pie season is here. Pumpkin, apple, cherry, whatever you like. We can use edible
pie charts -- and some chocolate -- to see how our national economic pie is being
carved up more unfairly. Let's look first at income distribution. Take two pies -- one for 1979, the other for 2003 (using the latest IRS data).
Divide the 1979 pie into 10 equal slices. If the slices were
eaten according to the distribution of income in 1979: -- The richest 1 percent of taxpayers would get one slice. -- The rest of the top 20 percent would get four slices. -- The other 80 percent of taxpayers would split five slices. Now, divide the 2003 pie into 10 slices. -- The richest 1 percent would get nearly two slices. -- The rest of the top 20 percent would get a little over four slices.
-- The other 80 percent would split four slices. In 1979, the top 20 percent of taxpayers had about as much income as
the other 80 percent combined. In 2003, the top 20 percent had 60 percent of
the income, leaving just 40 percent for the rest. The richest 1 percent nearly
doubled their share. Let's look more closely at the upward shift in income. In 1979, the bottom 40 percent of taxpayers had about 15 percent
more combined income than the richest 1 percent. In 2003, the richest 1
percent had twice the income share of the bottom 40 percent. The richest 1 percent share of reported income jumped from 9.6
percent in 1979 to 17.5 percent in 2003. The bottom 40 percent share fell
from 11.3 percent to 8.8 percent. Pulitzer Prize-winning journalist David Cay Johnston puts the growing gap between
the very rich and everyone else in stark perspective. He examined the income
reported on tax returns of the top 0.01 percent -- about 14,000 households with
at least $5.5 million in income. From 1950 to 1970, for every additional dollar earned by those
in the bottom 90 percent, those in the top 0.01 percent earned an additional
$162. From 1990 to 2002, for every additional dollar earned in the bottom
90 percent, those at the top brought in an extra $18,000. If you are feeling financially down this holiday season, there's a good reason.
Average workers have been earning less after inflation, not more. Average hourly
earnings dropped 5 percent, adjusting for inflation, between 1979 and 2004 --
while domestic corporate profits rose 63 percent. The share of national income going to wages and salaries is at the lowest level
since 1929 -- the year that kicked off the Great Depression. The share going
to after-tax corporate profits, which heavily benefit wealthy Americans through
increased dividends and capital gains, is at the highest level since 1929. Income gaps in the workplace have become increasingly outrageous, as
seen in the growing gap between worker pay and CEO pay. We can demonstrate it
with a pile of chocolate. Give 1 piece of chocolate to your worker stand-in and 44 pieces
to your CEO stand-in. That was the 1980 ratio of average full-time worker
pay to average pay among CEOs in Business Week's survey of major corporations.
For the equivalent 2004 ratio, give 1 piece of chocolate to the
worker and 362 to the CEO. As the Center on Budget and Policy Priorities reports, federal policy is contributing
"to a further widening of income disparities between the most affluent
households and other Americans." Households with incomes over $1 million
will receive an average tax cut of $103,000 this year -- an increase of 5.4
percent in their after-tax income. The congressional majority is done crying crocodile tears over Katrina and
the shameful inequality it exposed. They're working overtime to stiff the have-nots with more budget cuts so they
can keep stuffing the pockets of the haves with more tax cuts. The budget knife
is dropping on Medicaid, education, child care, food assistance and more-- even
public health, despite loud warnings we are unprepared for bird flu and other
threats. Tell your senators and members of Congress what you think about their priorities,
and make your voice count when you vote next November. Holly Sklar is co-author of "Raise
the Floor: Wages and Policies That Work for All Of Us" (www.raisethefloor.org).
She can be reached at hsklar@aol.com. |