Columns » Voice of Reason

The class divide keeps growing

VoiceOfReason

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As we begin the New Year, the only certain thing about 2020 is 366 (it's a leap year) days of uncertainty. Here in the United States, citizens are gearing up for the most contentious presidential election in modern history, all in the midst of the nation’s third-ever presidential impeachment — and, oh yeah, Iran.

There are tariffs, global warming and myriad social, national and international quagmires to contend with. On top of that, Americans are waking to a new year with nascent policies on everything from marijuana and vaping to gender and privacy rights to plastic bag usage and gun ownership. The unpredictable news cycle will keep moving at breakneck speed, but based on years of trends, one thing seems certain in 2020: The working classes will fall further behind.

Consider the following three indicators: taxes, job quality and wages.

We’ll take them in order.

In 2018, for the first time in modern U.S. history, labor income was taxed at a higher rate than capital income. That’s according to University of California Berkeley economists Emmanuel Saez and Gabriel Zucman as reported in The Washington Post in October. Billionaire investment guru Warren Buffett also flags worker/owner tax disparities in a piece he penned for The New York Times.



“Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744,” he wrote. “That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”

But for everyday working Americans, disproportionate taxes are only part of the problem. That’s where jobs come in. Yes, the unemployment rate in the U.S. was less than 4 percent in 2019, but how good were the jobs? Not great, according to the Job Quality Index, which assesses job quality by measuring desirable higher-wage/higher-hour jobs versus lower-wage/lower-hour jobs.
The findings? Sixty-three percent of all jobs created since 1990 were low-wage, low-hour occupations.
So part of job quality has to do with wages, you say?

In 2016 Colorado voters approved a ratcheting up of the state’s minimum wage each year until it reached $12 an hour for non-tipped employees, beginning in 2020. And while mandating that privately owned businesses meet a certain pay threshold is not without controversy, data shows something needs to be done about growing pay discrepancies.

In May, The New York Times published a piece titled “It’s Never Been Easier to Be a C.E.O., and the Pay Keeps Rising.”

“Something about this feels inevitable,” the article reads. “Every year, Equilar, an executive compensation consulting firm, conducts a survey for The New York Times of the 200 highest-paid chief executives in America. And nearly every year, C.E.O.s already earning huge sums get even bigger payouts. In 2018, our analysis shows, they did particularly well: The median boss received compensation of $18.6 million — a raise of $1.1 million, or 6.3 percent, from the year prior.
“C.E.O. pay increased at almost twice the rate of ordinary wages. In 2018 — a pretty good year for the labor market — the average American private-sector worker got a 3.2 percent raise, or an extra 84 cents per hour.”



Trends are, themselves, powerful indicators — and most trends this year point to the American worker struggling to get by on less.

The simple fact is, the working class is still the engine of prosperity in this country. It drives small business and fuels economic growth. And while the American Dream compels millions to get up each day and strive to build a better life for themselves and their families, many are starting the race from behind... bearing weights... and they’re getting heavier. An uneven playing field created by high taxes, low wages and corporations skirting their responsibilities means those with the means can (and will) continue to make their own rules, and those without can watch the American Dream disappear in their rearview mirror.

Editor's note: We updated the number of days in the year to 366 because 2020 is a leap year. Many thanks to dedicated Indy reader and critic Doug Bruce, who set us straight! Strictly speaking, though, we already lived through seven days by the time this issue hit the streets, so make that 359... or whatever...)

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