Labor Day Question: Are you Better off than You were in 1970?

Thoughts for a Labor Day in 2012:

The real question isn’t whether we are better off than we were four years ago. It takes a long time to recover from burst bubbles and near-depressions (the Japanese have still not recovered from their burst bubble of the early 1990s). The real question is whether the working and middle classes of the United States will go on allowing themselves to be taken advantage of by our super-rich, who are gathering to themselves more and more of the national income. The top 1% owned 25% of the privately held national wealth in the United States in the 1950s, but have 38% of it today.

In contrast, real wages per hour for the average worker in the United States, adjusted for inflation, peaked in 1970. We’re now down from that, with a generation and a half blocked from meaningful economic advancement.


h/t Faustian urGe.

But, you will say, the US is a much wealthier society now than it was in 1970 or 1990. Where has all the extra money generated by American labor and investment gone?

It has gone to the rich. Yes, folks, the rich are taking home a fifth of everything we make as a country each year, up from ten percent in 1970. We are 310 million people. About 3 million get a fifth of the annual income. Those 3 million people are 3 million Mitt Romneys. They want low taxes and they want to get rid of social security, medicare and Obamacare.


h/t Adviser Perspectives

See, in general, Who Rules America?.

The rich in this country now see an opportunity to take us back to the age of the robber barons– and get rid of all government programs for the middle classes and the workers and make us wait to age 70 (when most people will be more decrepit than they expect) to retire. Because the more of the national income they take home every year, the more politicians they can buy, and the more they can cut their taxes and shift the burden of road-building and other government services to the middle classes and workers.

It is a ratcheting process that is leaving the US an increasingly unequal society, and one in which hopes of upward mobility for ordinary people are increasingly crushed. Indeed, Europe (the “Old World”) now offers more opportunities for upward mobility and getting ahead than the United States.

The way to reverse this crisis of income stagnation is to restore rights to unionize and collectively bargain and to make the rich pay their fare share for government-provided infrastructure and for educating the work force they exploit.

Guess who will do the opposite if they win in November?

26 Responses

  1. Putting your thoughts into words with simple, logical and common sense order and intent will get you no where today, Mr.Cole.
    Tremendous piles of green, freshly pressed and bundled together dollars have loosed themselves on the multitudes and come to own the broadband.
    Truth is an anachronism, facts are for the timid and the time of the Big Lie returns with 24 hour access.
    Personal guilt and no plaid pants to wear to hide our collective failure with not being smart enough or working hard enough to be among the anointed and gaining access to the right clubs where Father Knows Best.
    Thank you for the commitment to see beyond the Mad Men landscape and keeping the moments of insight fresh. Please continue to feed the well of understanding that provide the fuel needed to make it clear and understood to the smart money crowd that we are not all as dumb as they believe and that knowledge is power and that the game is on and people actually matter. Numbers do not always win.
    Each of us needs to Occupy our Space.

  2. This post really does get at the root of the problem in the intent it exposes. Very much worth forwarding.

    People always want to do better than the next guy, and once they create a little bit of separation they not only want but need more, less they fall back.

    It’d be futile and counterproductive to try to eliminate the Invisible Hand. As Adam Smith essentially (actually) said, for true progress it bears being managed.

  3. Does ANYONE who was not poor in 1970 deserve to be better off than they were in 1970? Does SOMEONE who was not poor in 1970 deserve to be worse off than they were in 1970?

    • I am not sure where the questions come from. The numbers, graphs and thoughts of the piece are relative to each other. The question isn’t take from some and give to others. That is a creation of the Big Lie. The issue is and the question is, Who does not have to contribute in a democracy to solve a national problem?
      Corporate profits and higher income levels have risen at and reached levels not seen since the beginning of the 19th century when their was little or no interference from government in the “free” market.
      What the “We Built It” crowd forgets and doesn’t want to remember is that same period was the time when the smart money crowd called upon the interfering governments to send them foot soldiers to “protect” what was built, from those who had actually built it.
      It was also the same time that others pushed harder for government involvement to provide a social network to help its citizens who were being used when healthy and tossed aside when not or told their collective quarter in wage demands were not cost effective or smart business.
      Now we are being asked to cheer and chant to return us all to those glorious days of yesteryear.
      No, never again, we, our children, and our planet don’t have the time to waste digging ourselves out of that hole, all over again.

      • If your question, where do the questions come from, is asked about my questions about people who were poor and not poor in 1970, it comes from global warming.
        How will people measure better in the future? Will they say things are better becuae not only can the top 20% of Americans can afford a 40 foot long camper but the top 80% can afford a 40 foot long camper?
        Both major parties are discussing who will have more at a time in human history when every one, except the poor should have to get by with less, in some cases much much less.
        To tell people that they have to learn to live with less is not a way that people get elected to lead. Such people can only lead with lead and that is not the American way now is it?

    • The better question is: Are the same exact people that were poor in 1970 still poor today? Do we not move between classes as we become more; experienced educated, tenured etc… at our jobs and life?

      Of course we do: the majority of the people that were once “poor” are not now the same ones that are “poor” and by the same token the people that were once considered “rich” are no longer the same ones that are considered “rich”.

      Example (one of hundreds of millions)
      Mark Zukerberg
      2003s earnings: very little if any.
      2012 salary = $600,000

      Point being: At the beginning of a career people earn very little, later they earn more (in and out of classes) – how would, why would and how could you change that?

    • The point is that a small number of people is capturing all the country’s increased income, and they are doing it because of tax policy that the small number of people bought and paid for, enacted by Congress.

      • “Small number of people”: They are not the same people. People move into and out of the quintiles all the time – including the top quintile.

        “Capturing”: As in; wealth and money are finite? They are not.

        “Tax policy”: How does some people paying; no federal taxes and others paying the bulk of the federal taxes even relate to what you or I earn? It does not.

        “Congress”: Spikey said it well.

        • Actually in the 1960s and 1970s, 50% of the members of the top 1% were self-made persons. That percentage has plummeted. More and more of the small group of people were born to privilege. Our tax and other policies are creating a hereditary aristocracy.

          The Paul Ryan argument that the quintiles are not the same people over time is only partly correct. At the top and the bottom, more and more people remain in the category for a lifetime. That is why our gini coefficient has gotten worse over the past 70 years.

        • To Juan’s “Actually” post:
          You have still not “demonstrated” how: Many people (the poor) paying zero taxes and other people (the rich) paying the bulk of taxes in the U.S., causes the poor to remain poor and the rich to remain rich.

          Now some “other policies” are tossed into the mix: Are some people (the poor) in the USA now slaves or lacking some “policy” they had in the 1970′s?

          “born to privilege”, “tax policy” and “remain in the category” (rich and poor): Again, see Spikey’s post below.

          “remain in the category” (Poor): Back to finite wealth and money again? Please explain how one person having some money and wealth prohibits another person from getting money and wealth.

          “gini”: The topic of discussion was from 1970 not the last 70 years.

        • “Please explain how one person having some money and wealth prohibits another person from getting money and wealth.”

          You’re joking, right? By offshoring jobs and industries, and by unfairly cornering markets and resources, especially via the policies of a complicit political system beholden to one’s wealth.

  4. If you were not better off than 1970 look no further than the House of Representatives……
    Seats:
    6911 Democrat
    4229 Republican
    10 Independent

    • And that pseudostatistic proves exactly what, again, Beavis?

      Simply astounding “logic.” I hope all your personal perceptions are equally simplistic… Who’s your hero? Ron Paul, Ron Reagan (who?), Ron-ney?

      • There have been 22 sessions of congress since 1970 (91st 1969-1971): Democrats have controlled 15 of the sessions and Republicans only 7.

        As you can see from the figures in my last post there have been a great number more Democrats than Republicans in the House and the Democrats have controlled the House during many more sessions than Republicans.

        The House makes and passes federal laws….

        Do you really believe that the income disparity that occurred from 1970 to 2012 is the because of Republicans or is it the because of the Democrats having a majority share of the House over that same time frame.

      • Please see my reply to JTMcPhee.

        If you could please explain to me: How is a representative’s vote in the House related to tenure?

        It would be my guess that a “newcomer” (to the House) would probably be more apt to vote along party lines.

        Do you have any data/figure/numbers concerning tenure times that are relevant to the discussion?

  5. This neo-Victorian model will not work unless you bring back most of the evils of the past. I strongly suspect that if America’s workers had not been (intentionally) divided by racism in past centuries, our bosses would have faced a tougher labor movement, and our current labor practices would be much closer to western Europe. So they’ll have to bring that back. Once you’ve done that, it’s easier to make the case for enslaving foreign lands for cheap resources. So we won’t be going back to isolationist 19th Century America, but to imperialist 19th Century Britain.

    We’ll also need to bring back severe punishments for debtors. And use convicts for really cheap labor. Right-wing operatives have already laid the groundwork for this. After that, indentured servitude will be needed for the debtors who weren’t deterred by prison.

    In the final stage, we will make debt inheritable again, so that most citizens will pass their serfdom on to their children. Then the pretense of capitalism will be replaced by the reality of aristocratic rule, the most durable form of oppression in human history.

    It will keep getting worse as long as the bastards know we are too cowardly and covetous to risk what we have to fight them.

  6. Indeed, Europe (the “Old World”) now offers more opportunities for upward mobility and getting ahead than the United States.

    No wonder Romney keeps talking so disdainfully and disparagingly about Europe….

    Guess he really does want not just one army of the unemployed, but many of them, to scare the hell out of workers about losing their pittances and ensure the One Percenters can get their labor costs down to near zero.

    Gee, why not just provide hovels and bare mininimum nutrition, no schooling (except for what the bosses determine is needed to perform necessary tasks), but get the wage slaves to promise to never strike and work till they die? No health care, no contraception (gotta keep the baby assembly line rolling to ensure there are plenty of the starving eager to take the places of those who can no longer work or die on the jobs with few to no safety regulations), no right to strike much less unionize, and so forth. Those silly Foundinbg Fathers, and the uppity states, who believed in that quaint Bill of Rights.

    Ya know, those feudal lords had the system just about right, except for too many religious holidays and too much individuality allowing free thinkers to pop up every so often….

    • Super390 and Jawbone both are getting to the real point.

      Obama and others say we have a stark choice coming up and they’re right. Romney etal have taken a thoughtful look at the policies that began with Reagan and got us to where we were in 2008 and have decided….that WAS the right course!

      There is a fundamental perspective that we all get what we earn/deserve, and it’s compelling looked at in a vacuum. That to take the fruits of my hard work and give it to those who did less is unfair/socialism/communism. That works as long as you don’t have to find a balance to life together and if the exchange of value is fair….an idealistic and highly, highly naive precept of how the Invisible Hand works.

      In reality this approach leads to the good ole days that never were, of feudalism.

  7. I don’t give anyone who is or was a representative of the people over the last 30 years a pass for the well documented and obvious state of economic inequality that exists today.
    However, it is impossible for me to believe that the answer to inequality, at any level, in any area, is to give control to those who believe that their input, passive or pro-active, was missing or somehow stymied, and hence they bear none of the responsibility for creation of the problem.
    From Ronald Reagan, through Bill Clinton and throughout the entangled and dangerous years of George 2, the majority of our political leaders, on both sides of the aisle, were convinced and initiated, free market trickle downs, globalization as the foundation of a prudent and rational foreign policy, lower taxes and stabilization on a world wide scale of the macro economic conditions these actions brought about.
    To think that the solution, the one and only answer is to continue on the same path adding a jigger of religious zeal and a base of moral steroids. No discussion, no middle road, no other options and all collectively enforced and heavily financed to create an unctuous cloud of public amnesia. To once again, induce the marks into believing that all their good intentions and past efforts, to work hard and do the right thing was squandered away by their sentiment and deviation from past truths, biblically long axioms and falling for the liberal chant of “can’t we all just get along.”
    The audacity and arrogance of the effort is in itself as insulting as the heavily bet on and continuing belief that it will be enough to succeed.

  8. My freshman year at Michigan (1969-1970) cost $1,800 for tuition, room & board (20 meals and clean sheets each week), books, and spending money.

    The State of Michigan has nearly ten times as many people incarcerated in 2012 than in 1970.

    Changing the distribution of wealth in the USA requires more than changing tax laws. We need to spend our money at businesses that value (and pay) their employees.

  9. Folks, the number and scope of the responses indicate that economics should be placed among politics and religion as topics that shouldn’t be discussed over the dinner table or if one hopes to reach a consensus.
    I am not sure how to state the obvious in a more easily understood graphic or paragraph.
    I can only ask the obvious, one more time and as simply as I can manage, In 2007 after 8 years of concerted and unfettered control of the national economic policy of the US, a major catastrophe struck at the core of the industry. Collective and universal support from central governments was needed to save the industry. Individuals whose buy in had been the kindling for the surge and prosperity of those same 8 years lost the most, became at risk to the accumulated debt taken on to bail out the initiators and players in the grand game, and are now being told that it wasn’t us, it was him, that one black guy, and we need you to help us get him and bail us out one more time. Oh and by the way don’t put in your time sheets and hold onto your epson salts because we are going to need every nickle and dime we can corral to help you, help us, to fix this mess.
    Okay best I can do on a short fuse. How do you explain to someone as deluded as I am how this reasoning in the least makes any sense?

  10. TRUTH thinks people at bottom have changed. If there is low mobility, they have not changed. Just consider the African Americans. It’s bad when even fuedal Pakistan has more mobility than US:
    link to tnr.com politics/magazine/100516/ inequality-mobility-economy- america-recession-divergence
    link to urbanhabitat.org
    Segregation is Still Wrong and Still Pervasive
    Also please Google to download:
    The Vicious Cycle: Segregated Housing, Schools
    and Intergenerational Inequality
    Gary Orfield and Nancy McArdle

  11. There is little difference between both parties. And how could this not be so with the money in the system. You should start reading Mike Lofgren
    link to truth-out.org
    Closer Than You Think: Top 15 Things Romney and Obama Agree On
    link to truth-out.org
    How Republicans Went Crazy, Democrats Became Useless and the Middle Class Got Shafted
    And you are living in a historic time. The minority majority era and America’s end as a developed country is now upon us as of 2011. The poor neglected in the cities and the suburbs will be the ones forming the majority, while the former majority will be looking for govt dole that will not be available without exorbitant taxes on a shrinking well off population.

  12. Couple things: First, the second graph should not use dollar amounts but values indexed to 100 as a baseline so that the percentage increases can be easily perceived. Second, are there any studies that look into the effects of globalization on domestic U.S. income/wealth distributions? Since capital can flow across borders so much more easily now than before, while the owners of capital can retain their U.S. residence, it’s easy to see how the owners of capital can see their incomes go up while those of U.S. workers stagnate because their jobs are being shipped oversees as the margins (due to that fluidity of capital). Since the ’70s, on a global scale, there appears to have been a reduction in inequality (link to voxeu.org) even though domestically it has gone up. Tax policy changes since the ’70s would likely have an effect as well though I just haven’t seen any studies that would separate out and measure the contributing factors.

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