In the past few months, headlines among national news and economic publications are circling around the economic state of the middle class. “The middle class hasn’t gotten a raise in fifteen years,” Ben Casselman of FiveThirtyEight Economics wrote earlier this year. The Washington Post ran a similar story this month, reporting that the middle class is actually poorer today than in 1989 when adjusting for inflation.
For all the growth in the American economy, American workers haven’t seen any of it. We are more productive than ever, but we’re seeing less and less of the fruits of our labors.
The gross domestic product is recovering, but the rich are recovering much more than the rest. Last year, economists Emmanuel Saez and Thomas Piketty published a surprising report about the economic recovery. During the recovery period from 2009 to 2012, 95 percent of income gains went to the richest 1 percent. According to their report, the 1 percent shared 49 percent of the losses of the Great Recession, but then saw 95 percent of the gains of the recovery.
It’s a well-known fact that CEOs out-earn their average employees by a wide margin. The current ratio, as reported by Forbes, shows CEOs out-earned the average worker by 331-to-1. I understand that top-level management deserves something extra for their education, ambition, stress and hard work that goes into the job, but no one has ever explained why the top management deserves 300 times a worker’s salary instead of 20 or 50 or even a mere 100 times.
What are the wealthy doing with all of that money? It’s certainly not trickling down. Is it making them happier? I doubt someone with $50 million in the bank is much happier than someone with $20 million.
People in this economy aren’t being rewarded in proportion to their hard work or their contributions to society. Teachers are absolutely essential to us (who in the world would argue that we don’t all benefit from living in an educated society?) yet are paid very little. I can’t imagine what tangible benefit currency trading produces for anyone anywhere, yet a dealer doing just that can turn money into a great deal more money. Those who produce tangible goods, like manufacturing or service industries, make much less than those who deal in intangibles like information and stocks. Workers aren’t rewarded for building a better society so much as for being close to the finance industry.
One could simply say that the teacher could have studied finance and become an investment banker instead, but that would conflate “anyone can get rich” with “everyone can get rich.” Essential though they are, we can’t pay every teacher and policeman a six-figure salary. We also can’t run a society where everyone is in upper management or investment banking.
No matter what we do, a market economy will have some people at the bottom of the totem pole who clean the sewers and make the fast food, but we can at least ensure that they have a decent quality of life and that poor neighborhoods don’t have to resort to crime. If there’s always going to be a bottom 10 percent, we don’t have to sneer, punish them and blame them for not being the next quartile higher. I call that “the somebody’s-gotta-do-it principle.” What kind of society are we if we don’t take care of the least of our brothers?
Everyone hears their parents’ middle class success stories, something along the lines of, “We started with nothing and worked our way up.” Our generation has a major difference: We’re starting below nothing.
I don’t need to quote statistics here. We all know that college is more expensive than ever and that student debt is ballooning. This May, I won’t be starting out with nothing. I’ll be starting out with some $40,000 of debt that even bankruptcy can’t assuage, and I know there are a lot of K-Staters, especially out-of-state, who have it much worse.
Student debt hits us at our weakest point right out of the gate. Some of us might be working part-time jobs until something better comes along. Some of us might be taking low-skill, low-pay jobs because the threat of unemployment keeps looming overhead and we’re not in any position to be picky. Even for those of us with full-time work, we’ll have to start paying off our debt before we have any real career experience or job stability.
Though our earnings are sure to rise as we gain experience and find employment to suit our educations, our debt collectors aren’t waiting for that day to come. If our wealth had grown along with the economy, we might not have this problem. But since the cost of everything seems to rise without our incomes following suit, our situation is looking rather bleak.
The Tea Party likes to say that “tea” is an acronym for “taxed enough already,” but I see taxes as the convenient scapegoat for the larger problem of income inequality. Every paycheck shows the sum that was deducted for income and payroll taxes, and every receipt shows the sales tax you’re paying, so anyone can see how much money they would have if they didn’t have to pay those confounded taxes. It’s much harder to visualize how much money one might have if the wealth in this country were distributed a bit more evenly.
If every paycheck had a table showing what you would have earned in a society with less income disparity, people would see the real reason they feel so poor.
Brian Hampel is a graduate student in architecture.
