Why We Need To
Raise the Wage
There are two major crises facing us today:
1. Economic Inequality
2. Climate Change
This article is about solutions to the crisis of Financial Inequality.
What do we know about Economic Inequality? There are two interrelated aspects to Economic Inequality: Income and Wealth. These are some main points about the issues:
- in 1970, a CEO made 40x the average worker, now a CEO makes 350x that,
- in 1973, the top 1% collected 7.7% of all US income, in 2013 it is 19.3%,
- the top 10% took-in 48% of the nation’s income in 2018 – but did not work any harder,
- over 500,000 Americans file for bankruptcy each year on average,
- the federal minimum wage is worth less today than 50 years ago
- super rich do not pay an equal share of taxes compared to middle class,
stores like Walmart show their staff how to apply for public aid because they don’t pay them enough to live on.
- income inequality contributes to wealth inequality – the rich and super rich invest in the stock market and other places, but most Americans have nothing to invest.
- 1% of Americans own 50% of the stocks in the market,
- 38 million Americans live in poverty,
- 1% of population takes home 22% of the income and owns 40% of the wealth,
- 40% of Americans have $400 or less in the bank,
- the 400 richest families own more wealth than 80 million families,
- 3 men own more than the bottom 50% of Americans,
- the top 5% hold 74% of the wealth created since 1982,
- Black Americans who are 12% of the population only own only 1.5% of nation’s wealth,
- White families have 41x more wealth than Black families, 22x more than Latino,
- the wealth gap between White and Black tripled from 1984 to 2009, from $85,000 to $236,000 – most super rich person are White, contributing to this skewed number,
- in 1864, Blacks owned 1% of wealth, in 2019, they owned 1.5%,
- the bottom 25% of Americans have zero or negative net wealth,
- the combined net worth of all US households in 2017 was $95 Trillion – if we divided that equally amongst all Americans, it would be $760,000 per household – but currently, the bottom 50% of households net worth is only $11,000.
What does this information mean?
- Many Americans cannot make ends meet each month,
- Many Americans are relying on credit cards for monthly living expenses,
- Many Americans are a minor event away from financial collapse,
- Many Americans cannot afford to shop at the same department stores as their parents,
- Nearly a million Americans cannot afford adequate food,
- Poverty is growing and poverty leads to increases in drug use, incarceration, and suicide,
- Millions of Americans are defaulting on car loans,
- Millions of Americans are unable defaulting on student loans, cars, and credit cards.
- 4 out of 10 Americans cannot afford to have anything go wrong with their car, home or health without being in a dire situation!
In the graph below, you can see how bad income inequality is in America compared to Europe. Europeans get paid much more and they also have much better benefits than Americans – such as childcare, 6 weeks average of vacation, paid medical leave, and so on. European countries pay more taxes, but they feel more secure and happier than Americans.
The largest difference is European countries spend much less on their military budget than America, so they invest more in their people. This is exactly what President Eisenhower warned us about – for every dollar we spend on our military, it’s one less dollar to spend on our economy and neighborhoods. This year, Republicans and moderate Democrats agreed to spend 50% of our discretionary tax income on the military budget, after giving the super-rich as $2 trillion dollar tax break.
Pete Visclosky accepted more donations from military contractors in 36 years than probably any Democrat in the last 60. That comes at a cost – our road and bridges are in disrepair, our environment remains polluted, and our jobs continued to be sent overseas, replaced by low wage jobs. Visclosky endorsed Buttigieg, another moderate (centrist) Democrat who supports bloated military budgets, big corporations and the status quo. Visclosky will probably endorse Mrvan who said he will continue to govern like Visclosky. If you want the status quo, then vote Mrvan. When you vote for me, you’re voting for expanding Unions, keeping and creating jobs in America, and investing in NW Indiana infrastructure. I will fight for $10 billion investment in NWI over 10 years. I will also fight for Medicare for All and many other policies that benefit the working class!
Medicare has the highest satisfaction rate of any insurance plan, public or private. Physicians love Medicare because of it’s simplicity, and it’s overhead is less than 2% compared to private insurance, which is greater between 15-20% (see Medicare for All).
When I say, $10 billion in 10 years, people seem shocked. What is more shocking is how average Americans aren’t aware of just how wealthy we are as a nation. This is because both centrist Democrats (Joe, Amy, Pete, Mike) and Republicans keep telling us that we broke. Well, that’s because they spend 50% of our discretionary income tax budget on the military – more than the next 8 countries combined – $738 billion for 2020 –$1.4 million a minute. We spend this money out of fear of being attacked, but it still didn’t protect us from terrorists on 9/11. The Pentagon says we would have trouble taking on China or Russia – but we spend more than China and Russia in one year than they spend in 10. What is really going on is that military businesses lobby the government for contracts and donate to their campaigns. The politicians then sell the budget to their constituents using fear tactics. I say, enough is enough! We need to rebuild America!
The decline in manufacturing jobs since the 1970s has been the major problem for wealth inequality in America. The loss was caused by “globalization” which was a replacement for colonialism. Instead of colonizing less powerful countries, we started shipping jobs their for cheap labor and lax environmental laws which allows big corporations to pollute for free. So, the cost of production was low. As other countries allowed their manufacturers to move jobs overseas to save money, the United States decided it would, too, in order to stay competitive. That was the first mistake. The US should have not permitted the sale of products in the US that were made in other countries using child labor, non-union labor, and lax environmental standards. We had the political, economic, and market power to do that, but Nixon, Ford, Carter and everyone since has not.
What causes Inequality?
Wealth inequality is caused by Greed. In the last 50 years, greed has come in the form of Ayn Rand Libertarian ideology which the super-rich refer to as “economics.” Neo-Liberalism is modern Libertarian ideology embraced by Republicans and Moderate Democrats. Neo-Liberalism is the idea that the market economy will solve our problems, and that we should privatize everything (schools, jails, the post office, etc). It also includes ideas such as, the rich should not pay any taxes and this will cause wealth to “trickle down.” I am against Neo-Liberalism and trickledown economics, also known as Reaganomics, which has been the policy of Bush and Trump.
Alan Greenspan once said that “you can’t regulate greed.” But we can regulate greed. In fact, greed is the motivation of law-makers to de-regulate corporations so they can save money, and greed is the source of unfair tax laws like Trump’s tax cut for the super-rich that was invested in the stock market, setting us up for another major crash-recession-bail cycle. Regulating greed is easy – just look at what corporations are lobbying for and then don’t do it. Campaign finance reform has everything to do with protecting Unions, keeping jobs here, and investing here.
The US has no national economic policy. What we have are a bunch of corporations donating money to politicians and then lobbying for laws or de-regulation to benefit them. Frankly, any candidate who promotes “de-regulation” is not a friend of Unions, American jobs, the working class, or the Environment. We need a national economic policy-framework which puts American jobs first. We need procurement rules that say that we will not import products that are made by corporations who use child labor, non-union labor, or pollute the environment. If we demand this, then we will level the global-playing field and corporations will stay here and use our labor.
There are many things we can do to improve manufacturing jobs in America, but we need to vote for candidates who will fight for these policies. When I say fight, I mean to go beyond our district and fight so that we can build a national consensus. For example, when Scott Walker was trying to destroy Wisconsin unions, Obama and Biden stayed home. Visclosky stayed home. I would have been in Madison to show support! I would go to Kentucky to speak-out against McConnell and his authoritarian ways and his inappropriate relationship with Russia, opening a $200 million Russian aluminum factory in his State (https://thehill.com/homenews/438925-russian-aluminum-maker-investing-in-kentucky-plant-months-after-sanctions-lifted).
In the meantime, most jobs in America are service sector, many of which do not pay a living-wage. Far too many Americans are barely making ends meet, day-to-day. The degree of poverty is outrageous considering how wealthy we are as a nation. A simple and very effective solution is to raise the minimum wage to $15 per hour. Some companies are already doing this, even though they previously complained it would be horrible. A hundred years ago, corporatists argued that ending child labor would put everyone out of business. Where would we be today if we listened to them? The same arguments are being made about raising the wage (RTW). There are many right-wing libertarian think-tanks who have and will produce studies with pre-determined results, that RTW is bad. The long-time libertarian theory of raising wages was that it would cause unemployment. However, we know that it does not. In fact, since we are a consumer-based economy, we know that the more money that people must spend, then the more jobs are created.
What can we do to Reduce Income Inequality?
In 2018, Alaska, Florida, Minnesota, Missouri, Montana, New Jersey, Ohio and South Dakota raised their minimum wage based on a cost-of-living index. Eleven other States, including, Arizona, California, Colorado, Hawaii, Maine, Michigan, New York, Rhode Island, Vermont and Washington, raised their rates as well. Some corporations have raised their wage or are planning to: Amazon, Walmart, Chase, Target, Facebook, Wells Fargo, Costco and Ben and Gerry’s. Some cities have required lower increases for certain industries. Other cities have discouraged tipping – for example, raising the wage at a restaurant required raising the prices for food, but patrons were discouraged from tipping (https://time.com/5404475/history-tipping-american-restaurants-civil-war/). This would not have happened if it weren’t for people organizing and fighting for an increase. Keep in mind that these corporations are trying to avoid Unionization as well. There is still a lot of work to be done – because the rate of poverty in America is increasing as well as economic stress on the working class.
A lot of people fear RTW, but again, we are a consumer-based economy. Henry Ford knew this. He was a progressive. He paid a high wage and was criticized by other industrialists as practically insane of doing so. But he knew that he would sell more cars if the people who built them could also buy them.
If you haven’t read the Green New Deal, and you’re just listening to corporation-paid news, then you’re probably going to get a skewed view of what it’s all about. The GND addresses all the issues important to Unions, Environmentalists, working class Americans, the Middle Class and Poor because it finds the common thread in all these problems and provides a framework to solve them. It is not a specific law, it’s a framework that values Americans, Unions, and the Environment. It just happens to go against the status quo of lobbyists and big donors running the show.
Finally, we need a better tax plan. What we have today is a regressive tax system. Consumers, the working class, and middle class pay far more than their fair share while the super-rich pay far less. Also, we need to encourage entrepreneurship by eliminating the self-employment tax for sole proprietors and shifting that to be covered by corporations many of who pay no federal taxes, like Amazon, Netflix and so many more. Veterans should pay no federal tax, ever. The sacrifice they make is profound and they should be rewarded far more than they are. Increasing the wage and decreasing tax burdens on poor and working class and making the super-rich pay more than the middle class is what needs to happen. There is a much more to be said about the role in taxes and wealth inequality, so that will be addressed in a subsequent policy article.
These are ideas up for debate. We live in a democracy, so ideas should be shared and discussed. It starts with agreeing on facts and defining terms. The Republican party’s divide and conquer political strategies have been failing, so they are resorting to confusing Americans by distorting information or frank lies propagated in “alt right” media which has a lot of funding behind it from wealthy right-wing funders who want to maintain their power. There has never been such a great threat to the working and middle class and democracy as there is today. I never thought I’d live to see the Republican party align itself with Russia in order to keep their power. At the same time, it’s a sign that they are desperate because Americans are waking-up to the false narratives of divide and conquer politics.
Progressive Democratic Candidate
US House of Representatives
Copyright Scott L Costello All Rights Reserved