by Janet Goloub
In this time of questionable economic security, United For a Fair Economy (UFE) provides information about how we got this way. They clarify how in this richest, most powerful and promising nation there are so many whose lives are full of insecurity, the promise of better elusive.
Comparing two periods of economic growth illustrates well how this growth has benefited different economic classes. If one divides the population into fifths, from 1947–1979 real family income increased somewhat evenly across the board, between 116% and 99%, the bottom fifth increasing the most and the top fifth the least. Progressive taxation permitted funding of programs that built the middle class by those who could afford to pay more: the GI bill for education and low interest loans to purchase homes, for example.
From 1979–2001, real family income increased 3% for the lowest fifth, 53% for the top fifth—and 81% for the top 5%. During this time, taxes were reshaped to decrease the burden on the wealthy, anti-union policies by the government undermined worker security, CEO salaries exploded upwards, and the main growth came from investment earnings, which are owned by the wealthier to begin with.
This growing division includes the increase of CEO salaries compared to the decrease in real buying power for those earning the minimum wage. Since the Social Security tax is a fixed rate and applicable only up to earnings of $90,000, those making more have much less of a burden than those with lower incomes. And, in the 2001 tax cut, the average annual cut benefited the lowest fifth of the population with savings of $74, increasing gradually to $3,005 in savings for the top fifth—and $34,247 for the top 1%.
The facts show that the U.S. is an example of “the rich getting richer and the poor getting poorer.” Claiming to relieve individuals, the federal government passed the 2001 tax bill, which will actually cost $135 trillion over the next 10 years. Many are beginning to understand that the immense burden we are putting on younger generations is untenable, and at this time there is nothing to indicate a change of direction by the federal government toward decreasing the growing economic divide.
by Janet Goloub
Source: United for a Fair Economy workshop, “The Growing Divide”. United for a Fair Economy is at 37 Temple Place, 2nd fl., Boston MA 02111; 617-423-2148.
For presentations of this workshop, call LEPOCO, 610-691-8730.