Saturday, May 2, 2015

Comment on Robert Reich article

Robert Reich penned an article in the American Prospect titled "The Political Roots of Widening Inequality". Link to it here.
I mention the long report "The Middle Class Squeeze", and here is it's link.
The Conclusion of this 145 page report is only 3 pages, it is worth a quick pass over.
I haven't read the entire report. It's contents page include six major topics: Jobs, Early Childhood Education, Higher Education, Health Care, Housing, Retirement.

Here's my comment:

The Center for American Progress report "The Middle Class Squeeze" goes into this topic, even more than Reich's article. It's 145 pages long, for one thing. It shows a graph, page 9, of income and expenses for a two-parent-two-child family, comparing 2000 with 2012. Median income and its expenses remained roughly equal over the 12 year period. Income for this group is surprisingly high, $84,700. State of Working America shows a graph of income for "working age families" showing median income of $65,577 for 2013, which is up only 8% since 1979. The GDP per capita, 1979 to 2013, increased by 75% for a comparison of unequal growth. That "working age families" median income dropped by 8% since 2000, unlike the 2-parent-2-child family income which did not drop but gained $600. My point here though is to look at the expense side of the picture. Expenses for middle-class security (housing, health care, childcare, college savings and retirement savings) increased $10,600, by a third, from $33,000 to $44,000. Their taxes decreased $4,400 from $15,600 to $11,700, and basic needs (groceries, telephone, clothing) budget decreased $5,400 from from $19,200 to $13,600. The expense for two autos stayed about the same. Some expenses have gone up (health care doubled and child care and college up by 35% or so in 12 years) while other costs have dropped (taxes, groceries). The costs shifts have balanced each other, and the same amount of income is needed to cover total expenses. This Reich article fails to state another fact, non-supervisory workers, about 80% of the workforce, have seen only a 3% increase in wage income since 1964, while during the same period disposable (after-tax) income has risen per capita by 177%, nearly tripling, making for extreme inequality. It is a complicated picture, but the jobs market has suppressed wage growth, and political policy has suppressed it. Fixing the market would require a direct public jobs program to tighten the labor market. A tight labor market raises wages for the lower-earning 80%, as it did 1995 to 200. Politically, a labor and union rights policy and a pro-labor foreign trade policy would change the political dynamics. has the program, as does the Progressive Caucus budget. My blog,