In January, the AFL-CIO held its first National Summit on Raising Wages at Gallaudet University in Washington, DC. The event hosted union and political leaders to address the alarmingly growing problem of income inequality in the United States and beyond.
“Last summer, when we decided to put this Summit together, [we knew] that, once again, our productivity was up and our wages were flat,” said AFL-CIO President Richard Trumka at the event. “America’s workers are creating more and more wealth for every hour we worked, yet most were slipping backwards.”
Perhaps United States Secretary of Labor Thomas Perez framed the state of income inequality best at the Summit when he told attendees that “in the three-plus decades from the end of World War II to 1979, median family income more than doubled, reaching about $58,000 a year. That’s a hallmark of an economy that’s working for everyone. But in the three-plus decades that followed, taking us to the present day, median income growth virtually stalled, increasing by only 8 percent. It’s not that workers have failed to keep up their end of the bargain. The fact is that productivity has been robust since 1979, increasing by more than 90 percent, but wages have essentially flatlined if you’re not on the upper end of the income spectrum. Workers are doing everything being asked of them – working hard, adapting to change, and contributing to a growing economy. But what do they have to show for it? The pie is getting bigger…American workers helped bake it…but most of them aren’t getting a bigger slice.”
Income Inequality by the Numbers
So, why the urgency by the AFL-CIO and other groups to erase this income inequality? Because just one look at the big picture of this issue clearly shows just how dangerous income inequality is to the entire country; not just one group or another.
First of all, what is income inequality? Inequality.org defines it as “the extent to which income is distributed in an uneven manner among a population.” That is, one portion of the population is receiving a disproportionate amount of income generated in the country. In other words, the rich keep getting richer, while the rest of us are left behind.
Let’s revisit the 1 percent issue that made the headlines in the last presidential election and the Occupy Wall Street movement some years ago as an example. Members of the movement were protesting the fact that the top 1percent of households received far more than only 1 percent of pre-tax income in the country. Were they right? The data certainly backs up their claim.
As reported by Inequality.org, the top 1percent of households in 1976 received 8.9 percent of all pre-tax income. In 2008, that share skyrocketed to 21 percent of income.
Take a look at the chart below. It highlights the top 1 percent share of total pre-tax income from 1913 through 2008. Note the two highest points – 23.9 percent in 1928, and 23.5 percent in 2007. If those dates don’t ring a bell for you, they should.
When the top 1 percent peaked at receiving 23.9 percent of total pre-tax income in 1928, the Great Depression hit the country the following year. In 2007, when the top 1 percent was collecting 23.5 percent of that income, the Great Recession hit just one year later. Facts are stubborn things and the relationship between drastic income inequality and profound economic crises cannot be ignored. This inequality is not only bad for the 99 percent; it’s bad for the entire country.
Why it Matters for All of Us
As union members, most of us are fortunate enough to have a higher, negotiated wage than our non-union counterparts. The income inequality is being addressed in the organized labor movement, so why do we need to join this fight?
The issue of income inequality affects us all. The Great Recession not only put far too many of us out of work; it wreaked havoc on pensions and personal savings, as well. Now, as our financial system recovers from our most recent economic unrest, income inequality continues to threaten our retirement future by affecting our Social Security program.
Most know that the revenue for Social Security is collected through a payroll tax. However, what many do not know is that there is a “cap” on how much of your wages are taxed to contribute to Social Security. The current cap is set at $118,500. Simply put, millionaires and yes, the top 1 percent, only contribute to Social Security on the first $118,500 they earn. Wage earnings after that mark are exempt.
The Los Angeles Times recently reported on a study that analyzed the effect of income inequality on Social Security based on the above cap, and wage stagnation in the middle class. The report indicated that less revenue is going into Social Security because workers’ wages are not rising with productivity, and the “portion of American wages that exceed the income cap on the Social Security payroll tax” is increasing.
Although we, as union members, are fortunate to have a pension, Social Security remains a crucial part of our retirement security. If income inequality persists and continues to undermine Social Security, our retirement future grows more uncertain.
“The rise and fall of the American middle class correlates almost exactly with the rise and fall of private-sector unions, because unions gave the middle class the bargaining power it needed to secure a fair share of the gains from economic growth. We need to reinvigorate unions, beginning with low-wage service occupations that are sheltered from global competition and from labor-replacing technologies. Lower-wage Americans deserve more bargaining power.”
– Robert Reich
Former Secretary of Labor for President Bill Clinton, Chancellor’s Professor of Public Policy at the University of California at Berkeley – www.RobertReich.org
Clearly, we are all in this together. That is why the AFL-CIO is rolling out its Raising Wages campaign across the United States.
At the Summit in January, President Trumka announced that the campaign will visit seven cities: Atlanta, Columbus, St. Louis, Philadelphia, Minneapolis, San Diego and Washington, DC. The campaign is designed to generate discussion, share ideas and rally working families to action to fight income inequality.
“Instead of building an economy for all Americans, for the past generation, this country has grown an economy that works for some Americans,” Senator Elizabeth Warren (D-MA) said at the January Summit. “For tens of millions of working families who are the backbone of this country, this economy isn’t working. These families are working harder than ever, but they can’t get ahead. Opportunity is slipping away. Many feel like the game is rigged against them – and they are right. The game is rigged against them.”
It is time to heed Senator Warren’s call for change in income inequality. It is time for the organized labor movement to put our unique level of activism to work for the rest of the middle class and set things right for working families – union and non-union.
Learn more about the AFL-CIO Raising Wages Campaign at www.AFLCIO.org.