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23.6 % of the U.S. labor force,
nearly one in four workers, 
or 39 million American workers,
are either
unemployed, under-employed involuntarily, or working full-time and year-round for poverty wages (1)  -- see graph below

46 % of workers in 2013 earned less than $25,000 for the year (see reference 2 below).  The poverty threshold for 2014 for a four person family was $24,008. the average yearly income for 46 % of workers is $12,365 (#2 below). Two average workers earning below the median would earn less than the poverty level for 2014. Most researchers say this official poverty rate is much too low.  The U.S. Census states (page 6) that of Poor Americans age 18 to 64, half are working poor, this is 13 million. 13 million is also 9%, or 1 in 11, of daily workers. the combined income of half of u.s. workers totals less than 8 % of national income. only 18 % of daily workers are classified as part-time workers. 82% are full-time. 
Median worker income — $28,031 in 2013 (2) 
                     46 % of workers earned annually less than $25,000, just above 
                            the poverty level for a family of four   (2)
                            The typical family of four had about $63,000 in expenses (3)
                             USA today says that $58,491 is the annual expenses for a 4
                             person family. 
                            44 % of u.s. children live in low income or poor families (4)
                             with incomes below $47,248 per year, about double the 
                             official poverty level  
average worker income — $79,183 (5)
Average household income — $99,618 (6)
                               extremely high incomes raise the average. Ditto for wealth.
Average household savings, 2015 — $691,000 (7) 
median household savings, 2010 — $77,300 (8) 
                   31% of households have zero or negative 
                    “non-home” savings     (9)
                   50% of households have less than $10,000 in
                   “non-home” saving (9)

(1) National jobs for all coalition, (employment) september 2015
(2) Social Security Administration wage report, Oct. 2014
(3) basic Family budget Calculator, EPI.org, for 2015
(4) basic facts about low-income children, nccp, 2015
(5) CBO, Distribution of Household income and federal taxes, 2011, (2014) page 2 
       i used the cbo total national income and divided by number of workers
(6) CBO report, page 2, i adjusted the 2011 figure, $93,900, for inflation
(7) Federal Reserve Bank, flow of Funds, page i, September 2015
(8) federal reserve, survey of consumer finances,  page 17
(9) edward wolff, the asset price meltdown, 2012,  Page 10, and Table 1

23.6% -- I get most of my info from National Jobs for All Coalition. They have updated their web page. Here's their graph showing the real under-employment rate of over 12.1%. Dec. 5, 2015 official U6 unemployment is 9.9%, the NJFAC says it should be 12.1%. They say that 19.8 million or 12.1% of the labor force are out of full-time work. Add those not paid above poverty level wages, the rate is 23.5%. 

Welcome to NJFAC

The Economic Populist web page has a thorough employment report. 
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I will speak tomorrow, August 1, 2015, to the local Democrats in Oakhurst, California. My topic:
               Inequality as a Threat to the American Middle Class

Here's my outline with the comments I will make. 

                      half own 1.1%                                  own 12%              own 17%         own 30%
                                                                                                                                                    top 1%
                                                                                                                                                    own 40%    
0% --------------------25%---------------------50%-----------------------80%---------90%---------100%

         no savings                under $80,000            average               average       percentile
                                                                                    $225,000               $500,000      90 - 94   95 to 99
                                                                                                                                   $1.3 mn      $3.3 mn
                                                                                                         Average for top 1%  ---  $27 million
                                                                       Average for all households: $685,000 as of 2015 Q1

Reference: Flow of Funds Report, page i,  Survey of Consumer Finances, page 17, showing a 40% drop in median household savings, from $126,400 to $79,300, between 2007 and 2010. In three years the "typical" household lost nearly half its life savings. Is that simple enough? The Congressional Research Service report that shows the lower-half owns but 1.1% of all savings, and Edward Wolff's report here. Wolff states that the median dropped by 47%, from $108,000 to $58,000 between 2008 and 2010. It dropped below its 1969 level.


Moving in Opposite Directions, the Richest and the Majority 
Total private wealth in the past seven years has grown by 36%, adjusting for inflation. See the Federal Reserve's Flow of Funds, page 2.
In seven years since 2008 total private savings for all households in the nation grew            
                                        by $28 trillion , from $57 trillion to $85 trillion.
This is a nominal increase of 50% in seven years, a windfall. But, when adjusted for inflation and population growth, wealth increased by 36%. During the same seven years, perversely, the nation suffered its worst economic debacle in 75 years since the Great Depression of the 1930s!  Most of the wealth increase went to the already wealthy, the owners of financial assets; and most of the damage of the recession went to the lesser wealthy 90%. Perversely, the instigator of the debacle -- the financial system that collapsed through over-lending -- was rewarded.
To make that $28 trillion understandable, it also equals $88,000 per citizen, and $229,000 per household -- of new or additional personal savings over 7 years.
If we compare the wealth of 2007 with today's wealth, then the increase in personal savings was not  36% but 11%.
While the average for ALL households since 2008 increased savings by 36%, the middle household, the median, lost 40%of its life savings, or as Edward Wolff reports, 47%, from $107,500 to $57,000. --- Moving in Opposite directions 
Wolff further states, page 10, "Then during the financial crisis of the late 2000s, median non-home wealth nose-dived by a colossal 60 percent to only $10,000 – is lowest level over the fifty-year period!"
The median had $25,000, then lost 60% or $15,000, now has $10,000 in "non-home wealth". And this is why the liquid asset poverty rate is around 44%, see here
And that means that nearly half of all citizens are in danger of living on the streets after a 3 month period with no income, save for the government safety net programs that aid the low income households. Resentment and bewilderment is understandable. Disgust with the political system that oversaw this perverse enactment is nearly universal. The portion of society that feels itself lower-income, not middle, has increased from 25% to 40% in the last few years. "Today, about as many Americans identify themselves as lower or lower-middle class (40%) as say they are in the middle class (44%), according to a recent Pew Research Center/USA TODAY survey."
The lower 40% of households, according to Wolff, see the WaPost graphic below, have no savings. 

As the wealthiest 5% of households own 75% of all financial assets, see here page 11 (this SWA report by Sylvia Allegretto is excellent), and financial assets were the source of most of the new wealth, then the top 5% or the wealthiest 6 million households gained about $450,000 per year in wealth, an average total of $3.125 million over seven years. The cash annual income (not life savings) of top-earning 0.9% of households is more than $500,000 per year. The gain in wealth is like a second income, not in cash but in stock value. The new $28 trillion, is not treated as taxable cash income. But what is the difference? It is equivalent to cash; it is a liquid asset, as of course cash is. One possible way to adjust for such windfall increases is a direct tax on financial assets or wealth, just as now the property tax is levied on home values. Or, as a second choice, a tax on financial transactions -- the Robin Hood Tax -- would suffice. Though this is not popular, that could change. The Credit Suisse Bank report World Wealth Report, page 146, shows the composition of wealth in the U.S. as 70% financial and 30% non-financial. (See link below to WWR) The ZeroHedge article, referred to above, shows wealth composed of 82% financial assets, 18% other.

A Double Boost -- Wealth and Income Surge 
        for the Few at the Top -- Everyone else gets creamed       
"Top 1% Got 93% of Income Growth" reads the 2012 Bloomberg article.   What it fails to mention is the simultaneous surge in wealth benefiting only the wealthiest. Remember the lower half of U.S. families saw their assets reduced by 47%, according to Edward Wolff, and their non-home liquid assets reduced from $25,000 to $10,000, while the annual median income dropped by about $5,000.  Below is a good visual of the growth of net worth, or private savings, in America. See the other visuals of private savings at this site, Floating Path. In 2007 private wealth fell by $12.7 trillion. Since 2008 it has grown by $28.4 trillion. Since 2007, wealth has increased by 11%, or since 2008 it has increased by 36%. Both income and wealth went up for the top 5%, BUT income and wealth fell for the lower 80%. 
That is the lesson of the Great Recession and Obama's failure to manage the recovery which he inherited from GW Bush.  That wealth could be taxed: $28 trillion could easily wipe out the national debt standing at $18 trillion, or the publicly held national debt at $10 trillion. In comparison, the federal government will spend $3.9 trillion in 2015, and the Social Security Trust Fund totals $2.8 trillion.  But an even better use of this $28 trillion would be to employ every unemployed and under-employed worker into a living wage job, and that would manifestly and actually improve our national well-being. 

Reader, superimpose on this graph the growth of net worth of the lower half of U.S. households. They own 1.1% of all net worth today, see here.
It has been essentially flat since 1952. And we call this progress?
The average household net worth or savings in 2015 is $685,000.  Average is not average, though. About 1 in 10 live in a family with about that much in savings. Only half of all households own more than $80,000, the median. (See here.) And as we've read in the Wolff report, $10,000 in non-home savings is the median, which Wolff reports is less than the 1960 level. Therefore it's not surprising that only a bare 10% of households own the official "average" or more. In the same seven years the median household net worth has fallen from $130,000 to around $80,000, (as I've noted in recent blog entries, below) a fall of 40%, a loss of about 20 to 30 years of savings, or as Edward Wolff claims, a loss of 41 years of savings. Also since 2007 median income, not wealth but income, has dropped 8%, and some 9 million jobs were permanently eliminated with the 1.5 year recession, and millions of homeowners lost their houses through foreclosure during the worst slump in 75 years. Of the Recession, 14 months occurred under G.W. Bush, 4 months under B. Obama.

Wealth Distribution - International Comparison
Among 39 nations, the U.S. has the highest inequality of wealth, save for one nation, Russia.

In Australia the "typical" (or "median" or middle person) adult owns about 4 times more than the typical adult in the U.S. --- 4.2 times more --- meaning he or she owns not $53,352 but $225,337.

Therefore, the typical household savings in Australia is around $450,000, not $80,000 as in the U.S.

Chances are high that one's neighbors in Aussie land are pretty well off. Average wealth per adult in Australia is $537,140; it is wealthier than the U.S. which also is wealthy at $405,671 per adult (see page 146 of Credit Suisse report, linked here). Even though Australia is a very wealthy nation on a per capita basis, it has chosen to share its abundance. Many advanced nations have chosen to share; in these countries the "typical" adult wealth is much higher, often double, that of the U.S.  The World Wealth Report, by Credit Suisse Bank, the databook, page 141, shows the relationship between "mean average" to "median" wealth per adult.
The higher the ratio between the median to the average, the greater the inequality gap. In the U.S. average household wealth, $685,000, is 6.6 times greater than the median, $80,000. That is using data from the Federal Reserve. If we use the data from the Credit Suisse report, the ratio is 7.6.
In Belgium the average wealth per household is only 1.7 times greater than median wealth (($476,000 is the average, and $280,000 is the median). Belgium has a lower average than the U.S. ($476,000 to $685,000), but the median is higher ($280,000 to $80,000). Average to median: In Italy average is 1.8 times higher than median, Australia 1.9, UK 2.2, France 2.3, and Norway 4.1. In the U.S., again, 7.6 times greater. Of 39 nations, only Russia has a higher ratio, 8.3.
Internationally, the U.S. is about the worst when it comes to sharing prosperity.

If the U.S. had the same ratio as France for instance, 2.6, then most of our neighbors would have $263,000 of household net worth, not $80,000 or less. I believe this would improve the quality of our lives, our families, our neighborhoods in many ways.

These countries are not poor. In fact they are richer. The median wealth in Belgium is greater than the U.S. median by 3.5 times ($280,000 to $80,000 as I showed in the last paragraph). Japan's median surpasses the U.S. median by 2.2.  In France by 2.6, in UK by 2.5, in Italy by 2.6, in Norway by 1.6, but in Australia the median adult savings is 4.2 times greater than the U.S. median adult savings. The middle class in these nations enjoys a higher quality of life with far greater security. In simple words, other countries share their economy's surplus among the general  population, but in the U.S. the wealthy hoard most of the wealth. And that trend is a threat to our culture, society and economy. Our lives could be greatly improved if we could shift this picture to greater sharing. If others do it, and they do, why not us?   

Take a glance at childhood poverty rates among advanced nations, and ask if we can be proud of our record, especially given that our national income per capita, over $37,000, is the highest. Compare our performance with Korea, UK, and Denmark.

As I report later in this essay, the five nations with the highest income inequality gap among 38 advanced nations are 1) Mexico, 2) Turkey, 3) Chile, and 4) Israel tied with the U.S., the income  inequality gap between the 20th and 80th percentile of income earners, as reported by the OECD.
The high child poverty level duplicates this inequality gap. Australia needs to work on its poverty level, obviously.

Page 147 of this Credit Suisse databook shows wealth distribution in deciles among the population of 38 countries of the world. In the U.S. the wealthiest 10% own about 75% of all wealth. In Japan, 48%. These are the two extremes among the 38 nations, except for Indonesia which surpasses the U.S.

The U.N. Human Development Index ranks the U.S. at the 5th place among about 170 nations of the world. When adjusted for inequality, see here Table #3, the U.S. slips down 23 places to #28. This loss of 28 places is exceeded by only one nation, Iran.

Here's a chart from Edward Wolff's data, published in the Washington Post:
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My Congressman, a Tea Party person, visited the local community. I handed him this essay because, I told him, he needed to take a closer look at the other side of his argument. This essay is both problem and solution; I hope readers will gather a useful, hopeful, and comprehensive overview.


            Inequality Devastates Social Norms
What if the total national income was $100 a year, and $50 went to just 10% of the population? What if  $20 went to only 1% of the population? What if the lower-earning half, 50%, received just 16% of all income? Every worker, on average, contributed over $70,000 a year to the national income, but half received less than $28,000 a year and half also average less than $10,000 a year in wage income (that would include all the unemployed, part-time and partial-year workers)? What if half of U.S. workers earned in wage income less than 8% of the total national income? As for savings, what if the average household held over $650,000 in assets? And still, what if the lower-saving half of all households owned just 1.1% of total private net worth, about $14,000 per household, not the $650,000 average for all? What if 1 in 7 in the population survived through the charity of food coupons to purchase their food? What if 40% of the richest nation on earth reported their status as “low income or poor”? What if candidates for public office, both national and state, depended almost entirely on the wealthy minority to fund their  election campaigns? What if only 4% of the national income was devoted in charity, through government programs, to the alleviation of poverty afflicting the elderly, the disabled, and poor children? (see here, Table 3, page 10)  Here is the Economic Policy Institute's report on lop-sided income growth. This report states that in the past 33 years, 1979 to 2012, the top-earning 1% increased its income by 180%, the rest by 3%. This graph shows 9% income growth at the median while total economy growth was 72%, 1979 to present; while between 1949 and 1979 all income groups grew at the exact rate.


The above describes the U.S.A in 2015. Furthermore, what if much of the great private annual income and most of past savings were mostly diverted into a large international gambling casino with no productive purpose? For instance, JPMorganChase, one of the largest banks, reported that 46% of its assets were “trading assets” or stock brokerage accounts, not loans to business. Loans to business was less than 12%. Reputable  economists (William Lazonick, here) report that between 2001 and 2010 corporate profits were not directed to improve productive facilities or research or to raise workers’ incomes, but that 94% of record profits went to shareholder dividends and stock buy-backs. From Lazonick's article, " For 2001-2010, 459 companies in the S&P 500 Index in January 2011 distributed $1.9 trillion in dividends, equivalent to 40 percent of their combined net income, and $2.6 trillion in buybacks, equal to another 54 percent of their net income. After all that, what was left over for investments in innovation, including upgrading the capabilities of their workforces? Not much.

How, then, can the majority of Americans appropriate the vast surplus, the non-productive gambling funds, and convert these resources into productive uses that would generate employment, create useful services and products, establish financial security for most households, and even provide more leisure and vacation time for the majority of the population?  

“What is an economy for?” is the general question. What is the goal of coordinated economic activity? Should it be coordinated? How? I argue that an economy should organize human talent and potential to serve society while preserving basic rights and freedoms. The economy should serve. It should raise minimum social standards gradually as techniques and tools, often called productivity, improves. Since 1964 the U.S. economy on a per person basis has increased its output by 155% (see here and do your own calculation, from $19,455 to $49,584 per person), yet the weekly and yearly wage income of 80% of its workers, the non-supervisory workers, has actually increased by 3% — this is a Federal Reserve data fact. 
Median usual weekly real earnings: since 1979, wage and salary workers, employed full time
Median usual weekly nominal earnings, full time, wage and salary workers, since 1979
Share of National Income going to Employees as wages and salaries
Per capita disposable income
This shows that while after-tax, or disposable, income has tripled since 1964, up almost 200%, the average wage income is up 3%, and the share of income going to wages and salaries has dropped from 50% to 42%, a difference of $11,000 or more to each of the 96 million households in the lower-earning 80%, those who are employees. Evenly distributed, this rebalancing would eliminate poverty.

The economy has not shared its prosperity. The Economic Policy Institute reports that in 28 years, 1979 to 2007,  the top one percent increased its income by 200.5% (a tripling) while the average income of the lower-earning 99% increased by 19%. The per capita GDP expanded by 72% in this 28 year period (read the EPI report “The Increasingly Unequal States of America”). Only 5% of households matched the pace of the economy’s growth. There are many scholarly sources supporting this conclusion. 

To right the imbalanced distribution of income and wealth a practical first step would be to tax financial transactions, stocks and bonds, derivatives and futures trading -- (called an FTT). Since 75% of all financial assets are owned by 5% of the population this would not affect 95% of the population. Congressman Chris Van Hollen recently proposed this measure in February 2015 (see link below). Also income from capital and capital gains could be taxed at the nominal personal income tax rate, and the top income tax rate, say on income that exceeds $1 million a year, could be set at the level of all 8 years of the Eisenhower presidency, at 90%. During those Eisenhower years the economy grew rapidly and shared its prosperity. 

Explaining the need for a FTT, the Chicago Political Economy Group recently wrote a reply to an editorial in a local Chicago newspaper. Here's an excerpt: 
The Sun Times endorses the notion that more trading 

is always better, worrying that the LST [the FTT] 

would drive trading volume down and/or away from 


There is a huge amount of trading occurring on the 

Chicago derivative markets: more than $900 trillion 

in underlying value in 2014. Bear in mind, world GDP 

is $70 trillion and the US GDP is about $17 trillion. It 

is obvious that most of this trading is of the “socially 

useless” type described by Andrew Haldane, the 

leading UK regulator during the Great Recession. 

Further, there is evidence that such misdirection of 

resources hampers growth in the real economy.


Without increasing the national debt a multifaceted public jobs program could be initiated to end unemployment and under-employment. See the plan "Stimulus Without Debt" by University of Delaware economist Lawrence Seidman. And also see Rutgers University economist Philip Harvey's plan Back to Work to understand how at a price of about $30,000 per job, about 10 million jobs could be created for $300 billion per year. This would employ full-time all the unemployed and about half of those who are involuntarily employed in part-time work. About 20 million jobs are needed, but this $300 billion per year plan coincides with the Congressional Progressive Caucus plan. The Federal Reserve would advise the Congress on the ongoing danger of inflation growth. See the Economic Policy Institute on the the acceptable wage growth and inflation growth target.

Remember, 1 in 4 (or 40 million) American workers are either 1) out of work, 2) working involuntarily at part-time work,  3) dropped out of the labor market, or 4) working full-time and year-round at less than poverty level wage income. This should end. See the National Jobs for All Coalition's report on employment. Just as during the Great Depression, 1933 to 1937, when unemployment dropped from 25% to below 10%, (see the article supporting this finding here) or during the war period 1940 to 1946 when the number employed increased by a near-miraculous 40% and annual output increased by an astounding and record breaking 75%, public employment is effective in spurring an economy. This would tighten the labor market which would raise wage income for over 80% of workers. Presently wage income as a percentage of total income stands at 42%, down 8% from its historical norm between 1950 and 1980. (see Fed. Reserve graph here) This represent an income loss of about $13,000 per year for all employees (non-supervisory workers) in the lower-earning 80% of workers, perhaps $20,000 per household. If this difference were rectified and spread evenly among all households in the lower-earning 80%, 
then poverty would be eliminated

Capitalism must balance the distribution of its economic surplus, which is often called income or profits. Labor cannot receive excess income without destroying necessary corporate profits, and vice versa, excessive corporate profits decreases private purchasing demand, which in turn lowers employment. A balanced distribution is requisite, and presently corporate profits are at a historical high. 

Many sidewalks in San Leandro are clearly marked “WPA, 1937”. Many public bridges, dams, electrical installations, roads, trails, national parks, court houses, airports and seaports, schools and universities that were built in the 1930s are still functioning. Today’s needs are no less than before. We need to convert our transportation system to a renewable energy source, electric or hydrogen. Providing subsidized home energy retrofitting for energy efficiency is needed nationally. Improved childcare, public education, and expanded services to the infirm elderly and disabled are needed. The reestablishment of municipal and local recreational departments would greatly improve the developmental opportunities of the nation’s youth. And if we should find a paucity of work to perform, vacation time could also serve to maintain high employment ratios. Presently the labor force participation ratio is at a 37 year low and the employment to population ratio is at a 31 year low. Today we are about 8 million jobs below the historical 20 year (1989 to 2009) average E/P ratio. The nation needs jobs. And surprisingly, by creating public jobs the demand for products and services increases, and this in turn reduces and removes the need for public jobs. See the Philip Harvey report, below.

These goals are simple, comprehensible and within reach. The national debt need not be increased, either through the FTT or the Stimulus Without Debt approach. All capable adults could find employment, needed public services and infrastructure would be upgraded, financial security for most would cease to be an unobtainable dream, working paycheck to paycheck would disappear, and families would find time for leisure and vacation. This is        the View of the Future.           

Additional reading: 

For public job creation see 
Chicago Political Economy Group, Working Papers, and Reports
“A Better Off  Budget” from the Progressive Caucus of Congress, at EPI.org 
Philip Harvey, Back to Work: A Public Jobs Proposal for Economic Recovery
Nouriel Roubini, et al, The Way Forward

Congressman Chris Van Hollen’s proposal for a Financial Transaction Tax at The Center for American Progress

See also my web page, Economics Without Greed            
Thank you for reading. 

Ben Leet                   
Here's a recent example of Paul Buchheit's writing, where he states,
1 "138,000 Kids Were Homeless while 115,000 Households Were Each Making $10 Million Per Year.
2. The Average U.S. Household Pays $400 to Feed and Clothe Walmart, McDonalds, and Other Low-Wage Workers
3. As $30 Trillion in New Wealth was being Created, the Number of Kids on Food Stamps Increased 70%
4. Despite the Decline in Food Security, the Food Stamp Program was Cut by $8.6 Billion and the Money Paid to Corporate Agriculture"
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              Where is that $25 Trillion?

The private wealth of the nation increased by $25 trillion since 2008. Did you get some of it?

OK, it was only $24.8 trillion. Where did it go? See the Federal Reserve report here, page 2.
(How this relates to the Ryan-Republican budget plan follows below this discussion of $25 trillion.) 

How much is $24.8 trillion created over a six year period? It is  $77,500 per citizen or $200,000 per household of new or additional wealth. (Divide $24.8 trillion by 320 million citizens). That's how much more wealth each American has since 2008. Every family of four will have $315,000 more savings since 2008 to add to their previous savings. Now the average family has almost $700,000 in total assets, not bad is it? It is a gain in national wealth of over 44% since 2008 while most families were struggling with declining home values, unemployment, loss of wages, and the worst economic collapse in 75 years. The per capita GDP between 2006 and 2012 increased by all of $3, from $48,905 to $48,908 (see this site to check). The national income, a composite of everyone's income, declined in 2008 for only the second time since 1933. But wealth began to skyrocket -- check the Federal Reserve report cited above. 

Now the average wealth per human being in the U.S. is $254,000, and each household has $676,000 in savings, on average. But, in actual fact, only about 10% are average or above. Most of the $25 trillion went to just 5% of the households. 

The lower-saving 50% -- half of America -- own just 1.1% of all savings (see here) and their average savings is below $14,000, not the average for all of $676,000. Inequality is the structural problem of our nation's economy, and our society. We must ask, does this affect the life opportunities of everyone, including the reader? Are we all poorer as a result of such extreme inequality? Is there an immense and immoral human suffering because many have NO access and many have little access to the immense resources that the nation possesses? Are we ignorant, heedless, or uncaring that we allow this distribution of resources to remain so one-sided. 

I have difficulty explaining the economy. My friends and those I share my concerns with do not get it. The economy's main problem is that the immense "surplus" has not been shared adequately; the poor receive too little for their contributions, and the very wealthy seemingly hog most of the surplus. The result is a horrible distribution of total wealth that is beyond moral justification. Yet the most vociferous among us are silent, as though they must ignore this stupendous inequality. 

Together the economy is a collective effort, but 40% of the workers only receive 4% of the annual income in wage income, check out  the Social Security Administration's report on wage income. The annual surplus, which we call savings, profit, net worth, more-than-we-need-to-use-this-year, mostly goes to waste in excess savings of  the very wealthiest. In order to save $25 trillion over a six year period when total output was around $90 trillion, some 28% of the output had to be saved. How else can one explain a gain of $25 trillion? (25 is 28% of 90) And during this period most were experiencing crushing wage decline, job loss, and housing value collapse. The median family lost 39% of its life savings according to the Federal Reserve (see page 2 and page 17), a drop from $124,000 to $77,000. But the national increase in net worth resulted from a splurge of wealth pouring into capital markets inflating financial assets, creating a bubble condition.    

The new $24.8 trillion of savings increases each household's savings by  $200,000, on average. Or $101,000 per adult. How many readers actually experienced this gain? 

In contrast, about 47 million out of about 320 million Americans (about 1 in 7) cannot buy their food with money, instead they rely on the charity of food stamps (or its equivalent SNAP credits). They get $1.40 per meal, or $30.05 per week or $130 per month. What is a normal food expenditure per household? Let's look to the basic family budget analyzed by the EPI. It is $188.50 per month per person, or $43.50 per week per person, for a family living in Topeka, Kansas, the median expense location in the nation. The SNAP food budget is almost a third less than the basic frugal food budget. Instead of three meals a day, maybe food stamp recipients  eat just two meals daily? 

As a nation are we concerned about those one in seven American citizens, 47 million humans, who must rely on that $30 a week for food? How do we explain this failure in the wealthiest nation on the planet? Are these Americans stuck in a state of dependency on the government? Or is there a structural reason for their poverty, such as perhaps chronically low wages and inadequate job  opportunities? 

Lawrence Mishel published in the New York Times an op-ed that targets low wages as the primary source of the economy's troubles. 
Here's an excerpt:

WASHINGTON — WITH the early stages of the 2016 presidential campaign underway and millions of Americans still hurting financially, both parties are looking for ways to address wage stagnation. That’s the good news. The bad news is that both parties are offering tax cuts as a solution. What has hurt workers’ paychecks is not what the government takes out, but what their employers no longer put in — a dynamic that tax cuts cannot eliminate.
Wage stagnation is a decades-long phenomenon. Between 1979 and 2014, while the gross domestic product grew 150 percent and productivity grew 75 percent, the inflation-adjusted hourly wage of the median worker rose just 5.6 percent — less than 0.2 percent a year. And since 2002, the bottom 80 percent of wage earners, including both male and female college graduates, have actually seen their wages stagnate or fall."

There is an solution, a way to reverse the trend. Briefly, you can go to Bernie Sanders' statement on the 12 proposals to turn the national economy in the correct direction. Or you can read on further in this blog, or review the blog list to the right here, particularly the EPI and its proposal of the Progressive Caucus budget. Sample idea: "
  • Make necessary public investments. The [P C] budget finances roughly $485 billion in job creation and public investment measures in calendar year 2014 alone and roughly $1.35 trillion over calendar years 2014–2016.3 This fiscal expansion is consistent with the amount of fiscal support needed to rapidly shrink the “output gap” and restore the economy to full health.

The economic solution lies in taxing the unused surplus that the wealthiest have coopted and waste in financial speculation and employ at a living wage in public jobs the capable but un-employed and under-employed and under-paid, which is about one in every four adult American workers -- one in four (I explain this 1 in 4 in the most recent posts. It is over 40 million workers.). Yes, we can be proud of our history, our  heritage, our patriots, etc., but surely we can do better. 

I could go on in detail about the means to spread prosperity, to spread the vast resources at hand, to spread the amazing $254,000 per citizen of personal savings or the near $700,000 per household savings, on average. Easily we all could have access to living wage  employment. The CBO shows that the average market income per household is $93,900 per year (see page 2, here), and that translates into $72,000 per worker (on average) including all the unemployed workers. Each worker, even the unemployed and the part-timers, contribute $72,000 to the total national income. Yet 40% of all workers earn less than $20,000 a year  and most of that 40% earn less than half that amount. The average wage income for the 40% (or 62 million workers) is just over $8,000 a year -- not $72,000. We could easily devise a way to share more equally these resources -- a true ownership society. (I explained this in a recent posting.) Figure it out, reader. We have plenty --- $81 trillions in savings, and over $12.7 trillion in annual income, according to the Joint Committee on Taxation, and $14 trillion according to the BEA.gov --- but millions are destitute and suffering, truly suffering. About 44% of citizens live in households where a $1,000 emergency expense is a disaster.  And 40% of the adults self-identify as "lower or lower middle class". Soon the majority will self-identify as poor.  

Most citizens are sleeping. We should be clamoring for real redistribution of resources. But the society is adrift, tragically unconcerned or unperplexed, often caught in a dog-eat-dog mentality, and cannot see its great potential.   


Wikipedia's article on Income Inequality in the U.S. is an excellent and detailed reference that covers the full scope of the issue. It's an example of the power of "wiki". I highly recommend it.

I looked at the EPI article on international comparisons of "safety net" support for the poor, also an excellent reference. It concludes that the U.S. has a greater differential from low to middle to high incomes, and it also supports low income the least. I'm not convinced the report proves the last statement.

The U.S. Census finds that 48% of citizens are low-income or poor, from an article at Huffington Post.     
Pew Research finds that 69% of Americans believe that government should do more to reduce inequality. 

The Ryan-Republican Budget Plan
The Ryan budget, which is supported by all Republicans, would reduce by half the taxes on the wealthiest who earn more than $400,000 a year, and raise taxes by $788 on households earning $40,000 (see here, page 2 and 5). Tax increases would be served to three out of four Americans. Halving the tax rate on the wealthiest is hare-brained, to say the least, given that research shows that in the 28 years, 1979 to 2007,  the top one percent has increased its income by 200% (a tripling) while the average weekly earnings of the lower 80% of earners has decreased by 2%(see here, Federal Reserve chart and convert for inflation, using this site).The per capita GDP expanded by 72% in this 28 year period, see here. An excerpt from the cited report:

"The average inflation-adjusted income of the bottom 99 percent of taxpayers grew by 18.9 percent between 1979 and 2007. Over the same period, the average income of the top 1 percent of taxpayers grew by 200.5 percent. This lopsided income growth means that the top 1 percent of taxpayers captured 53.9 percent of all income growth over the period."

An updated report shows that between 1979 and 2012 households in the lower 99% had 2.6% income growth and the top 1% had 180.9% growth. Does this mean its time to cut the taxes of the 1%? 
According to Ryan and the Republicans, yes.

Ryan's budget would cut total tax revenues by 22% to 28%, and to compensate for the drop in revenue it would eliminate government programs serving the poor. About 69% of the cuts in program benefits eliminate serves to the poor elderly, the poor disabled, and poor children --- the politically defenseless. Read the report. The Tax Policy Institute predicts that since no new revenues are specified the national debt would climb from around 60% of GDP to 175% by year 2050. Ryan's budget would totally eliminate Medicaid, it would convert Medicare to a poorly funded voucher system, and it would privatize Social Security as well as raise the retirement age to 69. 
I'll write a more detailed analysis someday. References for the above info can be found here, and here and here
Here's an income perspective from the Joint Committee on Taxation, 2014, see page 30:
The wealthiest 5.2% of tax filers, earning over $200,000 yearly, earn 32.3% of all income, pay 70.0% of all income taxes, and 46.7% of all combined income and Social Security taxes. Most of Ryan's tax cuts would benefit the top-earning 5 percent. The fact that they earn almost a third of all income, own 75% of all financial assets, and more than half of all wealth -- that's the status quo that is anti-democratic and harmful. The Ryan Budget is a pay-off to the rich (campaign contributors) who make most of the campaign contributions. Two-thirds of all contributions came in amounts greater than $200 from just 0.5% of all U.S. adults -- see here. The wealthiest exclude, effectively, any candidate who would raise their taxes and reward those who would cut them in half. The Ryan budget is also an insult to intelligence, as it does not balance out as the proponents claim. It is Robin Hood in Reverse. 

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I created  two charts, one on income, the other on wealth.
And I've included two essays, both rather basic. 

Basic to a modern economy are the distribution profiles of income and wealth. I've fashioned two home-made colored-pencil charts in this posting, one displays wealth distribution and the other income distribution. And below them I've included two recent short essays that are introductory in nature, all the same they are crucial for understanding the needs we face. In short, the lower-earning and -saving majority are being left out, and  a social disaster is in the making.  
But first I'm including an Introduction to the overall blog, you can skip it, or read it, here it is:

A reader stumbling on to this blog might wonder what to read. The essay below is easy and basic, "America's Economic Decline Simply Explained"  (click here). The next about Stark Inequality is a little harder, but full of basic info. The Solutions essay breaks a lot of assumptions about how to solve economic problems, and the Full Employment is good, also bursting with unconventional ideas; and last of all the Radical Populist Budget is one of my favorites. The most popular essay is "The 1950s and Today." 
I have few readers, but few is better than none. This is my public record book where I store thoughts. I also enjoy constructing the photos and making detailed and very involved searches  -- Growth and the Federal Budget is such a long-winded and overly detailed screed. Often I'll come back and realize that I've forgotten the content of an essay. That's because they are too dense, but, then, also I repeat a lot. The graph from Olivier Giovannoni on the decline of income share for the lower-earning 90%, from 1980 to the present, is the most important thing a reader should learn. Most of the above articles I recommended contain this graph. The Radical Populist essay has it, and in several more it appears. Even this present essay could use, so here it is, again. 

What does the graph show? The deep blue area represents the "labor share" to the lower-earning 90%. Note that in 1980 it begins to decline, from 55% to 38%. Here's what Giovannoni states at the Levy Institute: "This amounts to a transfer of $1.8 trillion from labor to capital in 2012 alone and brings the US labor share to its 1920s level." In 2018 the share decline, of 17%, represents $2.75 trillion. Without this drop the incomes of the lower-paid workers would be about $19,000 higher per worker among each one of the 144 million workers whose income is below $90,000 a year. So this is a major shift in income distribution, and if we could ever regain the "labor share" of 1945 to 1980 we would be living in a much improved society. Not perfect, by any means, but improved. That's why the graph is so important. (Continued at --  the most recent essay of May, 2018.) 

Today's report:

It's a common sense Keynesian idea that aggregate demand is necessary for efficient, mass production. Mass production exists only with mass consumption which is also called purchasing demand. Therefore a relative equality is needed. The worker-majority must be able to purchase what they produce. Wages and wealth must keep pace. A too equal distribution would be unfair, but a too unequal distribution will be a drag on output -- not enough purchasers. What corporation will produce goods that are not purchased? Why is India so poor? 

From two reports I've reproduced two charts, on income and wealth distribution.
And I've included two recent essays, one 1,200 words, the other 900. Similar in focus. 

Wealth today:

Source, Edward N. Wolff
YouTube has a video on "Wealth Inequality in America". By July, 2018, some 21 million had viewed the video. It is amazing, check it out here.

Income today:

Hope you can read the small print.
Source: here, here and here.

Post-tax income growth of 21% between 1980 and 2014 shows a slight improvement for the lower 50%, but that's in light of an overall growth rate of 61%.

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This following is a letter to the editor, so it's general info and simple: 

    The Trump/Republican Budget and                                
               America’s Poorest 40%                               

In April, 2018, the Congressional Budget Office scored the Trump/Republican tax bill passed in December, 2017, and said it would increase the public debt from 76% to 96% of GDP by 2028. This is an increase of $4.6 trillion. Mr. McClintock voted for this bill stating that economic growth would increase the tax revenues offsetting the decline created by the tax cuts. In 1980, running against Ronald Reagan, George H. W. Bush called this “voodoo economics”. Reagan and Bush I increased the national debt from 25% of GDP to over 50%. Bush was correct. And in 10 years we will see approximately the same increase in the national debt. A report from ITEP states: "The national debt today [April 9, 2018] stands at $15.7 trillion.[3] Two decisions made since 2000 — tax cuts and America’s wars since September 11, 2001 — together account for roughly two-thirds of that amount.[4]"

Due to the fact that about 60% of the county voted for Mr. McClintock, and he and Mr. Trump see eye to eye, I don’t know how to approach the readers of the Mariposa Gazette. It will be an uphill battle. In my opinion, the Republicans, nationally, are making life worse for most Americans.

Approximately 43% of Americans live with incomes that fall below 200% of the official poverty level. They are either poor or “low income" in this very wealthy nation, according to the Supplemental Poverty Measure, U. S. Census, page 7. This is after paying taxes and receiving government transfers. Many scholars claim the poverty line is artificially low, and 140% of poverty is where it should be set. These 43% are our neighbors, and they make up the majority in some cities and neighborhoods. As a nation we are so rich that poverty could be eliminated. How much income does our economy generate? It created over $15 trillion in 2017 (see page 34), and evenly divided among 163 million workers, that’s an income of $92,067 per worker. But over half of all workers earned less than $30,553 in 2016 (last year for available statistics), and the average annual income for the lower half was below $13,000 a year. These facts come from the Social Security Administration’s annual report on wage income. An income of $13,000 a year is also 11% of the average of $92,067, and a minimum wage worker working full-time year-round would earn more. I repeat, we are very prosperous, but we have polarized income and wealth distribution. 

Between 1980 and 2014 the economy grew by 60%, according to two reputable reports. The income of the lower-earning half increased from $16,000 to $16,200, while the income of the top 1% increased from $420,000 to $1,300,000. The top 1% received 36% of all growth, the next 9% received 32%, and the percentiles 50 to 90 received 32%. The lower half received zero percent. 

On June 7, 2018, the Federal Reserve released its quarterly Flow of Funds report, (see page 2) and the private “household net worth” is over $100 trillion. That’s trillion, not billion. It stood at $100.768 trillion  — the first time surpassing $100 trillion. The federal government will spend $4.1 trillion in 2018 in comparison. And still we have a $500 billion deficit. We could easily tax that $100 Trillion and balance the budget. A financial transaction tax would be enough. Household net worth stood at $48 trillion just 9 years ago, so there has been a boom in the value of paper assets, as many stock watchers know. Wage income did not double, it increased by 5%. The nation’s average wealth, per adult over 20 years-old, stands above $400,000. We are wealthy. Yet the median wealth — the middle rung — per adult is about $40,000. The lower-saving 40% of U.S. households has a negative net worth, they owe on average $9,860, according to a study by Edward N. Wolff, a scholar with abundant credentials in wealth studies. The wealthiest one percent own nearly 40% of all wealth, on average about $15 million per adult, or $31,300,000 per household, according to E. Wolff. Eighty percent of U.S. households own only 10.1% of all wealth. 

This is not the profile of a nation that should massively cut taxes to the wealthiest. The Trump tax cut and the following budget are twin policies. Mr. McClintock railed for years against the Obama era deficits, and now he supports deficits. Obama’s high spending was directly related to the worst recession in 75 years; they included unemployment insurance payouts, food, housing, and medical services to the nearly 9 million families who lost employment, and often their homes. The first 14 months of the recession were under George Bush’s term of office, the last 4 months were under Obama’s term. Deregulation of the financial sector resulted in the approximate evaporation of 25% of the private savings of America’s households, 70% of which were financial savings. It was a financial sector crisis.

The Trump budget will slash funding to programs that provide “social benefits” to the lower-earning 40% of America. These “non-defense discretionary” programs will lose 60% of their funding by 2028, it’s clearly stated in the 2019 budget proposal. Robert Greenstein at the Center for Budget and Policy Priorities states these are “massive cuts in . . . education, health care, assistance to low-income children and families, job training, environmental protection, and scientific research.” 
In light of these facts, I can’t understand how intelligent adults can vote in support of the present government. 
And a last graph originating from the Office of Management of Budget: 

How to absorb all this? The largest cuts occur to which agencies? 
$15 bn to HHS, $11 bn to State, $9 bn to Education. The EPA and State are the big losers, HHS is second biggest loser. But what is the average cut in one percentage? Maybe it's 14%. These are discretionary non-defense programs, so Medicaid, Medicare and Social Security are not included. Note the fine print about "eliminate funding". And the IRS? The CBPP has a report, stating, "Despite the once-in-a-generation enforcement challenge that the law poses, the bill leaves enforcement funding at roughly the same level as in 2017 — and down $1.5 billion (23 percent) since 2010 in inflation-adjusted terms." The new tax law is an opportunity for evasion. 


The next article deals with the income distribution of 1960. 
     Give Me That Ol’ Time Income Distribution    

Times aren’t so good for many Americans. A recent survey found that 78% of U.S. workers live paycheck to paycheck -- "38% sometimes live paycheck-to-paycheck, 17 percent said they usually do and 23 percent said they always do.", that's 78% on the edge --- and 71% live in debt, and 56% save less than $100 a month, and 40% of adults say that finding $400 in cash for an emergency within 30 days would be impossible. The total national income divided by all who worked and submitted a W-2 form, 163 million, equals over $92,000 per worker. Something is wrong here.

The Millenial generation (comprising 34% of U.S. population and between 18 and 34 years-old) is often paying between 68% to 90% of income just to rent an apartment. Nationally a rate of 34.1% of young adults are living at home with parents; this rate has never before been so high; in Miami area “a whopping 44.8% of 18- to 34-year-olds live with their parents.” The Pew Center published a graph showing in 1960 the median income for this age group was $27,300 a year, and it is now $15,000. Rental costs as a percentage of income have increased. The Federal Reserve conducts an annual survey,  page 7, on household well-being, and reading the fine print, it concludes that 40% of all adults “have scores that suggest a high likelihood of material hardship”. The U.S. Census poverty study, the Supplemental Poverty Measure, shows that 43% of Americans live in households with after-tax and after-transfer incomes below 200% the poverty line. That indicates a per person income of below $12,500 in a family of four. Yet our very prosperous economy generates over “$45,090” of income after taxes for each individual, says the Bureau of Economic Analysis (Table 2.1). Very likely, 40% of Americans live with incomes that are less than, and often much less than, a quarter of the average that our economy generates. That is shocking and depressing. We should work to change the depressing picture. Some of these data come from an article by Paul Buchheit at Common Dreams. Another article by Buchheit argues that about half of Americans live in poverty. Kathleen Short of the U.S. Census has stated, see page 30, in 2013, about 30% live below 140% of the poverty threshold, and that's poverty. 

As Woody Guthrie once sang, 
“If you ain't got the do re mi, boys, you ain't got the do re mi,
Why, you better go back to beautiful Texas, Oklahoma, Kansas, Georgia, Tennessee.
California is a garden of Eden, a paradise to live in or see;
But believe it or not, you won't find it so hot
If you ain't got the do re mi.”

It was not always like this. Let’s look at past distribution ratios of wealth and income, this will restore a little hope on our sad condition. I printed out a page from Edward Wolff's 2018 report on wealth , 2017, "Household Wealth Trends in the United States, 1962 to 2016: Has Middle Class Wealth Recovered?" (For a summary, see here.) Table 2 shows figures for wealth and income distribution from 1962 to 2016. The wealth picture shows in 1962 the lower-saving 80% owned 19.0% of everything, and now they own 10.1%. If we had that 1962 ratio today, an additional $87,840 would be in the savings of each of the 100 million households of the lower-saving 80%. It would increase the median household savings from  $78,100 to almost $166,000, and it would erase the debt burden of the lower-saving 40% of U.S. households. 

And for income distribution, in 1962 the lower-earning 80% took in 54.0% of all income, but by 2015 its share had dropped to 36.0%, a drop of 18.0%. What happened to the 18%? The top-earning 10% in '62 took in 30.0%, and in 2015 they received 49.9%  - an increase of 19.9% of all income. How much is 18% of all income? Today it's $2.7 trillion (multiply 18% times $15.007 trillion, from Congressional Joint Committee on Taxation, Overview), or it's $2.9 trillion (BEA.gov, Table 2.1). So $2.7 trillion distributed to the lower-earning 80% of workers, and that would be about 130 million workers, would increase the income of each of the 130 million by $20,769 every year. Other researchers also report the same general shift in income shares. This is in the ballpark for the figures that the Economic Policy Institute present on their web page “What should you be earning?” It also matches the general picture drawn by Olivier Giovannoni (Working Paper #66) showing a distribution slide of the lower-earning 90% beginning in 1980. The CBO report of 2011 also shows a massive shift. 

Now let’s look at the change that would happen to the incomes of the lower-earning half of U.S. workers. The median income worker — half earned more wage income and half earned less —  among all 163 million workers in 2016 earned in wages $30,533. That means 81 million earned less than $30,533, and the average income for the lower half was just under $13,000 in 2016. (You have to add the income columns of the Social Security Administration report, and divide by number of workers.) If we could add back the income share they once enjoyed, it would be, on average, an additional $20,769 of yearly income on top of today’s average of..
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  The Profile of Inequality of Income and Wealth

I read an article by Lawrence Mishel at the American Prospect and left this comment. My comment:

Income Shares --- Are they Healthy?"The lower-earning 45% of U.S. households all with incomes below $40,000 a year, earns in market income about 11.5% of all income, while the top-earning 20%, all with incomes above $100,000, earn 60.0% of all income. This comes out of the Congressional Joint Commission on Taxation (see here, page 30). When I convert this to average income per household, it means that the lower 45% have one dollar of income while the higher 20% have $11. This 1 to 11 ratio between nearly half and the better earning 20% is an unhealthy balance. Living standards for half are strained. And then I looked at the CBO report on income distribution for 2011 (see page 2) and see the same ratio. The market income disparity is relieved by government transfers and taxation, but the final disparity is glaring, 1 to 6 instead of       1 to 11

International ComparisonsWe are becoming like Mexico, which has the greatest inequality between the 20th and 80th quintiles, and our social ambience will become like Mexico’s as we continue down this line. The OECD places the U.S. income inequality at 4th worse out of 34 advanced nations (see page 45, "inter quintile share ratio 80/20). Mexico's 20th to 80th quintile average income ratio is 13.0 while the U.S. has 7.7. Lawrence Mishel says (at article cited above) that for 70% of the workers wages have been flat for almost 40 years, while the economy’s growth per human has more than doubled since 1964, by a factor of 2.6 times, a percentage of 160%. It's a stunning loss of income for the vast majority of Americans. "Raising America's Pay" is the call of the EPI, which also presents a wage calculator where one can discover what one's income would be if wages and productivity had matched. Not to be missed is the article "Wage Stagnation in Nine Charts" from the EPI. 

Wealth DisparityWealth disparity is far worse. Professor Saez released a report showing that one in 1,000 has as much savings as 900 in a 1,000, both have about 23% of all wealth. (And read more here) Bernie Sanders seems to be the only politician speaking out about cures."    More to come. But of course you could read the 2014 posts on inequality and capture most of what I have to say. 

Weekly Wages Today Are Lower than 
1964 Wages for 80% of Workers Even Though the Economy Is Two and a Half Times More Productive Per Worker  
Dollars and Sense magazine published this graph, but the article is not on the web. (They also published 11 graphs at the end of 2014 well worth our time to contemplate, here.)  Total compensation rose by 40% because insurance companies charged employers more for medical insurance. Employees never experienced a raise. Average hourly wages have gone up by 8% since 1964 while average weekly wages have declined by 4%, see the graphs below from the Federal Reserve. Wage income as a share of national income has declined from 51% to 42%, an amount equal to today's $1.26 trillion; and if the former 51% share went to wages then 80% of households would have $10,000 plus income, and poverty would not exist (because I'm distributing the $1.26 trillion equally to all households in the lower-earning 80%).  
The Federal Reserve graphs show that average weekly wage earnings for nonsupervisory employees since 1964 have decreased by 4%. Here are a few Fed graphs showing how poorly the economy has served employees --- here, here, here, and here. Use the BLS inflation calculator, here, and you can learn that incomes have stayed flat. Lawrence Mishel says, in the article cited above, that for 70% of workers, all employees, wages have not budged since 1970. 
The EPI details lopsided income growth since 1979, the net result is "Change in Income" for top 1% = 180.9%, for the bottom 99% =  2.6%, Top 1% share of all income growth, 88.5% over 33 years. At Measuring Worth we see in those 33 years GDP per capita increased by 70.3%, from $28,725 to $48,908. Again, 88.5% of that growth went to the top 1%. The difference between the 1% and the average 99% is 30 times. 

One in Four Workers Are Out-of-Luck
_____________________________________One in four U.S. adults who would like to work are either not working, working only part-time and want full-time, or are working for poverty wages full-time and year-round. One in four is 25% or about 40 million adults. Now I'll try to prove it: 
Look at National Jobs for All Coalition's monthly employment report, njfac.org. They state that 21.9 million are 1) not at work or 2) not working full-time but want full-time. Then they state that 18.5 million workers are 3) working full-time, year-round at less than poverty wages which they put at less than $23,850. This comes out to less than $11.50 an hour. A total of 40.4 million out of a workforce of 156 million (see here) is more than 1 out of 4. 
I could argue that this number is greater, but I won't. Who would read it? It was larger a year ago, about 28% of the labor force. 
So, things are improving. 
I read the December 2014 report of the Council of Economic Advisers, and I am upbeat, at last. Things are improving. But, one in four either working poor or not working? And 45% earning just 11.5% of all income while the top 20% earn 60.0%? A ratio of 1 to 11. And the top 1 in a 1,000 owning more than the lower 900 in 1,000?  We have quite a long, long road before we reach upbeat. 

The System Is Not Working_______________________________________When I think 1 in 4 workers are either not working, not working enough, or being paid a sub-poverty wage, I think this system is not working. Today I saw an old campaign poster for the local Tea Party winner, and it said "Freedom Works". For whom? 
The nation needs to get voters to vote. And to get money out of political campaigns. And to create public employment to drive up wages, while reforming laws pertaining to labor unions. I've gone over this in previous reports. 
In a more real way, we are witnessing a collective movement of  hearts. A very slow awakening of the importance of the economy, a shift of the old story of freedom to one of cooperation. Caring will at last form the basis of voting. Since there is so much wealth and income --- it is absurd to think that for long we can hold the natural instincts down with fear, paranoia, class animosity, and demagoguery. We are reasonable and understanding. "We'll come to understand that we like each other more than we thought we did," was my answer to "How will it ever change?" We'll come to care more and apply our strengths to making equal opportunity and more-or-less equal outcomes happen. I can't say it clear enough.  Too many of my friends insensitively and arrogantly predict calamity. I disagree, but the future will be difficult, both good and bad will come forth. The good will be much more powerful. But that matters little, each person will have to demonstrate his convictions and act. 
Here's a nice read about inequality in movement, from Too Much, again. Two British epidemiologists discuss the powerful insights about inequality, disease and health outcomes, and the reaction to their story, "Pickett: Actually, I don’t think people find what we’re talking about all that difficult at all. I think they find that what we’re saying, about the impact of inequality, is intuitively making sense of their own experiences. So the most common reaction we see among audiences when we’re talking is nodding." 
Maryland Congressman with a Bold PlanA news report Congressman Chris Van Hollen's plan for a $2,000 tax credit for middle class couple's taxes (an income increase of $1.2 trillion over ten years to about 50% of households), a Financial Transaction Tax, and for a  fine on corporations that boost only CEO pay while employee pay falls. See KPFA's Pacifica Evening News, January 14, 2015. The video of Van Hollen at the CAP is here, 58 minutes. I watched the entire 58 minutes, I feel I should watch it again. 

The nation's surplus is going to waste. 
$25 trillion of new savings has been created in the past 6 years, since 2008 (see Federal Reserve report, page 2). An increase of $78,000 per human, or a 30% increase per capita. It's a stunning increase. Haven't you noticed how much better things are, how much new construction is happening, how strained we are to meet the influx of all the new demand? 
No? Why not? Because all that surplus is going to waste, that's why. Van Hollen's plan, and others like it would put the surplus to productive use. Since 2008 the economic output, GDP, has been $90 trillion, and savings has increased by $25 trillion, and that's an amazing amount of savings. Too bad it goes to absolute waste. 

The CPEG program purports to raise close to $1,000 billion a year while Van Hollen's plan only $120 billion. CPEG recommends: "c) As we exploit our (greatest remaining economic “asset” - rentierism) we need to shrink it and eventually eliminate it. A straightforward way to do both (exploit and gradually eliminate) is to impose a financial transaction tax on all financial trading in the U.S. and with European collaboration (the EU parliament has already recommended this) worldwide.11 It is indicative of the degree of economic distortion of our rentier economy, that this one tax has the potential to raise up to $ 1 T a year and fund up to 25 M living wage jobs over 5 years (Barclay, 2005) (CPEG, 2009,2011). This should be immensely politically popular, would directly repress rentier activity, and if used for a jobs program, directly redevelop the productive side of our economy."

The Van Hollen video is a convincing public display by a knowledgable Congress Representative, and it should have a durable impact as he seeks to publicize it. Watch it. 
Also, here's a short piece from the Brookings Institute on the CBO report that has caught my attention. To quote: "Between 1979 and 2011, CBO calculates, inflation-adjusted market income for the bottom 20 percent of households rose by 16 percent.  For the middle three quintiles of households (the 21st to the 80thpercentile, this income also rose by 16 percent.  For households between the 81st and 99thpercentile, it rose by 56 percent.  And for the top 1 percent of households, it rose by 174 percent." 
See the web page Measuring Worth and calculate as I did that the per capita growth of the nation increased by 70.2% between 1979 and 2011. Not 16%, 70%. Michel's article covers this too.  
The CBO report mentioned in the Brookings report will be the topic of a soon to be posted essay here.
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A reader stumbling on to this blog might wonder what to read. The essay below is easy and basic, "America's Economic Decline Simply Explained". The next about Stark Inequality is a little harder, but full of basic info. The Solutions essay breaks a lot of assumptions about how to solve economic problems, and the Full Employment is good, also bursting with unconventional ideas; and last of all the Radical Populist Budget is one of my favorites. The most popular essay is "The 1950s and Today." I have few readers, but few is better than none. This is my public record book where I store thoughts. I also enjoy constructing the photos and making detailed and very involved searches  -- Growth and the Federal Budget is such a long-winded and overly detailed screed. Often I'll come back and realize that I've forgotten the content of an essay. That's because they are too dense, but, then, also I repeat a lot. The graph from Olivier Giovannoni on the decline of income share for the lower-earning 90%, from 1980 to the present, is the most important thing a reader should learn. Most of the above articles I recommended contain this graph. The Radical Populist essay has it, and in several more it appears. Even this present essay could use, so here it is, again. 

What does the graph show? The deep blue area represents the "labor share" to the lower-earning 90%. Note that in 1980 is begins to decline, from 55% to 38%. Here's what Giovannoni states at the Levy Institute: "This amounts to a transfer of $1.8 trillion from labor to capital in 2012 alone and brings the US labor share to its 1920s level." In 2018 the share decline, of 17%, represents $2.75 trillion. Without this drop the incomes of the lower-paid workers would be about $19,000 higher per worker among each one of the 144 million workers whose income is below $90,000 a year. So this is a major shift in income distribution, and if we could ever regain the "labor share" of 1945 to 1980 we would be living in a much improved society. Not perfect, by any means, but improved. That's why the graph is so important.  

The following is a short introductory essay on the economy. It should be published somewhere soon, it's not long or complicated. 

  America’s Economic Decline Simply Explained       

Many people  wonder why the U.S. economy is not working for them. I’d like to explain in simple terms. I’ve written a blog for 10 years, Economics Without Greed. I may be an amateur, yet my reasoning is not that far off. Here’s why the economy is not working: 
  1. Most people work for large corporations or non-profits. The U.S. Census shows that 82% of private sector workers are employed in firms with more than 20 workers, 65% work in firms with over 100 workers, and 51% work in firms with more than 500 workers. (I have to warn the readers to not focus on the numbers, but  focus on the main concepts.) The largest 1,909 corporations, all employing more than 5,000 workers in the U.S., generated 44% of all revenues, and employed 34% of all workers. The health (or non-health) of these large companies spills over to the smaller ones. 
  2. Large corporations distribute around 91% of their profits to shareholder owners, not to workers in higher wages, nor to plant expansions, nor to research. Wages are kept as low as possible. Since 2001, when corporate profits were 4.6% of GDP, they have increased to 8.9% of GDPin 2018. Some years these large corporations distribute more than 100% of their net profits to shareholders, thus looting their own companies. Professor William Lazonick’s research has shown “How American Corporations Transformed from Producers to Predators.” (Also “Profits Without Prosperity” published and winner of best article of the year at the Harvard Business Review.) 
  3. Most of the profits (85%) generated by corporations end up in finance seeking the highest rates of return; this surplus is not recycled into productive economic activity that would employ workers and increases prosperity. It is tied into hedged bets which act to diversify risk of catastrophic decline. Assets are added to existing value of financial assets. Seventy-five percent of financial assets are owned by 5 % of households.
  4.  Since there is a limited amount of corporate stock, these stocks necessarily increase in value. Wealth then accumulates exponentially for the minority owner class. In the past 9 years, since January of 2009, financial assets have increased their value by 87% (inflation adjusted), from $48 trillion to $98 trillion. In the same period wages for non-supervisory workers grew by 5%. And looking further back, since 1964 the S&P 500 Index has increased by 250%, and average weekly wages for nonsupervisory workers are exactly the same as in 1964, a zero percent increase. The aggregate value of stock more than triples, while weekly (and yearly) wages for 80% of the work force stays frozen. The economy’s per capita “disposable personal income” has tripled since 1964 (inflation adjusted) shows the Bureau of Economic Analysis. But average weekly wages for 80% of workers have not increased at all.                                                                          
  5. Labor organizing rights are suppressed by both corporations and by law; most of the change occurred by judicial amendment of the National Labor Relations Act, not by enacting a new law. Now strikes are rare because the original purpose of the NLRA has been nullified, and strikes normally result in lay offs. 
  6. If wages had matched the growth of productivity, the average wage income would not be today’s $46,640 but $69,648 (and that’s 49% higher). The median worker’s wage would not be $30,553 but $47,703 (and that’s 56% higher). Half of U.S. workers earn less than $30,553 a year. Adding their collective income, they earn a little more than $1 trillion in an economy that generates $16.2 trillion. Their collective average income, for 81 million workers, is less than minimum wage paid to a full-time year-round worker. There’s an interactive web page at the Economic Policy Institute that asks and answers the question “What Should You Be Earning?” It shows how large the productivity to wage gap is. Most workers could be earning about 50% more income. 

Earnings --    Would Be   ----                                  wage income    
 $10,000    ----    $17,845        --- a gain of   78%            22              
$20,000    ----    $32,256                        of   61%            36              
$30,000    ----    $46,855                        of   56%            49              
$40,000    ----    $60,744                        of   52%            61              
$50,000    ----    $73,299                        of   47%            70              
$60,000    ----    $82,747                        of   38%            77              
$70,000    ----    $92,308                        of   32%            82              
$80,000    ----   $100,453                       of   26%            86              
$90,000    ----   $107,919                       of   20%            89              
$100,000   ---   $115,832                       of   16%            91               
$110,000   ---   $123,807                       of   13%            93               
$120,000   ---   $131,782                       of   10%            94               

According to the EPI table and the Social Security table, at least 61% of workers (all in the lower earning 61%) would receive more than a 50% increase in income. Of the 163 million American workers submitting W-2 forms to the Social Security Administration in 2016, 91% reported income below $100,000. 

These are the reasons the economy is failing so many. 

The U.S. Census report, “The Supplemental Poverty Measure”, shows 43% of Americans live in households with incomes below 200% of poverty (see Figure 6). 

This interesting graphic shows one important facet of the economy: many households, about 20%, are pushed below 400% poverty. They are pushed into the lower income ranges, and the range between 1.0 and 1.99 of poverty enlarges, nearly doubles. That is, taxes push incomes down, government programs do not raise incomes upwards out of poverty, for the most part.  
Some researchers say that 200% of poverty income is poverty, and some say that 140% is actual poverty (Kathleen Short, page 23). Below 140% includes 28% of Americans. Short, a 30 year veteran of the Census department, stated, "This suggests that families with resources below approximately 140 percent of the SPM threshold, rather than 200 percent, may be characterized as not able to meet their basic needs and achieve a safe and decent standard of living, or as families with ‘low income’."
 That sounds like a definition of poverty, "not able to . . . achieve a safe and decent standard of living." Either way, a sizable portion of Americans, perhaps 93%, live with incomes below the average “disposable personal income” which the Bureau of Economic Analysis places at over $44,000 per person in 2017. A household of four with the per capita average “disposable personal income” (meaning post-taxes) would have an income of $178,000 (and that is post-tax income, so pre-tax would be about $210,000). An income of $48,600 for a  four-person family, which is twice the poverty level (200%FPL), is slightly over a quarter of the average of $178,000.  
As the SPM shows, 43% of Americans live below 200% FPL, and their pre-tax income is less than a quarter of the AVERAGE. This is inequality of a very high, extreme, stark nature. In my opinion the resources flowing to the highest income groups putrefy and go to waste. Hoarding is waste.
Shared prosperity is a long, difficult American dream away for many Americans. 

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     Richard Wolff's Economic Update

I just finished an hour's listening to Economic Update, January 23, 2015. 
It was the best show I've ever heard (click here - Audio/Jan. 23, or click here, KPFA radio which carries Wolff's program), especially the final half when Wolff's wife, psychologist Dr. Harriet Fraad, describes the dangerous plight of our nation's youngsters. I seldom describe the human side of bad economics; this show is refreshing and will enlighten you. One in six youngsters, below 18 year's old, suffers food insecurity and hunger perhaps daily. Half of the children attending public schools now qualify for free lunch, meaning their family has less than $43,000 income. (If you wish, you can check: the  Basic Needs Calculator, the Basic Family Budget Calculator at EPI - Topeka, Kansas is the median expense city in the nation, the MIT calculator, and State of Working America, and here, if you wonder if $43,000 is too high an income to qualify for food assistance.) In 1995, 20 years back, only 33% qualified. Our system of after-school care and infant childcare is lamentable and will destroy our nation ultimately. Other nations provide these services far better. Many, many children arrive at school hungry and need breakfast, and teachers often provide morning snacks out of their own savings. I taught in public schools in east Oakland for over 10 years, I testify that this is a reasonable assertion. Run-away and throw-away children are on the increase since the beginning of the recession. This radio show is a disturbing program, but it highlights the personal effects of an economy and society dangerously out of touch. Too often ordinary people claim that others who have money problems have made bad decisions and now survive  parasitically on the rest of society. Good people seem to make this erroneous assertion regularly, and they should learn better by listening to this radio show. 
I also read Robert Kuttner's article 
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     Solutions — The Way Forward                                                         
                       To Shared Prosperity    

The problem: 

Average income growth in US recoveries: top 10% versus the bottom 90%. (Graph: Pavlina Tcherneva)
The CBO report on income distribution is stark, but the report by Saez, Piketty and Zucman, 2016, is starker.

This graph came from the CBO, income distribution before taxes in 2011. 

And from the Saez, et al report that how the lower 50% lost while the top 1% gained, this graph:

This shows that each household in the lower 50% of households lost about $20,000 of yearly income, and all their loss was captured by the top 1%. 
From the report
From 1980 to 2014, for example, none of the growth in per-adult national income went to the bottom 50 percent, while 32 percent went to the middle class (defined as adults between the median and the 90th percentile), 68 percent to the top 10 percent, and 36 percent to the top 1 percent. An economy that fails to deliver growth for half of its people for an entire generation is bound to generate discontent with the status quo and a rejection of establishment politics.

      No growth to lower half; 
      about a third to the 50 to 90 percentiles, 
      and about a third to 90 to 99 percentiles. 
      about a third to the top 1%, 

I find myself mentally pursuing solutions. The world has to react to the presidential and Congressional realities, but perhaps we are forgetting the evolution of positive outcomes. Here is my list of 14 solutions to transform the economy worldwide, no small ambition. 

              The 14 Solutions                
1.  Get money out of politics. 
This report, Table 2, page 51, shows that donations of $10,000 or larger were the biggest contributor in the 2016 presidential contest. It breaks donation amounts into 7 sizes, from less than $200 to over $100,000 in the 2016 presidential election. Hillary Clinton received 60.0% of her donations in amounts greater $10,000, Trump 47.1%, and Sanders 4.8%. Sanders was obviously the people's candidate. I remember watching the World Series that year, and anti-Hillary advertising was blanketing the between innings advertising slots. Big money spent late in the race, this report states, played a very large role in the election. What chance does a tax increase on the rich have when the wealthiest pay for, or buy, our candidates? Thomas Ferguson, and Open Secret, and others have information about this, and Represent.Us has 10 reformsHere is a crisp video on election corruption from Represent.Us -- this video is convincing and right on, you should click now -- and here is the anti-corruption act site. You can download the act itself. Incumbents win re-election 90% of the time, they collect over 80% of all donations, and almost half of the time they outspend their opponent by 10 to 1 --- all this in charts at the Open Secrets site, here. Money calls the shots, and here's Lawrence Lessig at Ted Talks video, presenting a clear picture about the 0.02% who determine our democratic (?) system. 

2.   End "Financialism", a mutant off-spring of capitalism, the parasite that is destroying the host. Finance is destroying capitalism, period. 
Since 1986 financial assets have increased their value by 194%, that is almost tripling in value. They increased from $24 trillion to $72 trillion, adjusting for inflation (in comparison the national debt stands at $20 trillion in 2016). In the same period, GDP per capita rose by 56%. 56% vs. 194% -- This creates a disincentive for productive investment because investing in financial assets pays  far more than normal economic growth. 

Since the recession ended in June of 2009, the "real" household net worth - call it wealth - has increased by 64%, up from $48.9 trillion to $90.2 trillion. (See the FRB report, page 2, and Table B101) How, we should ask, is this possible? To create a stunning increase in total net worth during a period of recession? While the wealthiest six million households are now wealthier by over $5 million on average, even more millions of Americans lost their jobs and/or  income and often their homes. Half of Americans live a precarious life indecent for such a wealthy nation. While most of the attention has gone to the federal budget -- national debt rose by $9 trillion to $19 trillion in the same period -- the real problem is the enrichment of a minority at the expense of the majority. 
Most American families lost over 40% of their life savings. 

Median household wealth, by race and ethnicity, 1983–2010 (2010 dollars)

Graph from State of Working America.
The average household net worth is $721,000 (see FRB Flow of Funds, linked above) 
Running in the opposite direction, financial wealth was booming. Something is wrong here?  

The book Makers and Takers by Rana Foroohar targets unequivocally the financial system as the crippler of our economy. She cites a book by Adair Turner that claims 85% of corporate profits end up bolstering financial assets and 15% are applied to actual investment. And she cites (page 332) a study that "finds that the function of financial system . . . is no longer to funnel money to new investments, but to funnel it through existing assets, such as housing, often via complex securitization." (from an FRB paper by Schularick and Taylor, Credit Booms Gone Bust, 2009) From their conclusion: ". . . episodes of financial instability have more often than not been the result of credit booms gone wrong, most likely due to failures in the operation and/or regulation of the financial system. . . . For policymakers, a complacent attitude towards the growth in the scale and riskiness of the credit system now looks like a misguided choice that ignored history."
 Foroohar's book is also easy to read as she was a journalist at Time magazine for 20 years or more. I've not finished it, but it's good so far. See her interview at INET

John Kay, author of Other People's Money, states in an interview with the Financial Times, "that only three percent of British bank assets are to enterprises engaged in the production of goods and services. Most of the rest are loans to other banks. The primary activity of large banks is no longer financing growth in the real economy but 'exchanging bits of paper' with their peers, sometimes cutting the paper into different shapes in the name of 'innovation'."   See his interview at Institute for New Economic Thinking. 

"Capitalism is killing itself," states the expert in this interview. Another expert agrees. Watch this February, 2017, video interview at The Real News Network, where Paul Jay interviews Heiner Flassbeck, "Mountains of Uninvested Corporate Cash, Not Mexico, Most Responsible for Job Loss." 
Flassbeck worked as an economist for the German government, then for the United Nations at UNCTAD, United Nations Council on Trade and Development. 

Lawrence Mitchell, author of The Speculation Economy, has penned an accurate picture of this "financialism" parasite at his blog. His last installment, May 5, 2014, carries a paragraph "How can we fix it?" The details are not appropriate in this broader essay, but should be glanced at. 
The U.S. and global economies suffer from a scandalous and  enormous over-supply of unused capital. Daniel Alpert covers this in his book The Age of Oversupply, Overcoming the Greatest Challenge to the Global Economy, and in this shorter essay, Glut.  Other authors have been writing about it here (David Korten), and here, (Robert Kuttner), and here (Michael Roberts). And read my comment at the end of this essay. 

At the risk of cluttering my list, here's a graph showing the ratio of household net worth to GDP, at a historical high (see this web page). Today 70% of all U.S. assets are financial. See Flow of Funds, Table B.101. 

Globally, private net worth exceeds $256 trillion according to Credit Suisse Bank. How much of this value is simply wasted, not  put to productive use, squandered in speculation not investment? Most of it, perhaps 85% as Faroohar claims. 

A Global View 
What is a proper social response to this enormous pile of unused wealth? The Pew Research reports that in 2011 51% of humans (3.5 billion people) consumed or lived on less than $5 a day, and "at the end of the first decade of the 21st century, the vast majority of the world’s population (71%) [5 billion humans] remained either poor or low income", living on less than $10 a day. The Credit Suisse's wealth pyramid shows that 74% of the world's adults own 2.4% of total wealth, about $1,700 per adult. And they all survive at less than $10 a day. As for the poorer half of humankind, they consume annually $5 trillion of resources, 2% of the world's private net worth. This is a tragedy. A modest tax on these resources could improve the lot of half of all humans. The dynamics of "financialism" should be examined, and the incentives changed drastically. That's the purpose of this essay. 
James Kwak, co-author of several books with Simon Johnson, here proposes a retrospective tax on capital
And here is another proposal about a modest  tax on billionaire's wealth

I highly recommend this short report by L. Randall Wray which  capsulizes the essential economic problem we face, "Minsky's Money Market Capitalism and the Global Financial Crisis".  

   * * * * * * * * * * * * * * * * * * * * *
       The Way Finance Outpaces the Economy 
I don't like to complicate matters, but ---- as usual I have to anyway. Here's how financial growth exceeds normal economic growth. In 31 years, 1986 to 2016, the nation saved about $20.5 trillion, but financial assets increased in value by $61 trillion. How is that possible? Instead of using this surplus to improve the quality of life, the wealthy minority place their gains into a finite number of paper products. When the economy's surplus is converted into hoarded savings and poured into this finite pool, the value of these limited assets (stocks and bonds) automatically increases. During the 1960s and '70s this did not happen. If you want proof of skimming off the top, read the Harvard Business Review article by Professor William Lazonick showing that 91% of the profits from the S&P 500 went to shareholder dividends and stock buybacks. Stock values in this condition become a parallel currency that increases faster than the actual currency and faster than the economy! 

       * * * * * * * * * * * * * * * * * * *   

3.  Tax Financial Transactions
or, better, tax financial assets directly as a property tax. 
The public part of the national debt of the federal government is $14 trillion, while 6 times greater at $90 trillion is the total household net worth, or savings net of debt. A current study shows the wealthiest 0.1%, or 160,000 families, own about $20 trillion in assets, or $122 million average wealth, mostly untaxed financial assets. The CPEG writers have offered a FTT plan that would raise $900 billion in new taxes; and they are trying to create an Illinois tax on the Chicago Board of Trading. Also James Kwak has authored a plan to tax financial assets directly. Kwak co-authored several books with Simon Johnson, economics professor at MIT. I imagine this is the best way to treat the economy's imbalance, and  to also balance the federal budget: direct taxation of financial wealth. Of course a reworking of the long-term capital gains tax is much needed. And international trade should be conditioned on raising the incomes of all workers, not just on the efficiency of lower priced goods. It all fits together -- financialization is a global parasite. The Peter Barnes’ book, With Liberty and Dividends for All, also discusses a FTT. 

3.   Raise the Minimum Wage and Increase the Earned Income Tax Credit, EITC
Senator Sherrod Brown (Ohio, Dem) and Rep. Ro Khanna propose to double the pay-out on the EITC, an annual pay bonus for low-income workers, benefitting over 20 million households in 2017. Doubling would increase the pay-out from $70 billion to $140 billion per year. Childless workers would finally be eligible for a decent benefit. At U.Mass/Amherst, scholar Jeanette Wicks-Lim in 2011 wrote a similar proposal, which I analyzed. How much income do the lower-earning half of American workers earn (81 million workers)? Less than 7% of all the national income says the Social Security Administration. They need a raise. See here and here, my blogspot web page.

4.   Rewrite the National Labor Relations Act and make strikes effective again. Bernie Sanders in May, 2018, proposed an overhaul of the old labor laws that enables workers to form unions, make owners submit a contract, go to binding arbitration, and support secondary labor strikes. See also here.  Ellen Dannin has a book on litigating the NLRA and reviving its original intent. 
Others authors include Michael Yates, Thomas Geoghegan, Stanley Aronowitz. 
Kate Andrias presents a new approach. And this article at Salon

5.   Create Public Jobs, about 4 to 5 million, $300 billion per year.
Senator Sanders again makes history with a May, 2018 proposal for a guaranteed job plan. See Phillip Harvey speak about a public jobs program and read his proposal. The Center for American Progress, CAP, has two proposals, "Blueprint for the 21st Century" calling for 4.2 million new jobs; this would cost the taxpayers $250 billion a year. And see this program at CAP. For info about a Universal or Guaranteed Income Plans, which I do not favor, see Peter Barnes’ book With  Liberty and Dividends for All  (see the books web page), and an article with James Boyce “$200 a Month for Everyone”.

6.   Create Corporate Profit Sharing programs, and give tax preference status. 
See the book The Citizens’ Share by Blasi, Freeman and Kruse. Only 15% of corporations have either profit sharing or ownership sharing. Both are promising methods of raising income for the 80% who are employees and vastly underpaid. Simply put, our tax policy should encourage widespread prosperity by favoring companies that share their good fortune. As I mentioned elsewhere, William Lazonick has shown that over 10 years, the top 500 companies distributed 91% of their profits either as dividends to owners or as share buybacks. Leaving virtually nothing for employee raises or research and development. 
And read these articles at the Center for American Progress, one
and at Hillary Clinton’s web page, two

7.   Create cooperative, worker-owned businesses, and give tax preference status. I suspect that mostly businesses with less than 500 employees would develop this model, but they employ nearly half the work force. 
See author Alperovitz speak about his book What Then Must We Do?) and Marjorie Kelley on Broad-based Ownership Models.

8.    Create National Corporate Charters, a national standard mandating worker and community member positions on the board  — a Ralph Nader proposal found in his book Seventeen Solutions. The Roosevelt Institute paper on this, "Fighting Short-Termism with Worker Power -- Can Germany's Co-Determination System Fix American Corporate Governance?" takes a long look at the issue. Large corporations are the most powerful element in the American economy, and they serve only owner-shareholders. William Lazonick calls them predators and their work places "sweatshops". The quickest, and most effective, reform is an..
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          Wage Growth for 80% Stalls Since 1969        

Since 1969 average wages for nonsupervisory workers (NS) have dropped by 7% ($2,860 a year) while the GDP per capita expanded by 128%, more than doubling. The real (inflation adjusted) disposable personal income per capita has grown by 140% since 1969. 

Cumulative change in real hourly wages of men, by wage percentile, 1979–2011 
Source: Authors' analysis of Current Population Survey Outgoing Rotation Group microdata


From EPI's latest report of March 1, 2018, The State of America's Wages by Elise Gould.
This report links to EPI's site "What Should You Be Making?", showing that an income of  $40,000 today should be making $60,939, had productivity and wage gains been equal.
That's about a 50% gain in income. Most of America's workers, the 80% who are nonsupervisory workers, should and could be making about 50% more. See my list below  that shows how incomes from $10,000 to $110,000 would have risen if coupled with productivity gains.   On average most workers would be earning about 50% more than they are earning today.  

Cumulative change in total economy productivity and real hourly compensation of production/nonsupervisory workers, 1948–2015
YearReal hourly compensationProductivity
Cumulative percent change since 1948241.08%112.53%ProductivityReal hourly compensation-50050100150200250%1950196019701980199020002010

Note: Data are for compensation of production/nonsuper
Change in average real annual household income, by income group, 1979–2010
YearAll householdsBottom fifthMiddle fifth81–90%91–95%96–99%Top 1 percent
Cumulative percent change since 1979244.7%53.4%Top 1 percent96–99%91–95%Allhouseholds81–90%Bottom fifthMiddle fifth-50050100150200250300%1980199020002010

Note: Data are for comprehensive income. Shaded areas denote recessions.
Source: Authors' analysis of data from the Congressional Budget Office (2010)

From State of Working America.

From State of Working America.

And from State of Working America.
Real hourly earnings and compensation of private production and nonsupervisory workers, 1947–2013
YearHourly earningsHourly compensation
Real hourly rate (2013 dollars)Hourly compensationHourly earnings19501960197019801990200020101015202530

Note: Private production and nonsupervisory workers account for more than 80 percent of wage and salary employment.
Source: EPI analysis of Bureau of Economic Analysis National Income and Product Accounts data and Bureau of Labor Statistics Current Employment Statistics

Cumulative change in real annual wages, by wage group, 1979–2012
YearTop 1%95th to 99th90th to 95thBottom 90%
Cumulative percent change since 1979156.2%153.6%55.4%61.6%34.1%39.2%16.7%17.1%Top 1%95th to 99th90th to 95thBottom 90%-50050100150200%1980198519901995200020052010

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