The Wolf That Ate Wall Street: US Economy Roars Amid Rising Income Inequality
As the US stock market continues to set records, and the economy creates millions of new jobs, many Americans are forced to settle for low-paying work and meager benefits. How long can the inequality continue?
The sound of popping champagne bottles will soon echo across Manhattan this holiday season as corporate America is in decidedly high spirits. And for good reason. Wall Street has witnessed one of its most robust earning seasons on record, unemployment is at its lowest rate in 50 years, while many corporations are swimming in cash. But, as so often happens in the shady world of business and markets, all is not as it would appear.
Just below the shiny surface of Wall Street’s epic success story an epic tragedy is unfolding as millions of workers are silently struggling paycheck to paycheck, doing what they can to make ends meet while raising a family. The numbers are sobering.
According to data released by the Brookings Institution, 53 million Americans between the ages of 18 to 64 fall under the category of “low wage.” Their hourly pay comes out to around $10.22, while median annual earnings are $18,000. Most startling thing, however, is that this group of wage-earners accounts for a whopping 44 percent of the entire US workforce.
In other words, it may be a bit too early to start popping the champagne corks just yet. And it gets worse. Many of these low wage workers are not the stereotypical teenagers flipping hamburgers at McDonald’s for some extra spending cash on the weekends. In fact, the majority of people who fall into this category are adults in their “prime working years,” and low paying work is the “primary way they support themselves and their families,” the report revealed.
This was true for the majority of regions across the United States, as the study analyzed data from nearly 400 metropolitan areas. Other research supports the finding of the study.
According to a new economic metric called the Job Quality Index, 63 percent of all jobs that were created since 1990 were low-salary jobs, many of them part-time. Today, the real US average wage, that is, the wage after calculating for inflation, has approximately the same purchasing power it did 40 years ago. And what gains were made inside of companies mostly went to the highest-paid executives.
There are many reasons for this intense inequality, not least of all the collapse of labor unions, which once upon a time gave employees a real democratic voice inside of the workplace. Also to blame is the decades-long exodus of US corporations to foreign shores in their eternal quest for cheap labor and high profits.
Briefly, it was this concern over the hemorrhaging of well-paid manufacturing jobs, many of them to China and Mexico, which largely propelled Donald Trump into the White House in 2016. The US leader has pledged to reverse course on globalization and bring back those high wages of yesteryear. Trump’s particular brand of populism, however, combines a volatile mixture of semi-isolationism and firebrand nationalism that aims to ‘Make America Great Again.’ Judging by the way the current trade war with China is developing, the mogul of Manhattan may only succeed at sinking the US economy, while dragging down the rest of the global economy with it.
With regards to dwindling US paychecks for increasingly unattractive jobs, the danger here – aside from the very real risk of future social upheaval – is that if the number of ‘have-nots’ reaches a certain threshold of the population, then the overall health of the economy will begin to suffer accordingly. After all, workers are not just workers. They are also consumers, an integral part of any modern economy, and if their jobs start paying less they will naturally consume less, thereby appearing as a storm front on the economic horizon.
At the same time, it is important to note that it is not only the health of the economy that is at risk. Judging by recent data, a surplus of low-wage jobs appears to be having a direct impact on the health and wellbeing of the average American.
According to a report released this month by the National Center for Health Statistics, life expectancy in the United States fell between 2016 and 2017, fueled by drug overdoses and suicides, continuing a downward trend for the last three years. Today, Americans can expect to live 78.6 years, a decline of three-tenths of a year since 2014.
“We’re living in a developed country with a fairly sophisticated health care system and lots of resources… and now all of the sudden it seems to (have) reversed,” Robert Anderson, chief of the Mortality Statistics Branch at the National Center for Health Statistics, told US News and World Report.
Anderson called the decline “concerning.”
It would be very difficult to argue that there is no connection between the ongoing mental and physical health of people and the amount of money they are earning to support themselves and their families. That expensive burden seems at least partially to blame for the precipitation of drug abuse, domestic violence, and even suicide in the US.
How to reverse the trend of decreasing low-wage labor in the United States is another question. Although Trump seems right in wanting to reinvigorate America’s manufacturing base, that is a massive project that will not occur overnight, if at all. In the meantime, one possible answer is an increase in the minimum wage, or higher taxes on US corporations in order to provide more assistance to those Americans now falling through the cracks of one of the most cutthroat capitalist societies ever created.
If the majority of Americans continue to be treated as economic outcasts in their own country, it is difficult to see how the Wall Street traders and investors will continue to celebrate every holiday with heavy bonuses amid flowing champagne. There is a wolf on Wall Street, and it is called inequality. Wall Street needs to slay it if it wants the good times to continue.
By Robert Bridge