My suggestion to a local radio show,
Your Call Radio,
July 19, 2009
This is my Agenda for a New Economy.
We must raise wages for the lower 80% of workers.
To do this we need public education. That’s where your show comes in.
Then a program to create about 7 million public jobs, plus a more generous Earned Income Tax Credit, and lastly and somewhat later a higher minimum wage rate. In 1939 the country’s unemployment rate, after 10 years of depression, was 19%. In 1943, 44, 45, it was below 2%. Massive public job creation caused the change. (I think I got the unemployment figures out of Wikipedia.) It ended the Great Depression as well. About 15 million are unemployed today, another 15 are stuck in part-time work, and another 25 million work full time for less than poverty wages. That comes to 55 million workers in a workforce of 155 million, or 35.6% who are with no job, not enough job, or lousy pay. (Go to njfac.org and find the Bureau of Labor Statistics data to confirm.)
One percent of the society, known as U.S. households, owns more wealth than
91% of households. That translates out to a population of a little over 300 million,
and about 3 million who have more net worth than the bottom 273 million. Three million own more than 273 million. 1 % own more than 91%. That’s wealth, the end result, the outcome, of how our economy works. Naturally they don’t do 91 times more work, but their reward is 91 times greater. (These figures come from the 2006 report of the Federal Reserve’s Survey of Consumer Finances, titled Currents and Undercurrents, by Arthur Kennickel. It’s on the web.)
Why public jobs? It will tighten the job market, and in effect it transfers wealth from wealthy and idle accounts into paychecks to working Americans. The tightened job market will raise the price of labor, meaning wages, and the transfer will increase aggregate demand to stimulate the economy, and the actual work done will enrich the country. The EITC does the last two mentioned goals. The minimum wage hike also accomplishes those two goals, but it is damaging to small businesses and should be gradual. The Economic Policy Institute reported that 27.3% of the children in the country are living in poverty in 2009, I suspect they take their figures from the U.S. Census. Those parents need a higher wage. In 2001 the book Hardships in America stated that 28.7% of children under 12 lived in families who could not afford all four necessities, housing, health care, childcare, and food. Those parents need a higher wage.
In fact, 143 million workers are working in our economy, and each produces about $100,000 of value each year.
Here’s a little math that proves that half of the workers are receiving 85% of the total national income, the other half receive 15%.
The median income for 143 million individual workers, in 2007, was below $40,000 a year (the median for men was $44,240 and for women $34,240 --- U.S. Census, 2007, Income, Earnings, and Poverty Data From the 2007 American Community Survey). Our economy produces more than $40,000 per person for over 300 million people, but the typical (median) worker earns less than $40,000. Why are not the median income (less than $40,000) and the average income (almost $100,000) closer? Do the math. We have 100 people working in a community, we pay them a combined amount of $100,000, on average $1,000 to each worker. But half of them earn less than $400, more like about $300 on average for the lower half, for a total of $15,000 combined ($300 times 50 workers is $15,000). The other $85,000 goes to the workers in the upper half. Conclusion: wages need to be raised for the bottom half.
This is confirmed by looking at State of Working America, 2006/2007, page 79, that says that the U.S. households broken into quintiles (20% groups) of earnings per household earn, from lowest quintile to highest, accordingly: 2.5%, 6.4%, 11.4%, 19.8%, and 60.3%. The bottom 60% of households receive a combined 20.3%. (2.5% plus 6.4% plus 11.4% equals 20.3%) The top one percent receives 18.4% of the total national income, in 2006.
Conclusion: wages need to be raised for the bottom half.
I know math is tiresome, but this is not too difficult.
We produce over $40,000 per capita in our economy, and we do, how can anyone remain poor? Answer: really bad distribution of income, which in short means Low Wages।
I’m reading William Quigley’s book An End to Poverty as We Know It (2003, Temple University Press). He has a page on job creation ideas, page 152, and he mentions Robert Haveman of University of Wisconsin who talks about a wage subsidy for employers, a $10,000 a year subsidy that reduces employers wage expense by almost a half for new employees hired over the year before. That could create a lot of new jobs, not government jobs. Those subsidies could be auctioned off to employers.
L. Randall Wray, University of Missouri, Kansas City, wrote Understanding Modern Money, and presents arguments for full employment. One of his graduate students had an article about Argentina’s experiment with government created jobs after their 2001 financial and economic crash. It was published in Dollars and Sense magazine, sorry, I don’t have the date, but it was last year.
I’d like Your Call to schedule a program along these lines. That’s my Agenda. Dean Baker and Robert Pollin co-authored a book about it. You could find someone. By the way, if the nation created 7 million new jobs that would equal to 9,100 new jobs in Oakland, California, to keep it in perspective. Just what agencies or businesses would increase their workforce I have not figured out yet. Maybe you know someone would could answer that question.
Thanks a million, not dollars, just thanks, for your shows.
You’ve got interesting speakers as guests.
Yours, Ben Leet
Find someone who will make a movie, One Percent Own More than 91 Percent, Another Inconvenient Truth।
This is a comment to an article in AlternetJuly २१, २००९, about Phil Angelides new job
From 2000 to 2007 the combined debt of the nation, meaning government, consumer, and corporate debt, increased from $27 trillion to $49 trillion, an added $22 trillion of new debt, of which $18 trillion came from financial corporations (according to professor Jack Rasmus who publishes with Z Magazine. He takes the figures from the Flow of Funds report of the Federal Reserve.) Since the private net worth of the entire nation was valued at $50 trillion (Survey of Consumer Finances, 2006, Currents and Undercurrents) this amounted to the creation of phantom wealth, almost all new wealth being financial. The story is not well reported in the media, but it has to do with the explosion of financial engineering products, and unsustainable lending. They leveraged themselves into inevitable collapse. We should create public finance services, see professor Peter Dorman or Ralph Nader's plan, and dump the bankrupt banks into the abyss where they belong. Angelides should also note that the inequality generated since Reagan is the core problem that created excess footloose capital in an environment of dropping consumer demand, aggregate demand. Credit expansion took the place of wage increases, hence the financial meltdown, and a systemic economic problem that Obama is not dealing with. We need public jobs and tighter labor markets that force higher wages, more Earned Income Tax Credits funding, and higher minimum wages. See my blog, http://benl8.blogspot.com. See The Trillion Dollar Meltdown by Charles Morris and David Korten's Agenda for a New Economy.
Posted July २१, 2009
Another comment appeared after the article. This is not my comment:
(p.s. -- the GDP in 2008 = $14.3 trillion, national assets = $51 trillion)
Americans better hope and pray that Angelides and the Financial Crisis Inquiry Commission get to the roots of our economic crisis. Given the predisposition of Congress and the White House to ignore, obfuscate, deny and lie about the causes and even the current state of our economy.
The sheer magnitude of taxpayer involvement was laid bare in Congressional testimony.
From Bloomberg: "U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program."
Tax Payers on the Hook for $23.7 trillion!