Wealth Inequality Will Keep Growing Unless Workers Demand Better

I have an op-ed on The Guardian's web site today examining the problem that we all face in today's economy: income inequality. Give it a read.

With US unemployment near 8%, millions of Americans simply cannot find the work they need to keep a roof overhead, the lights on, and food on the table for their families. The problem is simple enough: there are not enough jobs to go around in an economy marked by slow growth and a growing number of job seekers.

To be sure, big and small firms alike are hiring to replace workers who retire or to expand as the economy recovers. For the newly unemployed, the competition for these job openings is fierce. Many find themselves locking horns with dozens, hundreds and sometimes thousands of fellow job seekers, all of whom are jockeying to score not a job but a job interview with a living human being.

Employers, inundated with job applications, are taking shortcuts to winnow the field of job applicants, eliminating from consideration applicants who are currently unemployed or have been out of work for more than a few months. Some are excluding job candidates with their credit score.

In what is essentially a game of musical chairs, employers are taking away more and more of the chairs before the music even starts. None of these strategies are unique to recessions; employers use them when unemployment is high or low. But with the unemployment rate high, these practices are prolonging the pain for millions of Americans unlucky enough to have a lost a job following the worst recession in decades.

As troubling as this is for the newly and long-term unemployed, they are not the only ones paying a price for the shortage of work in the economy. All of us are feeling the effects in our wages, which are not keeping up with growth in prices. Economist Emmanuel Saez estimates that so far in the recovery the income of the vast 99% of families has fallen, while the top 1% has scooped up what income growth there is.

That may be the lasting legacy of our current job shortage - and one that we must begin to address as the economy slowly returns to health in the years ahead. Even though most of us are working harder and smarter, an increasing share of the income growth from our increased efforts are not showing up in our take home pay or even as benefits like health care or pensions.

Economists John Schmitt and Janelle Jones have found that although the typical low-wage worker today is better educated and has more labor market experience, they earn less today than their more inexperienced and lesser educated counterparts of three decades ago.

Economist Larry Mishel has found that since 1979 low- and middle-income workers have increased their hours of work much more than the top 5%, yet the biggest wage gains have consistently accrued to the highest earners.

Top-earning women are the exception to this rule, stepping up work hours by a whopping 81% since 1979, and yet they still work fewer hours than women on average. Given these trends, it is no wonder that even before the recession a growing share of all income growth was being captured by an increasingly exclusive group of wealthy earners.

Too many workers today are trapped in a cycle of unemployment and underemployment driven by a prolonged job shortage and employers all too happy to write them off. Policymakers in Washington DC have acted with malice by taking steps to prolong the jobs shortage with budget cuts and by refusing to make long overdue investments in education, training and our aging infrastructure.

The failure to address the job shortage is rooted in abnormally high income inequality. No thoughtful person would make it a higher public policy priority to defend a corporate tax loophole than to provide food assistance to a young mother and her child in need. But to paraphrase Upton Sinclair it is difficult to get a member of congress to understand something, when their campaign donations depend on their not understanding it.

It is well understood what policy steps would ease the job shortage but implementing those steps in Washington DC requires overcoming the immense financial interests that are benefiting from rising inequality.

There remains only one way to break the back of rising inequality, and it requires workers organizing to demand higher pay, better working conditions, paid sick and family leave, and a decent pension. In other words, only you can take your economy and democracy back.

Those are easier words to say than live on in an economy with high unemployment where employers face minimal penalties for firing workers for just talking about organizing. But doing anything less means we will all continue to work harder and smarter for a smaller and smaller share of the wealth we create.


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