Moving toward economic justice

The following article by NFP State Board member Jay Schmidt appeared in the November 02, 2012 edition of the Lincoln Journal Star.

By Jay Schmidt
Lincoln Journal Star
November 02, 2012

If you have been feeling an economic pinch lately it isn't just your imagination. A Pew Center study found "the upper-income tier now take in a much larger share of the American aggregate household income than they did four decades ago, while those in the middle tier take in a much lower share." In fact, the middle class lost a 17 percent share of the total income between 1970 and 2010. The lower-income households lost 1 percent. If you look at net assets, it's even worse. The middle class took a 28 percent loss in assets from 2001 to 2010. Much of this was because of losses in home equity.

How did we get into this economic mess? It was no accident. There were deliberate planned actions. Those in the Pew study blamed Congress, banks and financial institutions and large corporations. They are surely on target. Many well-paying manufacturing jobs went overseas because of cheaper labor, such as the Vise-Grip plant in DeWitt. Many of these plants were profitable here, but the owners were seeking even more profits.

Teacher positions and other government jobs have been cut back. Minimum wage has fallen far behind cost-of-living increases and with it lots of lower-paying jobs. Beginning in the 1980s the government loosened banking regulations culminating in 1999 with the end of the Glass-Steagall Act. This helped financial institutions to become richer, and they in turn enriched their executives. In 1978, the average CEO's compensation was 26 times the average worker's salary, but by 2010 it was 205 times the average worker's wage. The home mortgage mess partially caused by looser regulations dropped home prices, thus hurting many middle- and lower-income families.

Some of the responsibility also goes to changes in our federal tax code. The richest Americans have had the greatest drop in their tax bills. They have many defenders in national and state governments claiming they are the "job creators" and therefore more money in their hands is a good thing. Of course if this were true we should have full employment by now. However, it is consumers with spendable money who create demand for products and services, and that translates into jobs. The tax rate on the top 0.1 percent has gone from more than 70 percent in 1970 to 35 percent in 2004. This is often lower because of the capital gains tax advantage. Our lawmakers have given continuous cuts to these top earners. When Congress has made cuts in programs to pay for a small part of these tax cuts, of course the programs cut have been those helping middle- and lower-income families.

When people lose jobs and do find work, it is usually at a lesser wage. Some people in the middle whose wages have fallen have been dropped down from the middle to lower-income bracket. When these lower incomes remain flat, we see it in some Nebraska statistics. Because we have low unemployment -- about 4 percent -- one would expect that the poverty rate would be minimal. But in 2010 we still had a state poverty rate of 11.8 percent and a Lancaster County rate of 13.8 percent, indicating that many of those jobs don't pay enough for a decent standard of living.

We can do something about this assault on the middle and lower classes. We can debunk the myths that we are fed. We can be informed, active citizens. We can work for quality education that meets the needs of today’s jobs. We can be active members of organizations that work for justice. This may mean working for laws that will encourage companies to bring jobs and profits back to the United States. It may mean pushing for higher wages or a more graduated income tax that plugs loopholes so that Warren Buffett's secretary no longer pays a higher percentage of her income in taxes than he does.

Jay Schmidt is a retired clergy member who keeps engaged in ministry through justice and peace concerns.

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