Friday, August 3, 2012

2 studies suggest how much more of the wealth pie the rich take nowadays.

Two studies released over the past few days both beg a simple question: what happened/happens to the money? In both cases, the answer is the same: it’s going to the wealthy.

In one study, Center for Economic and Policy Research (CEPR), a think tank that leans left, created a definition of a “good job” and then added up all the jobs that met that definition 30 years ago and all those that do today. 

We should all wonder about the criteria by which CEPR determined if a job was good or not. By clever criteria selection, it’s possible to fix an argument one way or the other.

While I don’t think CPR is fixing anything with the criteria it selects, you be the judge:
·         Make at least $18.50 an hour, or $37,000 annually (the median hourly pay in 2010, which means that in 2010, exactly half of all employees made more and half made less than $18.50 an hour).
·         Get any employer-sponsored health plan, no matter how paltry, for which the employer pays some portion, no matter how small, of the premium.
·         Have an employer-sponsored pension or retirement plan.

Using these criteria, CEPR found that the share of all jobs that could be considered as “good” fell from 27.4% in 1979 to 24.6% in 2010 despite the fact that gross domestic product increased by 63% per person. Americans were being 63% more productive and yet it wasn’t leading to better compensation. In fact there was a decrease in “good” jobs.

What happened to all the money produced by the additional GDP?

The answer, of course, is that rich folk got more, as avariety of studies have shown us over the past few years. The wealthiest 1% and 5% of Americans get a bigger slice of the wage and wealth pie than 30 years ago, leaving less for the rest of us.

Where’s the money going? We could ask the same question about a study conducted by the nonpartisan Tax Policy Center, which found that if Mitt Romney’s proposed tax plan were enacted that it would cut the taxes of the wealthiest 5% of the population while raising taxes for everyone else.

This study, too, rests on assumptions that are open to question. The assumptions in this case fill in the blanks where Romney has been fuzzy on the details of his tax plan. But let’s assume that the highly reputable Tax Policy Center got the Romney details mostly right.   We’re left with the same question and the same answer:

What happens to the money? It’s flowing to the wealthy from everyone else.

Because they are based on assumptions, these studies prove nothing, but they certainly do suggest that over the past 30 years the wealthy have perpetrated class warfare against the rest of the country.

The study on Romney’s tax plan also indicates that the wealthy are ready to continue their assault. For 30 years, tax policy has been one of the weapons of choice in the economic war against the non-wealthy. Other weapons have included privatization of government functions, cutting of social welfare programs such as support for education, suppression of the minimum wage and anti-union policies.

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