A PROGRESSIVE VOICE FROM THE LLANO ESTACADO

Tuesday, June 25, 2013

The Young Are Affected The Most By Failed GOP "Trickle-Down" Economic Policies

The chart above paints a disturbing picture of what the Republican "trickle-down" economic policies have done (and are still doing) to this country. It compares the wealth of the different age groups in 2010 to the wealth those same age groups had in 1983 (when the "trickle-down" policies began to kick in). The chart is by the Urban Institute using tabulations from the Survey of Consumer Finances (and using 2010 dollars for the comparison).

Note that those who have been hurt the most by the economic policies in place since the early 1980's are the younger people. While those between from age 47 to over 75 have shown an increase in wealth of from 76% to 149% over those in that age group back in 1983, the same is not true for those under the age of 47. These groups have not increased their wealth substantially from what it was back in 1983 for those age groups. In fact, the 29 to 27 age group has lost wealth -- about 21% from what that group had in 1983. And the 20 to 28 group has seen only a very poor growth of 5%.

These failed economic policies have been (and still are) disastrous for young people. While the stagnation of wages and loss of productivity gains (which now goes only to the rich) has hurt all workers, the young are being hurt the most. This is because the older groups had already established themselves before the changes started occurring, while those changes are making it much more difficult for younger Americans to get started in creating wealth for themselves. There are several reasons for this:

* A huge loss in the buying power of the minimum wage. Most young people start their work lives at or near the minimum wage (because they have not yet established the experience and skills to demand a higher wage). This has always been true, but in the past that minimum wage was at least enough to keep the worker above the poverty level (allowing them to support themselves and start a bit of wealth creation while gaining experience). That is not true today. Today's minimum wage is a poverty wage, and doesn't allow a decent standard of living or the ability to start any wealth creation.

* The weakening of unions. Unions were instrumental in creating a vibrant middle class, by making sure that workers could share in the rise in productivity (through wage raises and good pension plans). But the GOP has been (and still is) in the process of weakening union power and membership. Because of this, productivity gains are no longer shared with workers (but are hogged by executives and owners) -- resulting in stagnant wages and poorer pension plans (both of which hurt younger and newer workers the most).

* The cost of a college education has ballooned out of control -- and so has the cost of borrowing to pay for that education. Back in the 1950's and 1960's our economy benefitted from a lot of students being able to get a college education -- and they did it through the veterans benefits and low cost government loans and grants (and state subsidization that kept tuition and other costs low in state schools). Today, any student without rich parents will probably graduate with a huge burden of debt, since even state schools now cost more than even middle class parents can afford. Instead of creating wealth, these young people must spend years paying off that huge debt.

* The high rate of unemployment. Since most employers (except for some offering only minimum wage and no benefit jobs) would rather have experienced workers, this high employment rate affects younger workers the most. It has also driven down starting wages (and raises) -- meaning those who are lucky enough to get a job have less opportunity for wealth creation (and those without a job have no opportunity to create wealth for themselves).

This is all due to the failed Republican economic policy of "trickle-down" -- which tilted the economic playing field to favor the richest 10% (and especially the richest 1%), while leaving the bulk of Americans to fight for the scraps leftover. And since it has been particularly devastating for younger people, it is creating a new phenomenon in this country -- a generation (and perhaps more) of young workers who will not be able to earn and create wealth greater than their parents.

It does not have to be this way. But to change it will require a change in economic policy (by dumping the "trickle-down" policy and returning to a policy creating a more equitable economic playing field -- as we have had in the past). We could start by lowering college costs (and interest rates for money borrowed for college), strengthening unions and encouraging union membership, passing legislation that will encourage real job creation (instead of just tax cuts for the rich), stopping the outsourcing of good jobs, limiting the worker to executive pay ratio, and raising the minimum wage to a livable wage.

Those are all reasonable measures that would boost the economy and help most Americans (including younger Americans). But none of them can be done as long as the Republicans retain the power to stop them. That means the first step that needs to be taken is in the 2014 elections, by kicking the Republicans out of power.

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