Worker Wages Continue To Decline

If you are one of those people who have swallowed the Republican lie that letting the rich, especially corporations, make more money will be good for everyone and will also lift the wages of workers, then you need to take a close look at the chart above. The red line represents corporate profits and the blue line represents worker wages. Note that the two lines are moving in opposite directions -- and the red line is not lifting the blue line (as it should if the GOP policy of trickle-down economics was even remotely true).

Traditionally, worker wages have made up about 50% of Gross Domestic Product (GDP). In the 50's and 60's (a time of healthy economic growth in this country) it was even higher, spiking at over 53% in the late 60's. Since then it has been declining. During the administration of Bill Clinton it started climbing again -- moving from about 46% of GDP to over 48%. But it again started to decline when Bush II became president, and really nose-dived in the Bush recession. Worker wages now comprise only about 43.5% of GDP (a record low).

The exact opposite is true of corporate profits. They now comprise over 60% of this nation's GDP -- a record high. In fact, corporations in the U.S. made a record $824 billion in profits last year. And corporations are still doing exceptionally well, registering $1.75 trillion in earnings just for the first three quarters of 2012 -- setting themselves up for another record-breaking year of profits. It should be obvious now that the GOP promise that increasing profits would trickle down and benefit everyone in this society is nothing more than a lie they used to benefit the rich at the expense of all other Americans.

In fact, unless substantial economic changes are made there is little doubt that worker wages will continue to tumble -- both in terms of the average wage and as a percentage of this country's GDP. Some of you might say at this point that there are jobs being created and a Democrat is now in the White House. Both of those facts are true, but they do not tell the real story. The Republicans have successfully blocked any real attempts to create a significant number of jobs -- first through the Senate filibuster, and then through the Republican majority in the House. Because of this obstruction, there are not nearly enough jobs being created.

And the few jobs that are being created are mostly low-wage and low or no benefit jobs. And the Bureau of Labor Statistics estimates that about 7 out of every 10 jobs created in the next 10 years will be these kind of low-wage jobs. By 2020, it is expected that at least one-fourth (25%) of all American workers will be in low-wage jobs (jobs that won't even allow them to lift their families out of poverty). It doesn't take a genius to figure out that this trend will drive the average wage and wages as a part of GDP much lower.

This could be changed. Here are some of the things we could do to reverse this trend:

* Pass the president's plan to create jobs by rebuilding our crumbling infrastructure.
* Raise the minimum wage to over $10 an hour.
* Strengthen unions and make it easier for workers to unionize.
* Remove the tax breaks companies get for outsourcing American jobs to other countries, and penalize the companies that do it.

These simple things would do several things. It would increase worker wages and move many of them into a bracket where they would pay some income taxes, thus increasing government revenues. It would put more money circulating through the economy and creating more demand, which would spur more job creation (and again increase government revenues). It would stop the current shrinking of the American middle class. And it would decrease the government deficit, since more people would be paying into the tax system (and these people would be thrilled to finally be making enough to pay income taxes).

Sadly, this won't happen anytime soon, because the congressional Republicans will oppose every single suggestion I listed above. This makes it very important that we don't ignore the off-year election of 2014 (like too many people did in 2010). Until the House of Representatives is flipped, and is no longer controlled by the Republicans, workers will continue to suffer and the middle class will continue to shrink.