Income Inequality Is Ravaging America’s Middle Class


For years now our economy has struggled. Our middle class is disappearing, and only those in the top 1 percent are seeing any increase in income. According to a2014 report from the Organization for Economic Cooperation and Development, income inequality is now back at 1820s levels. Their report emphasized that this inequality shot up after globalization began.

The report showed that income inequality fell sharply in the middle of the 20th century, when the U.S. had a thriving manufacturing sector and we produced much of what we now consume. According to the study’s conclusion, “The enormous increase of income inequality on a global scale is one of the most significant—and worrying—features of the development of the world economy in the past 200 years.”

Things are beginning to heat up in America with respect to income inequality. After decades of the minimum wage falling behind productivity, and CEO compensation skyrocketing during the same period, it could be that the working class has finally reached its limit.

Fast food workers across the nation were protesting the low wages which do not properly compensate them for their hard work. For too long the rich have been getting richer and the poor getting poorer in a country that was once the land of opportunity.

The median wage in the U.S. is $28,031, or approximately $13.50 per hour. This means that half of working Americans make less than that. The cost of living for one person in the U.S. is $20,194. After taxes and living expenses, most Americans are just getting by. For those in more expensive cities like New York or Washington DC, people with low wages are barely surviving.

Our minimum wage really should be about $22 per hour. The reason for this is because productivity has grown so much in the last few decades. The minimum wage from the 1960s would be $22 in today’s productivity terms. Back then CEOs made a couple dozen times what the average worker made. Now, they made several hundred times that, and this is clearly coming out of the workers’ salaries. The workers are more productive, but the CEOs reap the benefits. However, minimum wages alone miss the real issue.

How has the one percent managed to accumulate all of this wealth? That’s easy: “free trade,” the practice of opening up your borders and granting free access to all, even low-wage nations with no regulations for worker safety. It is impossible to compete with this, so American businesses go bankrupt – which lowers the demand for labor – or move their operations overseas – which lowers the demand for labor and floods our market with cheap competition.

As high paying manufacturing jobs leave our shores workers turn to service sector jobs. This has caused the once thriving middle class to all but disappear. It is no wonder that these workers are now protesting these wages.

Additionally even though we learned last week that the “official” unemployment rate has fallen below 6 percent, this does not include those who have given up looking for work, the long-term unemployed and those who are underemployed who are seeking full time employment. If those were included in the mainstream media’s reports, the official government number would be at least around 12 percent. Some have even said that the real number should be much higher given our low labor participation rate.

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