It’s almost a daily occurrence where I’ll hear some conservative complaining about how “Obummer is killing our economy” and how government regulations are killing the jobs market. This is usually combined with a rant about how President Obama is trying to kill off Americans with Ebola, impose Communism, sharia law or whatever else the right-wing conspiracy du jour is. When you point out that the stock market has fully recovered from the crash in 2008 and unemployment is now below 6% as well, the usual response is denial – especially when you explain that this proves trickle-down economics doesn’t work. After all, if it did work, wouldn’t we all be swimming in a warm sea of wealth since Wall Street is doing great and corporate profits in 2013 were at record highs?
Surely if trickle down economics weren’t a myth, wouldn’t the wonderful and generous job creators be lavishly spreading that wealth around to each and every one of their workers? How could it be that since Wall Street and all of these companies are doing so well, wages are still stagnant and not keeping up with inflation?
The answer is that during the Great Recession, employers took that opportunity to freeze or cut wages and benefits in the name of staying afloat in those tough economic times. Employees were told that sacrifices had to be made as bonuses for productivity were cut back or even eliminated, and retirement or healthcare plans suffered the same fate.
When the Great Recession hit I worked for Sprint. Pay raises were frozen, matching company contributions to our 401k plans were halted, and some call centers were closed. We were told that in order for the company to make it through, we would all have to make sacrifices and work harder if we wanted to keep our jobs. Of course, not being represented by a union, there wasn’t much we could do. When I left in 2010, even though the financial crisis was over and the economy was coming back, very few of the previous benefits were restored and pay increases were still almost unheard of.
Here we are now 5 years after the end of the financial crisis and while corporate profits are way up, worker’s wages aren’t. The reason for this is that many of these companies decided to keep wages and benefits at the level they were cut to during the recession, and keep on pocketing the extra cash. Corporate executives and stock holders are doing great, but that isn’t the case for many American workers, especially those not represented by a union. Even though companies can afford to hire more workers and/or offer better compensation, they’ve decided not to do so and keep on asking workers to do more for less. This is something companies will continue to do, so long as the labor market remains in their favor.
While paying low wages and refusing to hire workers unless absolutely necessary is legal for businesses to do, they are still pushing the cost off on the taxpayer. Meanwhile, many of these companies also contribute to the political campaigns of candidates who complain about people on public assistance. Amazing, isn’t it? After all, as David Siegel has proven, millionaires can pay their employees better wages and still make great profits
The cost of living and many products continues to climb, even as wages remain stagnant, as The Atlantic notes:
What’s more, there is the troubling fact that wages barely grew faster than inflation in the past year, which is consistent with how they’ve been doing since the recession. Job rolls may be growing, but paychecks aren’t, which is bad news for the majority of Americans who rely primarily on wages for their income. Median household incomes are down about 8 percent since 2007.
And even for those Americans who are working for their stagnated wages, rising costs for crucial services that might enable them to get ahead—healthcare, childcare, education—may make the good life feel increasingly out of reach.
At the same time, stocks and bonds have rebounded more quickly than the job and housing markets, exacerbating income inequality. Wealthy Americans, who keep more of their wealth in financial assets, simply experienced a different recovery. (Source)
The fact that corporations and their stockholders are enjoying these huge profits while asking the rest of us to pick up the tab for their employees is ridiculous, yet Republicans in Congress refuse to end their tax breaks and subsidies, or vote to raise the minimum wage. I’m not saying that raising the minimum wage will lift all workers out of poverty, nor will it end the need for public assistance. However, if conservatives really want to do something about ending the need for public assistance, perhaps they should look at corporations first.
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