(NEW YORK) MintPress – While the White House and Congress remain locked in a stalemate over how to resolve the budget deficit, and the threat of the so-called fiscal cliff looms large in Washington, many economists say a far greater problem facing the nation is the growing gap between rich and poor.
Even as the economy shows signs of recovery, the percent of Americans living in poverty has been increasing, from 12.3 percent in 2006 to 15 percent in 2011. Today, more than 46 million Americans live below the poverty line.
That is largely because most new jobs in America are in personal services like retail, with low pay and bad hours. The median wage is now 8 percent lower than it was in 2000 and, according to the Bureau of Labor and Statistics, the average full-time retail worker earns between $18,000 and $21,000 per year.
At the same time, according to a recent report by the National Employment Law Project, most low-wage workers are employed by large corporations that are enjoying strong profits. Three-quarters of these employers are, in fact, raking in more than they did before the recession.
At McDonald’s, the bellwether for the fast food industry, CEO Jim Skinner received $8.8 million last year. He also banked a long-term bonus of $8.3 million in 2009 and is due for another one this year. The value of Skinner’s other perks — including personal use of the company aircraft, physical exams and security — rose 19 percent to $752,000.
And Wal-Mart — the leader among big-box retailers — pays its executives lavishly. The total compensation for CEO Michael Duke was $18.7 million last year — landing him at number 82 on the Forbes list.
The wealth of the Walton family — which still owns most of Wal-Mart’s stock — is now greater than that of the bottom 40 percent of American families combined, according to an analysis by the Economic Policy Institute.
Last week, Wal-Mart announced that the company’s next dividend will be paid out on Dec. 27 rather than Jan. 2, which would be after the Bush tax cuts for dividends expires. That could save the family as much as $180 million.
According to the online weekly Too Much, that would be enough to give 72,000 Wal-Mart workers now making $8 an hour a 20 percent annual pay hike — and still leave them below the poverty line for a family of three.
“The ratio of corporate profits to wages is the highest it’s been since before the Great Depression,” notes economist Robert Reich
Striking back
Perhaps it’s not surprising that employees of Wal-Mart, McDonald’s and other low-wage jobs became mad as hell and decided they weren’t going to take it anymore — at least during temporary work stoppages last month.
In New York City on Thursday, hundreds of workers at dozens of fast-food chain outlets went on strike, demanding a raise to $15-an-hour from their current pay of $8-$10 an hour (the median hourly wage for food service and prep workers in New York is $8.90 an hour).
The previous week, Wal-Mart workers staged demonstrations and walkouts at thousands of Wal-Mart stores around the country, also demanding better pay.
“These workers are not teenagers. Most have to support their families,” said Reich. “According to the Bureau of Labor Statistics, the median age of fast-food workers is over 28; and women, who comprise two-thirds of the industry, are over 32. The median age of big-box retail workers is over 30.”
While the recent industrial action allowed them to vent their anger as well as mobilize the community, gaining support for the rights that come with unionization could prove a difficult challenge.
One key reason: The unemployment rate among people with just a high school degree, who comprise the bulk of low-wage workers, is still exorbitant. A conservative estimate by the Bureau of Labor Statistics puts it at 12.2 percent, up from 7.7 percent at the start of 2008. So workers are afraid of losing their jobs for attempting to organize for better pay.
Especially workers in retail and fast-food chains, who rarely qualify for unemployment benefits because they haven’t been on the job long enough or are there only part-time.
It is a catch-22 situation that leaves many in despair. Said one male worker taking part in the strike at a McDonald’s on Madison Avenue, “We can’t pay rent, pay bills.” He has worked for the company for eight years and makes $8 an hour. “We need change,” he added.
Looking for leadership
Yet neither side in the current budget negotiations is talking about that.
The administration’s plan calls for nearly $1.6 trillion in new tax revenue over the next 10 years, including returning the tax rate on income above $250,000 a year to 39.6 percent.
The Republican position is that some tax revenue increases may be acceptable, but that it has to be limited to closing loopholes and limiting deductions, not raising tax rates – even for millionaires and billionaires.
In exchange, the president suggests $600 billion in cuts to Medicare and other programs. House Republicans say that is not enough, but they have not publicly listed what they would cut.
Reich said they should not be focusing on cuts at all. “Cutting government spending reduces overall demand, which hits low-wage workers hardest. They and their families are the biggest casualties of austerity economics,” explained Reich.
“And if the spending cuts Washington is contemplating fall on low-wage workers whose families are under the poverty line – reducing not only the availability of unemployment insurance but also food stamps, housing assistance, infant and child nutrition, child health care, and Medicaid – it will be even worse.”
But they have no voice. “They have no super-PAC. They don’t have Washington lobbyists,” said Reich. “They’re invisible in official Washington.”
And they’re likely to pay the biggest price come Jan. 1.