Stock Market Soars, but Jobs and Wages Do Not
Trickle-down Economics do not seem to trickle down. Instead, the economy seems to flow upward; as ordinary people lose their jobs and their income stagnates, those at the top keep making larger and larger profits.
Late last month, the Dow Jones Average closed at 16,010, finally breaking 16,000 and it is predicted to keep climbing. In 2012, CEO pay increased 8% with an average median at $9.7 million, all the while cutting jobs for many companies. Wages for ordinary workers have stagnated for the last decade, shrinking the middle-class and driving more Americans into poverty. Job growth in the meantime has been slow, with millions of would-be workers out of work.
Republicans since President Reagan has convinced many Americans that if we will cut taxes and regulation for corporations that those corporations will create jobs. Instead, we got a bum deal, with union membership falling along with wages and benefits.
The GOP is still trying to sell us on that idea, that somehow, if we just keep doing what we have been doing for the last 30 years and even more so, things will turn around and the middle-class will grow and the American Dream will widen for many. Republicans keep telling us not to raise the minimum wage because that will hurt small businesses and to let competition raise the median income instead. Surely, those who have fallen for this idea, must wonder just when will this finally happen. When will the rest of America begin to enjoy at least some of the prosperity promised to them for so long? When will this trickle-down theory actually begin to work for all of us, those who work hard and save our money through 401Ks and bank CDs?
Instead, can we expect another recession, thanks to bad banking practices and faulty loans? Banks and corporations do not like to be regulated. They like to have the ability to use the money put in their hands any way they like. Republican lawmakers in Washington DC also have worked hard in the past to block financial reform, any way they can. They have done this by blocking legislation or by blocking confirmations of those who would keep an eye out for the public’s interests when it comes to banks and other financial institutions doing business in a way that can lead us into another financial crisis, as they did in 2008.
One thing we can count on, the people who will suffer the most, if we do have another recession, will be the middle-class and low paid workers. Of course, some banks will fall and we will hear all the grieving going on with stockbrokers, but just wait, it will not be long before they will be back at making money, drawing in big bonuses while the rest of us are out looking for jobs or still living on less wages than we were before.
It seems to be some kind of illusion; banks and big corporations get in trouble financially and our tax dollars are used to bail them out. We are told that if we do not bail them out, things will be a lot worse and even more people will lose their jobs and things will really be bad for us all. Therefore, we bail them out because we do not want things to get even worse. Then ordinary workers start being laid off from their jobs and those who keep their jobs are asked to take a pay cut and perhaps a cut in benefits, because we are all in this together, employers and employees, so we must all take a hit together. Those who still have a job work harder to fill in for the layoffs for lower pay.
Then, the economy improves but employers are afraid that it might slip again so they hold back on hiring more workers, especially now that the employees they have are working harder for less pay. Why should they hire more workers anyway; the workers who took on more responsibilities for less pay during the recession are still trying to hold onto their jobs, which means more profits for employers.
Perhaps – call me cynical if you want – the whole system is set up to keep more of the nation’s economy flowing into the hands of the wealthy while the rest of America works harder for less wages and less benefits. As far as I am concerned, the facts point in that direction. A study done by the University of California, Berkeley, points out where most of the wealth has gone to since the 2008 Recession:
“From 2009 to 2012, average real income per family grew modestly by 6.0%. Most of the gains happened in the last year when average incomes grew by 4.6% from 2011 to 2012. However, the gains were very uneven. Top 1% incomes grew by 31.4% while bottom 99% incomes grew only by 0.4% from 2009 to 2012.
Hence, the top 1% captured 95% of the income gains in the first three years of the recovery. From 2009 to 2010, top 1% grew fast and then stagnated from 2010 to 2011. Bottom 99% stagnated both from 2009 to 2010 and from 2010 to 2011. In 2012, top 1% incomes increased sharply by 19.6% while bottom 99% incomes grew only by 1.0%.
In sum, top 1% incomes are close to full recovery while bottom 99% incomes have hardly started to recover.”
It is high time that the 99% – that is the rest of America – begin to see the prosperity long promised by Republicans who have been so enamored over the years by their favorite president, Ronald Reagan and his theory of trickle-down economics, or in other words: The proof of the pudding is in the eating.