William Spriggs
Chief Economist to the AFL-CIO
From 1946 through the 1970s, the incomes of Americans grew together. This, of course, does not mean everyone earned the same amount, but it did mean that if the economy grew, everyone’s income grew. That pattern allowed President John F. Kennedy to note in a 1963 speech that “a rising tide lifts all boats.” Since the 1970s, that has not been the case. A rising tide has lifted those at the top 1%, sunk those at the bottom and left the rest adrift in rough seas. President Kennedy used the speech to defend a project some felt was pork barrel politics.
Today, the claim that a growing economy benefits everyone is used to defend tax cuts to corporations—that send America’s jobs overseas and shift their profits to tax haven countries—and the top 1%, like corporate CEOs who direct their corporations to borrow money to buy back the company stock to boost the CEO’s bonus for rising stock prices and their personal wealth in stock holdings.
Recent headlines have been dominated by congressional Republican-led cuts to the Supplemental Nutrition Assistance Program (SNAP) and unemployment insurance to longtime unemployed workers. Republicans believe this is a winning strategy because the path to the weird politics of their rise has been to convince those in the middle that it is the 20% at the bottom versus the 80% at the top. They have been reinforced by a prevailing notion that the growth in income inequality is the result of skills differences, with those industrious enough to study hard and get good education being rewarded and those too lazy to study being outpaced by advancing technology. But the Great Recession affected highly educated and less educated workers. And the failure of young people to gain a foothold in the current job market makes clear that explanation of the world is not true. It certainly does not explain why the real growth in inequality is between the 99% and the 1%.
But some warn that embracing a populist message over things like SNAP, extended unemployment benefits and the minimum wage is a turnoff to the middle class. There is lingering fear that the Republicans are right—the middle class doesn’t want to join a movement of the 99% and would rather cast its lot against the bottom 20%.
But if policies are going to truly benefit the 99%, it is precisely the bottom 20% who matter. A major reason the 1946 to 1970s era was marked by more equal growth is because we lifted the bottom—boosting and expanding coverage of Social Security benefits, expanding the share of workers covered by unemployment insurance and the minimum wage and having the minimum wage keep pace with overall wage and productivity growth. The rising tide was not that we aimed at tax cuts for the wealthy, but pushed up the level of the economy at the bottom.
A recent article in the federal Bureau of Labor Statistics’ Monthly Labor Review highlights the 24% of America’s families with children who receive some form of means-tested public assistance like SNAP, Medicaid and public housing. Eighty percent of those households include at least one worker. The expenditures of these families exceed their incomes, meaning every dime of assistance gets pumped back into the economy. Nearly 80% of their spending goes just to food, housing and transportation (though they are much less likely to own a car or house). Because family sizes are about equal between those getting assistance and those who don’t, the fact that families on assistance spend half what families not on assistance spend means there are huge differences between the experiences of America’s children in those families. Most notably, their families buy a third less food and have less than half to spend on education and books.
The middle has to care about the bottom because it represents how far our society will let someone fall. The current high level of unemployment hurts those with jobs, because the cost of losing a job is set so high it dampens demands for better wages and benefits. A higher floor means a better bargaining position. Republicans want the middle to believe they are better off if they are farther from the bottom. A true movement of the 99% needs the middle to understand that you aren’t rising because those around you are falling, but you are falling if the ceiling is rising.
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William Spriggs serves as Chief Economist to the AFL-CIO, and is a professor in, and former Chair of, the Department of Economics at Howard University. In 2009, Bill was appointed by President Barack Obama to serve as Assistant Secretary for the Office of Policy at the United States Department of Labor, taking a leave of absence from Howard University to do so. He is also a member of the National Academy of Social Insurance and the National Academy of Public Administration.
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This has been reposted from the AFL-CIO.
