Land of wealth and poverty

America is the richest nation in the world and yet has the highest poverty among peer nations. Life doesn't need to be this way.

America has the highest Gross Domestic Product in the world, $23 trillion in 2021. 25% of the entire global GDP is generated by the United States.

And yet, at the same time, 38 million Americans live in poverty every single day, almost 12% of the US population.

America has a wealth distribution problem.

There is not one state in America where the minimum wage is a livable wage, the wage needed to cover the average cost of living. In fact, in most states the minimum wage is so low that two members of the same household working full time minimum wage jobs, still couldn’t cover their bills.

The federal minimum wage hasn’t increased since 2009 and has no measure to automatically increase with inflation. That means that the buying power of the minimum wage today is over 27% lower than it was in 2009. It is even worse when comparing it to the peak buying power of minimum wage, which was all the way back in 1968. Today’s minimum wage is 40% less than it was in 1968.

It isn’t only minimum wages falling behind, middle class wages are doing the same. That is because they are linked. If the minimum wage goes up, then middle class wages go up. If the minimum wage falls behind, middle class wages also fall behind.

Inflation is only one aspect of changing wages, another is worker productivity. Workers produce far more than they did in the past thanks to new technology, education, and improvements in the workplace. Despite workers producing more, they are earning less.

If workers are earning less while producing more, where is all of the money going?

In 2021 CEO’s made 400 times what their average employee made, meaning that if an average employee made $60,000 a year, then the CEO of the company made $24,000,000. In 1965 CEO’s made only 20 times a typical employee, or $1,200,000 for the previous comparison.

That is where the money is going.

Workers wages have lessened to the point that the middle class almost doesn’t exist anymore, all while CEO wages have skyrocketed. One aspect that made this possible was the decline in union membership.

In 2022 only 10% of workers had a union membership compared to 20% in 1983 and 30% in the 1960s. A continual attack on unions by organizations, lobbying groups, and companies was supported by conservative politicians and led to the erosion of union memberships and power over the decades.

At the same time, companies began using “right to work” laws to further weaken unions. Right to work laws prevent companies and unions from having a contract that requires all workers to be members of the union.

This creates a situation where it is hard for unions to form and it means that workers who don’t join the union benefit from any negotiations the union makes, without paying union dues.

An additional complication is independent contractors. This is common work in many sectors, such as technology, and is what drivers for companies such as DoorDash, Grubhub, Uber, and Lyft are classified as. In the tech sector, this means an employee who is very skilled can take on work as they see fit, work for multiple companies at once, and typically negotiate decent pay.

For app drivers, the pay is very low. On top of that, being an independent contractor means no health insurance or other benefits. It also complicates and increases taxes for the worker.

All of this leads to situations where many Americans work multiple jobs, such as working a day job, then delivering food during time off and sometimes working a third part time job. All of that work is not to get ahead, but to simply get by, survive, and stay exactly where they are. A daily struggle that never ends.

This is in stark contrast to the 1960s and into the 70s where one member of a family household could work a typical blue collar middle class job for 40 hours a week and provide for the whole family, including owning a house.

America doesn’t have to be this way. We don’t have to be the wealthiest country while having the highest poverty rate among our peer nations. We don’t need to have American citizens going hungry.

The first step is to raise the minimum wage, ideally to $17 an hour. A false talking point on raising the minimum wage is that prices will increase by the same amount and then everyone is back to where they were. 

This is easy to disprove as minimum wages have been increased numerous times both federally and locally. Studies of those changes show that prices increase only a small amount, if they increase at all.

This is because worker pay is only a fraction of the overall cost to a business, and often a very small fraction when the worker pay is minimum wage. An additional benefit is that increasing the lowest wages causes an increase in the middle wages as a response.

Another helpful change would be Universal healthcare. This would open up more flexibility for all workers and help contract workers obtain a better financial position. The best part is that universal healthcare would bring the overall cost of healthcare down and therefore put more money back into the pockets of all Americans.

Those right to work laws are currently being challenged in a few states and Michigan recently became the first state in 58 years to repeal a right to work law. There is far more work to be done in this regard but progress is happening and unions are starting to gain ground again, albeit very slowly.

A more out of the box idea that has been proposed is to tax companies whose CEOs have above a 50 to 1 pay ratio compared to their employees. The goal with this type of policy is two fold. First is to encourage companies not to have such a large pay disparity to begin with and therefore pay their workers a better wage. The second part is that for companies who still don’t pay their employees more, they will pay additional taxes which in turn can go towards the social benefit programs that help low income Americans make ends meet.

Legislation was introduced for this in the past but has not been successful. The holdup is that major companies like Amazon don’t want to pay their workers more if they don’t have to. The executives don’t want to give up their lucrative salaries or have their capital gains slow down. 

Instead of paying workers a few more dollars an hour, billionaire CEOs pay tens of millions of dollars to lobbying firms to stop bills such as these in order to protect their wealth. 

Until America demands better, until all workers come together for the benefit of our nation. Nothing will change. 

We cannot let corporations, lobbyists and politicians divide us and convince us that some people aren’t worthy of a living wage or that some jobs aren’t worth paying for. 

If a company claims they can’t afford to pay a proper wage, then they simply can’t afford to have a business. As no business owner deserves to gain their wealth off of the backs of hard workers, while those workers struggle to pay rent and buy food.

It is time to respect American workers.