Recent analysis by the RAND Corporation quantifies what increasingly corporate-centric policy shifts over the last 50 years have cost 90% of workers in terms of lost income. The study was American, but similar trends have transpired in most other countries in varying degrees as similar thinking and policies have spread throughout the world. The numbers explain much of the dramatic wealth disparity now undermining democracy and social stability in the free world. History urges us that pro-active changes are necessary if we are to avoid a massive breaking point like revolution or civil war. See: Rand Study uncovers massive income shift to the top 1%. Here are some of the highlights:
A full-time worker whose taxable income is at the median — with half the population making more and half making less — now pulls in about $50,000 a year. Yet had the fruits of the nation’s economic output been shared over the past 45 years as broadly as they were from the end of World War II until the early 1970s, that worker would instead be making $92,000 to $102,000. (The exact figures vary slightly depending on how inflation is calculated.)
..Notably, it isn’t just those in the middle who’ve been hit. RAND found that full-time, prime-age workers in the 25th percentile of the U.S. income distribution would be making $61,000 instead of $33,000 had everyone’s earnings from 1975 to 2018 expanded roughly in line with gross domestic product, as they did during the 1950s and ’60s.
Workers in the 75th percentile would be at $126,000 instead of $81,000. Remarkably, even those in the 90th percentile would be better off than they are now if economic growth had been shared as it was in the post-war era. They’d be making $168,000 rather than $133,000.
Tally it all up, according to RAND, and the bottom 90% of American workers would be bringing home an additional $2.5 trillion in total annual income if economic gains were as equitably divided as they’d been in the past — leading Rolf to dub the phenomenon “the $2.5 trillion theft.”
…The RAND data also makes clear who the winners from inequality are: those in the top 1%…they’d be in a less advantageous position if the economic pie had been divvied up since the mid-1970s like it was previously. If that were the case, RAND says, yearly income for the average one-percenter would fall from about $1.2 million to $549,000.
…the blame lies, in large measure, with decades of failed federal policy decisions — allowing the minimum wage to deteriorate, overtime coverage to dwindle, and the effectiveness of labour law to decline, undermining union power. They also cite a shift in corporate culture that has elevated the interests of shareholders over those of workers, an ethos that took root 50 years ago this week with the publication of an essay by University of Chicago economist Milton Friedman.
Many of these developments, Rolf points out, have been driven by the belief that an unfettered free market would generate wealth for everyone. Thanks to the RAND study, he says, “we now have the proof that this theory was wrong.”
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