Grasping the Scales of Wealth Inequality

by Brian T. Lynch, MSW

The human brain has inherent limitations built-in when it comes to imagining the relative differences of huge numbers, whether they are describing the very small or the very large. Genetically speaking, we don’t have the intuitive capacity to handle very large numbers. We distort the scale and tend to group together orders of magnitude that aren’t at all alike. The best we can do is evaluate good, often visual comparatives.

Another brain limiting feature is that we tend to perceive things by putting similar things into the same buckets in order to make sense of a world of infinite variability. If we see a color that is red, slightly bluish red or slightly red-orange, our brain puts the visual input into the red bucket, and that is what we see.

In the same way, when we see big numbers or even bigger numbers we tend to group them in the big numbers bucket without really noticing just how out of scale our perceptions might be.

This human limitation doesn’t often matter in the day-to-day experience of most people, but it matters a great deal when it comes to understanding concepts such as our growing wealth inequality. There is at least a thousand-fold difference between a millionaire and a billionaire, yet most of us put them both in the “rich” bucket.

If we say that one dollar equals one unit of social power (social power being the ability to coordinate the actions of other, as a quick and dirty definition), then a “rich” billionaire is a thousand times more powerful than a “rich” millionaire, but it doesn’t seem that way to us. Many US billionaires have more than 20 billion dollars and they are major influencers in government policy and political decision making, yet we see them as merely rich.

So, this is an attempt to put wealth into a proper sense of scale using visual comparisons.

BASED ON THE WEIGHT OF A $1 BILL

$100 in singles

A single US dollar bill (a US Treasury note) weighs .04 ounces. Stack a hundred $1 bills together and they weigh just 4 ounces. In other words, a hundred dollars in singles weighs 4 ounces. That happens to be the exact weight of my favorite sandwich, peanut butter and jelly. I would never pay for my PBJ according to its weight in dollar bills, but to me, it tastes like a hundred bucks.



 



$1,000

A thousand one-dollar bills, or 10 stacks of one-hundred US Treasury notes, weighs as much as 10 peanut butter and jelly sandwiches, or 2.5 pounds. That weight is equal to a very full glass of water in a pint-sized beer glass. But, beer weights less than water in case you happen to be staring at your fresh pint of Guinness right now.





$1,000,000

A million dollars is a thousand times more than a thousand dollars. It’s a big leap, so all the weights go way up. A million one-dollar US Treasury notes weigh 2.5 tons (or the same as 10,000 PBJs). Your average pickup trucks couldn’t haul that much weight. You would need two ¾-ton pickups to haul a million one-dollar bills around town. And if you do, you really need to trust that other driver.


 

$1,000,000,000

A billion dollars is another giant leap. It isn't in the same bucket as a million bucks at all. It is a thousand times more than a million dollars. A billion US treasury notes would weigh a whopping 2,500 tons (ten-million PBJs). That is just shy of the weight of two fully grown Sierra Redwood trees with trunks so wide you could carve out a tunnel through them and drive the two pick-up trucks above right under the trunks. Keep in mind the weight of a million Treasury notes is only the cargo in the bed of two pickups, not the trucks themselves.  I visited the Redwood Forest last summer and I still can't imagine the weight of those trees.

The point here is to help everyone see that billionaires and millionaires are very different species. We must be put them in a very different bucket when we think about wealth and wealth inequality. Most of the billionaires in the world are here in the USA. We have over 500 of them. Together they control almost all of the wealth in this country.  They exsert an unimaginable influence over our government. If 90% of the people in this country want sensible gun control legislation and can't get it passed in Congress, it is because of the enormous power of a handful of uber-wealthy individuals who control enormous wealth and power.

So, the next time you pick up a peanut butter and jelly sandwich, remember that someone like Jeff Bezos privately owns the dollar-weight equivalent of a billion PBJs and Michael Bloomberg's wealth in the weight of a dollar bill is equal to the weight of 120 redwood trees.

BASED ON THICKNESS OF A $100 BILL

Instead of a US Treasury Note's weight, how do millionaires and billionaires stack up based on the thickness of a $100 dollar bill?  If you are of average height, make two stacks of $100 bills the hight of your knee cap. That is approximately one million dollars. Now keep stacking those two piles of $100 bills until they are about 400 feet above the Empire State Building. Congratulations, now you have your first one-billion dollars. And if you are Michael Bloomberg, you have about 160 stacks of bills higher than the Empire State Building.

And here is why it matters so much in our republic, in the words of Franklin D. Roosevelt:

"The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism — ownership of government by an individual, by a group, or by any other controlling private power." 

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2/28/2020 - I have added the following video link. It is a fantastic visual aid in understanding the scale of wealth inequality and I highly recommend you watch it.

https://twitter.com/i/status/1233405556796403714

And here are a few graphs to consider when thinking about Wealth and Income Inequality

A Solution to "Sh*t-Life Syndrome" in America

by Brian T. Lynch, MSW

I shared on Facebook a recent article at the CounterPunch Website by Bruce E. Levine titled, “Sh*t-Life Syndrome,” Trump Voters, and Clueless Dems. I got back a surprising question from a conservative friend and Trump supporter. He asked, “What is your solution to this problem?

I will offer one solution below, but first, let’s define the problem. You can read the above article for yourself, but the premise of it is stated in the first sentence:

“Getting rid of Trump means taking seriously “sh*t-life syndrome”—and its resulting misery, which includes suicide, drug overdose death, and trauma for surviving communities.”

The author goes on to say,

“The Brookings Institution, in November 2019, reported: “53 million Americans between the ages of 18 to 64—accounting for 44% of all workers—qualify as ‘low-wage.’ Their median hourly wages are $10.22, and median annual earnings are about $18,000… For most of these low-wage workers… “Finding meaning in life is close to impossible; the struggle to survive commands all intellectual and emotional resources.” 

That last statement also explains part of the reason 91.7 million eligible voters didn’t vote in the 2016 election. So many of them are barely hanging on day-to-day. I have written elsewhere that for decades neither political party has addressed the needs of the 45% of all Americans who live below the middle-class. These are the people who stopped voting. Referring to non-voters, I have written elsewhere:

“For too long politics has failed to make any difference in their lives. It doesn't matter which party is in power. Nobody cares about them. For the past 30 years, politicians have only cared about the middle-class or special interest groups. Even after 10% of the voters voted for the first time in the 2016 election, 40% of all eligible voters still didn't vote. We can do better because much of this 40% were once a big part of the Democratic base. We stopped attending to the needs of the poor and working class.”

What is the solution?
No one has all of the solutions figured out, but we can start by valuing everyone who works for a living. We can start by paying the lowest wage workers a living wage for a week’s work. Hear me out.

A living wage is a market-based minimum wage index. It isn’t an arbitrary, one-size-fits-all government number. A living wage respects all regional economic conditions. A living wage in Biloxi would be lower than a living wage in the Bronx because of their different cost of living conditions. A living wage law would require business owners to provide their lowest-paid employees a sufficient wage package for full-time work so that a low wage employee is not dependent on taxpayer assistance for housing, food, essential transportation or medicine. It wouldn’t pay a mortgage, or for vacations or luxury items. It doesn’t replace competitive, merit-based wage compensation for the rest of the experienced or more skilled workforce. It sets a wage floor below which workers financially qualify for public assistance (aid to the working poor). It set the wage minimum at a level that makes an employee marginally self-sufficient and therefore it maintains the dignity of work.

Most people already agree that we must end wasteful taxpayer subsidies to wealthy corporations for all sorts of tax breaks they receive. We should start by ending labor subsidies for low pay workers in America. Let’s end government assistance to the working poor by making Corporations pay their low-wage workers enough so taxpayers don’t have to supplement workers’ income to pay the rent, put food on the table, care for their children while they work, or pay for a doctor and medicine every time their kid gets sick. When we pay a living wage to low wage parents, it frees them up to be better parents and good role models to their children.

Every time the government steps in to pay for necessities it is degrading for the workers who must request this assistance. It says to them that their employer doesn’t recognize their true worth. Their employers won’t even pay them the bare minimum it takes to live a life. This takes a toll on a worker’s self-esteem. It often forces them to work overtime or take a second job to make ends meet.
When the working poor and working-class families try and get off government assistance they are often forced to work more hours. They become absentee parents by degree. Without parental supervision, their children are less disciplined and more peer-influenced. Their children might stop doing their homework, for instance, or lose their focus on school making them less successful in school and in life. When parents aren’t home to structure their time children may start hanging out with the wrong crowd. They face greater temptations and risky behaviors that lead them into a vicious cycle of declining prospects, and the “sh*t-life syndrome” is passed along to another generation.

It traces back to the degradation and loss of dignity that so many Americans experience when they are unable to make a viable living in the world’s richest nation. The enormous wealth-gap and the huge compensation paid to CEOs in this country are all evidence that the money is there for the working poor. Paying the lowest wage worker, a living wage wouldn’t even leave a dent on the highest-paid corporate leaders or wealthiest Americans.

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And for the 40% who can't imagine attaining a middle-class life or a politician really caring about them or their community, I offer this poem read on video by its author, the late, great Maya Angelou: 

 https://www.facebook.com/brooklynphenix/videos/3484505501622790/

OH LORDY, THERE ARE TAPES!!!

OH LORDY, THERE ARE TAPES!!!

by Brian T. Lynch, MSW

What do the tapes tell us so far? They show that just 18 months before Trump blocks aid to Ukraine, and a day after the first javelin missiles were delivered to Ukraine, Donald Trump hosted a dinner party at Mar-a-Lago, Trump’s resort in Palm Beach, Florida. His guests include Don Jr, Donald Trump’s buddies Lev & Igor, some national security advisor and others, who knows who at this point.

Igor apparently tape records the whole dinner conversation, over an hour of tape recording. Trump Can be heard chatting about the javelin missiles that had been delivered and other topics. At one point in the conversation is heard asking, presumably, his security advisors how long Ukraine would last against Russia without US military aid. He is told that Ukraine would be quickly overrun.

Later during the dinner, Trump asks how things are going in Ukraine. It isn’t clear who the question is directed to, but Lev pipes up to say he is hearing how bad Ambassador Yovanovich is and that she is telling Ukraine’s officials that Trump is going to be impeached. Word of these rumors came to Lev through Igor, who had recently been to Ukraine.

Trump doesn’t ask one further question. He doesn’t turn to his advisers for validation. He instead goes into a tirade and immediately calls for Ambassador Yovanovich’s immediate removal.

We know now that the Ambassador was the victim of an insidious smear campaign by corrupt, Russian friendly former Ukrainian officials. Judging from Trump’s extreme reaction it seems apparent that this was not the first time Trump has heard these rumors against Yovanovich. So, the question becomes, who had been feeding him these planted lies about her before this diner that he would blow upon hearing Lev’s report?

These tapes were just released late last night by ABC news and haven’t been fully transcribed or vetted as of this moment. Still, it is looking more and more to me like the President’s moves to undermine Ukraine is the result of a Russian covert psy-ops operation targeting our weak-minded, Putin loving, paranoid President to act once again in service to Russia’s national interest. I want to know more about the origin of this tape, who made it, how it was released and who was in the room where it happened. Let’s start calling some damn witnesses and demanding documents from this strange administration.

Bernie/Biden Clash On Social Security Masks Real Differences

by Brian T. Lynch, MSW

In an opinion piece by Paul Krugman, published by the New York Times on January 21, 2020, Krugman writes, “The Sanders campaign has flat-out lied about things Biden said in 2018 about Social Security… The last thing we need is another president who demonizes and lies about anyone who disagrees with him, and can’t admit ever being wrong.”

That is pretty damning. What did Sanders or his team actually do?

Krugman writes that the Sanders campaign promoted a doctored video clip that distorted Biden’s record on Social Security. He repeated a quote from another N.Y Times article from January 18th (and updated Jan. 21st) by Katie Glueck’s that said:

“There is a little doctored video going around,” Mr. Biden said, adding that it was “put out by one of Bernie’s people.”

But Glueck also wrote:

“Former Vice President Joseph R. Biden Jr. on Saturday accused Senator Bernie Sanders’s presidential campaign of distorting his record on Social Security, claiming without evidence that Mr. Sanders’ team was promoting a “doctored” video…” [emphasis mine].

In fact, the video clip linked to Krugman’s article is an unedited segment of an interview from January 7th between Senator Sanders and Anderson Cooper. While listing differences between Biden and himself, Sanders said:

“You know, Biden has been on the floor of the Senate talking about the need to cut Social Security, or Medicare, or Medicaid.”

That’s it! Sanders didn’t say exactly what Biden said or when he said it. Krugman’s comments about a doctored video, therefore, appear to convict him of the same false accusation that he accuses Senator Sanders of committing.

But in fairness to the truth, the released Sanders’ campaign materials Krugman refers to did make some misleading claims. As pointed out in the PolitiFact article linked to the Krugman article, item #1 on the Sanders campaign document said:

“BIDEN’S BRAGGED OF TRYING TO CUT SOCIAL SECURITY & MEDICARE”

So, from where did this accusation come? It came from the Congressional Record of the U.S. Senate, as did another article on the subject in the Intercept written by Ryan Grim on January 13, 2020. The lead sentence of Grim’s article reads:

“AS EARLY AS 1984 and as recently as 2018, former Vice President Joe Biden called for cuts to Social Security in the name of saving the program and balancing the federal budget.”

Grim then cites this excerpt is from the Senate Congressional Record just fifteen-years ago:

“When I argued that we should freeze Federal spending, I meant Social Security as well. I meant Medicare and Medicaid. I meant veterans benefits. I meant every single solitary thing in the Government.”

In this case, it is Ryan Grim who distorted Biden’s record by taking it out of context. Biden was arguing that the budget sequestration under discussion should include all areas of the federal budget and not exclude the very popular and vital entitlement programs. In this same Congressional Record transcript, then-Senator Biden went on to say Social Security, “…is arguably the most important and most depended-upon program in the Federal Government.”

Joe Biden suggested taking Social Security off of the Federal Budget. He wanted to protect the billions of dollars in surpluses it generated each year back then, surpluses that Congress spent every year to cover deficits in other areas of the budget.

What this manufactured controversy misses, however, it the very significant point that the thrust of this and so many of Biden’s speeches always center on the middle-class. Biden has rarely ever focused on 45% of all Americans who live below middle-class economic standards. 

This is the real distinction.  Joe Biden is interested in maintaining stability in America by growing and sustaining the middle-class. Bernie Sanders, for his entire career, wants to bring hope and relieve the structural economic burdens of every American family living in or below the middle-class. It is this focus and message that is beginning to resonate in places around America where Biden's message just doesn't carry. It is this focus on economic inclusion for all segments of society that scares the heck out of the wealthy elites.

Here is one example of Biden's middle-class messaging. In his 2018 speech at the Brookings Institute, also cited in the same PolitiFact article to which Krugman linked his opinion, Biden said, “Folks, we’re here today for a simple reason: to talk about the middle class.” 

 He later goes on to describe the plight of a factory worker to make his point:

“Folks in the middle class are in trouble. It’s not just their perception. They are in trouble. Now it’s all about taking care of the folks at the top… take that guy working on the assembly line making 51 grand. We don’t talk about him anymore, by the way, if you notice politically. Not you, we in politics don’t. And his wife is a hostess at a nice restaurant, she’s making 28 [grand]. So they’re making almost 80 grand and they’ve got 2 or 3 kids, and they can’t make it if they live in Washington or New York or San Francisco.”

No one can seriously argue that the middle-class is in trouble in "high living" places like San Francisco and New York City, but how does this limited message resonate with half of all Americans in far-flung places who make way less than $80,000 per year. Wouldn't they love to have the financial problems of these middle-class families? What they get instead is a conspiracy of silence from politicians in both parties who are beholden to the donor class. These are many of the same families that responded to Donald Trump in the 2016 campaign. He spoke directly to them and they love him for that.

The real question before us now is which Democratic candidate for President has the message and credibility to take back that momentum?  Who has the spark to inspire the working poor to turn out and vote for the Democrat? It isn't the loyal base who needs to be motivated. They will "vote blue no matter who"(if we can believe that). It is the great mass of inactive voters we have been ignored for decades who will sweep Donald Trump and his Republican sycophants out of office if we offer them real change. 

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This reads as a companion article to one I wrote on the differences between Senator Elizabeth Warren, who I admire, and Senator Bernie Sanders, who I support at this time. In the Studebaker article I linked to that post the differences between Biden, Warren, and Sanders are discussed. That post and two important articles can be accessed here: 

https://aseyeseesit.blogspot.com/2019/08/differences-between-warren-and-sanders.html

HOW TO UNDERSTAND TRUMP RALLY-GOERS

by Brian T. Lynch, MSW

Very low information voters who have avoided politics their whole life, who maybe never voted before 2016 or paid any attention to who was running, have found in DONALD TRUMP a politician who loves them unconditionally. He embraces them. He doesn’t care that they don’t know much. He is rich and powerful and he is going to take care of them.

Donald Trump talks to his fans like no other politician before. He doesn’t talk down to them or try to teach them stuff they don’t care to hear. He says amazing and unexpected things, things that thrill them and excite them. He makes them feel politically alive for the first time in their life. He doesn’t have to be accurate or truthful because they get what he is saying and they can read between the lines. No dog whistles required!

Donald Trump has turned politics into this incredibly entertaining blood sport and his fans love it. They have taken political sides for the first time. They are standing up against the old guards of both political parties who have ignored them in the past. They are standing up for their race, their religion and their traditional values. They only support the Republicans today because the GOP itself has gotten fully on board with their champion, and THEIR GUY IS GOING TO WIN because he does what he says and keeps his promises. He has made America Great Again.

This is what we are up against. No amount of facts or logic can dislodge Trump's loyal followers. The only hope we have of defeating Donald Trump is to overwhelm them at the polls. We need to put up the most exciting candidates up and down the line. We need candidates who best speaks to the greatest number of ELIGIBLE voters, not just Democrats or likely voters. We need to reach into the giant pool of those folks who don't normally come out to vote and get them as excited about our vision for America's future as Trump's supporters are for his outsized personality.

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Also see full video here: https://www.youtube.com/watch?v=3v4ZWM2Q1jM

A Reaffirmation of Faith in Our Republic

by Brian T. Lynch, MSW

This five-minute video message of actor Matthew Cooke, below, is worth a listen. It is a reaffirmation of faith in our republic at a time when it is most threatened and vulnerable. It articulates our founding principles, which contrasts sharply with current Republican behavior in Congress.

I try not to refer to Republicans as a "party" anymore because, despite any philosophical differences, political parties always maintain their fidelity to the nation's constitution. That isn't true of Congressional Republicans. Under Mitch McConnell, Republicans in Congress are more of a political movement to replace democracy with a plutocratic autocracy, a single "party" system that mostly represents a small but wealthy minority. So, it is time for each of us to stand up in unity to depose those for whom democracy, with its equitable distribution of power, is an obstacle to their corrupt designs.

History of Wages in America

By Brian T. Lynch, MSW

A conservative friend of mine was astonished to learn that a couple with two children in his town would need an income of $57,000 per year to live there. “I'm a CPA and I've had partners who didn't make $57,000 some years,” he said.


That sounds about right, yet we have come to the point where a living wage, defined as the minimum hourly income necessary for a worker to afford basic needs, is close to the U.S. median family income. Nearly half of the US workforce is unable to meet all of their family's basic needs without some assistance from relatives or the government.

"Everyone" can't be above average,” he protested. “If we set the poverty line or living wage standards above the average American income, the government could NEVER provide [enough for the poor].”
First, living wage standards are not set by the government. They are set by the market place where people spend their wages on the goods and services they need. Living wages are calculated based on the cost of food, shelter, clothing, medical care, transportation, and other necessities for living. These essential requirements have a free market price tag that varies from place to place. The poverty line, on the other hand, is an arbitrary federal government measure used to determine who may be eligible for government financial subsidy, among other uses. It is a single value that does not take local economies into account.

Second, his response assumes that it is the government’s role to subsidize America’s workforce. On the contrary, it is, and ought to be, the responsibility of employers and business owners to maintain strong communities and a stable, well-compensated workforce. When families can no longer afford to meet their basic needs in a given location they either migrate to places where their prospects are better or they devolve to survive and the social order breaks down. Either way, businesses suffer when this happens. Ultimately, commerce and markets cannot exist without solid communities and a stable, healthy workforce. When businesses shirk their responsibility to properly compensate employees, governments step in to help stabilize the workforce. This amounts to a hidden business tax subsidy.

Local communities are the medium from which businesses are created and through which commerce thrives. When most businesses were locally owned this truth was self-evident. Local employers took pride in the standard of living they provided their employees. Business owners were community-minded and proud of the beneficial impact they had in their home towns. Conservative Republican values were once rooted in the welfare of local economies.

As businesses became more regional and less dependent on local economies, pressure from organized labor unions helped maintain a reasonable standard of living for the workforce. This helped to keep local economies strong, which was ultimately good for business. With the rise of national and global corporations, however, the connection between corporate wellbeing and local community wellbeing has broken down. Large corporations are able to exploit local economies and then move on to new locations when a local economy falters. Large corporations have the power to control politicians, overcome unions and raise profits by lowering labor costs. Because of reduced reliance on local economies for their success, global companies enjoy an autonomy that didn’t exist before. This has given rise to self-serving corporate cultures and free-market philosophies centered around profits over people. The expansion of the welfare state to bridge the growing gap between lowered wages and rising prices has helped ease the conscience of business owners and investors during the transition to this new corporate culture.

But the really big point missing here is that median wages have fallen too low in America. The big story, from all which public discourse on the economy seems designed to distract us, is that American workers need a raise. Incomes have declined substantially relative to the costs of basic goods and services. This decline in American wages is neither accidental, nor inevitable. The flattening of American wages was done by design at a specific time in our history. The graph below shows that the decline in wages corresponds with the decoupling of worker compensation from the rise of hourly productivity. [see also http://bit.ly/IKDFup]

Based on this graph it is obvious that the rise in hourly compensation dramatically diverged from the rise in productivity per hour in the late 1970s and early 1980s. Hourly compensation has barely risen since then. This decoupling of wages from productivity coincides with the establishment of industry trade organizations, the creation of extensive business lobbies and a nearly inverse decline in the membership and influence of labor unions. It shifted compensation for growing productivity to top corporate management and wealthy investors. This shift, coupled with dramatic income tax cuts for the rich in 1980 and 1985 are the root cause of the large income inequality today.

While productivity rates increased 250% since World War II, hourly compensation only increased by 130% nearly all of which occurred before 1977. (The tiny increase around 2007 may reflect the increase in the federal minimum wage that year.) If wages had kept pace with worker productivity since 1977 the median income in America today would be more like $100,000 per year. Extra consumer spending capacity would put upward pressure on prices if that happened, but the relationship between discretionary income and consumer prices is neither linear or direct. In other words, the price of goods and services might be higher, but not in proportion to the increased income.


As mentioned earlier, when families can no longer afford to meet their basic needs in a given location they often move to places where the economy is better. This weakens the local economy when they move out because there are fewer people supporting local commerce. It may weaken the local economies into which they relocate by flooding the labor pool (which drives down wages), increasing housing costs and burdening local social services. Making sure working families can meet their basic needs is not just the right thing to do, a stable labor pool is critical to local economies. That’s why government programs to financially supplement the labor pool, especially during economic downturns, are so essential. When businesses fail to pay employees enough that they are financially self-sufficient, government programs step in to help with housing costs, food stamps, medical costs, etc.


For the past 40 years wage growth has been nearly flat. Consider the impact this has on government spending and government revenues. Each year the cost of food, housing, and other basic necessities rises. This means that living wage rates rise faster than our actual earnings. When worker compensation remains flat, income tax revenue remains flat as well. At the same time, the number of families in need of government financial assistance grows.

Think about how much more federal revenue there would be if the median family income today was $100,000 per year instead of nearly half that amount. Imagine how much less the government would have to spend shoring up low wage workers. If wages had continued to rise on par with productivity over the past 40 years our median income would far exceed current living wage levels.


The case for a living wage has been around for a long time. In 1891 Pope Leo XIII first described a living wage in terms that could be generalized and applied in nations throughout the world. He said, "Wealthy owners of the means of production and employers must never forget that both divine and human law forbid them to squeeze the poor and wretched for the sake of gain or to profit from the helplessness of others."

Even Adam Smith was a supporter of living wages. He viewed them as a way to achieve economic growth and equity. In his Wealth of Nations, Smith recognized that the rising real wages lead to the "improvement in the circumstances of the lower ranks of people" was an advantage to society. According to Smith, the government should align the interests of those pursuing profits with the interests of the labor force in order to grow the nation’s economy. Smith argued that high wages lead to higher productivity and overall growth. In this way, he linked higher wages with increased productivity. For much of our history, this alignment has been evident.


Below is a graph prepared by the Secretary of Public Welfare for the State of Pennsylvania. It was designed to show how government financial aid is uneven along the earned income continuum producing illogical "welfare cliffs". However, the graph also reveals the great extent to which working families need government assistance to bridge the gap between what they make and what they need. The entire area to the left of earned income represents the gap between living wage compensation and what families actually earn.

Some examples here might be useful. First, consider a case where a Pennsylvania company hires a single mom and pays her the federal minimum wage, $7.25 per hour. Working 40 hours per week, 52 weeks per year, she would gross approximate $15,000 per year. Subtract income taxes and payroll taxes and she would clear about $13,000 per year. Using the Welfare Benefits and Wages graph above we see she would require an additional $42,000 per year in government subsidy to meet her family's basic needs.

The only reason her employer can pay her minimum wage and count on her coming to work every day is that so much tax money is spent to supplement her wages. If there were no aid to the working poor her employer would have little choice but to pay this woman a living wage. In this sense, all government aid to the working poor is really a hidden tax break for businesses.

For another example, consider a family of four living in Harrisburg, PA, making a living wage. Using the Living Wage Calculator we find that the living wage in Harrisburg is approximately $51,000 per year. This corresponds to about $24 per hour (more than 3 times the minimum wage). Subtract payroll and income taxes from the living wage and this family's net income is around $38,000 per year. Using the PA Welfare Benefits and Wages graph above it appears that this family might still need some assistance paying for child care if both parents worked, and possibly for health care as well. However, if increases in hourly compensation had kept pace with hourly productivity over the last forty years this same family would be earning more than $100,000 per year. They would be contributing to state and federal revenue rather than being a drain on tax revenue.

If wages had doubled since 1977 (productivity rose 1.5 times) median family wages would be closer to $48 per hour and as many as 50 million American's who now receive subsidy would instead be contributing to federal revenues. It is about time we began pressing the case for passing a living wage law.

Below you will find a living wage calculator. Developed by Dr. Amy K. Glasmeier and Pennsylvania State University, the calculator estimates the hourly wages a person needs to meet their basic human needs. The calculator estimates living wages for each state or county, and many municipalities, in the United States. Check out what a living wage looks like near you.
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Introduction to the Living Wage Calculator
http://www.livingwage.geog.psu.edu/

In many American communities, families working in low-wage jobs make insufficient income to live locally given the local cost of living. Recently, in a number of high-cost communities, community organizers and citizens have successfully argued that the prevailing wage offered by the public sector and key businesses should reflect a wage rate required to meet minimum standards of living. Therefore we have developed a living wage calculator to estimate the cost of living in your community or region. The calculator lists typical expenses, the living wage and typical wages for the selected location.

Wealth Inequality has Always Been Un-American

by Brian T. Lynch, MSW

In an Intelligencer article entitled, “AOC Thinks Concentrated Wealth Is Incompatible with Democracy. So Did Our Founders,” Eric Levitz writes, “ [Alexandria] Ocasio-Cortez’s second argument against the existence of billionaires — that concentrated wealth is incompatible with genuine democracy — was something close to conventional wisdom among the founders. Levitz goes on to write:

“The notion that political freedom has a material basis did not originate with Karl Marx and the creed of Communism; it was a core idea of the 17th-century British political theorist James Harrington, and his formulation of classical republicanism. A man who does not own the means of his own reproduction can never exercise political freedom, Harrington argued, because “the man that cannot live upon his own must be servant.” Likewise, the man of immense wealth — whose fortune consigns great masses of men to servitude — is inevitably a kind of tyrant. After all, 'where there is inequality of estates, there must be inequality of power, and where there is inequality of power, there can be no commonwealth.'”

Having seen the ravages of extreme property-based wealth inequality in England, Thomas Jefferson was concerned that measures needed to be taken to prevent such inequality in America. Among his ideas, he wrote:

“Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.”

The vast concentrations of private wealth we see today is incomparable with a democratic society - and our founding fathers knew it. Regardless of if they were for or against democracy as a form of government, there was agreement that this nation needed to guard against the extreme accumulation of property in the hands of a few.

While Jefferson and the founding fathers understood this, they nevertheless adopted a Constitution which only permitted a flat tax (Art. 1, Sec. 9, 4th paragraph). It wasn't until the Sixteenth Amendment was adopted in 1913 that the idea of a progressive income tax became possible.

The progressive income tax of 1913, as it was originally designed, did exactly what Thomas Jefferson had suggested. It was not intended that wage earners would be taxed at all. The bottom tax bracket began with incomes over $100,000 in today’s inflation-adjusted dollars and many higher marginal tax brackets climbed upwards from there. The one reason most wage earners ended up paying income taxes is that the 1913 law was not indexed to inflation. Just like the alternative minimum tax today, the progressive income tax crept down the income scale over time as wages were adjusted upward for inflation and productivity growth.

Up until World War II the top marginal income tax rate was over 90%. It was set that high to help prevent the unchecked accumulation of private wealth for the sake of maintaining a functioning democracy. President John Kennedy scaled back the top tax bracket to 70%, but it was Ronald Reagan who destroyed the whole purpose of the progressive taxes by cutting the top rate to less than it is now. At the same time, he adjusted the bottom rate to increase income taxes paid by lowest-paid workers. These changes, along with a law to tax capital gains at 1/2 the rate of wage income, set-in-motion one of the main conditions that would result in the creation of today’s billionaire class.

The other changes that allowed for the current unchecked accumulation of vast amounts of private wealth were the rise in the mid-1970s of organized capital in the form of political associations and PACS, (Political Action Committees) bent on killing unions and electing pro-business politicians. To this end the practice of sharing growth in the hourly gross domestic product (GDP) with workers in the form of productivity wages ended. Since then the US economy has nearly tripled but nearly all of that new wealth has gone to the wealthiest owners of capital. Wage growth, adjusted for inflation, has been nearly flat since 1975.

The irony here is that if productivity wages had been allowed to keep pace with America’s growing wealth (hourly GDP), the average family of four today would be making over $100,000 per year, the point beyond which they might have had to start paying income taxes if the original 1913 progressive tax law had been indexed to inflation.