| Wealthiest 20 percent get big breaks { August 17 2004 } Original Source Link: (May no longer be active) http://seattlepi.nwsource.com/business/186625_incomegap17.htmlhttp://seattlepi.nwsource.com/business/186625_incomegap17.html
Tuesday, August 17, 2004
America's income gap grows; rich get richer Wealthiest 20% account for 50% of U.S. income, Census shows
SEATTLE POST-INTELLIGENCER STAFF AND NEWS SERVICES
Over two decades, the income gap has steadily increased between the richest Americans, who own homes and stocks and got big tax breaks, and those at the middle and bottom of the pay scale, whose paychecks buy less.
The growing disparity is even more pronounced in this recovering economy. Wages are stagnant, and the middle class is shouldering a larger tax burden. Prices for health care, housing, tuition, gas and food have soared.
The wealthiest 20 percent of households in 1973 accounted for 44 percent of total U.S. income, according to the Census Bureau. Their share jumped to 50 percent in 2002, while everyone else's fell. For the bottom fifth, the share dropped from 4.2 percent to 3.5 percent.
Jobs and the economy top the list of voter concerns this election year. President Bush touts a strong economy that is growing, but polls find that Americans have doubts and think jobs are scarce. John Kerry is trusted more on the economy, with Democrats talking regularly of "two Americas," divided between the rich and everyone else.
That argument has merit, some private economists say.
"For those working in the bottom half of the pay scale, they're under an enormous amount of pressure," said Mark Zandi, chief economist at Economy.com.
New government data also show that Bush's tax cuts have shifted the overall tax burden to the middle class from the wealthiest Americans.
"We're just trying to get ahead." said Debbie Reames, 49, of Raytown, Mo., whose bank job of 24 years was sent overseas in February. "But it seems like we climb a few rungs and then we fall back again."
Reames has a new secretarial job, which pays $7,000 a year less than her bank job, and she works catering jobs for extra money. Her husband, Russ, can no longer work after an injury. One son is finishing college and another will start in the fall.
So the family budget tightened. That meant fewer cable channels, more meals at home, postponed doctor appointments, missed vacations, delayed credit card payments, all to "keep the wolf away from the door," she said.
The U.S. jobs market is soft, sending wages down. Hiring came to a near standstill last month, with companies adding just 32,000 new jobs overall, stunning economists who had expected seven times as many.
More than a million jobs have been added back to the 2.6 million lost since Bush took office, but they pay less and offer fewer benefits, such as health insurance.
And the Seattle area has yet to recapture all the jobs it lost after the tech collapse and Boeing Co. slump. The region lost 95,400 jobs in the two-and-a-half year recession, and had only regained 26,500 by the end of June, according to an analysis by Employment Security Department economist Roberta Pauer.
Local workers and union members said yesterday they have felt the financial pinch in recent years.
Chuck Hughes, business manager for the International Brotherhood of Boilermakers Local 104, said his membership has dwindled to about 800 working members -- from more than 40,000 in 1945.
Perhaps more tellingly, those workers still employed -- mostly area shipyard mechanics and welders -- are making only little more than they were 20 years ago, especially when inflation is taken into account.
"Our wages have not only stagnated, they've actually gone backwards," said Hughes, who started his career as a shipyard welder 25 years ago.
Journeymen boilermakers earn roughly $17-18 per hour, Hughes said, including the $2 per hour they now have to kick in for health insurance costs.
In the mid 1980s, the same workers earned $13.50 per hour, he said.
Hughes echoed the Raytown, Mo., bank worker's fears that employers are moving many jobs overseas, where labor costs are cheaper.
"I see guys coming into this hall every day -- every day -- having to leave, and frankly, it's all they know," said Hughes. "You look at a man straight in the face and you don't know where they're going to go."
Eleni Henry, a member of the Hotel Employees and Restaurant Employees Union Local 8, is also the proprietor of Zoey Blueplate Bistro, a restaurant and bar in the basement of the Labor Temple.
Two years ago, she said, she employed more than a dozen workers. Business was solid.
But largely because of downward economic trends that have forced stagnant wages, layoffs and jobs moving overseas, there simply aren't as many workers doing business in her building, which is home to dozens of local unions.
Now she is down to four workers.
"We're hurting tremendously, and we shouldn't be," Henry said.
Across the country, what new jobs exist are concentrated in health care, food services and temporary employment firms, all lower-paying industries. Temp agencies alone account for about a fifth of all new jobs.
Three in five pay below the national median hourly wage -- $13.53, said Sung Won Sohn, chief economist for Wells Fargo.
On a weekly basis, the average U.S. wage of $525.84 is at the lowest level since October 2001.
In Washington, wages (adjusted for inflation) have remained relatively stable in recent years, standing at $37,397 in 2001 and 2002, and dropping slightly to $37,205 last year, according to the Bureau of Labor Statistics. The figures are all in 2001 dollars.
Washington workers, though, fared better than many others, as the state boasted the 11th highest private sector wages in the country, the bureau reported.
Across the nation the income gap is showing up in booming sales of luxury items.
Porsche Cars North America Inc. says sales are up 17 percent for the year. Strong sales at Neiman Marcus, Nordstrom and Saks Fifth Avenue overshadow lackluster sales at stores such as Wal-Mart, Sears and Payless Shoes.
Economists say wages should rise as companies boost hiring. But the growing gap between the haves and have-nots will remain.
Technology has eliminated many U.S. jobs, as has global competition, particularly from low-wage countries such as China.
Highly skilled, educated workers in America will thrive as demand rises, Sohn said, while low-skilled jobs remain vulnerable to outsourcing.
"This really has nothing to do with Bush or Kerry, but more to do with the longer-term shift in the structure of the economy," Sohn said.
P-I reporters Paul Nyhan and Sam Skolnik contributed to this report by The Associated Press.
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