Economic inequality in America is getting worse, but here’s how we could close the gap
Decades of failed economic policies have left hard-working Americans behind. While the GOP tries to tout a “booming” economy, that doesn’t reflect the reality for many of our working families.
Too many Americans are struggling to make ends meet and are faced with stagnant wages and minimal income growth. Meanwhile, the rising costs of housing, health care, and other necessities are consuming more and more of their budgets.
“Whether in my field or another type of service worker, the stories of how the economy has grown doesn’t match reality on the ground.” — Ms. Kismet Evans, a home health care worker from Las Vegas, Nevada
That’s why the House Budget Committee recently held a hearing examining the real harm of inequality and solutions to improve the economic well-being of working families.
CEO compensation is soaring while the federal minimum wage is stagnant
This is the longest period in our nation’s history without an increase to the minimum wage. By contrast, CEO compensation at the top 350 U.S. firms increased by more than 50 percent over the same period. What’s more, CEO compensation has grown nearly 1,000 percent since 1978. Whereas CEOs made about 32 times more than typical workers in 1978, executives now make 278 times more.
The GOP tax law hasn’t helped. Despite the GOP’s claims that the tax law would give a meaningful economic boost to all Americans, it was primarily a giveaway to the rich and corporations. In fact, 60 of America’s biggest corporations paid zero federal income taxes on their $79 billion of U.S. profits in 2018 and instead received a net tax rebate of $4 billion.
What about workers? Worker bonuses slumped 22 percent after the GOP tax law, according to the Bureau of Labor Statistics. Corporations used their significant tax cuts to buy back $1.1 trillion of their own stock, rather than invest in the workers whose productivity drives their profits.
Hard-working Americans are overdue for a raise
Rising income inequality weakens our nation’s economic and fiscal futures. It suppresses economic growth, erodes Social Security’s tax base, reduces economic mobility, and increases the likelihood of recessions. All these consequences put pressure on federal, state, and local budgets. Income inequality has cost the United States six to nine percentage points in cumulative economic growth over the past two decades.
That’s why earlier this year House Democrats passed the Raise the Wage Act. This bill would raise the minimum wage to $15 an hour by 2025 and index it to inflation so it does not lose its value over time. This higher minimum wage would provide 27 million Americans with a raise and lift 1.3 million Americans out of poverty — including 600,000 children — according to the Congressional Budget Office.
“We have to protect the bottom, and raising the minimum wage is crucial to that effort”
— Dr. William E. Spriggs, Chief Economist at AFL-CIO and Professor of Economics at Howard University
Further, the federal minimum wage can again be a tool to address economy-wide racial inequality, as the minimum wage increases during the Civil Rights era reduced the then black-white earnings gap.
House Democrats kept their promise by passing the bill. Now it’s the Senate’s turn to support America’s workers.
Strengthening our nation’s economy: Investing in working families
If we want to build an economy that works for all Americans, we need to implement policies that benefit all Americans — not just the top 1 percent.
Unlike the GOP tax scam, House Democrats are focused on policies and solutions that address the underlying causes of economic inequality.