by Tula Connell, Apr 12, 2007

We already know that U.S. workers, the most productive in the world, are not seeing their efforts translate into comparable wages: Average inflation-adjusted wages today are only 15 percent higher than in 1980, despite a 67 percent increase in productivity.

Now, as tax time approaches, the Center on Budget and Policy Priorities (CBPP) released its annual report showing how the national income pie is sliced. And for the majority of working people, that slice is getting smaller and smaller.

The report finds the share of U.S. national income paid to wage and salary workers fell to a new low in 2006, while the share going to corporate profits was the highest on record.

Employees’ pay declined to 51.6 percent of national income, from the previous low of 52.4 percent in both 2005 and 2004, according the CBPP’s analysis of federal government data. Small percentage declines can make a big difference because each one-tenth of 1 percent amounts to $117 billion in national income, CBPP said. In contrast, corporate profits’ share of national income has increased sharply each year since the 2001 recession, when they bottomed out at 8.5 percent, and hit 13.8 percent in 2006, matching the record high set in 1942.

The study also looks at federal tax rates going back to 1960 and finds that since that year average federal tax rates for middle-income households have increased and then declined modestly. Over the same period, high-income households saw sharp drops in their federal tax rates. As a result, writes the CBPP:

the share of the nation’s total income going to the top 1 percent of households jumped from 8.4 percent in 1970 to 19.3 percent in 2005, an increase of 10.8 percentage points. In 2005 terms, that increase works out to about $550,000 more in income per household for those in the top 1 percent. In other words, households in this income group received an average of about $550,000 more in income in 2005 than they would have if the group’s share of national had remained constant since 1970. 

Of the slightly less than $2.7 trillion the federal government spent in fiscal year 2006, some 21 percent of the budget, or $557 billion, went to pay for defense, homeland security and security-related international activities. Another 21 percent of the budget, or $549 billion, went to Social Security, which provided retirement benefits averaging $964 per month to 34 million retired workers (and dependents of retirees) in the last month of fiscal year 2006. Meanwhile, social safety net programs—such as unemployment insurance, child care assistance and low-income housing—made up only 9 percent of the budget hardship. 
There’s lots more data, check it out here.

While U.S. workers are feeling the pain of a decline in compensation and decreasing share of the national budget pie, those with jobs have even more to fear: Under the Bush corporate-greed economy, nearly any worker in the United States also faces the same risks as the 3,400 Circuit City workers laid off because they are being paid too much and the 17,000 Citigroup workers, professional employees who are seeing their presumably safe jobs shipped overseas.

Print This Article | E-Mail This Article | Comments (2)