Wages crash, profits spike, in Obama’s economy
President Barack Obama is touting his “opportunity agenda” on the 2014 campaign trail, even through government data shows that his policies have helped lower employees’ share of the nation’s annual income to the lowest level in 63 years.
The data also shows that companies’ profits reached an after-tax, 85-year record level of $1.683 trillion in 2012. That’s 10 percent of the economy, even after companies paid $418.9 billion in taxes.
That record profit level is one-tenth higher than the previous record which was set in 1929, the year of the Wall Street crash.
In 2012, employees received $7,138 trillion wages and salaries, or 45 percent of the nation’s income. That’s down from 48.6 percent in 1929, 51.6 percent in 1953, 49 percent in 1965, and 44.8 percent in 2008, according to government data.
However, compensation crept up with the addition of various benefits paid by employers. Those benefits comprised 0.9 percent national wealth in 1929, 5.7 percent in 1965 and 10.6 percent in 2008. They fell to 10.4 percent in 2012.
“Restoring opportunity for all has to be our priority,” Obama declared at an April 8 White House p.r. event. “That’s what America is about. It doesn’t matter where you started off, what you look like — you work hard, you take responsibility, you make the effort, you should be able to get ahead,” he announced at the campaign-style event.
“We’ve got to fight for an opportunity agenda, which means more good jobs that pay good wages… and making sure the economy rewards hard work for every single American,” he said, reprising one of his major themes in the 2014 election.
Under Obama, the drop in wages has helped to double the profit-fueled stock market, up from 7,500 in February 2009 to 16,000 in December 2013. The vast majority of that extra wealth was won by the top 0.1 percent of the population that already owns large stock portfolios.
In contrast, average household income has slid downwards in Obama’s five and half years in the White House.
By April 2013, “real median household income (excluding capital gains and losses but including cash government benefits) has declined 4.4% since the “recovery” began in 2009,” according to Sheila Bair, who was chairman of the Federal Deposit Insurance Corporation from June 2006 through June 2011.
The drop was 10.9 percent for African-Americans, and 9.6 percent for people younger than 26 and 7.5 percent for unmarried mothers, Bair wrote in the Washington Post.
The clash between Obama’s opportunity rhetoric and reality is mirrored by Obama’s high-profile claim of a 23 cent “pay gap” between men and women. The claim has been damaged in the last few days by the media’s attention to data, including the data showing a 12 cent disparity between White House salaries for men and women.
Obama’s top second-term priority — a rewrite of immigration law — is also expected to shift more of the nation’s annual wealth to investors, and away from workers.
The immigration bill passed by the Senate in 2013 would boost investors’ and owners’ share of the economy for at least twenty years, and shrink some Americans’ wages and salaries for at least 10 years, according to a report from the Congressional Budget Office.
“The rate of return on capital would be higher [than on labor] under the legislation than under current law throughout the next two decades,” says the report, titled “The Economic Impact of S. 744.”
The bill would triple the inflow of immigrants, guest-workers and foreign professionals to roughly 40 million over the next decade.
In contrast, roughly 4 million Americans enter the workforce each year, and roughly 20 million Americans are unemployed or underemployed.
The shift in Obama’s economy towards investors, and away from workers, has been downplayed by the established media. The New York Times, for example, described the wage and profit data on the third page of the business section on April 5.