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Saturday, October 13, 2007

Note to America: While you're looking down the ladder at the guy mowing your lawn, here's who's picking your pocket
Posted by Jill | 9:33 AM
And they aren't looking to give you a set of keys to their club, either:

The richest Americans' share of national income has hit a postwar record, surpassing the highs reached in the 1990s bull market, and underlining the divergence of economic fortunes blamed for fueling anxiety among American workers.

The wealthiest 1% of Americans earned 21.2% of all income in 2005, according to new data from the Internal Revenue Service. That is up sharply from 19% in 2004, and surpasses the previous high of 20.8% set in 2000, at the peak of the previous bull market in stocks.

The bottom 50% earned 12.8% of all income, down from 13.4% in 2004 and a bit less than their 13% share in 2000.

The IRS data, based on a large sample of tax returns, are for "adjusted gross income," which is income after some deductions, such as for alimony and contributions to individual retirement accounts. While dated, many scholars prefer it to timelier data from other agencies because it provides details of the very richest -- for example, the top 0.1% and the top 1%, not just the top 10% -- and includes capital gains, an important, though volatile, source of income for the affluent.

The IRS data go back only to 1986, but academic research suggests the rich last had this high a share of total income in the 1920s.


So what does the president, who is among those whose fortunes have grown even larger over the past seven years (despite his stated need to "replenish the ol' coffers" after leaving office) attribute this concentration of wealth in the hands of ever-fewer people? A skills gap -- perpetuating the myth that the rich are just smarter and harder-working than the rest of us:

In an interview yesterday with The Wall Street Journal, President Bush said, "First of all, our society has had income inequality for a long time. Secondly, skills gaps yield income gaps. And what needs to be done about the inequality of income is to make sure people have got good education, starting with young kids. That's why No Child Left Behind is such an important component of making sure that America is competitive in the 21st century."


Certainly education is important, though it's highly debatable whether teaching with a goal of scoring to a certain level on a standardized test requires education. But when you look at the jobs being outsourced and taken by H-1Bs workers, they are not those on the low end of the educational requirement scale, they are those at the higher ranges -- not just IT jobs, but those for financial analysts, accountants, nurses, clinical data managers, and other relatively high-paying jobs are being outsourced to other countries or H-1Bs. Someone needs to ask this president exactly what kinds of jobs will be available for those with more education -- when month after month, the numbers reflect job creation primarily in the food service, hospitality, health care (presumably jobs like home health aide) and retail industries.

The fact is that most of us in our lives are not going to be entrepreneurs, we are going to work for other people. And as long as those other people are seeking to lower pay ranges to as close to slave level as they can, the share of American income held by working people is going to continue to shrink.

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