Restaurant workers have been protesting low wages across the country, but restaurant industry backers are saying be careful what you wish for. What happens when workers demand higher wages companies cannot afford? Companies will begin to try to find ways to offset the costs of higher wages. In fact, some companies have already begun researching new technologies to eliminate restaurant workers altogether.
Descent into bankruptcy seems to reflect ascent of ultra-rich
Continued from: “Graphs of bankruptcy filings may indicate links to credit-cards, siege on middle class“
March 20, 2011
By Mike Hinshaw
Last time we extended the previous discussion about links between the creation and rise of the consumer credit card and bankruptcy rates. We ended with a discussion of Michael Moore’s recent contention that 400 families in the U.S. have more wealth than half the U.S. populace, a contention that PolitiFact has rated as “True.”
We found some other PolitiFact discussions that shed light on the widening income gap in the U.S.
Hillary got a “Half-True” rating–yet, her finding had merit
The first one dates to 2007, when Secretary of State Hillary Clinton was on the campaign circuit and made the claim that “Thanks to President [George W.] Bush’s policies, the poor and middle classes are suffering economically, while the rich are prospering. The income gap is now higher than at any time since the Great Depression.”
PolitiFact deemed the statement only half true, but its discussion of the wealth gap is, nonetheless, illuminating. The problem with the statement is that the decline of the middle class began in the 1970s, accelerated in the 1980s and has continued under every president since–and therefore can’t be laid at the feet of Bush:
Clinton’s figures are essentially right. She gets them from an analysis of U.S. tax returns published in the Quarterly Journal of Economics in 2005 and updated this year, which found that the top 1 percent of earners, those making more than $350,500 per year, earned 21.3 percent of the nation’s total income in 2005.
The U.S. Census Bureau shows a similar disparity, with the top 5 percent of Americans earning 22.3 percent of the income in 2006. Those in the top 20 percent earned about half of the nation’s income, while the bottom 20 percent earned just 3.4 percent of the income.
However, while some of Bush’s policies have favored the rich, economists say it is not fair to link the president to the rising income gap itself. This is a longtime trend that began to soar in the 1980s and has persisted throughout several presidencies. In fact, the income gap also reached new highs and grew more quickly during the administration of Bill Clinton, a Democrat and the husband of Sen. Clinton, than it has under President Bush.
Economists point to several reasons for the growth in disparity between the very rich and the rest of us, including the decline of labor unions, the loss of high-paying manufacturing jobs to cheap labor overseas, rising executive pay, and the relative drop of the minimum wage from 1981 to 2007. While goods and services became more expensive, the minimum wage stayed the same.
It looks as though bankruptcy rates mirror siege on middle class
We’re aware that the credit-card industry fought for passage of the Bankruptcy Reform Act of 2005 in response to what it termed as “bankruptcy opportunists,” but we also wonder if it’s mere coincidence that the nation’s consumer bankruptcy rates really began to accelerate in the 1980s, as can be seen in the following graph from the U.S. Administrative Courts.
Another revealing Politifact discussion concerns a November 2010 Senate floor speech by Vermont Senator Bernie Sanders, who is an independent but has become something of a Populist darling. In his speech, which promptly went viral on the ‘Net, Sanders said that ” ‘in the year 2007, the top 1 percent of all income earners in the United States made 23.5 percent of all income. The top 1 percent earned 23.5 percent of all income–more than the entire bottom 50 percent. That is apparently not enough. The percentage of income going to the top 1 percent has nearly tripled since the 1970s. In the mid-1970s, the top 1 percent earned about 8 percent of all income. In the 1980s, that figure jumped to 14 percent. In the late 1990s, that 1 percent earned about 19 percent.’ ”
Sanders’ statement not only mirrors the basic facts of Ms. Clinton’s assertion but also lends strength to Moore’s statement–both of which PolitiFact rated as True.
Senator’s speech leads to damning facts–from the Fed & IRS
The balance of this particular PolitiFact piece concerns the vagaries of interpreting data. No doubt, that is a problem when you’re sifting through data from a variety of sources. However, it’s also true that the data are not coming from crazy-different organizations–we think it’s fairly safe to assume that the Federal Reserve and the IRS have much more in common than they have differences. And, yet, PolitiFact publishes this:
One paper we found is by Arthur B. Kennickell, assistant director of the Federal Reserve Board’s Division of Research and Statistics. This paper, published Jan. 7, 2009, found that the top 1 percent’s share of income was 21.4 percent in 2007 — slightly lower than the 23.5 percent that Sanders cited but certainly in the ballpark. That’s also higher than the 14.6 percent taken by the bottom 50 percent, which is consistent with what Sanders had said.
Another study, published in 2010 by Adrian Dungan and Kyle Mudry of the Internal Revenue Service’s Individual Returns Analysis Section, found the top 1 percent taking 22.8 percent of income. Once again, this is slightly lower than what Sanders quoted, but in the same vicinity. That was also well over the 12.3 percent earned by the bottom 50 percent, which is once again consistent with what Sanders said.
As mentioned earlier in this series–no tinfoil hats required
The point is that these are not drug-addled hippies or hateful terrorists who are making some sort of outlandish claims–you can’t get much more “Establishment” than the Fed or the IRS.
Bottom line? If you’re jammed up with debt and creditors, your very best play right now just might be turning to the protection of federal bankruptcy code. You can learn that on your own–with much research–and find out how you can file yourself, or get an advocate’s help (with paperwork, no legal advice), or you can hire an experienced, trained bankruptcy attorney.
Next time: More about the economy overall and the latest in foreclosure news.
For bankruptcy basics, please see: