New figures released by the Social Security Administration show that half of America’s wage earners are being left behind by the economic recovery, as the median wage fell to its lowest level since the closing years of the Clinton Administration. Wages at the top, however, have soared to unprescendented levels.
According to documents seen by the Qatar-based Al Jazeera news agency, the median wage in 2012 was $27,519, virtually unchanged since 2011. In real terms the median wage in 2012 was actually $4 lower than the previous year. That 2012 figure shows that the median wage was at its lowest level since 1998 when it stood at $26,984.
This means that from its pre-crash peak in 2007, the median wage has fallen in real terms by $980. That means that someone who worked 52 weeks at the median wage has seen the equivalent of a two-week pay cut since the 2007 peak.
There was some good news; the average wage for American workers is up by 1% after inflation to $42,498. However even this was tempered by the reality that it is still lower than the 2007 peak, showing that while the US economy may be seeing (relatively) robust growth, this is not translating into anything like a return to pre-crash living standards for ordinary American workers.
In economics when the average wage grows but the median wage stagnates (or falls) it means that only the top half of wage earners are seeing an increase in pay. According to the report from Al Jazerra:
In 2012, the data show, 67. 1 percent of workers earned less than the average, up from 66.6 percent in 2011 and 65.9 percent in 2000. When a rising share of workers makes less than the average wage, it is another sign that wage increases are taking place only high on the income ladder, not on every rung.
There has been one success story in the post-crash economy: the top earners. The number of Americans making $5 million or more has grown by 27%, from 7,082 workers in 2011 to 8,982 in 2012. This means that wages for those earning $5 million grew by a staggering 40%, 13 times more than the compensation for workers.
Things improved even more at the very top of the ladder:
The number of workers making more than $50 million soared even more, from 93 in 2011 to a new record of 166 people in 2012. Average pay at this stratospheric level grew almost 20 percent, from $81.4 million in 2011 to $97.5 million last year.
However the biggest winner of them all in the post-crash economy is the corporate sector. Adjusted for inflation, corporate profits between 2000-2012 have doubled. In 2000, corporate profits were around $800 billion. In 2012 they totaled $1.7 trillion. That is a profit increase of 121%. In that time real wages grew by just 7%.
These figures are distressing but not surprising. Since the advent of neo-liberalism and in particular under Ronald Reagen, the American state-capitalist system has moved away from one that strived for the general welfare to one that promotes the interest of the ruling classes. Income tax and corporate tax have been repeatedly cut, while federal subsidies for corporations have grown. In that time, what little tax corporations do pay has been skillfully avoided and evaded at a staggering level. All this has lead to cuts in welfare as government revenue has fallen, and borrowing has had to increase.
Unless ordinary Americans demonstrate their outrage at a level sufficient to generate dramatic change in Washington, the United States will continue to demonstrate a unique and sinister welfare system: the state takes care of the rich, while churches and charities take care of the poor.