So, earlier this week, I wrote about the economic conditions in America.  How we no longer believe in the American Dream, how wealth is being allocated to the 1% as the bottom 50% loses.  How the wage gains some folks want you to think are due to our economic conditions are really just the result of the (finally approved) changes to the minimum wage.

Now, I don’t deprive the ability of folks to earn money.  Lots of it.  I do deplore- and feel regulations are a must- when the rich companies refuse to pay adequate wages to their help, when companies pay wages that require many of their employees to appeal to the states and the feds to bolster their living capabilities.

When WalMart, McDonalds, and a slew of others pay their employees so little that these folks are ‘entitled’ to receive food stamps (aka SNAP), Medicaid (for health care), AFDC (aid for dependent children), rent subsidies (Section 8), and a slew of other goodies.

Goodies for which you and I pay.  So, for example, WalMart can tell its stockholders that it generated $ 6.7 billion in profits.  When, in actuality, that number is mostly due to the nearly $ 5 billion subsidy we provide their employees with those goodies we discussed in the above paragraph.  (Which is why we need to penalize- to the tune of 105% [the extra 5% is to cover administrative costs AND to force the firms to pay adequate wages] – the amount we subsidize employees of firms that generate $ 2.5 KK in revenue or more than 50 FTE (full-time equivalent) employees.)

Which brings up a new report published by the Congressional Budget Office.  (To be honest, I am surprised this reached the light of day- although who knows how much editing was done to remove even more damning evidence.  After all, TheDonald has removed reports on climate change, pollution effects, mining disasters and the like from public view the minute he took office on 20 January 2017.)

 

 

 

 

You notice that the above chart and the graph shows the lowest quintile of the population “earned”  $ 35K in  income.  That’s AFTER SNAP, Medicaid, EITC, and the like are added to the family coffers.  Moreover, that’s HOUSEHOLD income, not individual income.  Which further skews the data.

 

 

 

 

 

You do notice in the above charts that before transfers and taxes, it’s only the rich that have eked out income gains.  Albeit the top 20% gains are modest (compared to losses for the rest of the US.  And, that 1% gain is tremendous by comparison.

The new report recognizes other facts.  That the top 1% pay 25% of all federal income taxes.  But, as a percentage of their income, that’s still pretty small.  And, when one adds in social security and Medicaid taxes (for which the poor must pay a significantly higher percentage of their income than do the top 10%; actually they exceed the percentage of income paid by the top 25%), the payments to the federal till become far more equalized.  (You recall that one pays 7.65% of wages- not stock gains, dividends, or interest- up until $ 132900 of income in 2019 for Social Security and Medicare taxes.  After that threshold, the  Medicare tax cuts back in at a 0.9% rate once one’s wages and salaries exceed $ 200K [$ 250K married].)

The new report I mentioned above,  Projected Changes in the Distribution of Household Income, 2016 to 2021, was posted in mid-December 2019.  With facts like the top 1% earn some 15% of all the income generated in the US.  (Let that sink in for a second or two.)  Or, that the BEST improvement in wages from 2016 to 2012 will barely exceed 2%- and that’s for the top 1%. (The bottom 90% will see about 1.2% increase in wages.  And, you do recall that Wall Street Journal article headline we discussed Monday, right?  Which means my analysis that this increase was due to minimum wage changes and, will prove as such, to be totally chimeric.)

These data above depicts how household (not individual!) income will change in the years 2016 to 2019.  And, it’s clear that the top 5% will benefit.  But, you have to recognize that the feds are reporting these numbers AFTER taxes and transfers (SNAP, Medicaid, EITC, etc.), which support the folks at the very bottom rung.  (And, as mentioned above, those goodies require you and me to subsidize their income so that McDonalds, Burger King, Pizza Hut, WalMart and the like can report outsized profits.)

So what becomes absolutely clear from the report is that income inequality is now the standard in the USA.  It’s actually become government policy.  And, that’s leaving the American Dream behind locked doors.