The Gap Featuring Tops & Bottoms

Wage Gap Cartoon by Signe

In the event that you were somehow under the misapprehension that The Gap was merely a large retailer specializing in trendy clothing produced in sweatshops, allow me to enlighten you on the gap of which I truly speak: The Wage Gap. Yesterday, the Center for Economic and Policy Research issued a press release in response to a proposal to raise the federal minimum wage:

The federal minimum wage is at its lowest point in 50 years. Congress has not raised the minimum wage in a decade. As of December 2006, this will be the longest time Congress has ever gone without raising the minimum wage.

According to the Center for Economic and Policy Research, increasing the federal minimum wage to $7.25 per hour over the next 26 months — as proposed by Sen. Edward Kennedy in an amendment to the Department of Defense Authorization bill — would raise the annual earnings of the average full-time, full-year, minimum-wage worker by $1,520.

Raising the minimum wage is only the first step in helping families to make ends meet. First, it is important to recognize that a substantial share of minimum wage workers are adults making significant contributions to the total family income. In the early 2000s, fewer than one-in-five minimum wage workers was under the age of 20 and half were between ages 25 and 54. In 2002, minimum wage workers earned an average of 68 percent of their total family income. [full text and graph]

Of course, as noted by the Center for Policy Alternatives, “[a]n individual who works full-time at the current minimum wage earns about $10,700 a year—$5,900 below the 2006 poverty line for a family of three, and $9,300 below the poverty line for a family of four.� Thus, even with an increase to $7.25/hour, the minimum wage will still fail to be a living wage for a great many families. Now, contrast this data with what’s happening on the other end of the economic spectrum, as reported this past April by Derrick Z. Jackson in the Boston Globe:

Income Gap Mentality

AS TREASURY SECRETARY John Snow meandered through his thoughts about the pay gap between CEOs and workers, it brought back memories of 1992 when the first President Bush toured a mock-up of a grocery checkout counter, watched a carton of milk, a lightbulb, and some candy ring up via a scanner and said about the technology, ”This is for checking out?”

The scanner came to mind because, as the average American worker watches corporate America slash pensions and healthcare, as the average American has seen real wages decline in the last quarter century, and as the average American family has to work harder to maintain the standard of living it inherited, Snow talked about this as if it were not much of a problem.

He told Globe reporters and editors yesterday that the pay gap was symbolic of the nation’s ”aspirational” compensation system, a star system in which, for example, top baseball players are paid $30 million. But he thinks that the US economy shows there is still plenty of trickle-down money to go around, making our country one that still ”shares the spoils of the game….”

All we are left with is our aspirations in a game where the average share of the American dream is being spoiled. The Institute for Policy Studies and United for a Fair Economy, the two liberal think tanks that annually chart the gap between CEOs and workers, currently list the gap at 431-to-1, or $11.8 million to $27,460. That compares with a gap of 107-to-1 in 1990. If salaries of the average worker had kept up with that of a CEO, he or she would be making $110,136. Had the minimum wage risen at the same pace as CEO compensation, it would stand today at $23.01. The federal minimum wage of $5.15 has not risen since 1997.

In 1980, the gap was only 42-to-1. Where the spoils go are quite clear. According to 2005 federal data from the Congressional Budget Office, the share of America’s income that went to the highest 20 percent of households increased from 45.5 percent in 1979 to 52.2 percent in 2003. The remaining 80 percent of American households all saw their share of the nation’s income drop.

The higher you go in that top 20 percent, the more the rise in their share of the income. The top 1 percent of Americans saw their share of America’s income zoom from 9.3 percent in the last quarter century to 14.3 percent. The top 10 percent saw their share go from 30.5 percent to 37.2 percent.

How Snow thinks that 10 percent of Americans holding 37 percent of the income represents a sharing of the spoils is checkout-counter economics. His claim falls especially short considering that 46 of the nation’s 275 largest companies, according to the Institute for Policy Studies, the United for a Fair Economy, and another liberal think-tank, Citizens for Tax Justice, paid no federal income tax in 2003. Eighty-two of the largest 275 companies paid no federal income tax at some point during 2001-2003 as the current President Bush cut taxes for the wealthy. [full text]

In case you were curious, Gap, Inc.—which is currently ranked 139th among the Fortune 500 companies—did apparently pay federal income taxes during the aforementioned time period. Don’t you feel better now? So what if this country would prefer to wage war rather than war about wages and inequality. So what if some 37 million Americans and nearly 18 percent of all children in this country are living in poverty. So what if a sizable number (1/3 to 1/2) of those seeking emergency food assistance are among the working poor. Let them eat cake.

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2 responses

  1. Preaching to the choir my friend…. and we still vote in the kind of folks who perpetuate the problem….and use the funds they raise as a yardstick for viability.

    Seems Jekyl and Hyde to me….

  2. I had worked out the gross and net pay for a worker being paid minimum wage here. I also suggest we ask each of our senators if they would live off of the resulting $174.04 net pay for 4 weeks. I don’t think many will be willing to do so.

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