Statistic after statistic shows the devastating effect this income imbalance is having on working people across this nation. According to Oxfam America, the 85 wealthiest people in America have as much wealth as the bottom half of the population. Workers’ wages and salaries are growing at the lowest rate relative to corporate profits in our nation’s history. State income tax returns show that the average income of the bottom 80 percent of earners has dropped during the last two decades, while the top earners have seen dramatic increases. In fact, since the beginning of our current economic recovery in 2009, 95 percent of all gains have benefited the top one percent of wage earners. Meanwhile, 65 percent of Americans are living paycheck to paycheck. Most egregiously, 1 in 4 Californians is living in poverty, the highest poverty rate of any state in the country.
These disturbing facts should be of great concern to policymakers. Given that 70 percent of our national economy is represented by consumer spending, a dwindling middle class will not be able to sustain former levels of spending without continuing to accumulate more debt. With median income continuing to stagnate and fall, the purchasing power of most Americans reflects that reality. Our unemployment rate will only return to acceptable levels when employees have sufficient money in their pockets to increase their spending, driving demand for more goods and services and creating new jobs.
As Ron Unz, a conservative Silicon Valley entrepreneur has said, “In recent years, the growing impoverishment of non-wealthy Americans has become a major drag on the consumer spending that drives our economy, and a hefty rise in wages and disposable income would be a tonic for our continuing economic stagnation.” Norm Ornstein further writes in The Atlantic, “We now have a body of research by top-flight economists showing that an increase in the minimum wage does not reduce employment or significantly hinder the economy.” I couldn’t agree more.