By Peter Bearse
MAY DAY! MAY DAY! – The call of people in distress; also, the name of May 1st, traditionally more of a “Labor Day” than the one in September.
These days, “distress” and “labor” go together. Workers’ work is earning far, far less, either in real terms [their inflation-adjusted earnings have declined] or as a share of earned incomes [in an economy in which the share of the rich has risen by leaps and bounds]. Thus, rising inequality is a sleeper (read between the lines) issue of this 2008 political year, to become a time bomb of an issue if we don’t start to do something about it now.
What’s to be done? First, try to get to the root of the problem. One fundamental source is that garden-variety wage and salary workers aren’t receiving shares of the profits and other wealth that their work helps to produce. Some firms have profit-sharing plans. Others have “ESOPs” – Employee Stock Ownership Plans. The latter are preferable since shares of stock embrace all company assets, not just profits. Several studies have shown that companies with ESOPs perform better than those without.
Another source is that, while paying through the nose as gas prices rise, American workers are not receiving any shares of the considerable profits being accumulated by “Big Oil” from our nation’s (diminishing) natural resource of oil, nor from any other natural resources whose prices are also rising in the commodities markets. The exception is Alaska, whose citizens receive an annual check from the Alaska Permanent Fund, derived from oil revenues produced in the state.
A third source is the negative rate of return on the forced savings that American workers contribute to Social Security for their own retirement.
Anybody seriously concerned with the ability of American workers to earn “living wages” that can support families will do more than claim an increase in the minimum wage as a major accomplishment. The evidence shows that it “helps” no more than a small minority of the nation’s workforce and leads to a loss of entry-level jobs. The next Congress will need to do much more. A good start would be threefold:
(1) In light of a generation of experience, liberalize and improve laws to encourage and enable the spread of employee stock ownership.
(2) Allow more oil drilling on public lands and increase lease rates and royalties that oil companies would have to pay for the privilege. [At the state level, states with considerable natural resources should look at the Alaskan model.]
(3) Require that workers’ Social Security funds are invested to earn a significantly positive rate of return – by putting the funds into a true, secure trust fund in the form of a public/private partnership that would invest them in a broad spectrum of American enterprise. This would negate the need to raise the already high rate of FICA taxation to maintain Social Security.
The bylines of these suggestions are: “Everyman an entrepreneur!” by broadening the base of ownership, “Spread the Wealth!” and “Let’s hear it for the American worker!”
Yet, these points are but a partial beginning of an effort to deal with a long-run, fundamental issue. Let’s get a discussion going. Comments? Other suggestions? Reply to email@example.com.
Peter Bearse, Ph.D., International Consulting Economist, author of Mobilizing Capital & Services: The New Economy (co-author), and Candidate for Congress, NH CD #1. Released by Supporters of Peter Bearse for Congress on May 1, 2008.