Robert Reich: Economic Inequality Stems from Policy Shifts and Declining Labor Power

Robert Reich, former Secretary of Labor, has drawn a comparison between job growth trends from 30 years ago and current figures, highlighting significant shifts in the U.S. economy.

He notes that 30 years ago, the U.S. economy averaged 200,000 new jobs per month. In contrast, the past year saw an average of 15,000 new jobs per month, which is described as a record low, with most gains occurring in the health care and construction sectors. Wages during this recent period have been characterized as stagnant.

The Widening Gap: Capital vs. Labor

Reich highlights a growing disparity between corporate profits and average worker compensation. He states that while corporate profits and stock market valuations have significantly increased, average workers have experienced minimal gains in jobs or wages. This divergence between capital and labor is presented as a factor contributing to low consumer confidence.

Political Roots of Economic Trends

The author attributes these economic trends to political decisions concerning tax laws, antitrust regulations, and labor laws. He notes that since the Reagan administration, taxes on the wealthy have decreased, while taxes on average Americans have increased. Additionally, the economy has seen reduced antitrust enforcement, which has contributed to corporate consolidation.

The Historical Role of Labor Unions

Reich discusses a historical correlation between union membership rates and the distribution of national income. He points out that periods of high union membership in the 1940s and 1950s corresponded with a larger share of national income going to ordinary working people. Unions are described as increasing workers' bargaining power, which benefited both unionized and non-unionized employees and contributed to the growth of the middle class.

The Decline of Unions and Growing Inequality

Since the 1970s, union membership has declined. This decline is linked to increased corporate influence in politics and efforts to weaken labor laws, actions that were amplified in the early 1980s. As union membership has decreased, the gap between the wealthiest individuals and others has widened.

Addressing the Imbalance: A Call for Union Resurgence

Currently, the top 10 percent of Americans own 92 percent of the value of all stock shares. Reich states that economic wealth has become concentrated in the richest one-tenth of 1 percent, while the bottom 90 percent face economic challenges.

He concludes that this level of economic inequality is detrimental to the economy and democracy.

Reich proposes that a resurgence of labor unions is essential to address inequality, rebuild the middle class, and improve economic conditions for Americans.