Consumers: The real job creators • Celia Murary
The related issues of job growth and a stubbornly high unemployment rate promise to be the leading issues in the upcoming presidential election.
ऀPresumptive GOP nominee Mitt Romney believes that “America’s individual tax code applies relatively high marginal tax rates on a narrow tax base. Those high rates discourage work and entrepreneurship.” Romney consistently campaigns on the notion that the very wealthy (the 1 percent) are the “job creators,” and that we as a society must give them additional tax cuts in order to stimulate the economy and create jobs. It is only the lowering of the tax rate for top earners, Romney contends, that will spur the creation of much needed jobs.
ऀThe sluggish recovery has been good for some. While workers continue to struggle, those in the top 1 percent have done extremely well. According to recent research by Emmanuel Saez, an economist at the University of California, during the economic recovery, the top 1 percent saw income gains of 11.6 percent while the bottom 99 percent saw only a tiny 0.2 percent rise. In other words, the top 1 percent captured 93 percent of all income gains.
ऀThe recovery has also been a boon to American corporations. They’ve reported record profits over the past two years. However, the good fortunes of the corporate world have not trickled down to workers. Desmond Lachman, a former managing director at Salomon Smith Barney who now serves as a scholar at the American Enterprise Institute, a conservative policy center, sees corporate leaders reshaping their worlds.
ऀ“Corporations are taking huge advantage of the slack in the labor market – they are in a very strong position and workers are in a very weak position,” he said. “They are using that bargaining power to cut benefits and wages, and to shorten hours.” That strategy, Lachman said, serves corporate and shareholder imperatives, but “very much jeopardizes our chances of experiencing a real recovery.”
ऀAmerica would be well served if corporate leaders took a page from history. In 1914, Henry Ford started an industrial revolution by more than doubling wages to $5 a day – a move that helped build the U.S. middle class and the modern economy. The pay increase was also accompanied by a shorter workday (eight hours). Ford reasoned that since it was now possible to build inexpensive cars in volume, more of them could be sold if employees could afford to buy them. The $5 day helped better the lot of all American workers and contributed to the emergence of the American middle class.
ऀIn a recent address at the Technology, Entertainment and Design Conference in Long Beach, Calif., venture capitalist Nick Hanauer, channeled Ford, saying, “We've had it backwards for the last 30 years. Rich people like me don't create jobs. Jobs are a consequence of an eco-systemic feedback loop between customers and business, and when the middle class thrives, businesses grow and hire, and owners profit.”
ऀLooks like Mitt Romney is wrong – consumers are the real job creators.
Celia Murray is a member of the Morgan County Democratic
Printed in the May 24, 2012 edition