A newly-released analysis by the Economic Policy Institute shows that the super-rich have done well in the economic recovery while almost everyone else has done badly. The top 1 percent of earners' real wages grew 8.2 percent from 2009 to 2011, yet the real annual wages of Americans in the bottom 90 percent have continued to decline in the recovery, eroding by 1.2 percent between 2009 and 2011.
In other words, we're back to the widening inequality we had before the debt bubble burst in 2008 and the economy crashed.
But the President is exactly right. Not even the very wealthy can continue to succeed without a broader-based prosperity. That's because 70 percent of economic activity in America is consumer spending. If the bottom 90 percent of Americans are becoming poorer, they're less able to spend. Without their spending, the economy can't get out of first gear.
That's a big reason why the recovery continues to be anemic, and why the International Monetary Fund just lowered its estimate for U.S. growth in 2013 to just 2 percent.
Almost a quarter of all jobs in America now pay wages below the poverty line for a family of four. The Bureau of Labor Statistics estimates 7 out of 10 growth occupations over the next decade will be low-wage -- like serving customers at big-box retailers and fast-food chains.
At this rate, who's going to buy all the goods and services America is capable of producing? We can't return to the kind of debt-financed consumption that caused the bubble in the first place.
Get it? It's not a zero-sum game. Wealthy Americans would do better with smaller shares of a rapidly-growing economy than with the large shares they now possess of an economy that's barely moving.
If they were rational, the wealthy would support public investments in education and job-training, a world-class infrastructure (transportation, water and sewage, energy, internet), and basic research -- all of which would make the American workforce more productive.
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