MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT
BuzzFlash has known David Cay Johnston for many years. He is a Pulitzer Prize winning financial journalist and author-- with a specialty in tax policy analysis -- formerly on the staff of the New York Times among other publications.
Johnston is unusual for someone who used to be published by the "paper of record": he analyzes financial data and lets the numbers lead him to the logical mathematical conclusions. That means he doesn't start from a preconceived perspective about how to measure the economy; for instance, that the official government unemployment rate is the basic criteria to determine if we are becoming more prosperous as a nation.
Instead, Johnston drills down into arcane reports and figures, such as what trends in Social Security payroll taxes reveal. The other day, he wrote an article, "Median wage falls to lowest level since 1998," on Al Jazeera America using just such numbers to reconfirm that the working person is getting the short end of the financial stick:
Last year the median wage hit its lowest level since 1998, revealing that at least half of American workers are being left behind as the economy slowly recovers from the Great Recession.
But at the top, wages soared — the latest indication in a long-running trend of increasing inequality, with income gains going to top earners while the majority of workers see stagnant or falling wages.
Al Jazeera is the first news organization to report these figures from the Social Security Administration (SSA), which were released late in October.
The median wage — half of workers make more, half less — came to $27,519 last year, virtually unchanged from 2011. Measured in 2012 dollars, the median wage was down $4.
Now we are talking about people who pay into the Social Security Trust Fund through FICA, so the full extent in the growth of assets (which Johnston has also reported on) of the richest Americans is not fully revealed by a Social Security payroll analysis. That would make the disproportionate increase in wealth at the top even greater as compared to the decrease in earned wages below the top tier. This is because lower wage earners generally have limited non-payroll assets, and don't usually get the special tax breaks for the wealthy that are related to non-payroll income. They are more likely to accumulate debt, not stocks and real estate.
But returning to just the payroll income numbers, Johnston writes:
While most workers are having a tough time, the SSA data reveal a dramatically different story at the top of the job market. The number of workers making $5 million or more grew almost 27 percent, to 8,982 workers, up from 7,082 workers in 2011. Total wages earned by these highly paid workers grew 40 percent — 13 times the overall increase in compensation for workers.
Even higher up the ladder, the number of workers making more than $50 million soared even more, from 93 in 2011 to a new record of 166 people in 2012. Average pay at this stratospheric level grew almost 20 percent, from $81.4 million in 2011 to $97.5 million last year.
Turning to another set of data, Johnston addresses the imbalance in the growth of corporate profits as compared to the duress of most American workers, for those fortunate enough to have a job:
Another big winner in recent data is corporate profits, thanks to actions taken by the Bush and Obama administrations since 2007, including the bailouts of Wall Street and the auto industry.
Since 2000, corporate pretax profits, adjusted for inflation, have more than doubled, reaching record levels.
Pretax profits of all firms in 2012 totaled $1.77 trillion, compared with $800 billion in 2000. That is a gain of 121 percent. During the same period, total real wages grew by just 7 percent, less than the 11.2 percent population increase.
The growth of pretax profits at 17 times the increase in total wages tells us a great deal about the parallel increases in wealth at the top and want for middle- and low-income earners.
Using unemployment figures as the most common criteria in financial reporting as the benchmark for whether America is climbing out of the recession is looking at the economy through a distorted lens: if most workers are making less, the economy is not doing better for them. It is doing worse.
For those corporate media news outlets who see the financial well-being of the nation through the lens of an ongoing record-breaking stock market, Johnston offers this sobering statistic: "Since 2000 the population has grown by more than 11 percent, but the number of people with jobs increased just 3.7 percent. That is, population is growing about three times as fast as jobs are."
If you are at the top tier of US wealth, you are just getting richer. If you are among the vast majority of Americans who do hard work for a living -- if they can get a job -- you're just trying to earn enough to stave off the debt collectors.