What’s not for average hard working Americans to be enraged against both political parties. Since 1973 until 2018, the US corporate increase in productivity has been around 77% while the average Joe voter wages have been stagnate at less than 13%.
The major reason for the American workers’ stagnant wages has to do mostly with corporate greed but some causes have to do with more US goods being manufactured in other countries where the hourly pay for workers is much less; corporations developing a greater reliance in technology; and there being changes in the culture, like a greater usage by utility companies of renewable sources of energy versus fossil fuel.
But guess who the culprits are making these decisions. They are the corporation executives who recently benefited from a huuuuge 2017 GOP tax cuts bill, and not the other bogeyman (fill in the blank). It was easy pickings for a the republican President Donald Trump to sell these voters on taking a chance on him as he stoked their fears and anger towards the others like a Honduran caravan of refugee seeking asylum as the reason for being unfairly treated.
It’s time for the Democrats to start to educate these voters with accurate information and by actually providing them with some concrete help like increasing the hourly wage rate to $15.00 per hour and to enact an infrastructure bill.
When the GOP start to complain, the Democratic legislators can wipe the floor with the 2017 GOP tax cuts bill which was a boondoggle to corporate executives.
It used to be that after WWII until 1973, corporation executives shared the spoils of increased productivity, revenues, profits with their workers.
As per the EPI Economic Policy Institute, “From WWII Until about 1973, when US corporations productivity numbers increased to about 95.65%, the average workers’ pay wages increased to about 91%. There was this consensus that as corporations increased its productivity, revenues, profits, the workers also participated in the division of the spoils.
But after 1973, corporate productivity increased by 77% but workers’ pay increased by only 12.4%.
So these Americans are being squeezed financially to where most Americans are not in a financial position to send their children to at least a public state college. Then their young folks are saddled too frequently with a mortgage type student loan as they start their careers. Finally, when the average American retires, fewer and fewer have enough to retire on as corporate pensions have gone the way of the Dodo bird. They are reliant on 401ks which do not provide the security of pensions.
A Towers Watson study found that from 1978 to the end of 2013, only 24% of Fortune 500 companies offered any type of defined benefit plan.
In short, the non stock owners (about 50%) of Americans have been systemically shut out of the American dream and they have every right to be furious as neither the Democratic Party or the Republican Party lawmakers have done much to give these folks even a glimpse of hope.
As per a Bloomberg 11/8/2014 report, Since 1978, college tuition and fees have increased by a whopping 1,120%. During that same period, the price of food has increased 244% and medical expenses 601%. In fact, tuition prices have gone up four times faster than the consumer price index.
As per a 2/9/2018 Forbes report, “The year is 1965, and Mr. Smith has worked for the same company for 35 years. Mr. Smith is set to retire in the next year and is looking forward to receiving his full pension, which will guarantee him an income stream for the remainder of his life. It’s the reward and benefit he receives from his company for his loyalty and hard work for all those years.”
“This pension payment will give him the comfort of a regular paycheck plus Social Security benefits during retirement.”
“Many of today’s retirees are not as fortunate. The days of working at a company for 20+ years and receiving a hefty pension for your retirement years are all but over unless you work for the government or a select few companies that still offer them. A Towers Watson study found that by year-end 2013, only 24% of Fortune 500 companies offered any type of defined benefit plan.”
“Have you ever wondered why? Why don’t companies, for the most part, offer pension plans anymore? Let me explain.”
“In 1978, Congress approved The Revenue Act of 1978, which allowed for 401(k) plans. This act was implemented in the spirit of the government giving employees options for retirement outside of the standard pension plan. Sounds pretty reasonable, right?”
“In reality, large corporations were lobbying Congress to shut down their pension plans because they were too expensive to administer, and the employer held all of the investment risk. Corporate America needed a way to reduce costs and transfer the risk from the company onto the employee. Congress was determined to create additional options in order to shift funding away from pension plans, hence the birth of the 401(k).”
“The 401(k) allowed companies an alternative to pension plans so that they were no longer responsible for paying their retired employees. In addition to continuing to create a paycheck for the retired employee, the employer had a large amount of investment risk. If the underlying investments of the pension plan did not perform well, the company would have to add money to the pension plan to make sure it was properly funded. Without appropriate funding, the plan would fail, and the paychecks would stop.”
“The implementation of the 401(k) has allowed retirement planning to be on today’s retirees and workforce. It is now more important than ever for retirees to create solutions for their own dependable, sustainable income during retirement. Most retirees will have to count on the money in their 401(k) to create this income stream.”
“For a while, creating that income from a lump sum was easy. From 1986-2000, the market was up over 1000%, so having a big pile of money and “picking at it” sufficed. Experts called this the 4% rule, which states that if you take out 4% from your portfolio, you should be able to generate returns from the market to replace the 4% and grow your portfolio to hedge against inflation and, hopefully, never run out of money.”
“However, with the market volatility we have experienced over the last few years, we have seen the 4% rule start to be contested. Wade Pfau, a Princeton-trained economist and professor of retirement income at the American College of Financial Services, has said that the 4% rule should be adjusted to the 3% rule.”
“The 4% (now 3%) rule can leave a lot to question, since it’s not as predictable as a pension. Having a pension while creating income can create a sense of confidence, as the checks will continue for the rest of your life, regardless of the market.”
“A pension was one less thing people had to think about during their retirement years, which begs the question: Can a plan be created with the same sense of confidence and certainty?”