At some point in my lifetime, and I was born in 1972, capitalists pulled off an amazing feat. They convinced working class people to no longer bargain collectively for wages and benefits.
That victory alone could account for much of the flat or declining wages and benefits over the last 30 years.
Federal Income Tax Rates 1950
Let’s rewind back to post-war America. In the 1950s, union membership was strong, income taxes on the wealthy were high, and the nation was prosperous. I realize that not everyone shared in the prosperity of that time, particularly those folks living under the oppression of Jim Crow.
As an aside, and also a major factor in income inequality, are tax rates. In 1950, if you made more than $200,000 a year, you paid taxes on income over that amount at 91 percent. Adjusted for inflation that would apply to someone making more than $1.9 million a year in income today. But now that top income tax rate caps out at 39.6 percent. Top earners have seen their taxes cut by more than 50 percent. And I’m not even going to get into the tax rate on capital gains, it’s a joke.
But back to organized labor. The conservative movement back in the early 1980s decided to wage a war on labor. While the capitalists hate paying taxes, they hate paying workers even more. So while jokers like Grover Norquist waged war on taxes, the conservative movement, socially was able to convince Americans that they’re better off negotiating their salary on their own. It worked. Union membership is at an all-time low, and wages and benefits for working class people have either remained flat or declined, while billionaires are doing very, very well.
Think about the economic engine of America. For the sake of argument, let’s say that our market on any given year generates $16 trillion. Put aside all of the complexities of the economy for a moment and let’s boil it down to the basics. There are two players: capitalists and workers. If the capitalists get 30 percent of the pie, workers get 70 percent. If workers get 70 percent of the pie, capitalists get 30 percent. The capitalists know that the if they can suppress wages, it’s takes a slice of the pie away from workers and puts into the hands of the capitalists. The best way to keep wages low is to force workers to fight individually for salary increases and better benefits.
I’ve had well over 30 jobs in my life, many of them included some sort of benefits package, but did I ever get to be involved in that benefits selection process? No. My employer told me that these are the benefits, I could either take the job or not, but there would not now, or ever, be an opportunity to negotiate a better package.
The same goes for salary. Most employer’s try to mandate raises. They’ll tell you that every year you get a raise and it’s probably going to be 3 or 4 percent – barely beating inflation. If you try to negotiate a higher salary based on the current economic environment and your skill set, you might get a raise, but they will fight you tooth and nail. That fight, that’s what employers are banking most people won’t want to start, and most don’t. That’s why they wanted to get rid of unions, because without a union, most workers just take what their employer gives them and that’s the end of it. If you don’t like it, tough, go find another job.
I’ve fought for raises and quit when I lost. I’ve never really ever gotten what I wanted for a salary. And the fight for money, inevitably leads to stress at work between you and your boss. It’s so much better, if workers are represented by a union who can negotiate on their behalf. Unions are not perfect, but they are better at extracting wealth from capitalists than workers are on their own. That’s why capitalists hate unions and workers should, but for some voodoo by the right, they don’t.
In 1950, approximately 32 percent of the workforce was in a union. Now it’s just above 12 percent. The war against labor is over. Who do you think won?
Federal Income Nominal Tax Rates
Federal Income Inflation Adjusted Tax Rates