The Income Gap Con Game

Over the past twenty years there has been a noticeable and growing gap between the income and wealth accumulated by the rich versus that of the middle class, a political asset habitually exploited by the Democrats with class warfare rhetoric.  However, the reality is that the very government policies promulgated by the left and the Democrats, and abetted by Republican indifference, are chiefly responsible for a precipitous decline in upward income mobility in the United States.  Yet the current governing class refuses to recognize the cause and effect of their policies and instead blames the failure on the most convenient scapegoat the general public can easily focus upon, namely the wealthy and free enterprise.

Americans for many decades experienced the highest level of personal income growth of any nation in the history of mankind.  This occurred not because of government central planning or the worship of the false gods of extreme environmentalism or income redistribution, but because Americans were free to create, invent, and begin their own businesses, or freely work with those who did, without the heavy hand of government or a predetermined class system to impede their ambitions.   

In the process many were hired to produce the goods and provide various services to these businesses.  As the economy and these industries grew, wages and benefits increased, as the demand for workers was constantly on the rise.  A dominant middle class came into existence and the standard of living for all Americans improved dramatically.

The main generator of wealth for any nation is the research, development, and production of goods for domestic consumption and international export.  This is also the historical path taken by those nations throughout history that dominated the world economy in their era; this course is in the process of being repeated by China today.

The United States, thanks to the anti-capitalist mindset of those in power, has chosen instead to abandon what has made this country dominant in the post-World War II period.  The governing class, over the past twenty years and today more than ever, is determined to impose a) industry- and energy production-killing carbon mandates based on a specious "climate change" theory; b) a health care plan and a myriad of other mandates that fall most heavily on businesses large and small in an effort to "redistribute" wealth by fiat; c) tens of thousands of pages of new regulations to be administered by bureaucrats with no knowledge of business in order to establish a centrally planned economy; and d) increasingly higher taxes on all businesses and the upper income-earners while spending the country into bankruptcy.  China has eagerly exploited the opportunity by keeping the renminbi undervalued and stealing as much technology as possible.

The end result of these actions is the precipitous decline of the goods-producing sector of the American economy, the virtual end of large-scale upward income mobility, and a stagnant and potentially diminishing economy, as it becomes dependent solely on consumption, which in turn relies on upward income mobility.  This is a death spiral that can end only in national collapse.

The decline in the percentage of the employed labor force involved in the goods-producing sector of the economy is as follows (all statistics are from the Bureau of Labor Statistics (BLS) unless otherwise noted):

  June 1965

  June 1988

  June 1995

   June 2000

   Jan 2009

   June 2011

       36.1%

      22.4%

       19.5%

        19.0%

       14.3%

        12.9%

In terms of actual jobs lost, since June of 2000, 7,694,000 jobs have been eliminated in the goods-producing sector (2,239,000 since Obama became president).  Of the jobs lost in this category, 3,840,000 are in the production of durable goods.  Per the latest BLS report the average weekly earnings for those in the production of durable goods is $1,023.53 per week.  The overall average for the entire goods-producing sector is $973.96 per week.

In June of 2000 there were 131.2 million Americans working in the nonfarm employment arena.  In June of 2011 there were 131.0 working in the same sector.  Factoring the loss of 7.7 million jobs in the goods-producing sector and 0.2 million jobs overall, there was a net increase of 7.5 million jobs.  In what area were these gains?

The private service segment accounted for 5.9 million, and government hiring 1.3 million.

The following chart shows the area of gain or loss and the current average weekly earnings for that job sector:

   Job Sector

    Employed    

    June 2000      

    Employed 

    June 2011

  Gain (Loss)

2011 Average Weekly Earnings

Goods Production

 

    25.7 Million

 

   18.0 Million

 

  (7.7 Million)

 

    $973.96

Leisure and Hospitality

 

    11.5 Million

 

   13.2 Million

 

    1.7 Million

 

      340.34

Health Service and Social Asst.

 

    12.8 Million

 

    16.7 Million

 

    3.9 Million

 

      580.00*

Government

    20.8 Million

    22.1 Million

    1.3 Million

 

*Weighted average based on BLS employment data for Social Assistance (http://www.payscale.com/research/US/Job=Social_Worker_Salary/) and Health Service (http://www.payscale.com/research/US/Job=Healthcare/Hourly_Rate/by_job).

Utilizing the difference of $467.96 in average weekly earnings between the goods-producing sector and the two service segments (weighted: $506.00 per week); the loss in individual annual income is $24,334.00 per job and an aggregate wage loss of $187 billion per year to the economy, as well as the non-realization of the purchase of materials, supplies, and the sale and marketing of the products no longer produced in the United States.

Since Obama assumed office, the trend has worsened, as the higher-paying segments of the service arena are declining in employment as well.  The country is presently creating mostly low-wage and part-time jobs.

   Job Sector

  January 2009

      June 2011

   Gain  (Loss)

2011 Average Weekly Earnings

Goods Production

 

    20.2 Million

 

    18.0 Million

 

     (2.2 Million)

 

     $ 973.96

Leisure and Hospitality

 

    10.9 Million

 

    11.3 Million

 

        0.4 Million

 

        340.34

Health Service and Social Asst.

 

    16.0 Million

 

    16.7 Million

 

        0.7 Million

 

        580.00

Trade, Utilities & Transportation

    

    25.5 Million

  

    24.9 Million

 

     (  0.6 Million)

 

        836.31

Wholesale Trade

      5.8 Million

      5.5 Million

     (  0.3 Million)

     1,015.95

Financial Activities

 

       7.9 Million

 

      7.6 Million

 

     (  0.3 Million)

 

     1,026.93

Government

     22.4 Million

    22.1 Million

     (  0.3 Million)

 

It should be noted that federal government employment (less the Post Office) has increased by 164,000.

The United States has embarked on a ruinous trend of eliminating high-paying jobs which produce a value-added product or a higher-worth service.  This process has been ongoing for some time; however, it is now being dramatically accelerated by the federal government with such actions as the recent carbon mandates by the EPA, which will cause the shutdown not only of power plants and much of the petroleum based industry, but of manufacturing facilities as well.  The new financial regulations courtesy of the Dodd-Frank Bill make capital formation much more difficult, and the reporting requirements of Sarbanes-Oxley Bill leave all businesses more susceptible to the whims of regulators and frivolous lawsuits in the legal free-for-all that is the American justice system.

The mandates within ObamaCare along with a veritable tsunami of other regulations from every rule-making agency, but particularly the National Labor Relations Board and the Federal Trade Commission in Washington D.C. as well as many state capitals, are not only dramatically reducing competitiveness for American industry, but also significantly increasing costs on all businesses large and small.  Lastly, the insatiable appetite for government spending will eventuate in much higher taxes and fees for businesses and individuals at all levels. 

The net result: more goods-producing activity will move offshore; the income gap between the rich and the ever-shrinking middle class will widen, as there will be relatively little upward income mobility; the standard of living will degenerate; and joblessness will be epidemic, as the country cannot continue to produce low wage jobs in the service sector.  A net of nearly 1.6 million people enter the workforce each year; few jobs await them.

In short, it has now become more difficult, and in some cases nearly impossible, to do business long-term in the United States, and no domestic or foreign company will risk the investment to open new facilities in this country unless there is a seismic shift in national policy and the country returns to becoming the foremost haven for business and investment in the world.  There is still a window of opportunity, but it will close if the results of November 2012 elections do not eventuate in evicting the current governing class and their devastating policies from Washington D.C.

Over the past twenty years there has been a noticeable and growing gap between the income and wealth accumulated by the rich versus that of the middle class, a political asset habitually exploited by the Democrats with class warfare rhetoric.  However, the reality is that the very government policies promulgated by the left and the Democrats, and abetted by Republican indifference, are chiefly responsible for a precipitous decline in upward income mobility in the United States.  Yet the current governing class refuses to recognize the cause and effect of their policies and instead blames the failure on the most convenient scapegoat the general public can easily focus upon, namely the wealthy and free enterprise.

Americans for many decades experienced the highest level of personal income growth of any nation in the history of mankind.  This occurred not because of government central planning or the worship of the false gods of extreme environmentalism or income redistribution, but because Americans were free to create, invent, and begin their own businesses, or freely work with those who did, without the heavy hand of government or a predetermined class system to impede their ambitions.   

In the process many were hired to produce the goods and provide various services to these businesses.  As the economy and these industries grew, wages and benefits increased, as the demand for workers was constantly on the rise.  A dominant middle class came into existence and the standard of living for all Americans improved dramatically.

The main generator of wealth for any nation is the research, development, and production of goods for domestic consumption and international export.  This is also the historical path taken by those nations throughout history that dominated the world economy in their era; this course is in the process of being repeated by China today.

The United States, thanks to the anti-capitalist mindset of those in power, has chosen instead to abandon what has made this country dominant in the post-World War II period.  The governing class, over the past twenty years and today more than ever, is determined to impose a) industry- and energy production-killing carbon mandates based on a specious "climate change" theory; b) a health care plan and a myriad of other mandates that fall most heavily on businesses large and small in an effort to "redistribute" wealth by fiat; c) tens of thousands of pages of new regulations to be administered by bureaucrats with no knowledge of business in order to establish a centrally planned economy; and d) increasingly higher taxes on all businesses and the upper income-earners while spending the country into bankruptcy.  China has eagerly exploited the opportunity by keeping the renminbi undervalued and stealing as much technology as possible.

The end result of these actions is the precipitous decline of the goods-producing sector of the American economy, the virtual end of large-scale upward income mobility, and a stagnant and potentially diminishing economy, as it becomes dependent solely on consumption, which in turn relies on upward income mobility.  This is a death spiral that can end only in national collapse.

The decline in the percentage of the employed labor force involved in the goods-producing sector of the economy is as follows (all statistics are from the Bureau of Labor Statistics (BLS) unless otherwise noted):

  June 1965

  June 1988

  June 1995

   June 2000

   Jan 2009

   June 2011

       36.1%

      22.4%

       19.5%

        19.0%

       14.3%

        12.9%

In terms of actual jobs lost, since June of 2000, 7,694,000 jobs have been eliminated in the goods-producing sector (2,239,000 since Obama became president).  Of the jobs lost in this category, 3,840,000 are in the production of durable goods.  Per the latest BLS report the average weekly earnings for those in the production of durable goods is $1,023.53 per week.  The overall average for the entire goods-producing sector is $973.96 per week.

In June of 2000 there were 131.2 million Americans working in the nonfarm employment arena.  In June of 2011 there were 131.0 working in the same sector.  Factoring the loss of 7.7 million jobs in the goods-producing sector and 0.2 million jobs overall, there was a net increase of 7.5 million jobs.  In what area were these gains?

The private service segment accounted for 5.9 million, and government hiring 1.3 million.

The following chart shows the area of gain or loss and the current average weekly earnings for that job sector:

   Job Sector

    Employed    

    June 2000      

    Employed 

    June 2011

  Gain (Loss)

2011 Average Weekly Earnings

Goods Production

 

    25.7 Million

 

   18.0 Million

 

  (7.7 Million)

 

    $973.96

Leisure and Hospitality

 

    11.5 Million

 

   13.2 Million

 

    1.7 Million

 

      340.34

Health Service and Social Asst.

 

    12.8 Million

 

    16.7 Million

 

    3.9 Million

 

      580.00*

Government

    20.8 Million

    22.1 Million

    1.3 Million

 

*Weighted average based on BLS employment data for Social Assistance (http://www.payscale.com/research/US/Job=Social_Worker_Salary/) and Health Service (http://www.payscale.com/research/US/Job=Healthcare/Hourly_Rate/by_job).

Utilizing the difference of $467.96 in average weekly earnings between the goods-producing sector and the two service segments (weighted: $506.00 per week); the loss in individual annual income is $24,334.00 per job and an aggregate wage loss of $187 billion per year to the economy, as well as the non-realization of the purchase of materials, supplies, and the sale and marketing of the products no longer produced in the United States.

Since Obama assumed office, the trend has worsened, as the higher-paying segments of the service arena are declining in employment as well.  The country is presently creating mostly low-wage and part-time jobs.

   Job Sector

  January 2009

      June 2011

   Gain  (Loss)

2011 Average Weekly Earnings

Goods Production

 

    20.2 Million

 

    18.0 Million

 

     (2.2 Million)

 

     $ 973.96

Leisure and Hospitality

 

    10.9 Million

 

    11.3 Million

 

        0.4 Million

 

        340.34

Health Service and Social Asst.

 

    16.0 Million

 

    16.7 Million

 

        0.7 Million

 

        580.00

Trade, Utilities & Transportation

    

    25.5 Million

  

    24.9 Million

 

     (  0.6 Million)

 

        836.31

Wholesale Trade

      5.8 Million

      5.5 Million

     (  0.3 Million)

     1,015.95

Financial Activities

 

       7.9 Million

 

      7.6 Million

 

     (  0.3 Million)

 

     1,026.93

Government

     22.4 Million

    22.1 Million

     (  0.3 Million)

 

It should be noted that federal government employment (less the Post Office) has increased by 164,000.

The United States has embarked on a ruinous trend of eliminating high-paying jobs which produce a value-added product or a higher-worth service.  This process has been ongoing for some time; however, it is now being dramatically accelerated by the federal government with such actions as the recent carbon mandates by the EPA, which will cause the shutdown not only of power plants and much of the petroleum based industry, but of manufacturing facilities as well.  The new financial regulations courtesy of the Dodd-Frank Bill make capital formation much more difficult, and the reporting requirements of Sarbanes-Oxley Bill leave all businesses more susceptible to the whims of regulators and frivolous lawsuits in the legal free-for-all that is the American justice system.

The mandates within ObamaCare along with a veritable tsunami of other regulations from every rule-making agency, but particularly the National Labor Relations Board and the Federal Trade Commission in Washington D.C. as well as many state capitals, are not only dramatically reducing competitiveness for American industry, but also significantly increasing costs on all businesses large and small.  Lastly, the insatiable appetite for government spending will eventuate in much higher taxes and fees for businesses and individuals at all levels. 

The net result: more goods-producing activity will move offshore; the income gap between the rich and the ever-shrinking middle class will widen, as there will be relatively little upward income mobility; the standard of living will degenerate; and joblessness will be epidemic, as the country cannot continue to produce low wage jobs in the service sector.  A net of nearly 1.6 million people enter the workforce each year; few jobs await them.

In short, it has now become more difficult, and in some cases nearly impossible, to do business long-term in the United States, and no domestic or foreign company will risk the investment to open new facilities in this country unless there is a seismic shift in national policy and the country returns to becoming the foremost haven for business and investment in the world.  There is still a window of opportunity, but it will close if the results of November 2012 elections do not eventuate in evicting the current governing class and their devastating policies from Washington D.C.