WE’RE ALL IN THIS TOGETHER
By LARRY BENNETT • Special to www.AllOTSEGO.com
This column is titled, “We are all in this together,” but it doesn’t always appear to be so.
The U.S. economy is the world’s largest – our GDP will exceed $21 trillion in 2019. Our GDP represents 20 percent of total global output, is larger than China’s GDP, and is projected to grow 2.5 percent in 2019. Our GDP per person is seven times the world average while we have 1/20th of the population. We are the richest nation on earth, and you’d think we would all be doing well. But – according to the Organization of Economic Cooperation and Development (OECD) – we have the second highest poverty rate of the OECD nations and the worst income inequality rate. How can this be?
In 1960, an average American couple with two kids lived on a single income. With saving and planning they bought a modest home. Unless they were big city residents they owned a serviceable automobile. They saved for their kids’ educations. While it is true that many African Americans, Native Americans, and others were often excluded from these opportunities, it was still the case for many Americans.
Early 1960s corporate-CEO-to-employee pay ratio was an average of 20:1. In 2018 it was almost 300:1. Since 2006, corporate profits grew 30 percent while household income grew only 4 percent.
According to one Federal Reserve Bank study, the share of the national income that workers receive has fallen to its lowest level since World War II, even as worker productivity has gone up six-fold. Workers fuel the success of the companies but executives reap the rewards at increasing levels of inequality. This money grab deprives company workers of a fair share in what they help create.
What does this mean in Otsego and Delaware counties? We are a microcosm of the nation: What we see here is happening everywhere. At least one Fortune 500 company operates here; in fact, Walmart has been #1 on the Fortune 500 list for six years running. Their CEO was paid $22.8 million in 2018. That’s 1,188 times the $19,177 median wage of employees. In just two hours of one week he made more than those employees made in a year. An average Walmart has 280 employees who are paid around $20,000 each.
With a payroll of $5.6 million a store typically brings in around $46.7 million in revenues. The majority of these Walmart revenues leave our area and go to Walmart’s corporate coffers: to highly compensated executives, to pay dividends to stock holders and Walton family members, and to support a $500 million private art collection and museum.
This flood of money makes the Walton family the richest in America, with assets of over $160 billion in 2018.
Yet the average Walmart employee makes around $20,000 per year. The corporate starting wage is $11 per hour. Fifty percent of employees are approved only to work part-time, which curtails benefits and opportunities for raises and advancement. Employees are cheap to hire and fire. They are intentionally disposable. It is also known that a significant number of Walmart employees depend on food stamps to feed their families.
If this is how the wealthiest company in America treats its employees everywhere, including here, what model does that set for other employers? I do not mean to pillory Walmart alone. This is the model under which American businesses currently operate.
From the largest to the smallest businesses, many working people are treated poorly, and this keeps or pushes many into poverty. As a business problem, a political problem, and a social problem it is crucial to fill this vast income gap. As a nation, if we expect those who struggle to be able to escape poverty, income inequality must be addressed.