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economic justice

Income gap widens into a chasm

The middle-class tax burden has grown since 2001, even as it has fallen for high-income Americans. The top 20 percent of taxpayers shoulder almost a percentage point less of the overall share of total federal tax liabilities. The combined shares of middle-income earners for federal tax liabilities have risen almost 2 percentage points.
Income gap widens into a chasm
By Leigh Strope
Associated Press
Monday, Aug. 16 2004

WASHINGTON - Over two decades, the income gap has increased steadily between
the richest Americans, who own homes and stocks, and those at the middle or
bottom of the pay scale, whose paychecks buy less.

The growing disparity is even more pronounced in this recovering economy. Wages
are stagnant, and the middle class is shouldering a larger tax burden. Prices
for health care, housing, tuition, gas and food have soared.

The wealthiest 20 percent of households in 1973 accounted for 44 percent of
total U.S. income, according to the Census Bureau. Their share jumped to 50
percent in 2002 while everyone else's fell. For the bottom fifth, the share
dropped from 4.2 percent to 3.5 percent.

Jobs and the economy top the list of voter concerns this election year.
President George W. Bush touts a strong economy that is growing, but polls find
that Americans have doubts. John Kerry seems to be trusted more on the economy,
with Democrats talking regularly of "two Americas," divided between the rich
and everyone else.

The argument has merit, some private economists say.

"For those working in the bottom half of the pay scale, they're under an
enormous amount of pressure," said Mark Zandi, chief economist at Economy.com.

New government data also show that Bush's tax cuts have shifted the overall tax
burden to the middle class from the wealthiest Americans.

The middle-class tax burden has grown since 2001, even as it has fallen for
high-income Americans. The top 20 percent of taxpayers shoulder almost a
percentage point less of the overall share of total federal tax liabilities.
The combined shares of middle-income earners for federal tax liabilities have
risen almost 2 percentage points.

"We're just trying to get ahead," said Debbie Reames, 49, of Raytown, Mo.,
whose bank job of 24 years was sent overseas in February. "But it seems like we
climb a few rungs and then fall back again."

Reames has a new secretarial job, which pays $7,000 a year less than her bank
job, and she works catering jobs for extra money. Her husband, Russ, can no
longer work after an injury. One son is finishing college, and another will
start in the fall.

So, the family budget tightened. That meant fewer cable channels, more meals at
home, postponed doctor appointments, missed vacations, delayed credit-card
payments, all to "keep the wolf away from the door," she said.

The U.S. jobs market is soft, sending wages down. Hiring came to a near
standstill last month, with companies adding just 32,000 new jobs overall,
stunning economists who had expected seven times as many.

More than a million jobs have been added back to the 2.6 million lost since
Bush took office, but they pay less and offer fewer benefits, such as health
insurance. The new jobs are concentrated in health care, food services and
temporary-employment firms. Temp agencies account for about a fifth of all new
jobs.

Three in five pay below the national median hourly wage of $13.53, said Sung
Won Sohn, chief economist for Wells Fargo. On a weekly basis, the average wage
of $525.84 is at the lowest level since October 2001.

The income gap is showing up in booming sales of luxury items. Porsche Cars
North America Inc. says sales are up 17 percent for the year. Strong sales at
Neiman Marcus, Nordstrom and Saks Fifth Avenue overshadow lackluster sales at
stores such as Wal-Mart, Sears and Payless Shoes.

Real estate agent Lance Anderson, 38, of Overland Park, Kan., expects a record
sales year as homeowners upgrade to more-expensive houses and commercial
clients expand. He recently took his family to Disney World for a two-week
Florida vacation.

"My clientele, it seems as a whole, has seen positive growth," he said. So, his
family, including three children, eat out more often and spend more on clothes.
They recently bought two new cars and anticipate buying a larger house in the
next few years.

Economists say wages should rise as companies boost hiring. But the growing gap
between the haves and have-nots could remain.

Technology has eliminated many U.S. jobs, as has global competition,
particularly from low-wage countries such as China. Highly skilled, educated
workers in America will thrive as demand rises, Sohn said, while low-skilled
jobs remain vulnerable to outsourcing.

"This really has nothing to do with Bush or Kerry, but more to do with the
longer-term shift in the structure of the economy," Sohn said.

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just to be absolutely clear. 17.Aug.2004 16:34

this thing here

>Technology has eliminated many U.S. jobs, as has global competition,
particularly from low-wage countries such as China. Highly skilled, educated
workers in America will thrive as demand rises, Sohn said, while low-skilled
jobs remain vulnerable to outsourcing.<

this is untrue, especially if we carry the "logic" of outsourcing to it's logical end. highly skilled, technical jobs can just as easily be outsourced in a second. why pay a professional in america $75,000 to conduct a load stress analysis on a hypothetical piece of structural steel using computer software, when you can pay someone in india, who is just as smart, who recieved just as competent an education, and who will use exactly the same software, the equivalent of $20,000 in rupees?

there is no end to outsourcing other than those jobs which require on-site, physical, flesh and blood prescense. that defines it's economic limit, that defines the point at which it no longer makes economic sense to outsource. all else can go, and what incentive is there to stop it...

>"This really has nothing to do with Bush or Kerry, but more to do with the
longer-term shift in the structure of the economy," Sohn said.<

"long-term shift in the structure of the economy". sounds totally harmless, random. but the fact is, it is most definitely NOT a mistake or a random event. capitalism has been systematized in this country for a long enough time to really cast into doubt "random events" and seemingly harmless "shifts"...

The Self Entitled Minority 17.Aug.2004 19:43

North Portlander

You're right . . . the only jobs that can't be outsourced are certain managerial jobs and service jobs like counter people at McDonald's, waiters and waitresses at restaurants, plumbers, electricians, truck drivers and the like.

I live in a blue color part of town that is slowly being bought up by people who rent its homes to others for ridiculous prices and are seeking to gentrify its neighborhoods.

It is still chiefly inhabited by the old people who have lived here for years and by poor and middle class families who are willing (when able) to help each other out with goods and services and to sit on front porches in the evening and share a beer and a story. At the same time, I am watching a house in NW in the hills for friends who are out of town. That neighborhood is completely different . . . composed of the isolated wealthy who create their own fiefdoms and don't have any need to communicate with neighbors except to proudly exhibit their new acquisitions which are "better" and more expensive. People like this - the "haves" - are more likely to shut the rest of us out except when they have to use us for our skills and the services we offer. I doubt that many of them COULD help a neighbor fix his plumbing or car or that they would have the time in their busy schedules to help tutor a neighborhood child or pick up groceries for an elderly neighbor. They find it easier to pay someone else to do these things . . . make these things . . . fix these things.

The self-entitled make me physically ill.

If Democracy Worked As It Is Supposed To 17.Aug.2004 21:29

Ted

Absolutely the wealth gap is growing and the tax burden becoming more regressive. Now, as for outsourcing, this would not necessarily be harmful in all aspects if our government was really working on behalf of the American citizen. As profits swell as a result in outsourcing, the expatriation of income reduces government revenue from income taxes. To adjust appropriately, the Legislature should increase corporate taxes (rather than eliminate the Corporata Alternative Minimum Tax altogether, as Bush did to make it seem like we're having a stock market recovery) and use that bolster unemployment benefits and worker retraining. Yes, structural changes occur over time, and this recent change is about 500% more the result of increased productivity (the digestion of technology added faster than organization could effectively implement it) than outsourcing, but this change was hardly unforseeable. We have a Republican dominated (let's put aside the argument of whether things would have been different under a Democratic President or Legislature) government that is literally subserviant to the monied class of America that paid to put them in power. Until big money is completely removed from the electoral process and anti-trust measures are brought to bear on companies like Clear Channel and AOL/TimeWarner, so the average citizen has easy access to the truth, this trend will continue.