Quantcast
Connect with us

Republicans claimed their tax cuts would boost wage growth — here’s what really happened

Published

on

- Commentary

The recent announcement by the founder of Amazon, Jeff Bezos, that his company would give substantial raises to its lowest-paid employees should not blind us to the fact that most American workers are not receiving big wage increases. In fact, the real wages (that is, wages adjusted for inflation) of average American workers are declining.

When justifying the Republicans’ December 2017 $1.5 trillion tax cut for corporations and the wealthy, President Donald Trump and House Speaker Paul Ryan claimed that it would result, in 2018, in wage gains for American workers ranging from $4,000 to $9,000 each.

But, in reality, nothing like that has materialized. Instead, as the U.S. Labor Department reported, between the second quarter of 2017 and the second quarter of 2018, the real wages of American workers actually declined. Indeed, the second quarter of 2018 was the third straight quarter―all during the Trump administration―when inflation outpaced wage growth. The last time wages grew substantially above inflation was in 2016, during the Obama administration. Consequently, by August 2018, as the Pew Research Center reported, the purchasing power of American workers’ wages was at the same level as in 1978.

Why did the Republican promises go unfulfilled? A key reason for stagnating wages lies in the fact that U.S. corporations used their windfall derived from the slashing of the corporate tax rate from 35 to 21 percent under the 2017 GOP tax legislation to engage in stock buybacks (thereby raising their stock prices) and to increase dividends to share-holders. This practice produced substantial gains for big corporate investors but did nothing for workers. Although it appears that some workers (a reported 4 percent) did receive pay raises thanks to the tax cuts, it’s estimated that corporations spent 88 times more on stock buybacks than on pay increases for workers.

Another important long-term factor that has depressed workers’ wages is the dwindling membership and declining power of America’s labor unions. Once a force that created a more level playing field between workers and their bosses, unions have been badly weakened in recent years by Republican-sponsored anti-union measures, such as so-called “Right-to-Work” laws and the subversion of the National Labor Relations Board.

ADVERTISEMENT

The Republican opposition to raising the minimum wage has also undermined wage levels. In the past, numerous Republican Presidents backed legislation that increased the minimum wage. But that position has radically changed as the Republican Party has turned sharply to the Right. Although the federal minimum wage has remained at $7.25 for more than nine years, Trump and congressional Republicans have blocked legislative efforts to raise this pathetically low wage floor, contending that they saw no need for a federal minimum wage. Moreover, Republicans have used their control of state governments, as in Missouri and Iowa, to block cities and counties from raising local wage levels through legislation.

By contrast, Republican policies have done wonders for the wealthy and their corporations. By the fall of 2018, the stock market had reached new heights and the fortunes of the wealthiest Americans had grown remarkably. According to Forbes, the wealth of the 400 richest Americans averaged $7.2 billion each―a hefty increase over the previous year, when they averaged $6.7 billion. Moreover, the ten richest Americans possessed $730 billion among them―an increase in their wealth of nearly 20 percent over the past year. And the very wealthiest American, Jeff Bezos, nearly doubled his wealth during this time―to $160 billion. From the Republican standpoint, their programs had been a great success. Accordingly, the GOP-controlled House of Representatives voted in late September to make its steep tax cuts for corporations and the wealthy permanent.

So let’s stop saying that Republican rule in the United States―from the White House, to the Congress, to the Supreme Court, and to the states―has been dysfunctional. It’s been very functional―not for American workers, of course, but certainly for those people Bernie Sanders has referred to as “the billionaire class.”

ADVERTISEMENT

Dr. Lawrence Wittner is Professor of History emeritus at SUNY/Albany. His latest book is a satirical novel about university corporatization and rebellion, What’s Going On at UAardvark?


Report typos and corrections to [email protected].
READ COMMENTS - JOIN THE DISCUSSION
Continue Reading

Breaking Banner

‘Washington is no longer functional’: Brian Williams admits he’s sad to report that ‘our government is broken’

Published

on

MSNBC anchor Brian Williams on Tuesday reported that America's federal government is broken.

"This was day 908 of the Trump Administration and while there is no joy in it, one way of summing up today is this: Our government’s broken, our politics are broken, Washington is no longer functional, and the cracks in our society are deepening," Williams reported.

"Much of this day was taken up by the discussion of racist statements by the president. Then tonight came the news that had so many people thinking back to when we were different, the death just tonight of retired Supreme Court Justice John Paul Stevens at the age of 99," he said.

Continue Reading

Breaking Banner

Trump ignored being condemned by Congress and instead praised Republicans on Twitter for defending his racism

Published

on

President Donald Trump celebrated on Tuesday night despite the House of Representatives having voted earlier in the day to condemn his racist statements.

By a final vote of 240 to 187, Congress voted for a resolution saying, "Trump’s racist comments have legitimized fear and hatred of new Americans and people of color.”

The resolution said Congress “strongly condemns President Donald Trump’s racist comments that have legitimized and increased fear and hatred of new Americans and people of color by saying that our fellow Americans who are immigrants, and those who may look to the President like immigrants, should “go back” to other countries, by referring to immigrants and asylum seekers as “invaders,” and by saying that Members of Congress who are immigrants (or those of our colleagues who are wrongly assumed to be immigrants) do not belong in Congress or in the United States of America.”

Continue Reading
 

Breaking Banner

The tortured madness of Donald Trump: It’s clear the president is out of his mind

Published

on

Where’s Shakespeare when we need him? Only the Bard of Avon could do literary justice to the tortured madness of Donald Trump, who fluctuates between petulant self-pity and weird self-praise.

His brags are especially weird because they usually involve achievements he hasn’t made. It’s as though his saying something makes it true — even though everyone except his most naive devotees can clearly see that he’s either hallucinating or lying. In June, for example, at a rally launching his reelection campaign, he retrumpeted an old campaign promise to “drain the swamp,” assuring the adoring crowd that “that’s exactly what we’re doing right now.”

Continue Reading
 
 
 

Copyright © 2019 Raw Story Media, Inc. PO Box 21050, Washington, D.C. 20009 | Masthead | Privacy Policy | For corrections or concerns, please email [email protected]

close-image