"Between 1980 and 2019, the share of the nation's total household income going to the richest 1 percent more than doubled, while the earnings of the bottom 90 percent barely rose (all adjusted for inflation). CEO pay increased 940 percent, but the typical worker's pay increased 12 percent. In the 1960s, the typical CEO of a large American company earned about twenty times as much as the typical worker; by 2019, the CEO earned three hundred times as much." [The System: Wo Rigged It, How We Fix It, Reich, Robert, p. 15. 2020.]
This was systemic and incremental over 40 years, therefore, largely invisible. But it explains the different perceptions about the state of the U.S. economy. Until recently, the media largely seemed puzzled about the discrepancy between the general public's and Wall Street's responses. Wall Street and the top 10% applaud the current economy; the general public has registered disapproval. That might have something to do with the fact that the top 10% own 90% of the stock market. The rest of us are left with the higher price of food, gas, and housing. These have not decreased.
Inflation has come down from its 40-year high of 9.1% in June 2022 to its current 3.4% annual rate. If you buy your own groceries, you've noticed that there was no reduction in price. You're still paying $4 to $6 for a loaf of bread. My weekly grocery bill has gone from $100 to $150. The reduction in the inflation rate only means that it isn't climbing as fast as it did when it reached 9.1%. The real inflation rate reached near 20% (19.32%) between January 2020 and April 2024 per the Consumer Price Index[i]. Once the price of a food item goes up it rarely comes down.
So, is this Joe's fault? Nope. In fact, there has been a huge transfer of wealth beginning in 1980, as Robert Reich points out. The causes? 1. a shift in corporate governance from concern for all stakeholders (consumers, employees, community) to one focused solely on shareholders; 2. a shift in bargaining power from large unions to giant corporations; 3. deregulation of Wall Street, especially banks and financial institutions which profit from high interest rates. Banks also got a taxpayer bailout from their 2008 debacle, while homeowners did not (10 million families lost their homes).
Still wonder why a large segment of Americans (including MAGAs) think the economy sucks? Trump has channeled resentment, anger, and alienation to the government and to the usual scapegoats (people of color, migrants) and those he believes have harmed him (opposition politicians, judges, prosecutors). This insulates corporations, the wealthy, and the Republican Party.
Was the economy better under Trump? Well, it was if you were part of the top .01%, .10%, or 10% of the population or one of the large corporations. Trump's 2017 Tax Cuts and Jobs Act (TCJA) PERMANENTLY reduced the corporate tax rate from a high of 35% to a flat 21% with the old saw that it would trickle down to workers through investments in business that would translate to higher wages and lower prices. It didn't. With minor exceptions, corporations transferred the money saved to shareholders through dividends and stock buybacks (which can avoid taxes).
The TCJA also decreased personal income and estate taxes -- though TEMPORARILY until 2025. Again, the lion's share of the reductions went to the wealthy. As The Center for American Progress reported:
"The 2017 law changes disproportionately benefited the highest-income households. In 2025--the last year before the temporary changes to the personal income and estate tax provisions expire--households in the top 1 percent of the income distribution will receive an average tax cut of $61,090. In contrast, those in the middle quintile of the distribution will receive an average reduction of $910, while those in the lowest quintile will receive on average, just a $70 reduction." ["The Tax Cuts and Jobs Act Failed To Deliver Promised Benefits," April 30, 2024. www.americanprogress.org, p. 3.]
As their chart shows, individuals in the top .01% will receive a tax cut of $252,300 in 2025.
It's inflation more than jobs and unemployment and interest rates that drive Americans' view of the economy. While the rate of inflation is down considerably from its high of 9.1%, it's not going backwards. The economy in the U.S. doesn't work that way. Having raked in billions, corporations, whose sole goal is profit, will not reduce prices or return profit to anyone but their shareholders.
Until the system changes, the wealth disparity will continue and those at the lowest end will continue to view the economy as not serving them -- because it doesn't. They appropriately feel discontent and rage, which from time immemorial has only needed a demagogue to channel it in whatever direction will give him power. Being part of a rageful movement (MAGA) overrides the feeling of individual powerlessness. Following someone who projects strength and gives voice to emotions of anger and frustration when a sea of others are doing it, too, makes the powerless feel they have some control over their lives, that they can accomplish something, that they can be powerful.
Counteracting MAGA requires systemic change, including: 1. laws that require corporations to consider more than profit and shareholders in their operations, i.e. employees, consumers, the community, the public good; 2. campaign finance reform that removes the power of the wealthy class and corporations over politicians so the average person can influence those who are supposed to represent them; 3. laws that close (or at least lessen) the gap between the wealthy and everyone else, including tax law, labor law, price controls (for essentials like food, housing, and health care) if corporations can't or won't govern themselves.
The current disparity in wealth is unconscionable -- as are the hundreds of thousands of unsheltered people living on our streets.[ii] Our cities more resemble the 1930s depression than how they looked when I was growing up in the 1950s. Only serious systemic change will correct this.
[i] The Bureau of Labor Statistics has classified all expenditure items into more than 200 categories, arranged into eight major groups (food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services). Bureau of Labor Statistics, Mar 15, 2024.
[ii] The U.S. Census Bureau found 653,100 homeless people in 2023, up 12% from 2022. "The US Interagency Council on Homelessness attributes the current rise to inadequate systems around affordable housing, wages, and equitable access to physical and mental health care and economic opportunity. According to the council, people who experience homelessness have a life expectancy of 50, compared to 77 for the average American."