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November 2011, Week 1

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Sun, 6 Nov 2011 23:03:42 -0500
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The 99%, the 1%, and Class Struggle
BY ALEJANDRO REUSS
Dollars and Sense
November 2011
http://www.dollarsandsense.org/archives/2011/1111reuss.html

[moderator: please use the link above to view the
accompanying graph]

Between 1979 and 2007, the income share of the top 1% of
U.S. households (by income rank) more than doubled, to
over 17% of total U.S. income. Meanwhile, the income
share of the bottom 80% dropped from 57% to 48% of total
income. "We are the 99%," the rallying cry of the
#OccupyWallStreet movement, does a good job at calling
attention to the dramatic increase of incomes for those
at the very top-and the stagnation of incomes for the
majority.

This way of looking at income distribution, however,
does not explicitly focus on the different sources of
people's incomes. Most people get nearly all of their
incomes-wages and salaries, as well as employment
benefits-by working for someone else. A few people, on
the other hand, get much of their income not from work
but from ownership of property-profits from a business,
dividends from stock, interest income from bonds, rents
on land or structures, and so on. People with large
property incomes may also draw large salaries or
bonuses, especially from managerial jobs. Executive pay,
though treated in official government statistics as
labor income, derives from control over business firms
and really should be counted as property income.

Over the last forty years, the distribution of income in
the United States has tilted in favor of capitalists
(including business owners, stock- and bondholders, and
corporate executives) and against workers. Between the
1940s and 1960s, U.S. workers' hourly output ("average
labor productivity") and workers' real hourly
compensation both grew at about 3% per year, so the
distribution of income between workers and capitalists
changed relatively little. (If the size of a pie
doubles, and the size of your slice also doubles, your
share of the pie does not change.) Since the 1970s,
productivity has kept growing at over 2% per year.
Average hourly compensation, however, has stagnated-
growing only about 1% per year (see figure below). As
the gap between what workers produce and what they get
paid has increased, workers' share of total income has
fallen, and capitalists' share has increased. Since
income from property is overwhelmingly concentrated at
the top of the income scale, this has helped fuel the
rising income share of "the 1%." 

The spectacular rise in some types of income-like bank
profits or executive compensation-has provoked
widespread outrage. Lower financial profits or CEO pay,
however, will not reverse the trend toward greater
inequality if the result is only to swell, say, profits
for nonfinancial corporations or dividends for wealthy
shareholders. Focusing too much on one or another kind
of property income distracts from the fact that the
overall property-income share has been growing at
workers' expense.

Workers and employers-whether they like it or not,
recognize it or not, prepare for it or not-are locked in
a class struggle. Employers in the United States and
other countries, over the last few decades, have
recognized that they were in a war and prepared for it.
They have been fighting and winning. Workers will only
regain what they have lost if they can rebuild their
collective fighting strength. In the era of globalized
capitalism, this means not only building up labor
movements in individual countries, but also creating
practical solidarity between workers around the world.

A labor resurgence could end workers' decades-long
losing streak at the hands of employers and help reverse
the tide of rising inequality. Ultimately, though, this
struggle should be about more than just getting a better
deal. It should be-and can be-about the possibility of
building a new kind of society. The monstrous
inequalities of capitalism are plain to see. The need
for an appealing alternative-a vision of a cooperative,
democratic, and egalitarian way of life-is equally
stark.

___________________________________________

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