July 4, October 31, December 25, January 1… All of these dates conjure up warm memories of great times with family and friends. The antithesis of these dates is April 15, when, for a majority of Americans, the biggest emotion being conjured up is dread. Nobody likes paying taxes. Period.
For most of his time in office, one of the biggest battles that President Obama has fought is his campaign (as part of a deficit reduction plan) to expire the Bush era tax cuts for America’s wealthiest 2% back to the rates that this group paid during the Clinton administration. Although 98% of the nation would not be paying the increased rate, the battle was fierce for one very simple reason: we all hate paying taxes and the idea of increasing rates for anyone is repugnant to us.
However, what if I told you that for a large number of America’s middle-class there is a huge tax being taken out of their weekly paychecks that most threatens our economic strength in the 21st Century? What is that large tax? It is the reduced size of the paycheck itself. America’s middle-class is increasingly being paid less at the expense of corporate profits. The value of corporate citizenship has been replaced by an almost fanatical obsession with the size of the Dow Jones industrial average.
Consider this from a November 2012 Time magazine article on Bill Gross: He states, “Over the last several decades, companies have taken profits at the expense of individuals. A lot of people aren’t being paid enough to spend. How can you have a sustainable recovery in an economy that’s 70% fueled by consumer spending when 90% of the income gains since the recovery began have accrued to the top 1%?”
I’m sure at this point in the column my fiscally conservative friends are rolling their eyes and making snarky comments about Jack touting the words of Western European socialists. Well, what if I told you that Gross is an Orange County Republican and is the world’s largest bond investor?
Let’s consider what Gross is saying. 70% of our economy is reliant on consumer spending, but 90% of the income generated is going to only 1% of the population, which begs the question, who will buy all the stuff that the 1% profits from when the bubble bursts and the middle-class can’t afford their products any longer? That’s a very real concern – as experts of all political stripes have come to realize. Slate magazine quoted former Federal Reserve chairman, Alan Greenspan as saying about income inequality, “This is not the type of thing which a capitalist democratic society can really accept without addressing.”
How do we address it? Let’s take a look at a local example: What would happen to many San Pedro restaurants, drycleaners, chiropractic offices, and other small businesses if many of their ILWU customers lost their jobs and they could no longer earn enough to afford their services? It would not be a pretty picture.
In 2014, the union will be renegotiating their contract with the PMA. One of the key bargaining issues will be automation. Just like in the 1960s when containerization emerged as an issue, in this decade, the goods movement industry is at a crossroads with the issue of automation. And just like containers replaced a line of workers unloading a ship with their bare hands, automation will again change the industry.
The jobs that were lost by the ILWU to containers were gained back in new technology and increased productivity, and today the ILWU is as strong as it ever was. This must be the model for the future. As man-hours are lost to automation, the new jobs in technology, maintenance, repair, and operations must be kept in our community as good paying ILWU jobs.
The alternative is another “wages tax” where yet another group of American middle-class workers get a huge chunk taken from their incomes in the never-ending quest for higher corporate profits. And who will ultimately pay for those profits? All of us (especially small businesses) as these private sector “taxes” continue to suck money out of our economy and erode the quality of American life. spt
Jack Baric can be reached at firstname.lastname@example.org.