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- iHaveNet.com: Economy
by Robert B. Reich
We're officially into Christmas buying season -- when American consumers determine the fate of American retailers and, indirectly, the American economy.
What's often forgotten is that consumers are also workers, and if their pay doesn't keep up, they can't keep the economy going.
A half-century ago America's largest private-sector employer was
Today, America's largest employer is
There are many reasons for the difference -- including globalization and technological changes that have shrunk employment in American manufacturing while enlarging it in sectors involving personal services, such as retail.
But one reason, closely related to this seismic shift, is the decline of labor unions in the United States. In the 1950s, more than a third of private-sector workers belonged to a union. Today fewer than 7 percent do. As a result, the typical American worker no longer has the bargaining clout to get a sizable share of corporate profits.
At the peak of its power and influence in the 1950s, the
The wealth of the Walton family now exceeds the wealth of the bottom 40 percent of American families combined, according to an analysis by the
Is this about to change? Despite decades of failed unionization attempts,
The action has given
What happens at
More broadly, the widening inequality reflected in the gap between the pay of
Consumer spending is 70 percent of economic activity. As income and wealth continue to concentrate at the top, and the median wage continues to drop -- it's now 8 percent lower than it was in 2000 -- a growing portion of the American workforce lacks the purchasing power to get the economy back to speed.
Without a vibrant and growing middle class,
Most new jobs in America are in personal services like retail, with low pay and bad hours. According to the
But if retail workers got a raise, would consumers have to pay higher prices to make up for it? A new study by the think tank Demos reports that raising the salary of all full-time workers at large retailers to $25,000 per year would lift more than 700,000 people out of poverty, at a cost of only a 1 percent price increase for customers.
Even retailers would benefit. According to the study, the cost of the wage increases to major retailers would be $20.8 billion -- about 1 percent of the sector's $2.17 trillion in total annual sales. But the study also estimates the increased purchasing power of lower-wage workers as a result of the pay raises would generate $4 billion to $5 billion in additional retail sales.
This seems like a good deal all around.
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Christmas-Shopping Season Highlights Plight of Retail Workers | Economy