In the 1970’s banks were restricted by how high the interest rates could be issued on both the lending and savings activities plus the banks were limited to the immediate area of service. By the early 1980’s the interest rate ceilings were phased out and regulations regarding the kind of service and activities a bank engages in have been eliminated. The deregulation was positive in the scope of national economic stability, but the real economy was impacted by “Wall Street” and “Main Street” being tightly integrated. The effect as we saw in 2008 was the complete collapse, across the board and internationally, when the desires of “Wall Street” members disregarded the impact of their decisions on members of “Main Street”.
Over the same period of deregulation in the financial industry, Chief Executive Officers (CEOs), have experienced an exponential increase in income and bonuses, not to mention additional non-cash bonuses and benefits. Dr Jack Rasmus puts it this way, “In 1965, CEO pay was 26 times that of their average worker. In 1980, as noted, 40 times. In 1989, it was 72 times. In 1999 it had risen to 310 times, and today, as per the above data from the accounting firm, Towers Perrin, survey it has reached 500 times.”
I looked frantically for some evidence that the deregulation of the financial industry, the increase in CEO pay and the decrease in the wages of the average worker are not linked. Unfortunately there is evidence that they are linked, and directly so. Again I turn to Dr. Jack Rasmus:
The overall picture is abundantly clear: real average hourly wages of more than 100 million of American workers’ are less today than 25 years ago; real wages of college educated workers have risen only modestly in the late 1990s and fallen since under Bush II; and real wages of the 10 million lowest paid workers have declined more than 21%.
Given this irrefutable array of facts, one might ask ‘how has the American worker and his or her family survived the last quarter century under Reagan and Bush’? The answer is by working longer hours individually and as a family unit and by taking on more and more household debt both in lieu of hourly wage gains.
What has caused the decline in real average hourly wages? Since the wages of the CEOs increased during this same period of time, we could draw the conclusion that this is the effect of “trickle-down economics” which in actuality cuts the cost of production, therefore increasing profits at the highest level. Unfortunately with the national economy tightening down on workers, many were forced to accept lower paying positions simply to remain employed. In order to compensate for the lower paying position, additional members of the household began working or working more. Dr. Rasmus clarifies the situation:
As a family unit, while real wages of male workers as heads of households in the US have fallen, the American family has worked longer hours by adding more family members to the workforce. Since 1973 this increase in family average hours worked is the equivalent of adding 5 months of work in a year to the 2080 hours. Wives in working families have assumed the major share of this increase in total family hours worked, contributing more than 500 additional hours of work per year. But the male worker in the family has also worked more overtime hours, and both husbands and wives have taken on second part time jobs as well. All three developments add up to the 5 additional months of work American workers’ families now work in order to offset declining hourly wages and just to make ends meet… While the American worker and family are working harder, with longer hours, and still falling further and further behind, the American CEO is 500 times better off since Reagan, Bush I, and Bush II.
So is it any surprise really that the Average American workers, represented by the Occupy Wall Street movement, are finally fed up? Trickle-down economics didn’t trickle down. Deregulation allowed greedy Wall Street CEOs to have their fingers in more and more industries which they proved in 2008 they couldn’t handle. American families are working harder and longer for much less per hour and taking on insurmountable debt to prevent the complete collapse of their household. Is it a wonder really that so many are in trouble when even those at the top of the pyramid of wealth were unable to prevent a collapse? Should the average American be held responsible to a different standard than the CEOs that control companies and make the decisions regarding wages and jobs? Should the American people be held exclusively to blame for nearly $700 Billion being withdrawn from the stock market, by investors, after the fall of Lehman Brothers, effectively shutting down the entire credit market?
Yes, some Americans incurred more debt than they could pay off. They also invested their hard earned dollars through 401(k) programs in major corporations, just to turn around and lose every dime because of the market crash. Corporations were buoyed on the hard earned dollars of workers just to turn around and take no responsibility for the decline in company value.
American workers invested and borrowed in good faith. It wasn’t their fault that the housing bubble popped or that variable rate mortgages doubled and tripled in a matter of years. It wasn’t their fault that banking institutions claimed large amounts of assets that were only present on paper. It wasn’t their fault that CEOs took advantage of the job market by laying off local workers and sending jobs overseas where the cost of labor was significantly less, for the sake of increased margins. It was a gamble, and many lost that gamble, but the vast majority of CEOs still came out on top.
Responsibility needs to be taken on a global level. CEOs, Financial Heads, Political Leaders and American workers alike participated in the build up and demise of our economy. We all took part in the damage, but we didn’t all benefit from it. So let the responsibility be meted out accordingly, or let everyone be forgiven, rescued, bailed-out, restored, given jubilee, however you would like to phrase it, together. The Occupy Wall Street movement is a movement of the American people and amongst other things, seeks to show CEOs that the American people will no longer fund their greed and it is time for accountability.