Working Harder, Falling Farther Behind

August 31, 2012 by

Mainers lucky enough to have a job are working harder than ever, but still finding it hard to make ends meet. A typical Maine family works over 3,500 hours in a year. That’s 500 hours more than they worked 30 years ago. Happy Labor Day.

Part of the reason Mainers are working harder is that wage growth is weak for most folks. Inflation-adjusted hourly wages are lower than they were in 2002. That means the typical hourly worker is earning about $1,000 less than they did almost ten years ago.

At the same time, the cost of housing, health care, and education have increased dramatically. Since 2000, home prices have gone up 58%. Individual health insurance in Maine has increased 220%. The cost of higher education at Maine’s public universities has increased 78%. Historically, homeownership, health insurance coverage, and higher education have helped Maine families secure their future. Nowadays, homeownership is often a financial burden for families while health insurance and college are harder and harder to afford.

To top it all off, good jobs are scarce. About 100,000 Mainers are unemployed or underemployed. Record numbers of part-time workers want a full-time job but can’t find one. Over a quarter of all Maine workers are earning poverty-level wages.

We didn’t get here by accident. Despite significant gains in worker productivity, corporate profits, and economic growth over the last 30 years, broadly-shared prosperity remains elusive. Poor policy decisions have contributed to a transfer of wealth from low- and middle- income workers, to the wealthiest.  This fosters greater inequality and does little to help the economy as a whole. It should concern us all.

Instead of promoting broadly shared prosperity, Maine policymakers are undermining the financial stability of working families. They have cut access to health care and child care for low-income working families. And at a time when interest rates are at historic lows, our leaders are failing to make the investments in research and development that boost per capita income over the long run.

Recent income tax cuts promote inequality and squeeze the middle class by shifting to towns and property tax payers more of the cost of education, road maintenance, public safety, and emergency assistance for families. That means towns must either continue to cut services, raise property taxes, or both. Property tax increases hit low- and moderate-income families hardest and likely mean that the bottom 60 percent of all taxpayers will actually see overall tax hikes, not tax cuts.

There is a better way, but it’s not as easy as simply cutting income taxes and hoping for a thousand roses to bloom. They never have before and they won’t now.

The better way requires strategic cooperation between government and business. It requires public investments in technology, infrastructure, and research and development. Most important, it requires investments in Maine people to help them get the tools and supports they need to succeed in the 21st century economy. It’s the only path to broadly-shared prosperity.

All data (except charts) comes from: Economic Policy Institute analysis of Current Population Survey data; and Working Poor Families Project, Population Reference Bureau from American Community Survey (ACS) 2010 and the Current Population Survey (CPS) 2011. 

One Response to “Working Harder, Falling Farther Behind”
  1. Joe says:

    Great blog Joel! I worry that the American dollar which is only valuable as long as people have faith in American stability and productivity will decline in a most catastrophic fashion if we cannot find a way to balance our federal budget. Bowles-Simpson may not be the best answer but it is better than anything the Democrats and republicans have proposed so far. Starving the poor and the middle class does nothing to help the rich maintain there standard of living. Long term it will destroy them in the most cruel and savage fashion.

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