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the evolution of subsistence labor under an industrialized capitalist state
I wrote this in October 2019, the relevant statistics would have changed a bit since then. ----- The US federal minimum wage of $7.25/hour is lower, adjusted for inflation, than it was in 1950. During these past 70 years, GDP per worker increased 150%. If the federal minimum wage tracked average worker productivity, it would be $18/hour today. The average hourly earnings of US nonsupervisory employees, adjusted for inflation, peaked in 1973. It is currently $23.65. If this average had kept up with productivity gains since 1973, the average nonsupervisory employee would now be paid $40/hour. ----- The other night, during a conversation with a friend, I talked about how the share of production going to workers in industrialized countries has stagnated for decades, and would continue to stagnate, at what I want to call a "subsistence industry" level. I was making up a new 21st Century term, based on the term "subsistence agriculture". Back in the days of widespread international human poverty, prior to the industrial revolution, when the typical family engaged in subsistence agriculture, GDP per capita was less than $1,000/year in today's money. Most people lived on $2 per day. The authoritarian elites -- royalty, priests, landowning nobility -- would skim about 10-20% of worker output for themselves via taxes or tithes. Over the centuries of global subsistence agriculture, worker productivity did not change much, societies did not experience the sort of rapid GDP growth that we are used to now, in which production doubles within a single human lifespan. ----- During the 20th Century, the US switched from being a rural subsistence farming economy, to an urban subsistence industrial economy. Urban workers require more expensive upkeep than rural workers. For starters, they can't just live on the farm, so they need separate housing and they need transportation between home and office. They can't just eat the food they grow on the farm, so they need grocery stores and restaurants, they need refrigerators and ovens. Urban workers require more skills, so they need schools and universities to train them. They can't keep an eye on the kids while producing at the office, so they need day care. Urban workers can't make their own clothes, so they need apparel stores. The stress, pollution, and communicable diseases of urban living means urban workers need sewers, health care, and mental therapy to keep functioning within normal parameters. So, urban workers have to be paid more than rural workers were paid, otherwise it wasn't worth it to leave the farm, and they can't keep themselves healthy and productive. But even as urban productivity has continued to increase, the pay for urban workers has stagnated, on average, for decades. The minimum pay is the same as it was in 1950, and the average pay is the same as it was in 1970. The rich and the corporations figured out long ago how much they have to pay urban industrial workers, and that amount of pay hasn't really changed since our parents entered the work force. ----- So where is all the extra production going if pay to the workers hasn't changed, while productivity has gone up 150%? You don't need a lot of math to figure this out. It's going to the supervisors and the owners. Pay at the top of the org chart has soared. The wealth held by the shareholders has grown even faster. The average net worth of a household in the bottom 50% in the US hasn't increased over the past 30 years, but the aggregate net worth of the top 5% in the US is over $60 trillion now, up from $10 trillion in 1990. All that extra productivity is going to the top 5%, in the form of massive increases in wealth and income. ----- This has happened under both Democratic and Republican administrations. It's been a bipartisan enforcement of stagnation for the working class, amidst fantastic growth for the supervisors and owners. It's been achieved by drastically reducing the proportion of workers who belong to unions, by privatizing and deregulating various industries, and by cutting tax rates on wealth and corporations. For example, the income tax rate for corporations was around 50% during the 1950s and 1960s. Carter (Democrat) cut it to 46%, Reagan (Republican) cut it to 40%. Clinton (Democrat) cut it to 35%, Trump (Republican) cut it to 21%. So, in a bipartisan fashion, corporate tax rates have been cut by more than half, during a period when worker pay has been flat. The tax on wealth transfers -- the capital gains tax rate on sales of stock and real estate -- has been cut from 35% to 20% since the 1970s. The income tax on wealthy individuals' salaries was at least 70% during the 1950s-1970s. It's now 40%. But wealthy people get most of their income via capital gains anyway, paying 20% on those. ----- The answer to any question about "How will the federal government pay for [fill in the blank]" should always be, "By increasing taxes on the wealthy back to where they were during the 1960s." But why haven't we already done this? Why are we still cutting taxes? Why has cutting taxes been a bipartisan goal since the 1970s? I don't think the answer is complicated or difficult. The supervisors and the owners have figured out how to manage subsistence labor under an industrialized urban economy. They've figured out that they need to pay unskilled urban labor about $10/hour, and skilled urban labor about $25/hour (adjusted for inflation, in perpetuity), and then otherwise they can keep the rest for themselves. They've figured out they can control both major political parties for mere billions per year in "donations", while increasing their aggregate wealth by trillions per year. It's an incredibly profitable system of legalized bribery. They've figured out how to keep the more politically active citizens busy arguing with each other on Facebook and Twitter over stupid shit, while tracking everything all of us read, say, and buy, so they can send us precisely targeted propaganda and advertisements. So ... here we are. Well beyond the first generation of industrial subsistence, it's now a fully reproducible 21st Century system, harvesting the planet's natural resources, harvesting the human population's labor resources, and piling up additional trillions of wealth per year in the hands of supervisors and owners -- while precisely focused propaganda keeps us arguing over nonsense, when we aren't captivated by endlessly bingeable audio-visual entertainments, or just too busy working. Some of the supervisors and owners are worried that this system is going to break the planet, but most of them are too happy piling up additional trillions of wealth to do anything that would slow the flow, so ... enjoy the spectacle on your phones, while it lasts.
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