Income ladder a tough climb for U.S. worker

It took a lot to drive average Americans into a torrent of populist outrage, ready to tar and feather executives of American International Group and other greedy financiers who brought the world economy to the brink of collapse and then dared to demand outrageous compensation for their work.

Given that regular stiffs have been struggling for decades, it’s a wonder that anger took so long to build.

CYNTHIA TUCKER
MY OPINION

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While Wall Street bonuses may have reached the apex of absurdity in the last decade or so, CEO compensation has been out of whack for much longer than that. In 1965, CEOs earned 24 times the pay of the average worker; by 2007, the factor was 275 times. Even CEOs who wrecked their companies were rewarded lavishly when they left.

Meanwhile, most workers didn’t share in the wealth produced by productivity gains in the 1990s. Their health care costs soared; their unions weakened; class divisions hardened. These days, it’s not as easy for young men and women to rise above their parents’ means as popular mythology suggests.

The typical worker might have noticed the growing income inequality — and protested — earlier. But easy credit helped Americans maintain comfortable lifestyles, concealing the effect of stagnating wages.

Besides, conservative commentators had convinced many that if you weren’t rich, it was your own fault. They denounced concerns about the income gap as “class warfare”; they dismissed any suggestion that greedy CEOs needed to be reined in; they lauded unbridled capitalism as man’s salvation.

That era is now officially over. And good riddance.

(Well, mostly over. In some quarters, the knee-jerk impulse to excuse fat cats their misdeeds remains so strong that some conservative commentators have tried to blame the financial meltdown on working-class home buyers. Not a single mainstream economist agrees with that assessment. It’s pretty clear that shenanigans at companies like AIG are to blame for this mess.)

However, it’s not yet clear what we’ll do with the lessons we’ve learned. For example, will we harness this righteous anger to adopt long-needed initiatives to stem income inequality?

This isn’t a plea for handouts for the incompetent or lazy. Nor is it a naive belief that government should ensure equal outcomes. It’s a call for a clear-eyed look at social mobility, without rose-colored glasses.

A few years ago, Earl Wysong of Indiana University and two colleagues published a study on social mobility in this country.

As outlined in the Economist, a right-leaning British news magazine, they “compared the incomes of 2,749 father-and-son pairs from 1979 to 1998 and found that few sons had moved up the class ladder. Nearly 70 percent of the sons in 1998 had remained at the same level or were doing worse than their fathers in 1979. The greatest social mobility occurred in those families already at the top of the income ladder,” the magazine reported.

In other words, America doesn’t level the playing field as well as popular culture suggests.

With the decline of the nation’s manufacturing sector, the great engine of economic equality is sputtering. Jobs that gave high school graduates a good middle-class lifestyle, with health care and pensions, are dying, with nothing to replace them.

You need look no further than the nation’s military to see the class distinctions. While affluent Americans send their sons and daughters to college, the all-volunteer armed forces have become increasingly dependent on young men and women from working-class homes, usually those earning under $40,000 a year.

While many of those volunteers felt the tug of duty and patriotism, others joined for health care and college aid. Those young men and women deserve to have other routes to economic stability.

The United States is still a country of great opportunity, as the Obamas would surely attest. Neither Barack nor Michelle Robinson Obama grew up in comfort; but with hard work, each of them rose to achieve an Ivy League education.

But countless other young Americans are struggling to climb just one or two rungs up the ladder of social and economic mobility. We ought to harness our righteous indignation to find a way to reward that effort.

— Cynthia Tucker is editorial page editor. Her column appears Sunday.