The $79 Trillion Heist

https://portside.org/2025-12-05/79-trillion-heist

Portside Date: December 5, 2025

Author: Harold Meyerson

Date of source: December 3, 2025

The American Prospect

There are, of course, two components to affordability: sellers’ prices and buyers’ incomes. For most American families, buying (or renting) focuses either heavily or entirely on life’s essentials: housing, food, transportation, education, health care, and other forms of care (child, senior). That a clear majority of American families are, at minimum, stressed by these costs is a consequence of not just a host of factors on the sellers’ side, but of one big factor on the buyers’ side: a half-century of wage stagnation, even as investment income has soared. Or, if you prefer, a half-century of buyers’ income stagnation, even as sellers’ income has soared.

If you depend on investments for most of your income, this is a pretty damn good time. The University of Michigan’s November survey of consumer sentiment finds that Americans who don’t own stock have their lowest confidence level in the economy since the survey began querying stock ownership in 1998. An exception to this mood, the survey notes, is found among the largest stock owners, whose assessment of the economy has actually risen by 11 percent this year.

As Emma Janssen has reported in these pages, marketers are going where the money is, like bank robber Willie Sutton. First-class and business-seat travel on the airlines is booming, so much so that seating arrangements on Delta and United are being reconfigured to create more room for the affluent, while coach seats are going unfilled and “discount” airlines struggle. Revenues are up 3 percent this year at the Ritz-Carltons, the Four Seasons, and other luxury hotels, yet down by 3 percent at economy hotels. And when it comes to life’s biggest purchase—a home—the median age of first-time buyers reached 40 this year, an all-time high according to the National Association of Realtors.

“All right,” as John Dos Passos wrote in his U.S.A. trilogy in the depth of the Depression, “we are two nations.”

Life in the nonaffluent nation is getting harder. According to a Brookings Institution analysis from last year, 43 percent of American families don’t earn enough to pay for housing, food, health care, child care, and transportation; every week, they must juggle which to pay and which not to pay. Among Black and Latino families, those figures rise to 59 percent and 66 percent, respectively.

The litany of the limits placed on workers’ ability to win sustaining incomes is long.

It has not been ever thus. In the roughly 30 years following the end of World War II, the nation experienced an unprecedented period of broadly shared prosperity, with workers’ incomes rising in tandem with the nation’s growth in productivity. In 1947, workers captured 70 percent of the total national income; today, that has fallen to roughly 59 percent, while investment income has gained at workers’ expense. As a landmark 1995 study by economists Larry Mishel and Jared Bernstein for the Economic Policy Institute (EPI) revealed, a gap between the rise in productivity and the rise in median workers’ wages opened in the mid-1970s and has grown steadily wider since then; the difference between those two rates today is 55 percent. In the years between 1948 and 1979, when the egalitarian legacy of the New Deal was at its apogee, with high levels of unionization and progressive taxation and constraints on the financial sector, productivity grew by 108 percent and median worker’s compensation by 93 percent. In the years between 1979 and 2025, an EPI analysis found productivity grew by 87 percent but median worker’s compensation by a bare 33 percent.

The declining share of national income going to workers hasn’t entirely been the result of the shift from wage income to investment income. There’s also been a shift in the distribution of corporate income to the most highly paid employees, through stock options and other forms of compensation. A 2021 EPI study shows that between 1979 and 2019, real yearly wages for the bottom 90 percent of workers increased by 26 percent, while the wages of those in the 95th to 99th percentile increased by 75 percent, for those in the top 1 percent by 160 percent, and for those in the top 0.1 percent by 345 percent. Worker pay ratios over the past decade have shown that CEOs usually make about 300 times what their median-paid employee makes, a far cry from the 1960s, when the ratio was roughly 20-to-1. Even as labor unions have largely disappeared in the past 60 years, the union of American CEOs—routinely appointed to the executive compensation committees of corporate boards with the blessing or at the instigation of the CEO whose pay they’re setting—has retained its power, adhering to the creed that an injury to one CEO (by, say, paying him or her less than 300 times what workers make) is an injury to all.

What would America look like if the gap between worker pay and productivity hadn’t opened? A RAND Corporation study from earlier this year found that the bottom 90 percent of wage earners received about 67 percent of all taxable income in 1975. In 2019, the last year for which this data was available, they received 46.8 percent. Had that bottom 90 percent continued during the past half-century to make the same share of the national income they’d had in 1975, RAND calculates that by 2023 they would have made an additional $79 trillion. Just in the year 2023, they would have made an additional $3.9 trillion. As the size of the bottom 90 percent of the U.S. workforce is roughly 140 million people, that means that the average earner would have made about $28,000 more in 2023 than they actually did.

Where have all those missing $28,000 paychecks gone? Well, our nation was home to 1,135 billionaires this year, whose aggregate net worth in 2024 came to a cozy $5.7 trillion. That’s $1.8 trillion more than what it would take to cut 140 million $28,000 paychecks.

Corporations aren’t cutting those checks. As EPI’s Nominal Wage Tracker documents, the 80 percent of corporate income that went to employees in 1980 declined to 71.5 percent this year.

This is the kind of thing that can irritate workers. As I write in mid-November, 3,200 members of the Machinists union have just completed a three-month strike at three Midwestern Boeing plants. Strikers noted that Boeing devoted $68 billion to stock buybacks between 2010 and 2024—funds that could have gone to developing safer and better planes, and better-compensated workers with more secure retirement benefits.

THERE’S A REASON WHY 1979 HAS BECOME the last “postwar normal” year, before the massive upward redistribution of wealth and income, in most of these economic studies. In 1980, Ronald Reagan was elected president. In his first few months in office, he signed a law reducing the top income tax rate from 70 percent to 50 percent. (It’s about ten points lower than that today, though most of our super-rich have found ways to get it much closer to zero.) The high marginal tax rates of the postwar decades, peaking at 91 percent during Republican Dwight Eisenhower’s presidency, had effectively put a ceiling on CEO pay. Tesla’s board would not be committing to pay Elon Musk a trillion bucks if Tesla thrives in the coming years under 1950s-era tax rates, where the feds would take the lion’s share above the top marginal bracket. The pre-Reagan tax rates ensured that America’s billionaires would be few and far between, helping to ensure that workers’ potential income wouldn’t be siphoned upward. Twenty years after Reagan, George W. Bush became the first president to lower taxes on the rich during wartime (a war he decided to start absent a plausible threat), and Donald Trump’s successive cuts make even Reagan and Bush look like Keynesians.

In 1982, Reagan’s appointees to the Securities and Exchange Commission (SEC) changed a rule that enabled shareholders to claim a greater percentage of corporate wealth. The SEC permitted corporate executives to authorize buybacks of the corporation’s stock, thereby raising the value of the remaining shares on the market. By the 1990s, due to a Clinton-era loophole exempting bonus compensation from corporate taxes, corporations began paying their top executives with shares and options of shares, which made buybacks an easy form of self-enrichment. As economist William Lazonick has exhaustively documented, by the 2000s, most major corporations were diverting more funds to buybacks and dividends than they were investing in growth and research, not to mention employees’ raises.

During his first year in office, Reagan also busted PATCO, the air traffic controllers’ union, firing all its members when they went on strike. (By contrast, Republican Richard Nixon had allowed all hundreds of thousands of postal workers who’d participated in a wildcat strike in 1970 to return to their jobs: The Republican Party of Nixon’s day was still closer to the accept-the-New-Deal ethos of Eisenhower than the overturn-the-New-Deal ethos of Reagan.) Reagan’s mass firing inspired private-sector CEOs to do the same with their own employees. During the next several years, a representative sample of leading corporations—Phelps Dodge, Greyhound Bus, Boise Cascade, International Paper, Hormel meatpacking—all slashed pay to provoke strikes, then fired the strikers and hired their replacements at a fraction of their original salaries.

During the years of postwar prosperity, strikes were a routine part of the economic landscape, and a major reason why worker pay constituted a decent share of the national income. After PATCO, they nearly disappeared. The number of major strikes plummeted from 286 a year in the 1960s and 1970s, to 83 a year in the 1980s, to 35 a year in the 1990s, to 20 a year in the 2000s. In recent years, the strike has enjoyed a modest revival—autoworkers and teaching assistants have won higher wages by walking picket lines—but unions have shrunk to the point that the fruits of such victories have limited ripple effects.

Reagan wasn’t the sole agent of upward redistribution during this time. Federal Reserve Chair Paul Volcker brought down inflation by raising interest rates so high that people stopped buying cars and construction projects slowed to a trickle. The industrial Midwest never recovered. Between 1979 and 1983, 2.4 million manufacturing jobs vanished. The number of U.S. steelworkers went from 450,000 at the start of the 1980s to 170,000 at decade’s end, even as the wages of those who remained shrank by 17 percent. The decline in auto manufacturing was even more precipitous, from 760,000 employees in 1978 to 490,000 three years later. These were the jobs whose union contracts had set the standard for the nation’s blue-collar workers.

Finally, also in 1981, at New York’s Pierre Hotel, Jack Welch, General Electric’s new CEO, delivered a kind of inaugural address, which he titled “Growing Fast in a Slow-Growth Economy.” GE, Welch proclaimed, would shed all its divisions that weren’t number one or number two in their markets. If that meant shedding workers, so be it. All that mattered was pushing the company to pre-eminence, and the measure of a company’s pre-eminence was its stock price. Between late 1980 and 1985, Welch reduced the number of GE employees from 411,000 to 299,000. He cut basic research. The company’s stock price soared. And Welch became the model CEO for a corporate America going fully neoliberal.

WHAT THE EARLY 1980S INAUGURATED GREW APACE over the subsequent 40 years. Emboldened by Reagan’s opposition to unions, CEOs and corporate boards routinely directed their companies to violate the laws that had empowered workers to form and join unions. In 2016 and 2017, employers were charged with violating the National Labor Relations Act in 41.5 percent of all unionization campaigns, often by firing workers involved in those campaigns. The penalties for being found guilty of such charges are negligible, and Democrats’ efforts to amend the NLRA so that the penalties actually have some effect on employer conduct have never been able to win the support of the 60 senators required to break a filibuster to enact such amendments. So it is that most unionized private companies were unionized many decades ago, and almost all the major companies that have been created since (including the two largest private-sector employers, Walmart and Amazon) have rebuffed their employees’ unionization efforts through illegal threats and firings.

Even when workers have managed to win unionization, that doesn’t mean they actually are able to bargain a first contract. An EPI study showed that 63 percent of the time during 2018, workers in newly unionized companies hadn’t been able to get their employer to agree to a contract within one year of their unionizing, as there’s no law requiring employers to bargain in a timely fashion. Amazon, for instance, has yet even to begin bargaining with the Staten Island warehouse workers, who decisively voted to join a union to much fanfare back in April of 2022.

These are among the factors that explain why the rate of American worker unionization has declined from one-third in the middle of the 20th century to just under 10 percent today, and a bare 6 percent in the private sector. Another factor, both in the shrinking of unions and the shrinking of worker pay, is the move of major corporations’ production facilities from the unionized Northern and Midwestern states to the right-to-work, anti-union South. The spread of Southern pay standards to the rest of the nation—a tale whose protagonist is most certainly Walmart—also served to bring down national pay levels in retail. The late 1970s deregulation of the trucking industry, by effectively negating the Teamsters’ nationwide contract with long-distance trucking companies that had covered nearly half of U.S. truck drivers, proved to be a huge hit to drivers’ incomes, by some estimates cutting them in half.

This November’s elections reveal a public that understands the current system isn’t working for them or their neighbors.

The litany of the limits placed on workers’ ability to win sustaining incomes is long.

Trade deals and offshoring have damaged workers considerably. NAFTA was the nation’s first trade treaty with a low-wage nation (Mexico), and our end-of-the-century trade deal with China greatly exacerbated the depressing effect on American workers’ wages. Both an EPI study and another by MIT’s David Autor and several co-authors independently concluded that such deals lowered the wage of non-college-graduate U.S. workers by 5.6 percent, taking an average bite out of their yearly income of roughly $2,000.

The federal minimum wage of $7.25 currently comes to roughly 29 percent of the median full-time worker’s wage. In 1968, the federal minimum wage came to 53 percent of the median full-time worker’s wage.

Worker misclassification as independent contractors (as in the cases of Amazon delivery drivers and Uber and Lyft drivers) reduces incomes, exempts workers from wage and hour legislation, and generally means they lack the benefits (such as health insurance) that customarily accrue to corporate employees. EPI’s 2021 study on the factors reducing workers’ income estimated that nine million American workers were then misclassified, reducing their incomes by anywhere from 15 percent to 30 percent. A 2019 study by Brandeis University economist David Weil, who was in charge of the Wage and Hour Division of the Department of Labor during the Obama presidency, found that drivers employed directly by UPS, who also worked under a contract with the Teamsters, earned $23.10 an hour, while the “independent contractor” drivers for FedEx earned $14.40 an hour, and those for Amazon, a paltry $5.30 an hour. Amazon is currently in court contesting the unionization of a number of those drivers, making the argument that the 90-year-old National Labor Relations Board is unconstitutional.

Noncompete agreements tucked into employment contracts forbid workers from taking a job with other businesses in the same sector or starting their own businesses in that sector. Initially devised to keep a small number of specialized employees from taking proprietary information to competitor companies, these agreements have now spread to workers at nail salons, barbershops, and just about any other kind of business. An EPI survey of businesses with at least 50 employees found that somewhere between one-quarter and one-half of all private-sector workers were subject to noncompetes. During the Biden presidency, both the Federal Trade Commission (FTC) and the NLRB found this practice to be a violation of law, and the FTC formally banned noncompetes nationwide. But those findings and rules have not been carried over, of course, to their Trump administration successors.

Corporate concentration, as the other feature articles in this issue abundantly document, is a huge factor in price increases afflicting the American consumer. It’s also a factor in limiting American workers’ incomes. In 2017, MIT’s Autor and other co-authors estimated that the increase in product market concentration accounted for a third of the decline in labor’s share of the national income for the years between 1997 and 2012. The shrinking of employer options relieves employers of the pressure created by workers flocking to higher-paying rivals. In opposing the merger of the Albertsons and Kroger supermarket chains, Biden’s FTC argued that it would lead not only to price hikes but also to lower wages for their workers unless they remained separate companies.

In weighing the relative responsibility of all these factors in creating the widening gap between productivity increases and median wage increases from 1979 through 2017, a 2021 EPI study by Lawrence Mishel and Josh Bivens concluded that excessive unemployment levels (due chiefly to Federal Reserve policies), the decline of collective bargaining, and globalization (devised by and benefiting corporations) explain roughly 55 percent of that gap, while misclassification of workers, subcontracting, noncompete agreements, and corporate concentration add up to 20 percent.

OVER THE PAST 45 YEARS, THE FUNDAMENTALS of the postwar economy that were put in place by the New Deal have been discarded at the behest and insistence of wealthy interests and individuals who’ve sought a much higher share of the national income. Creating a more equitable economy—effectively, reinventing a vibrant American middle class—will be an arduous task. That said, this November’s elections reveal a public that understands the current system isn’t working for them or their neighbors. The affordability solutions put forth by Zohran Mamdani, Abigail Spanberger, and Mikie Sherrill in their successful campaigns are just a start in what will be a long and difficult struggle. Herewith, some suggestions on the path to a more broadly shared prosperity and an affordable future.

First, nothing increases worker bargaining power like full employment. The next Democratic president’s appointees to the Federal Reserve must be committed to raising ordinary Americans’ share of the national income. That requires the low interest rates essential for a thriving economy. Denmark’s policy of providing free job training and up to 90 percent of their salary to laid-off workers has been a success in boosting that nation’s employment levels and mitigating the effects of an economic downturn.

Second, the return of collective bargaining. That necessitates labor law reforms that enable workers to unionize by signing affiliation cards; require employers to recognize unions when their workers have obtained those cards from a majority of employees; require employers to settle on contracts with unionized workers within a fixed time (90 days? 120 days?) or submit to compulsory arbitration; abolish “right to work” laws; make corporations the co-employers of record with their franchises; enable sector-wide bargaining in various sectors, thereby setting the same minimum wage and benefit standards for all of that industry’s employees, unionized or not; and perhaps enable bargaining from “minority” unions to which at least 25 percent of employees belong, so long as no union has achieved majority status. Today, unions are among the most well-thought-of American institutions, getting roughly 70 percent approval ratings in the annual Gallup polls, even as the rate of private-sector unionization is less than one-tenth of that. It’s primarily the weakness of labor law that has spawned this widest of gaps; that law must be changed if that gap is to shrink.

Third, raise the minimum wage to the level of a living wage, sufficient to pay for all life’s essentials. An MIT study this year has estimated the living wage for a family in each of the 50 states, from $22.43 an hour in Mississippi to $34.55 in California. A federal law could mandate such procedures for the states. A paper released in October by California-based economists Martin Carnoy, Michael Reich, and Derek Shearer suggests an anti-inflationary accompaniment to such raises would be a rigorous antitrust policy that would yield more competitive pricing in retailing.

Fourth, family-friendly financial policies. That could begin with a yearly federal payment to families with children, at an initial level of $5,000 per child. A Brookings Institution study has estimated that a middle-income family spends $310,605 to raise one child from birth to 17. The cost of child-rearing is such that it simply deters many families from having children. This is an area where our government must adopt the kind of policies that the governments of most nations with advanced economies have long since enacted. Universal free child care and pre-kindergarten could cut these costs to families, as well as enabling mothers to continue in their careers, which boosts family incomes.

In a recent paper for the Economic Security Project, Becky Chao and Mike Konczal document that Americans generally become parents when their earnings have yet to achieve mid-career levels, making the prospect of having children a financially fraught one. They argue for substantial child tax credits and earned income tax credits to address this structural gap between the costs of parenting and the income levels of young workers. Similarly, they also argue for more generous Social Security payments for the elderly and disabled.

Fifth, a ban on noncompete and forced arbitration clauses in employment contracts.

Sixth, the adoption of industrial policies, such as those advanced during the Biden administration, that revitalize domestic industries and lessen our dependence on imports from low-wage nations that have the effect of reducing the incomes of workers here at home. As the robotization of production work continues, manufacturing and transportation will employ fewer workers than they currently do, but the remaining workers in those sectors should not have their incomes reduced either by foreign competition or by the kinds of employment arrangements and opposition to unions that currently characterize our economy. Where unions have power, they can insist that smaller workforces receive the benefits of higher productivity, as the longshore unions have succeeded in doing during the past decades of mechanization and containerization, making their members’ jobs the highest-paying blue-collar jobs in America.

Seventh, a thorough reworking of our tax system. Higher taxes on the rich and corporations are clearly needed to fund the kind of programs listed above, and with the nation’s wealth disparities reaching stratospheric proportions, some form of wealth taxes must be adopted as well. The best argument for adopting such a tax is that right now, only the most common and widely held form of wealth—homes—is subjected to that kind of tax. If we can tax the wealth of middle-income families, why can’t we tax the wealth—such as stocks and other investments—of the truly wealthy? Certainly, the capital gains tax should be raised to the level of the income tax on work, and the SEC rule on buybacks should be revoked.

None of this will happen so long as money dominates our politics, so the Supreme Court decisions enabling that domination—Citizens United and Buckley v. Valeo—should be undone, if not by Democratic-appointed successors to the current justices, then by other work-arounds, such as the current effort in Montana to rewrite the state’s corporate charters so they deny corporations the power to involve themselves in elections.

Americans increasingly understand that our current economy isn’t meeting their interests and that it’s rigged to favor the wealthy. A sizable public will welcome candidates who expand the Overton window of economic reforms such as those suggested here, just as there were sizable publics that backed the reforms laid out by Bernie Sanders and Zohran Mamdani in their campaigns. Indeed, a national YouGov poll taken one week after Mamdani’s election showed that every one of his platform planks commanded majority support from the American people, including 69 percent support for raising taxes on corporations and millionaires, 66 percent support for free child care for children from six months to five years, and even 57 percent support for government-owned grocery stores.

There’s no reason why Democrats who don’t call themselves socialists can’t do well running on such reforms. This would be a very opportune time for them to start.