
President Barack Obama signed the American Recovery and Reinvestment Act today setting the course for the long journey to economic recovery. President Obama said this legislation represents only the first part of the broad strategy we need to address our economic crisis. Every recognizes the need to stabilize, repair, and reform the banking system, get credit flowing again, halt the wave of foreclosures and falling home values and usher in an era of corporate and personal responsibility. However I stand resolute on the fundamental need to address the systemic economic inequalities in our system that has led to the greatest disparity in wealth that this country has seen. And this is the greatest economic threat to the middle class.
As one simple example of the inequity you can look at CEO pay. According to the Economic Policy Institute in 1965, U.S. CEOs in major companies earned 24 times more than a typical worker; this ratio grew to 35 in 1978 and to 71 in 1989. The ratio surged in the 1990s and hit 298 at the end of the recovery in 2000. The fall in the stock market reduced CEO stock-related pay (e.g., options), causing CEO pay to tumble to 143 times that of the average worker in 2002. Since then, however, CEO pay has recovered and by 2007 was 275 times that of the typical worker. In other words, in 2007 a CEO earned more in one workday than the typical worker earned all year.
Another way to look at this is to examine wealth inequality. This wealth gap continues to grow larger over time. EPI says the richest 1 percent of wealth holders had 125 times the wealth of the typical household in 1962; by 2004 they had 190 times as much. These conditions are at the heart of what ails the middle class and their borrowing binge. When you're working harder and harder to just break even, then it is time to examine the rules of the game. Hopefully Vice President Biden's White House Council on the Task Force on the Middle Class will take a serious look at this problem as seek to solve our nation's economic woes.
Remember to visit www.recovery.gov for the latest progress of the American Recovery and Reinvestment Act.