Thirty years ago, in the 1980s, close to 60% of the income of all Americans came from work. Today, this figure is barely over 50%. This numbers come from a wonderful study produced by Wells Fargo (you can find it here). Danielle Kurtzleben, at Vox, highlights this chart that explains were income is coming from now:
Surprised? Government transfers have increased its share five points, although the reason behind this is simple: demographics. There are many more Americans on social security now than 34 years ago, meaning that a higher share of income comes from the government, not from wages. This is part of a long term trend - and it is one of the few things that have contributed to the very modest rise in income for most Americans in the last few decades.
Of course, this graph doesn´t tell us much about how income is being distributed, and how it compares to the returns of capital. We discussed this last month, talking about inequality - more here. Spoiler alert: it is not pretty.
Krissy Clark, from Marketplace, and Andrew Bouvé, from Slate, have a look at what would happen if Wal Mart raised wages to its workers enough to make it a living wage:
Their conclusion: not a whole lot. Wal Mart would have to raise the hourly wage for its salaried employees to $13.63/hour, for a total cost of $4.8 billion annually. This might sound like a lot of money, and it is, but Wal Mart had a $17 billion profit last year alone, and that´s after spending $15 billion on stock buybacks to make its shareholders happy.
Even without reducing its profits one dime, the reports find that the retail chain would only have to raise prices on its stores by 1.4% to cover the increase in wages.
The video is part of a wonderful series from Marketplace, "The Secret Life of a Food Stamp", giving an in depth look on how companies like Wal Mart rely on public benefits both to make money and to pay workers low wages. Make sure to have a look.