The Price of Civilization_ Reawakening American Virtue and Prosperity - Jeffrey D. Sachs [7]
There are other similarly stunning developments. The higher educational attainment of the United States, once the world’s unchallenged pacesetter, is falling behind. Currently, the United States ranks twelfth in the world in the proportion of twenty-five- to thirty-four-year-olds with at least an associate’s degree (meaning a degree from a two-year college or higher).18 Many other countries are enjoying a surge in college completion rates, especially in four-year colleges, which register the biggest returns to earnings, employment rates, and job security. In the United States, more students are attending college, but the percentage completing a four-year bachelor’s degree has stagnated since the year 2000.19 After decades of enjoying the world’s best-educated labor force, America’s educational credentials are now falling behind many countries’ in Europe and Asia.
The Divided Workplace
Workplace conditions have also deteriorated during the past three decades. We derive most of our income and many of life’s pleasures from productive work. A healthy workplace is key to a healthy society. Yet the overriding reality of the past thirty years has been a sharply widening gap in power, compensation, and job security between senior management and professionals, on the one hand, and the rest of the workforce, on the other. This has been an era of soaring CEO pay combined with a grinding squeeze on the wages and working conditions of production and clerical workers. Job security has plummeted for relatively low-skilled workers (those with a high school diploma or less). The working class has been caught in the pincers of low-wage competition from abroad combined with the technological obsolescence of many traditional low-skilled jobs.
The top CEOs have cashed in as never before. As shown in Figure 2.5, the compensation packages of the top hundred CEOs soared from the mid-1970s onward. At the start of the 1970s, average top 100 CEO pay was roughly 40 times the average worker’s pay. By the year 2000, it had reached 1,000 times the average worker’s pay! The most important component of this compensation boom was the increased payment of stock options to CEOs and senior management teams.
Figure 2.5: Ratio of Top 100 CEO Compensation to Average Worker Compensation, 1970–2006
Source: Data from Database for “Income Inequality in the United States” (Saez and Piketty).
While top CEO pay has been soaring, the median take-home pay of male full-time workers (adjusted for inflation) has stagnated since the early 1970s. This is shown in Figure 2.6. Incredibly, the median earnings of male full-time workers actually peaked in 1973. And it’s not just earnings that have declined. So, too, has job satisfaction, which has been on the wane for a quarter century, according to the surveys of the Conference Board.20
Figure 2.6: Real Median Earnings of Full-Time Male Workers, 1960–2009 (in Constant 2009 Dollars)
Source: Data from U.S. Census Bureau.
The New Gilded Age
The CEO-friendly political environment, the economic effects of globalization, and specific regulatory and tax policy choices made in Washington over the past thirty years have combined to create an inequality of income and wealth unprecedented in American history. We are living through a new Gilded Age exceeding the gaudy excesses of the 1870s and the 1920s. The extent of riches at the top of the income and wealth distributions is unimaginable to most Americans, especially at a time when one in eight Americans depends on food stamps.21
The wealthiest 1 percent of American households