We're The Number 1, Low Wage Nation. We're Number 1, We're Number 1, USA, USA!

The United States is a low-wage nation

by Laura Clawson

The United States is a low-wage country. (Here a chorus of Republicans pipes up: Yes, but it's the greatest low-wage country in the world, and don't you forget it!) In fact, in 2009 the United States led developed nations, with 24.8 percent of workers earning less than two-thirds of the median income. By comparison, the United Kingdom, Canada, Ireland and Germany all came in at between 20 and 21 percent of workers earning less than two-thirds of their respective median incomes. (Republicans: We're number one!!!)

John Schmitt of the Center for Economic and Policy Research offers a set of policy conclusions stemming from this observation. A key problem is that the United States has set its minimum wage too low, so that the minimum wage doesn't exert upward pressure on low wages defined in relation to the median: "In France in the mid-2000s, for example, the minimum wage was set near the country’s low-wage threshold and that country had among the lowest levels of low-wage work in the OECD." In the United States, though, that's not the case even in states with minimum wages set well above the federal level.

The growing prevalence of low-wage work in the United States contributes to income inequality from the bottom, just as the increasing wealth of the top 1 percent, and especially the top 0.1 percent, adds to inequality from the top. The middle is a shrinking place, and you can bet that, without a major shift of economic and political direction, its future is not only to shrink but to be be squeezed downward.

Again US Not #1

Social Security In US Less Generous Than Similar Countries  

 

 

 

By Kenneth Quinnell

April 21, 2012

When compared to other similar countries, retirement benefits in the United States are relatively modest. A report from CNBC took a closer look at retirement systems in numerous countries and found the U.S. to be performing lower than the average. Retirees in the U.S. generally receive about 47 percent of their pre-retirement income on Social Security. Similar programs in Europe and elsewhere generally pay about 68 percent of pre-retirement income.

In the 2011 Melbourne Mercer Global Pensions Index, the U.S. was given a middling grade of "C," along with France, Singapore, Brazil, Poland and Germany.

A country given a C has “a system that has some good features, but also has major risks and/or shortcomings that should be addressed,” the report states. “Without these improvements, its efficacy and/or long-term sustainability can be questioned.”

The United States ranked close to average among 16 countries in adequacy of benefits provided and above average in sustainability, the likelihood that the system can maintain the benefits in the future. It fell short, however, on a sub-index focused on the private sector pension system.

The U.S. could take steps for a better score, the report said, including raising the minimum benefit for low-income retirees, improving benefits vesting, and further limiting access to funds before retirement.

The Service Employees International Union, among other organizations, is calling upon Washington to improve the U.S. retirement system:

The fastest, most efficient and fairest way to improve retirement security in the United States is to strengthen Social Security. Social Security is often the sole source of retirement income for low wage workers who are less likely to have access to an employer-sponsored retirement plan. The problem with Social Security is that its retirement benefits are less than $1,200 per month for millions of low wage workers.

SEIU reports that the upper one percent of Americans have already stopped paying Social Security taxes for 2012 because of a cap on what earnings pay into the system. Currently, once someone reaches $110,100 of income they have paid Social Security taxes on, they pay no more into the system for the year. Eliminating this cap is widely seen as the easiest and fairest solution to shoring up the future of Social Security. SEIU has an action opportunity for citizens to contact Congress and demand they scrap the cap.

The Results Of A Thought Experiment