The American economy has long been characterized by some glaring structural economic weaknesses. These weaknesses and their consequences have been even more starkly revealed with this coronavirus pandemic.

A most visible and consequential structural weakness is the growing inequality of income and wealth that, in addition to serious equity implications, has direct effects on the size of this economy and, indeed, its very ability to function.

From the end of World War II and through the mid-1970s, sometimes referred to as “the golden era of capitalism,” American incomes grew closely in proportion to labor productivity, and at roughly the same rate up and down the income ladder, approximately doubling in inflation-adjusted terms over that period. Beginning in the late 1970s, hourly pay for workers stagnated, even as labor productivity continuing to grow. Concentration of income at the top is now at levels last seen during the 20th century’s “Roaring Twenties.”

Concentration of wealth is even more concentrated than income. The nation’s top 10% own 80% of the nation’s wealth, while the entire bottom 50% own less than 1%.

This trend has long been dismissed by conservatives as unimportant. During his 2012 presidential campaign, Republican stalwart Mitt Romney dismissed concern over income inequality as mere “jealousy of the successful.”

Inequality of income and wealth is often justified as the inevitable and necessary outcome of capitalism that rewards ability and effort. This justification misses the point entirely. No critic of the growing concentration of income and wealth is suggesting perfect equality of wealth or income. But how far must we go toward a “winner take all economy?”

The ratio of CEO income to the typical production worker was about 20 to 1 during the prosperous mid-20th century. It has risen to over 350 to 1 presently, while CEO compensation continues to rise at double digit percentages as median wages barely budge.

Capitalism as a form of economic organization is praised for its promotion of competition, innovation, incentives for profits, and reward for hard work and talent. Competition is seen as a self-regulating force to prevent abuses and economic exploitation.

But the catch is that unfettered capitalism leads to concentration of wealth, further leading to concentration of political power, to yet further concentration of wealth, a spiral resulting in an economic and political aristocracy. If competition is seen as a “restraining force,” the incentive is for powerful economic interests to make every effort to eliminate competition through a combination of exercising political and economic power. 

Workers at the bottom of the income scale lack what economists call “market power.” Those at the top, with concentration of income and wealth, are able to exercise political power to further strengthen their position through political action. Examples include weakening of labor unions, and making it more difficult for labor to organize. Examples at the legislative level include the 2017 Trump/Republican tax bill, the benefits of which went mainly to corporations and America’s top income earners. An example at the judicial level is the US Supreme Court’s “Citizens United” decision that favors corporate influence regarding political money.

The net result is a “winner take all economy,” leaving many essential workers left with neither economic, nor political power. Along with low incomes, many of these workers lack the benefits that many higher income workers have, and are all but neglected by the media and politicians who rely on political donations by more powerful economic interests.

Enter the coronavirus pandemic.

Employees, along with everybody else, are urged to stay home, and, to the extent possible, work at home. Many lower paid workers, by the very nature of their jobs, are less able to work at home. And these are the very workers that are essential to keep this economy from shutting down completely.

And, whaddaya know — these unsung workers are suddenly recognized by the media and politicians, praised for their willingness to carry on, many being exposed to health risks that others are not.

Workers who remain on the job include health and home care workers, grocery and drug store employees, domestic workers, food service workers, local public sector workers such as police officers and firefighters, janitorial staff, farm workers, delivery drivers, warehouse and transit workers, and those who work in meat packing plants. Many of these are among the lowest paid employees with limited access to affordable health care. These include immigrants, documented and undocumented.

It is not just the top physicians and nurses with specialized training that are essential to health care. Where would hospitals be without staff that do the laundry and cleanup work? At long last, these unsung employees are getting well-deserved recognition, if not a living wage.

This coronavirus pandemic is sometimes referred to as “the great equalizer.” Actually, it is quite the opposite; it exaggerates and reveals the contrast between those who are able to protect themselves from the virus, and low paid, often unrecognized, workers who keep this economy running while exposing themselves to great health risks. To add insult to injury, the Trump administration has famously made efforts to strip away access to the Affordable Care Act, and do away with pre-existing conditions protections — actions that would disproportionately affect those who already are left behind.

If and when the threat of this pandemic recedes, will the power structure of our nation, the political class and the corporations, seriously address these inequities, and take steps to make capitalism work so that all essential workers share in prosperity.

The contribution of many workers who have not shared in American economic growth is now ever clearer during this pandemic.

The concept of a universal basic income and guaranteed access to health care, including Medicare for all who want it, deserves, and is, getting some attention.

To make capitalism work for everyone, including for those not adequately rewarded through the market place, will require the kind of serious public policy action we have not seen for a long time.

— John Waelti of Monroe, a retired professor of economics, can be reached at jjwaelti1@tds.net. His column appears Saturdays in the Monroe Times.