That's correct Mike, it's not always the case (benefits being cut and working a job can provide you with a worse quality of life) - but I think that is more of a problem regarding the wages people are being paid in jobs, rather than the benefits system.
For a long time inflation, house prices and general costs have beat basic wage increases - leaving many working for less money relatively than they would've got years ago. Meanwhile, the big corporations report yet ever greater profits and the CEO's take ever higher multiples of basic salary in bonuses each year.
The system is broken, but the equality of pay and living standards is not to blame with the government, it's to blame with greedy corporations, share holders insisting they need to do anything for profit and wages being pinned down to the minimum they can be that the work force will stand for (to maximise profits).
If corporation pay was fairer (like it used to be) where perhaps a CEO only makes 10 times the basic workers salary, rather than 100 or 1000 times the basic workers salary, then the wealth from the corporation output would be shared more evenly and the problem would be solved (for people in work).
Not to mention corporations which don't pay tax causing governments to lose out on a lot of tax revenue which would in turn pay to support the poor!
> The system is broken, but the equality of pay and living standards is not to blame with the government, it's to blame with greedy corporations, share holders insisting they need to do anything for profit and wages being pinned down to the minimum they can be that the work force will stand for (to maximise profits).
Let me ask you something... If you start a new business, and let's say you take out a huge loan to pay your startup expenses, and you have a huge pool of qualified workers fighting to work for you for 10 dollars per hour, are you going to pay them any more? Knowing full well that that's a shitty wage, but that if you pay them any more you might go out of business and have a huge debt burden... Or do you pay them 20 dollars per hour out of generosity, and risk going bankrupt, with repercussions that could follow you for years?
It's easy to blame corporations, but remember, there's more players in the job market, including many struggling small businesses... Furthermore, large corporations have gone out of business, and when they fail entire towns and cities can become destitute (look at Detroit).
Corporations pay market value for wages, to increase wages you need to either increase the number of jobs, or decrease the number of workers.
Capitalism is powered by money and greed. At it's heart, the point is to maximise profit and efficiency. This drives innovation and growth across the world... this is no bad thing.
However, as a side of effect of this, it also means businesses want to become more efficient, reduce costs and maximise profitability - your share holders are expecting good returns and that's just the way the world works!
Let's say the CEO takes $9.6 million and the average worker gets $40,000...
This income divide is causing the problem, as the prices will move up in line with the wealth the CEO has just got (along with the workers obviously), but to the average worker, they're not really being paid much more (or any more at all) to counter act the inflation.
If you go back to that graph in 1980 where the CEO only made 35 times the amount of the average worker and redistributed more of the profit to the employees, let's say average employee now gets $55,000 and the CEO gets $2,000,000 then the prices remain more affordable relative to the money in the market and the wealth has been distributed more evenly.
Note this is with the assumption the corporation still made the same profit whichever way it was divided.
The top 1% of wealth is greater than the other 80% of wealth combined in the USA and it's this greed that is causing the divide, rise in prices and rise in poverty line compared to the 'average salary'.
The growth in the divide is caused by changes in CEO compensation that reward CEOs of public companies with large stock option rewards. In theory this is a reform-- only CEOs with rising stocks should get paid. Also just looking at the top public companies isn't really representative of the economy as a whole. The median CEO really makes around $360,000, which is a respectable 9-1 ratio.
Further, being paid $9.6mil/year as a CEO is exceptionally rare. $10.2mil of total compensation would have placed you in the top 100 out of the 100Ks (millions?) of CEOs world wide in 2012. $20mil would have placed you in the top 20.
> Corporations pay market value for wages, to increase wages you need to either increase the number of jobs, or decrease the number of workers.
To a large degree the market value for wages is such only because of a government subsidy to the employers. Take Wal-Mart for example, they go as far as helping their employees enroll in all sorts of government poverty programs because even though they are full-time workers they still qualify for SNAP (food stamps), Medicaid and other similar programs.
Wal-Mart, McDonalds and other similar large low-wage paying corporations should not be able to use government welfare in what effectively part of their compensation to employees.
The government isn't subsidizing Wal-Mart; Wal-Mart is subsidizing the government by reducing these people's dependence on government benefits from 100% to something less.
Wal-Mart, McDonalds and other similar large low-wage paying corporations should not be able to use government welfare in what effectively part of their compensation to employees.
Think about what would happen if they weren't able to do this. Prices would go up and who would this hurt the most? Their customers. Who are their customers, generally? Poor people.
"Let me ask you something... If you start a new business, and let's say you take out a huge loan to pay your startup expenses, and you have a huge pool of qualified workers fighting to work for you for 10 dollars per hour, are you going to pay them any more? Knowing full well that that's a shitty wage, but that if you pay them any more you might go out of business and have a huge debt burden... Or do you pay them 20 dollars per hour out of generosity, and risk going bankrupt, with repercussions that could follow you for years?"
This calculus does not apply at all to the companies currently turning record profits. That's not to say that there's necessarily no important reason those companies should be choosing to keep their profits high as opposed to paying out higher salaries, but this manifestly isn't it.
Actually, wages are increasing enormously, and faster than costs, for the vast majority of workers of those corporations. It's just that most of them are not American or European.
In any case, that assessment, valid or not, doesn't provide a solution.
For a long time inflation, house prices and general costs have beat basic wage increases - leaving many working for less money relatively than they would've got years ago. Meanwhile, the big corporations report yet ever greater profits and the CEO's take ever higher multiples of basic salary in bonuses each year.
The system is broken, but the equality of pay and living standards is not to blame with the government, it's to blame with greedy corporations, share holders insisting they need to do anything for profit and wages being pinned down to the minimum they can be that the work force will stand for (to maximise profits).
If corporation pay was fairer (like it used to be) where perhaps a CEO only makes 10 times the basic workers salary, rather than 100 or 1000 times the basic workers salary, then the wealth from the corporation output would be shared more evenly and the problem would be solved (for people in work).
Not to mention corporations which don't pay tax causing governments to lose out on a lot of tax revenue which would in turn pay to support the poor!