THE AFFORDABILITY CRISIS Part 4

The U.S. affordability crisis is multifaceted and has been growing for 45 years, caused by low pay and high prices. Many factors have been depressing workers’ pay including the failure to raise the minimum wage, the weakening of unions, globalization, gig work, and reduced competition for workers.

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The U.S. affordability crisis is multifaceted and caused by low pay and high prices. (Previous posts have discussed the reasons for high prices.) This post will discuss the factors leading to low pay.

Over the last 45 years, workers’ pay has barely kept up with the increase in prices (i.e., inflation). And the pay increases there have been, have gone disproportionately to high earners. A study by the Economic Policy Institute found that between 1979 and 2019 the annual wages (adjusted for inflation) of the lowest-income 90% of workers increased by 26%, while the wages of those in the top 1% rose by 160%. The next richest 4% of workers saw their wages increase by 75%. CEOs now make about 300 times what their typical employee makes, while in 1960s they only made 20 times as much as the typical worker.

Good, middle-class blue- and white-collar jobs have been lost to globalization, while the compensation for the remaining jobs has declined due to the purposeful undermining of unions and global pay competition. The result is a crushing affordability crisis for many current and formerly middle-class households, as well as for lower income households.

According to a Brookings Institute analysis, 43% of American families can’t afford to pay for housing, food, health care, child care, and transportation. This figure is 59% for Black families and 66% for Latino families. The shift in income from workers to executives and investors has been dramatic: in 1947 workers received 70% of total national income, while today they get only 59%. Unlike the previous 35 years, after 1980, workers did not receive wage increases that were in line with their increases in productivity: from 1979 to 2025 workers’ productivity increased by 87% but their compensation only increased 33%. According to a Rand Corporation analysis, in 1975, the 90% of workers at the bottom of the income spectrum received 67% of national income, while in 2019 (the latest data it had) they received just 47% of national income. This highlights again the skewing of income to the top 10%. It calculated that if, in 2023, the 90% of workers with the lowest incomes had received 67% of national income (as they did in 1975), they would have earned an additional $4 trillion or, on average, each worker would have made $28,000 more than they did. Over the period from 1975 to 2023, if these workers had received 67% of national income, they would, in aggregate, have received $79 trillion more in income. [1]

There are many factors that have been depressing workers’ pay. They include:

Failure to raise the minimum wage. The federal minimum wage of $7.25 an hour is only 29% of a typical worker’s wage today; in 1968, it was 53% of the typical wage. If the minimum wage had been raised at the same pace as productivity growth since the late 1960s, it would be over $24 an hour today.
Dramatic weakening of unions by the emasculation of pro-union government policies and of the enforcement of labor laws, as well as by the monopolistic power of huge employers. These have resulted in a huge shift in power from workers to employers over the last 45 years. Union membership has declined from roughly a third of workers in the 1950s to under one-tenth of workers today and only one-sixteenth of private sector workers.
Globalization, which shipped jobs overseas and put downward pressure on the pay for the remaining jobs.
Gig work and the misclassification of workers as contractors and not employees, which reduces wages, removes the protections for employees that are in labor laws, and typically means they get no benefits (e.g., health insurance, sick or vacation time, and retirement benefits). A 2021 study estimated that nine million American workers, from Amazon and FedEx delivery personnel to Uber and Lyft drivers, earn between 15% and 30% less than they would as employees.

The gig work-based companies, using AI with vast amounts of personal data and tremendous computer processing power, can tweak the pay of gig workers instantaneously so each worker gets the minimum pay for which they’re willing to do a job. For example, Uber pays drivers based on their past behavior. If a driver is hungry for work, perhaps because they badly need the income, and therefore always grabs the first job that is offered, Uber will pay them less because it knows they’ll take the job. On the other hand, Uber will offer more to a driver that waits for a better paying option.
Reduced competition for workers among employers due to fewer, very large employers and the widespread use of non-compete clauses in workers’ contracts (which prevent workers from moving to similar work for another company, down to and including other franchisees of the same fast-food chain). The Federal Trade Commission under President Biden banned non-compete agreements but the Trump administration undid this.

Capitalism in the U.S. is out of control. Competition has been stymied and monopolistic power is widespread. This has happened because of the failure to enforce antitrust laws for 45 years (except for four years under President Biden).This means the invisible hand of a market economy and the economic “rules” of supply and demand do not work to give fair compensation to workers. The rules of the economic game have been rigged to favor large employers. One indicator that clearly confirms this is that corporate profits are at very high levels in terms of percentage of revenue. In 1980, 80% of corporate income was paid to workers; in 2025, that percentage was under 72% with the difference largely going to profits.

Regulators have been compromised (aka captured) by the large employers through the political influence garnered by campaign spending and lobbying, as well as the revolving door of personnel between government regulatory positions and private industry jobs. As a result, many aspects of corporate behavior have undergone deregulation, which allows companies to increase profits by, for example, blocking increases in the minimum wage, shipping jobs overseas, gig work, breaking existing unions, blocking union organizing, failing to negotiate in good faith with unions, and frequently preventing new unions from ever getting a contract. In 2018, 63% of new unions, each of which had been voted for by a majority of workers, failed to get their employer to agree to a contract within a year. Amazon workers at a New York City warehouse voted decisively for a union in April 2022, but as of December 2025, Amazon had refused to even begin contract negotiations with them. This reflects a lack of effective labor laws and a lack of enforcement of them.

My next post will discuss steps to take to tackle the affordability crisis.

[1] Meyerson, H., 12/3/25, “The $79 trillion heist,” The American Prospect (https://prospect.org/2025/12/03/79-trillion-heist-worker-pay/)

GOOD NEWS TO START THE NEW YEAR

2025 was a horrible year for American democracy. However, many good things did happen; here are some of them. Let’s keep up the activism and resistance in 2026. And let’s get out to vote and get everyone we know out to vote. That will make it a much better year than 2025 was. Happy New Year!

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2025 was a horrible year for American democracy. However, there were glimmers of hope and many good things did happen. Let’s start 2026 by looking at some of the good things that happened in 2025.

Many increases in the minimum wage, put in place in 2025 or earlier, will go into effect in 2026. On January 1, 19 states will increase their minimum wage, on average from $13.90 to $14.57. (Note: The federal minimum wage is $7.25.) Over eight million workers will benefit. Three more states and D.C. will increase their minimum wage later in 2026. Furthermore, roughly 50 counties and municipalities will increase their minimum wage in 2026. [1]

Bob Reich presents his 2025 top ten biggest wins in domestic politics in a 3.5-minute video from Inequality Media. They include the growing pushback and protests against Trump and his administration from the public at the No Kings rallies and through other actions. He notes Democratic election wins for Governor in New Jersey and Virginia, for Mayor in Miami, New York, and Seattle, and for supreme court seats in Pennsylvania and Wisconsin, among others. He highlights positive actions by voters and legislators in several states in support of school meals and universal child care, in opposition to huge data centers and consumer price manipulation, and in blocking junk fees and private equity firms’ ownership of health care providers. He also celebrates the resurgence of unions and worker solidarity, including the strike by Starbucks workers.

Medea Benjamin at Common Dreams identifies “10 good things that happened in 2025” in the arena of justice and peace here in the U.S. and abroad. They include the growing protests against ICE and support for immigrants, which have led to the release of a number of ICE detainees. The growing resistance to war and the use of the military by theTrump administration also make the list, along with the growing opposition to the horrors of the ongoing war on the Palestinians.

Jess Craven, in her Chop Wood, Carry Water blog, posts good news at a very granular level every Sunday. In addition to touching on many of the topics mentioned above, her 12/28 edition also highlighted the Supreme Court ruling disallowing the Trump administration’s deploying of the National Guard in Chicago, the growing resistance to ICE, and increasing opposition to the Trump administration’s military actions. She also notes the freeing of Abrego Garcia from ICE detention and Arizona’s elimination hundreds of millions of dollars of medical debt for its residents. And much more. In her 12/21 edition, she highlighted the growing production of clean energy (despite the Trump administration’s opposition), resignations at the Heritage Foundation (the source of Project 2025), the success of a discharge petition in the U.S. House requiring a vote on extending the Affordable Care Act subsidies, a judge blocking the corrupt sale of a private equity-owned nursing home chain (to escape liability for patient negligence claims), and a judge’s nullification of the Trump administration’s termination of some federal employees. And much, much more.

Let’s keep up the activism and resistance in 2026! And let’s get out to vote and get everyone we know out to vote. That will make it a much better year than 2025 was. I’m raring to go and I hope you are too!

Happy New Year!

[1] Wilkins, B., 12/31/25, “‘A national disgrace’: 19 states to raise minimum wage but federal rate stuck at $7.25,” Common Dreams (https://www.commondreams.org/news/minimum-wage-increase-2026)

WHAT EVERYDAY AMERICANS WANT FROM GOVERNMENT

Many Americans are worried about being able to afford the cost of living. Government policies can increase the amount of money they make and the benefits they get, as well as reduce the cost of everyday expenses. If Democrats or others want to garner support and votes, they should unequivocally advocate for policies that would improve the affordability of day-to-day life. Some examples are presented below.

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Polls have shown for some time, and elections results on Nov. 4 underscored, that many Americans are worried about being able to afford the cost of living. This has two components: 1) the amount of money they make and the benefits they get from their employer, and 2) the cost of everyday expenses from food to housing to health care to utilities.

If Democrats, or another party such as the Working Families Party, want to garner support and votes, they should focus on the affordability of day-to-day life. They need to promote a vision of a more economically secure future for working Americans. They should embrace economic populism, including reducing economic inequality. [1]

Workers’ wages haven’t kept up with inflation over the last 45 years. The value of the federal minimum wage is 60% of what it was 45 years ago. Similarly, workers’ wages have not kept up with their increases in productivity. The result has been that investors and corporate executives have gotten rich, very rich, billionaire rich, off the big profits companies make on the backs of underpaid workers. Meanwhile, workers’ standard of living has been falling, and, for many, their economic security is gone. Government has helped, but its safety net is fragmented and full of holes. It prevents some workers, some of the time, from becoming destitute. Nonetheless, many workers are anxious, distraught, depressed, and even suicidal. Meanwhile, the government safety net is in effect subsidizing large companies that don’t pay their employees enough to live on. However, these big companies and their owners and investors don’t want to pay a fair share of the taxes needed to fund even this limited safety net.

Here’s an overview of some government policies that would increase workers’ compensation, including both wages and benefits. [2]

Increase the minimum wage. Government officials and candidates at all levels, national, state, and local, should work toward increasing the minimum wage. If Democrats want to continue the winning momentum from the recent elections and want to win back one or both chambers of Congress, they should run hard on increasing the minimum wage and put questions to do so on the ballot wherever they can. (Note: An enormous body of research on the effects of higher minimum wages has shown that past minimum wage increases have meaningfully raised pay for low-wage workers without causing significant increases in unemployment. Moreover, increases in the minimum wage often lower worker turnover, a major cost savings for employers, and can attract better workers.)
Support unions and unionization. Unions built the American middle class, but Republicans have been undermining unions and the ability to unionize for 45 years. (See Story #2 in this previous post and also this previous post for more background.) Democrats weren’t actively supporting unions either and were complicit in expanding global trade and the off-shoring of jobs, which undermined unions and workers’ wages here in the U.S. Elected officials and candidates need to stand up for unions and strengthen federal laws and agencies that support and protect workers right to unionize. For example, federal laws and regulators should not allow companies to do what Starbucks has done. It has been stonewalling its workers since the first votes to unionize in December 2021. It has refused to meet with union representatives and has failed to engage in any serious bargaining. It has shut stores where workers voted to unionize. While its workers face low pay, rising health care costs, and working conditions that are not worker friendly, Starbucks’ CEO made $96 million last year.
Other ways to increase workers’ incomes. The federal and state governments should take action to enforce labor laws and reduce wage theft. Wage theft occurs when employers don’t pay overtime as they’re supposed to, don’t pay workers for some of the time they spend on the job or in job-related activities, etc. It adds up to billions of dollars a year. In addition, overtime rules should be strengthened so employers can’t dodge overtime pay by claiming that low-level, low-pay workers are members of management who aren’t eligible for overtime pay.
Ways to increase benefits. The federal and state governments could increase unemployment benefits, strengthen regulations on employer offered health insurance, and enhance requirements for employer-supported retirement savings programs. They could require minimum amounts of paid sick leave and vacation time.
Enhance public supports and the safety net. The federal and state governments could expand food, heat, and utility cost assistance programs. They could also enhance subsidies for early education and child care, as well as implement paid family leave. They could increase support for renters and first-time home buyers, while also better regulating private owners of large rental properties and single-family homes, which are increasingly being bought up by investors. They could help alleviate the student debt crisis. Perhaps, most importantly, they could make health insurance and health care more affordable and accessible. Over half of Americans support creating a Medicare for All type universal health insurance program. These public supports and the safety net are underfunded today because wealthy individuals and corporations are not paying their fair share in taxes. More on this in my next post.

My next post will discuss policies that would tackle the cost of goods and services. It will also discuss economic inequality.

[1] Reich, R., 11/3/25, “What the Democrats must do. Now!” (https://robertreich.substack.com/p/what-the-democrats-must-do-now) /

[2] Dayen, D., 7/28/25, “Greg Casar is organizing to win,” The American Prospect (https://prospect.org/2025/07/28/2025-07-28-organizing-to-win-greg-casar/)