To the Editor:

Today the American economy is strong. The percentage of American unemployed is down, the Dow Jones industrial average is north of 25,000 and millions of jobs, most of which require some degree of higher education, are going unfilled. So what kinds of jobs are available to people without much education? Jobs that do not pay enough to live on.

The Bureau of Labor Statistics defines a “working poor” person as someone below the poverty line who spent at least half the year either working or looking for employment. In 2016, there were roughly 7.6 million Americans who fell into this category. Most working poor people are over 35, while fewer than five in 100 are between the ages of 16 and 19.

Over the last 40 years, corporate profits have risen, but real wages have remained flat for workers without a college education. Since 1973, American productivity has increased by 77 percent, while hourly pay has grown by only 12 percent. If the federal minimum wage tracked productivity, it would be more than $20 an hour, not today’s poverty wage of $7.25. 

One of the most effective antipoverty solutions is a decent-paying job, scarce as they are. Today, 41.7 million laborers — nearly a third of the American work force — earn less than $12 an hour, and almost none of their employers offer health insurance. The most recent tax cut package was supposed to raise wages and spur hiring, but instead a record amount of stock buybacks and dividend payouts took place after the tax cut, benefiting investors and company executives over workers.

How much did corporation benefit from this tax cut? The Commerce Department said that after-tax profits across the U.S. rose 16.1 percent in the quarter ended June 30 from a year earlier, the largest year-over-year gain in six years. Because of the lower corporate tax rate signed into law last year, taxes paid by U.S. companies in that quarter were down 33 percent from a year earlier, according to the government data, or more than $100 billion at an annual rate.

“More than 70 percent of this [tax cut] will be returned to workers,” said White House Press Secretary Sarah Huckabee Sanders at a January press conference.

However, companies have instead used the extra cash to spend billions of dollars buying back their own stock, boosting the value of shares held by investors. Buybacks reduce the number of shares on the market, immediately increasing the value of the shares that investors already hold. Over the past year, S&P 500 companies have given their shareholders a record $1 trillion in the form of buybacks and dividends.

Clearly, there is enough corporate profit to share with employees, but large corporations act as if there is no incentive to share profitability with their workers who drive corporate success but live below the poverty level.

In July, the White House Council of Economic Advisers issued a report endorsing work requirements for the nation’s largest welfare programs. The council favored “negative incentives,” which means recipients must work to receive aid, and the council dismissed “positive incentives,” like tax benefits for low-income workers, because the former is cheaper. The council also claimed that America’s welfare policies have brought about a “decline in self-sufficiency,” a claim that has no factual basis and which maligns every member of the working poor who need assistance to feed, clothe, and shelter their families.

One of the claims made buy ardent supporters of a “pure free market capitalism” is that a rising economy necessarily lifts up the financial fortunes of all members of society, including the poor. Unfortunately, the need for public assistance is a direct result of the failure of capitalism to deliver on that promise.

John Barry

Franklin