The Erosion of Economic Security in America: A Longitudinal Analysis

Strategic Insights -

As the financial struggles of Ford and General Motors come into sharp focus, a broader narrative about the decline of economic security for American workers emerges. Standard and Poor's recent downgrade of both companies' bonds highlights the transience of job security in a world where companies prioritize profits over employee benefits. The stark contrast between the economic realities of General Motors in 1968 and those of Wal-Mart today underscores a troubling shift. While General Motors' workers earned a solidly middle-class income and enjoyed generous benefits, Wal-Mart's average full-time employee earns barely $17,000 per year, with fewer than half receiving health care coverage.

Key Takeaways:

  • In 1968, General Motors' workers earned an average salary of $29,000 in today's dollars, a solidly middle-class income, and had generous health and retirement benefits.
  • Wal-Mart, America's largest corporation, now pays its average full-time employee about $17,000 per year, with less than half receiving health care coverage.
  • The cost of health care for General Motors' workers has risen significantly, running to about $1,500 per vehicle, placing a strain on the company's finances.
  • Over 40 percent of Wal-Mart's workers leave the company every year, highlighting the transient nature of employment in the retail industry.
  • The head of General Motors in 1968 received about $4 million in today's dollars, an amount considered extravagant at the time, whereas Wal-Mart's CEO, Scott Lee Jr., was paid $17.5 million in 2002.
  • A growing number of working Americans rely on Medicaid for health care, especially for their children, as employer-based health insurance declines.
  • A recent poll cited in Business Week found that 67 percent of Americans believe that the government should guarantee health care to all citizens.
  • Richard Wagoner Jr., Genereal Motors' CEO, has publicly expressed support for Canada's publicly-funded health care system, but refrained from proposing a similar system for the US.

Statistics:

  • $29,000: the average salary of General Motors' workers in 1968 in today's dollars.
  • $17,000: the average annual salary of a full-time Wal-Mart employee.
  • $1,500: the cost of health care for General Motors' workers per vehicle.
  • 40%: the percentage of Wal-Mart employees who leave the company every year.
  • $4 million: the annual income of General Motors' CEO in 1968, equivalent to about $29 million in today's dollars.
  • $17.5 million: Scott Lee Jr.'s annual income as Wal-Mart's CEO in 2002.
  • 67%: the percentage of Americans who believe that the government should guarantee health care to all citizens, according to a recent poll cited in Business Week.

Sources:

  • "The Erosion of Economic Security in America" by Robert Reich, The New York Times, no date provided.
  • Business Week article "Safety Net Nation", no date provided.
  • The Journal Register News Service article on Richard Wagoner Jr.'s speech, no date provided.
  • Kaiser Family Foundation report, no date provided.