The Tribune Democrat, Johnstown, PA

February 12, 2012

William Lloyd | GOP continues to stub toe on income inequality

William Lloyd

— In recent election cycles, Republicans have successfully forestalled a debate over income inequality by labeling criticism as “class warfare.”

That strategy may not work this year, because the criticism is coming from Republicans and not just Democrats.

For example, it was his Republican primary opponents who initially made an issue out of Gov. Mitt Romney’s tax returns and his alleged inability to connect with middle-class voters.

Romney’s counterargument – that his opponents were putting free enterprise on trial – was less effective than it would have been if the attacks had come solely from the Democrats.

Similarly, Romney’s argument that the criticism was fueled by envy rather than by excesses on Wall Street fell flat.

This debate within the Republican Party has been surprising, but it probably should not be. After all, anger at a perceived Wall Street bailout helped fuel the rise of the tea party.

Furthermore, blue-collar workers now make up a significant percentage of the Republican base. In fact, even though Republicans are generally considered the party of business, a Wall Street Journal/NBC News analysis concluded that more blue-collar workers identify as Republicans than Democrats.

At least since the Vietnam War, blue-collar workers have been moving toward the Republicans. To a significant number of these workers, the Democrats were too sympathetic to anti-war protesters and the counterculture and continue to be on the wrong side on abortion and gun control.

In addition, many of these workers view the Republicans as the party that promotes opportunity and the Democrats as the party that rewards people who refuse to help themselves.

Increased support from blue-collar voters has paid dividends for the Republicans. Beginning with Richard Nixon’s victory in 1968, the GOP has won seven presidential elections to four for the Democrats.

In addition, Republicans have controlled the U.S. Senate for 16 of the 32 years since the election of Ronald Reagan in 1980, and the U.S. House of Representatives for 14 of the 18 years since Newt Gingrich led the ouster of the Democrats in 1994.

Admittedly, the Republicans’ primary election debate over income inequality has gotten much of its traction from a perhaps cynical effort by Romney’s opponents to stop his march to the nomination. However, there is ample evidence that inequality is a problem.

In 1960, the pay of the average CEO was 42 times the pay of the average blue-collar worker. By 2010, the average CEO was making 100 times as much as the average worker.

The disparity between the pay of CEOs and their workers is even more pronounced for those companies whose stock is publicly traded.

In 2010, the average CEO of a company listed in the S&P 500 was paid about 300 times what the average worker in such a company was paid. The difference was even greater for companies listed in the Dow Jones Industrial Average; the average CEO was paid 550 times as much as the average worker.

Managers and other professionals below the CEO level have also done better than the average worker. For example, the share of the nation’s income received by the top 20 percent of earners grew from about 52 percent in 1982 to about 61 percent in 2006; that means that the share received by the bottom 80 percent declined to about 39 percent from about 48 percent.

It is possible that Republican blue-collar voters would overlook the increased concentration of income at the top if they were confident that hard work would give them, their children and their grandchildren a reasonable opportunity to get ahead in the future.

Unfortunately, the Great Recession has undermined that confidence. Unemployment remains stubbornly high. The collapse of the housing bubble has made Americans less wealthy than they thought they were just six years ago. 

Americans counting on IRAs and CDs for retirement are faced with stock prices well below pre-recession levels and interest rates that are practically nil. A college degree has become a less attractive ticket to a better standard of living because of the high debt often owed after getting that degree.

President Obama has not yet convinced a majority of voters that his policies are likely to restore the middle class. That failure may be fatal to his re-election.

However, Republicans will have to convince their own blue-collar supporters that protecting those at the top of the income ladder while cutting defense, Social Security and Medicare is the answer.

To this point, the GOP has not clinched that argument.

William Lloyd of Somerset represented Somerset County in the state House of Representatives (1981-1998) and served as the state’s small business advocate (November 2003-October 2011). His column appears the second Sunday of each month.

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