THE NEWS OF this Labor Day is that it's not such a good time to be a working man or woman in America. The eight straight years of economic expansion that are the pride of Republican policy have had an uneven effect. A new analysis of mostly government data by the Economic Policy Institute here shows that income from capital has risen much more than income from labor, and income from labor -- average hourly earnings -- has risen much more in the upper reaches of the economy than in the middle and below.
The typical worker earns less today, in terms of purchasing power, than did the typical worker 10 years ago, the study indicates. Families are keeping up only by having fewer children and working more hours. Even so, some basic costs -- of a first home, shelter generally, health insurance -- have risen faster than ability to pay. Either these things are less affordable or there is less left over when they have been bought.
The broadest indicator of economic well-being, real per capita income, continues to rise. But this is a deceptive average. It has risen largely because of enormous increases in the incomes of the richest fifth, in particular the richest 5 percent, of Americans. The middle fifth, by contrast, has by most measures gained only slightly, while the bottom two-fifths have lost ground -- and ground that the poorest especially could not afford.
Income inequality is up. At roughly an eighth of the population, the poverty rate for this point in the business cycle is also high. It remains particularly high for children -- nearly 20 percent. The poverty gap -- the distance between the average poor person and the poverty line -- has also increased.
Government policies haven't so much caused as they have exacerbated these trends, many of which predate the 1980s. The causes are deeper, from such sources as increased vulnerability to competition from abroad. The role of government should be to lean against such polarizing trends in the society. Instead in the 1970s and 1980s the tax structure became much less progressive, while in the early Reagan years means-tested federal benefits were cut. The government now does less than it used to or it should to moderate the distribution of income.
All these are points to remember not just on Labor Day but as the budget negotiations between the president and Congress resume this week. The result of these negotiations needs to be fair as well as forceful. The big winners in the past 20 years have been the people at the top of the society. This time the middle and bottom deserve the help.