INTRODUCTION
$12.78 an hour, but IBISWorld, an independent industry research firm, reports that workers
are paid $8.81 hourly on average.52 A study by the Committee on Education and the Workforce in the House of Representatives found that in Wisconsin, a typical Wal-Mart store costs
taxpayers $5,815 per employee because workers qualify for, and participate in, public safety
net programs.53
In the early twentieth century, Henry Ford realized that to build a larger market for the
cars he was producing, workers such as
the ones he employed in his factories
needed to earn enough money to afford
one. Ford doubled his workers’ wages,
and as factory workers everywhere
dreamed of coming to work at his plant,
it led other employers to raise wages to
keep their workers from bolting to Ford
at the first opportunity.54
The U.S. economy has changed a
great deal since Ford’s day. So has the
thinking at its largest companies. When
Henry Ford passed away in 1947, CEOs
at top U.S. companies were earning on
average about 20 times more than a
rank-and-file worker.55 By 2012, CEOs
were earning 204 times the average
wage.56 The divergence between what
companies pay their executives and
Franklin D. Roosevelt Presidential Library
what they pay average workers has been
the source of a wide-ranging national conversation about income inequality. Between 1978 President Franklin D.
and 2012, CEO compensation rose by 875 percent, while worker compensation rose by an Roosevelt signs into
law the Social Security
average of 5.4 percent.57
Act in 1935. Behind
Exit polling during the 2012 election showed that most Americans believe that the him is Frances Perkins,
economy is not working for them; 76 percent strongly believed that the rich are getting richer Secretary of Labor and
and the poor are getting poorer.58 A 2011 study by the Pew Economic Mobility Project found first female cabinet
that four out of five Americans believe that the government does an ineffective job of helping member, who pushed
the president to enact
poor and middle-class people.59 Americans are clearly frustrated.
massive public works
By some measures, such as productivity growth or GDP, the U.S. economy has performed projects and create jobs
exceptionally well over the last few decades. Yet real wages have been stagnant.60 Income for millions of uneminequality has widened to levels not seen since the financial crash that caused the Great ployed workers.
Depression. The New Deal is a useful reference point for us today. During the New Deal,
the government attacked income inequality and succeeded, putting the country on a path of
broadly shared prosperity that lasted for decades.
In the United States, our concept of a social contract is rooted in the New Deal, the policies
and institutions created by President Franklin D. Roosevelt’s administration in the 1930s. A
social contract is basically a right to economic security. At the beginning of the chapter, we
explained that hunger and poverty are indivisible. Here at the end, let’s turn that around.
www.bread.org/institute?
? 2014 Hunger Report? 29
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