In a landmark speech on the state of the US economy and society, US President Barack Obama on Wednesday warned against the dangers of a growing income inequality, an increasing gap between rich and poor, and a shrinking economic mobility in America.
Those conditions pose a “fundamental threat to the American dream”, Obama said at an event hosted by the Center for American Progress in one of the poorest areas of Washington, DC.
Making sure that the economy works for every working American is the “defining challenge of our time”, Obama said, adding that he would continue to focus on these issues in the remainder of his second term as president.
Slashing taxes for the wealthy while cutting investments in things such as education, and sending manufacturing jobs overseas have contributed to a “profoundly unequal” US economy since the 1980s, Obama said.
Since 1979, the year Obama graduated from High School, the US economy has doubled in size. Yet, the top ten percent of the population that took ten percent of the economy then today takes 50 percent, Obama said.
As a result, the American “social compact began to unravel” and families are “more insecure” now, Obama said.
Obama called for a raise in the federal minimum wage, which currently stands at $7.25 an hour, but which was $10.60 in 1968. “It would be good for our economy. It would be good for our families,” he said. He said he supported actions of five states and the District of Columbia that have recently passed measures to increase the minimum wage.
The federal minimum wage in the US is the third lowest in an OECD country. Democrats in Congress have pushed an increase in the federal minimum wage, which would take it to about $10. But the Republican majority in the House of Representatives is opposed to it.
The problem of income disparity, and the fight for a higher minimum wage, have gained renewed attention in the past weeks – low wage fast food workers have staged one-day strikes across the country demanding higher paychecks, and protesters stood outside stores of the country’s biggest retailer Wal-Mart and other box stores on Black Friday demanding employees be paid better.
Obama referred to those employees in his speech, saying that they and low wage workers in other branches “work their tails off” to make ends meet, yet are still unable to earn a decent living.
Obama gave the speech at a time when his job approval ratings have fallen to around 40%, largely because of problems with the roll-out of his health care plan and general anxiety about the direction of the economy.
In his Wednesday speech, Obama touted the economic benefits of the Affordable Care Act (Obamacare) like a higher coverage rate, better health insurance, sinking health care costs, and less insecurity for families.
Obama expressed confidence that his administration was finally turning the corner after severe technical issues hobbled HealthCare.gov, the website where Americans can enroll in health insurance.