Reducing state worker pay by 15 percent only hurts the economy. Here is why. Realistically, state workers spend every penny of their paycheck. Very few have enough left over to save. By taking 15 percent from them, the governor is taking 15 percent ($136.7 million a month) out of the economy. That’s money that would have been spent at small businesses. Money that would have been spent locally.
Alan Greenspan recently laid out the problem with the economy. He said there were two economies: the very wealthy and the large corporations and then the rest of us. The very wealthy and the large corporations, he said, are recovering but holding onto their profits. The rest of us are not recovering.
We need to maintain lower and middle class workers’ pay. That money helps the economy. We also need to recapture profits that the wealthy and large corporations are reaping and reinvest them in the economy. In the 1960s we had a 95 percent tax on profits over $250,000. This led to corporations reinvesting and retooling with their profits instead of squirreling them away in Abu Dhabi.