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wealth of the top 10 percent is 4,653 times greater than the

financial wealth of the bottom 20 percent.6

One of the main reasons for that disparity is that many

workers are unable to take the surest route to wealth cre-

ation--savings and investment.  Approximately one-third of

all income in America comes, not from wages, but from sav-

ings and investment.7  As Louis Kelso, father of the employ-

ee stock ownership plan, noted, "The bulk of wealth is

produced, not by human labor as under pre-industrial condi-

tions, but by capital instruments. . . . Capital and not

labor is the source of affluence in an industrial society."8

But most union workers do not have the financial re-

sources to save and invest.  Clearly, imposing the Social

Security tax on workers reduces their private savings.

Workers are required by law to pay Social Security taxes.

That requirement precludes their investing their wages in

private savings or investments.9

The payroll tax is the

largest tax most union workers pay.  Indeed, nearly 76

percent of Americans pay more in Social Security taxes than

they do in federal income taxes.10

The average union worker, earning $33,200 a year, will

pay $4,117 a year in Social Security taxes (including the

employer share).  That leaves very little money to invest

privately.  The inability to invest is borne out by the low

participation rates of low-income workers in company-spon-

sored 401(k) plans.  Only 64 percent of low-wage workers

contribute to the 401(k) plans offered by their employers,

compared with more than 90 percent of their higher wage

colleagues.11  Low-wage workers who do participate contrib-

ute an average of only 4.73 percent of their wages, compared

with an average of 6.79 percent for high-wage workers.12

Low-income workers are also less likely to work for

companies with private pension plans.  For example, small

businesses and service-sector employers are far less likely

to offer pensions and other retirement benefits than are

large corporations.13

Finally, Social Security may be contributing to the

wealth gap even more by reducing the value of wages and

increasing the value of capital.  Because Social Security

reduces savings and capital accumulation, it reduces the

ratio of capital to workers, which means that each worker

will be less productive, on average.  As a result, wages are

lower than they would be otherwise.  At the same time, with