Wages of the Top 1% Still Growing at the Expense of Others

Who the economies of the world were rigged to benefit most. The latest data confirms the trend of the upwards redistribution of income often seen over the last several decades.

The world’s largest economies have grown at a steady pace and unemployment has consistently fallen in the years following the greed-driven global financial crisis of 2008, but income gains during the so-called recovery have been enjoyed almost exclusively by the top one percent while most workers experience “unprecedented wage stagnation.”

That’s according to the OECD’s 2018 Employment Outlook (pdf) published Wednesday, which examines recent economic trends and finds that wage growth for most citizens in the 35 industrialized nations studied is “missing in action” due to a number of factors, including the the rapid rise of temporary low-wage jobs and the relentless corporate assault on unions.

[…]

In a statement on Tuesday, OECD Secretary General Angel Gurría said “[t]his trend of wageless growth in the face of a rise in employment highlights the structural changes in our economies that the global crisis has deepened, and it underlines the urgent need for countries to help workers.”

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Ridiculously High CEO Pay

CEO compensation has become absurdly high over the last few decades, and part of the reason why is a broken corporate governance structure where (interestingly enough) shareholders lack enough legal authority to rein in CEO pay. The ridiculous CEO pay also puts upward pressure on the wages of other executives worldwide, meaning they also are paid too much more, thus typically leading to less money for most other workers.

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Flawed NYT Article on Inequality

I definitely don’t agree with all of the analysis in this NYT article, but there are some interesting takeaways from it. The article only mentions political democracy and completely avoids any mention of economic democracy. This is an important point, as a strong political democracy requires a strong economic democracy. I know how counter that truth runs to the standard doctrine of the corporate propaganda system, but it needs to be said.

It’s also particularly jarring that the article assumes the U.S. is a democracy — in reality the country has dysfunctional democratic structures (see gerrymandering, the typical top-down structure of corporations, and voter suppression) and is better described as a plutocracy.

Most recently, Thomas Piketty, a French economist who is the author of “Capital in the Twenty-First Century,” has come up with a straightforward answer: Traditional parties of the left no longer represent the working and lower middle classes.

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There are those who would like to accept inequality and focus exclusively on issues like gender equality and anti-racism. I would never minimize the importance of combating gender inequality or racism/nativism, but if that means ignoring the policies that have led to the enormous inequality we now see, that is not a serious progressive agenda.

Inequality Shown as the Fight For 15 Movement Continues

The story of U.S. wage disparity: “In 2007, average annual incomes of the top 1 percent of households were 42 times greater than in­comes of the bottom 90 percent (up from 14 times greater in 1979), and incomes of the top 0.1 percent were 220 times greater (up from 47 times greater in 1979).”

The income share of the top 1 percent in the U.S. has doubled from its share during most of the 1950s to 1980. This is an amount high enough to increase the income of people in the lowest 90 percent of the country’s income distribution by over 20 percent, and it’s nearly enough to double the income share of the bottom 40 percent. That basically represents massive amounts of money being wrongly transferred upwards.

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Today’s article that’s linked to here reports on the movement of employees fighting for a $15 an hour wage. This is hardly radical when it’s considered that the minimum wage would be about $20 an hour today if wage gains had kept pace with productivity rates since the late 1960s. That’s yet another absurdity about inequality in the United States though.

According to the compensation research company PayScale, fast food workers make an average of $8.28 per hour. Those wages, depending on hours, leaves those workers making about $15,000 to $21,000 per year.

According to the National Low Income Housing Coalition, the current minimum wage of $7.25 per hour leaves workers unable to afford a two-bedroom rental apartment in any U.S. state.

The Poor People’s Campaign and Fight for $15 are also planning six weeks of “direct action and nonviolent civil disobedience” starting on Mother’s Day.

Noticing Upward Class Mobility Under High Inequality

Class is a suppressed concept in America, although the loathsome big business community there has lots of class consciousness. The understanding of class struggle is a surprisingly useful insight into current affairs though, as used correctly it often identifies the core conflict at the root of political disputes.

This article in The Guardian identifies individual stories of upward class mobility, noting the differences in the livelihoods of those who advanced up the socioeconomic ladder. Karl Marx’s theory of alienation can perhaps be applied differently to wealthy professionals that have advanced up, since (as the article relates) those with much higher incomes can lose — become alienated from — the friends they once had with lower socioeconomic status. Such is another consequence of the dysfunctional economic system currently operating.

World’s Top 1% Obtained 82% of Wealth Generated in 2017

What a horrifying report this is on the status of global inequality. It’s easily one of the most disturbing reports on economic inequality ever released, as it shows that the world economic system has overall been structured to benefit the top 1 percent to an extreme degree.

In 2017, a new billionaire was created every two days and while 82 percent of all wealth created went to the top 1 percent of the world’s richest while zero percent—absolutely nothing—went to the poorest half of the global population.

That troubling information is included in Oxfam’s latest report on global inequality—titled Reward Work, Not Wealth (pdf)—released Monday. In addition to the above, the report details how skyrocketing wealth growth among the already rich coupled with stagnant wages and persistent poverty among the lowest economic rungs of society means that just 42 individuals now hold as much wealth as the 3.7 billion poorest people on the planet.

“The billionaire boom is not a sign of a thriving economy but a symptom of a failing economic system,” Winnie Byanyima, Oxfam’s executive director of Oxfam International. “The people who make our clothes, assemble our phones and grow our food are being exploited to ensure a steady supply of cheap goods, and swell the profits of corporations and billionaire investors.”

Among the report’s key findings:

  • Billionaire wealth has risen by an annual average of 13 percent since 2010 – six times faster than the wages of ordinary workers, which have risen by a yearly average of just 2 percent. The number of billionaires rose at an unprecedented rate of one every two days between March 2016 and March 2017.
  • It takes just four days for a CEO from one of the top five global fashion brands to earn what a Bangladeshi garment worker will earn in her lifetime. In the US, it takes slightly over one working day for a CEO to earn what an ordinary worker makes in a year.
  • It would cost $2.2 billion a year to increase the wages of all 2.5 million Vietnamese garment workers to a living wage. This is about a third of the amount paid out to wealthy shareholders by the top 5 companies in the garment sector in 2016.
  • Dangerous, poorly paid work for the many is supporting extreme wealth for the few. Women are in the worst work, and almost all the super-rich, nine out of ten, are men.

The report comes just as the world’s economic and political elite are set to open the World Economic Forum, held annually in Davos, Switzerland. And why the global elite argue the summit’s focus is addressing the world’s most pressing problems, Oxfam found that the amount of new wealth which went to the world’s top one percent in 2017 was roughly $762 billion—a figure large enough, the group points out, to end extreme global poverty seven times over.

What the report ultimately exposes, Mark Goldring, Oxfam GB chief executive, told the Guardian, is a “system that is failing the millions of hardworking people on poverty wages who make our clothes and grow our food.”

“For work to be a genuine route out of poverty we need to ensure that ordinary workers receive a living wage and can insist on decent conditions, and that women are not discriminated against,” he added. “If that means less for the already wealthy then that is a price that we—and they—should be willing to pay.”

Not just cataloging and lamenting the metrics of inequality, the new report also puts forth a number of policy solutions that should be embraced by people and governments worldwide to reduce levels of inequality and lift billions of people out of extreme poverty. They include:

  • Limit returns to shareholders and top executives, and ensure all workers receive a minimum ‘living’ wage that would enable them to have a decent quality of life. For example, in Nigeria, the legal minimum wage would need to be tripled to ensure decent living standards.
  • Eliminate the gender pay gap and protect the rights of women workers. At current rates of change, it will take 217 years to close the gap in pay and employment opportunities between women and men.
  • Ensure the wealthy pay their fair share of tax through higher taxes and a crackdown on tax avoidance, and increase spending on public services such as healthcare and education. Oxfam estimates a global tax of 1.5 percent on billionaires’ wealth could pay for every child to go to school.

Though Oxfam has been calculating global inequality on an annueal basis for more than a decade, the anti-poverty group notes that this year’s report used new data from Credit Suisse and a separate kind of model. Specifically, Oxfam noted, the fact that the world’s 42 richest billionaires have as much wealth as the poorest bottom half “cannot be compared to figures from previous years – including the 2016/17 statistic that eight men owned the same wealth as half the world – because it is based on an updated and expanded data set published by Credit Suisse in November 2017.  When Oxfam recalculated last year’s figures using the latest data we found that 61 people owned the same wealth as half the world in 2016 – and not eight.”

Wrenching Back Power from the Corrupt Billionaire Class

A strikingly profound op-ed for the new year. Also, a basic point of economics that most economists don’t like to talk about is that reducing the rents high-income individuals receive is typically a gain for lower socioeconomic groups.

Here is where we are as a planet in 2018: after all of the wars, revolutions and international summits of the past 100 years, we live in a world where a tiny handful of incredibly wealthy individuals exercise disproportionate levels of control over the economic and political life of the global community.

Difficult as it is to comprehend, the fact is that the six richest people on Earth now own more wealth than the bottom half of the world’s population – 3.7 billion people. Further, the top 1% now have more money than the bottom 99%. Meanwhile, as the billionaires flaunt their opulence, nearly one in seven people struggle to survive on less than $1.25 (90p) a day and – horrifyingly – some 29,000 children die daily from entirely preventable causes such as diarrhoea, malaria and pneumonia.

At the same time, all over the world corrupt elites, oligarchs and anachronistic monarchies spend billions on the most absurd extravagances. The Sultan of Brunei owns some 500 Rolls-Royces and lives in one of the world’s largest palaces, a building with 1,788 rooms once valued at $350m. In the Middle East, which boasts five of the world’s 10 richest monarchs, young royals jet-set around the globe while the region suffers from the highest youth unemployment rate in the world, and at least 29 million children are living in poverty without access to decent housing, safe water or nutritious food. Moreover, while hundreds of millions of people live in abysmal conditions, the arms merchants of the world grow increasingly rich as governments spend trillions of dollars on weapons.

In the United States, Jeff Bezos – founder of Amazon, and currently the world’s wealthiest person – has a net worth of more than $100bn. He owns at least four mansions, together worth many tens of millions of dollars. As if that weren’t enough, he is spending $42m on the construction of a clock inside a mountain in Texas that will supposedly run for 10,000 years. But, in Amazon warehouses across the country, his employees often work long, gruelling hours and earn wages so low they rely on Medicaid, food stamps and public housing paid for by US taxpayers.

Not only that, but at a time of massive wealth and income inequality, people all over the world are losing their faith in democracy – government by the people, for the people and of the people. They increasingly recognise that the global economy has been rigged to reward those at the top at the expense of everyone else, and they are angry.

Millions of people are working longer hours for lower wages than they did 40 years ago, in both the United States and many other countries. They look on, feeling helpless in the face of a powerful few who buy elections, and a political and economic elite that grows wealthier, even as their own children’s future grows dimmer.

In the midst of all of this economic disparity, the world is witnessing an alarming rise in authoritarianism and rightwing extremism – which feeds off, exploits and amplifies the resentments of those left behind, and fans the flames of ethnic and racial hatred.

Now, more than ever, those of us who believe in democracy and progressive government must bring low-income and working people all over the world together behind an agenda that reflects their needs. Instead of hate and divisiveness, we must offer a message of hope and solidarity. We must develop an international movement that takes on the greed and ideology of the billionaire class and leads us to a world of economic, social and environmental justice. Will this be an easy struggle? Certainly not. But it is a fight that we cannot avoid. The stakes are just too high.

As Pope Francis correctly noted in a speech at the Vatican in 2013: “We have created new idols. The worship of the golden calf of old has found a new and heartless image in the cult of money and the dictatorship of an economy which is faceless and lacking any truly humane goal.” He continued: “Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalised: without work, without possibilities, without any means of escape.”

A new and international progressive movement must commit itself to tackling structural inequality both between and within nations. Such a movement must overcome “the cult of money” and “survival of the fittest” mentalities that the pope warned against. It must support national and international policies aimed at raising standards of living for poor and working-class people – from full employment and a living wage to universal higher education, healthcare and fair trade agreements. In addition, we must rein in corporate power and prevent the environmental destruction of our planet as a result of climate change.

Here is just one example of what we have to do. Just a few years ago, the Tax Justice Network estimated that the wealthiest people and largest corporations throughout the world have been stashing at least $21tn-$32tn in offshore tax havens in order to avoid paying their fair share of taxes. If we work together to eliminate offshore tax abuse, the new revenue that would be generated could put an end to global hunger, create hundreds of millions of new jobs, and substantially reduce extreme income and wealth inequality. It could be used to move us aggressively toward sustainable agriculture and to accelerate the transformation of our energy system away from fossil fuels and towards renewable sources of power.

Taking on the greed of Wall Street, the power of gigantic multinational corporations and the influence of the global billionaire class is not only the moral thing to do – it is a strategic geopolitical imperative. Research by the United Nations development programme has shown that citizens’ perceptions of inequality, corruption and exclusion are among the most consistent predictors of whether communities will support rightwing extremism and violent groups. When people feel that the cards are stacked against them and see no way forward for legitimate recourse, they are more likely to turn to damaging solutions that only exacerbate the problem.

This is a pivotal moment in world history. With the explosion in advanced technology and the breakthroughs this has brought, we now have the capability to substantially increase global wealth fairly. The means are at our disposal to eliminate poverty, increase life expectancy and create an inexpensive and non-polluting global energy system.

This is what we can do if we have the courage to stand together and take on the powerful special interests who simply want more and more for themselves. This is what we must do for the sake of our children, grandchildren and the future of our planet.