Interesting Inequality Article

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An interesting article on inequality. The journalist is probably of the class who feel some guilt for benefiting from the unjust, enormous upwards redistribution of income that’s happened in the last four decades. 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.

I have my disagreements with the article, and it doesn’t offer many solutions relative to its lengthiness. In brief though, one of the most important ways to reduce inequality is to stop wealth from being distributed so unequally to begin with. Market structures have been rigged in all sorts of ways to benefit the wealthy, and instead of only focusing on tax and transfer policy, pre-tax distributions of income need to be focused on more.

Supreme Court to Hear Case and Probably Damage U.S. Public Sector Unions

The modern right-wing “conservatives” weakening unions is simply designed to reduce worker bargaining power, thus allowing for more upwards redistribution and therefore higher incomes among the richest people in the country. The graph below demonstrates this quite well, even if weakened unions aren’t the full story of U.S. wage disparity. Also, ironically enough, Republican president Dwight Eisenhower was a strong supporter of unions (and New Deal programs), which shows the rightward shift of U.S. politicians since the 1960s.

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In Janus vs. AFSCME, the court will reconsider its 1977 decision stating that public employees who choose not to join unions can still be required to pay partial union dues, to help fund unions’ collective bargaining negotiations, which hold benefits for all workers.

While AFSCME is the union that represents state and municipal workers, supporters fear that a decision in favor of Mark Janus—the individual plaintiff backed by a network of billionaires, corporate interests and right-wing ideologues determined to undermine organized workers—would threaten labor in all sectors across the country. As Andrew Hanna and Caitlin Emma wrote at Politico on Sunday:

The financial blow dealt by a Janus victory would far exceed the loss of nonmember fees, thanks to what economists call a “free rider” problem. Unions are compelled by law to represent all workers within a collective-bargaining unit—not just dues-paying union members. If workers are permitted to quit the union and still benefit from collective bargaining agreements without paying non-member fees, union non-membership will become much more attractive.

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.”

CEO-Worker Income Discrepancy is the Worst in the U.S.

When the massive upwards redistribution of income to the top 1% over the last four decades is mentioned, CEO pay should be noted as one of the prime causes of it. Essentially, CEOs have been taking an exorbitant amount of the income share of many workers and shifting it into their own pockets.

As corporations and wealthy individuals across the United States are slated to benefit from massive tax breaks thanks to the GOP’s latest tax legislation, a Bloomberg analysis published Thursday found that chief executives of American companies already make 265 times the amount of money an average worker is paid—the largest CEO-worker income gap in the world.

“CEOs of the biggest publicly traded U.S. companies averaged $14.3 million in annual pay, more than double that of their Canadian counterparts and 10 times greater than those in India,” according to Bloomberg. While India ranked second on Bloomberg‘s CEO pay-to-average income ratio, Indian chief executives made about a tenth of their American counterparts’ incomes, averaging $1.46 million annually.

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Last year’s CEO-to-worker compensation ratio, calculated by the Economic Policy Institute (EPI), was 271-to-1, with the chief executives of American companies seeing an average of $15.6 million in annual compensation. The EPI report, which was published in July, notes that “regardless of how it’s measured, CEO pay continues to be very, very high and has grown far faster in recent decades than typical worker pay,” and “exorbitant CEO pay means that the fruits of economic growth are not going to ordinary workers.”

EPI president Lawrence Mischel and research assistant Jessica Schieder found that CEO compensation rose “by 807 or 937 percent (depending on how it is measured—using stock options granted or stock options realized, respectively) from 1978 to 2016.” They argue that “exorbitant CEO compensation…has fueled the growth of the top 1 percent incomes” at the expense of “the vast majority of workers.”

“Simply put, money that goes to the executive class is money that does not go to other people. Rising executive pay is not connected to overall growth in the economic pie,” Mishel explained, as Common Dreams previously reported. “We could curtail the explosive growth in CEO pay without doing any harm to the economy.”

In response to their findings in July, Mishel and Schieder proposed the following policy solutions:

  • Reinstate higher marginal income tax rates at the very top.
  • Remove the tax break for executive performance pay.
  • Set corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation.
  • Allow greater use of “say on pay,” which allows a firm’s shareholders to vote on top executives’ compensation.