The Growing Divide Inequality & the Roots of Economic Insecurity - - PowerPoint PPT Presentation

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The Growing Divide

Inequality & the Roots of Economic Insecurity

March 2014

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2

The Nation at a Crossroads

H Growing Insecurity

Layofgs & job instability Stagnant wages Insecure retirement Roller-coaster stock market

H Greater Burdens

Longer work hours Loss of family time Rising costs of housing, health care, education, utilities, and food

H Stress, Isolation & Scapegoating

Environmental hazards Endless war Anger at immigrants Growing prison population Fear of crime

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The Trends since 1980

H The Good News

Infmation is moderate Interest rates on loans are low

H The Bad News

High unemployment persists. Growth in income has gone to the top 1%; the gap between highest and lowest paid workers has widened. Real wages have dropped since 2009. Wealth gap has widened and the racial wealth gap is growing. Poor families not lifued out of poverty.

For a few, the U.S. economy has done very well. But the rising tide lifted only a few boats and most of us are struggling to stay afmoat.

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4

We Grew Apart

70% 60% 50% 40% 30% 20% 10%

+73%

$26,934 - $47,914 $47,914 - $73,338 $73,338 - $112,540 $200,000 and up Bottom 20% Second 20% Middle 20% Fourth 20% Top 20% Top 5%

0% 80%

+49% +23% +11% +4% – 7%

Up to $26,934 $112,540 and up Top 1%

+169%

$1.2 M and up

Real Family Income Growth by Quintile & for T

• p 5% &

T

• p 1%, 1979 - 2009

Source: US Census Bureau, Historical Income Tables, Tables F-1, F-3 <http://www.census.gov/hhes/www/income/data/historical/families/index.html>. Data for the T

• p 1% from Emmanuel Saez. <http://elsa.berkeley.edu/~saez/> is for 2008 and excludes income from capital gains.

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Real Family Income Growth from 2009 - 2012

35% 30% 25% 20% 15% 10% 5% 0%

Source: Piketty and Saez (2003), series updated to 2012 in August 2013 using IRS preliminary tax statistics for 2012.

6.0%

Average

0.4%

Bottom 99%

31.4%

Top 1%

40% 45%

44.8%

Top 0.1%

Growing Apart Even Further since the Great Recession

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$50,000 $40,000 $30,000 $20,000 $10,000 $60,000

1947

Median Family Income by Race, 1947-2010 Racial Income Inequality Persists

White African American* Latino**

1969 1979 1989 1995 2000 2007 $27,807

$14,216

$40,910 $40,785

Source: Analysis of Current Population Survey Annual Social and Economic Supplement Historical Income Tables (Table F-5) in The State of Working America <http://stateofworkingamerica.org/chart/swa-income-table-2-5-median-family-income/> Economic Policy Institute. All income in 2011 dollars. * Prior to 1967, data for African Americans included all “non-whites.” ** The Census Bureau uses the term “Hispanic.” We prefer “Latino.” Persons of “Latino” origin may be of any race.

$70,000

2010 $65,138

$39,715

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Median Annual Wages for Women & Men, 1960-2008

$50,000 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2008

Gender-based Income Inequality Persists

Notes: Annual earnings data are for full-time, year-round workers aged 14 and older through 1979 and workers 15 and older from 1980 through 2008, and include self-employed workers. (A full-time worker works 35 hours or more per week, a year-round worker at least 50 weeks during the year.) The data series is derived from the Current Population Survey. Adjustments to 2009 dollars are computed on the basis of the Consumer Price Index (CPI-U) (U.S. Bureau of Labor Statistics. <ftp:// fts.bls.gov/pub/special.requests/cpi/cpiai.txt> retrieved January 2010). Source: Institute for Women’s Policy Research, IWPR Fact Sheet #C350, updated March 2010.

$46,202 $38,907 $35,618 $23,606

Men Women

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CEO Pay as a Multiple of Average Worker Pay, 1960-2012

1960 1970 1980 1990 1995 2000 2005 2010

41x 79x 44x 107x 180x 525x 411x

For large U.S. corporations.

Note: 1960-1980 based on Business Week calculations; 1990 & 2000 based on UFE & IPS calculations; 2010 - 2012 from Economic Policy Institute’s State

• f

Working America, 12th edition.

500 400 300 200 100 343x

2011

281x

2012

354x

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Multiplier of CEO Pay to Average Worker Pay, 2012

350 300 250 200 150 100 50

Tie wage gap in the U.S is out of step with the rest of the world.

U.S. Japan Germany France U.K. Canada Spain Sweden Poland

Sources: AFL-CIO Executive Pay

• Watch. 2012 U.S. CEO-to-worker pay ratio calculated based on

AFL-CIO analysis of average CEO pay at 327 companies in the S&P 500 Index, which disclosed 2012 CEO pay data as of April 1, 2013, as provided by Salary.com. 2012 U.S. rank-and-fjle worker pay calculated from the U.S. Bureau of Labor Statistics’ Current Employment Statistics Survey—Table B-2: Average hours and earnings of production and non-supervisory employees

• n private non-farm payrolls. GDP rankings from the IMF.

Countries are ranked by size of per capita GDP , largest left to right.

354:1 67:1 147:1 104:1 84:1 206:1 127:1 89:1 28:1

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Productivity and Median Family Income, 1947-2007

Since the mid-1970s, family income hardly grew while productivity soared!

350 300 250 200 150 100 1947 1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007

Productivity Median Family Income

Source: Analysis of US Census Bureau and US Bureau of Labor Statistics in The State of Working America 2008/2009, Figure 1G, by Lawrence Mishel, Jared Bernstein, and Heidi Shierholz, Economic Policy Institute.

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11

Ownership of Household Wealth in the U.S., 2010

64.6%

Top 1%

Source: Edward N. Wolff, New York University, 2012.

Bottom 99%

Tie total net worth of the top 1% = $21.9 Trillion Tie total net worth of the bottom 90% = $18.4 Trillion

35.4%

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Net Worth is ASSETS minus DEBTS

(What You OWN minus What You OWE)

$4,995 $110,729 $7,424

African American White Latino

Household Median Net Worth by Race, 2010

Source: US Census Bureau. (Dollar fjgures for Whites and African Americans exclude Latinos.)

$69,590

Asian

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Student Debt on the Rise

Student debt has outstripped credit card debt for the fjrst time.

$1,000 $800 $600 $400 $200 $0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Mother Jones: College Tuition and student debt charts and graphics <http://motherjones.com/contributor/2011/09/student-debt-charts>

(Billions)

Student-loan debt Credit card debt

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14

The Power Shift Since the 1970s

On the Rise

Big Campaign Contributors Corporate Lobbyists Corporations Big Asset Owners CEOs Wall Street

In Decline

Popular Political Movements Voters Labor Unions Wage Earners Employees Main Street

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Rule Changes Since the 1970s

Policy changes refmect and reinforce the power shifu.

Unions:

Anti-union climate weakens the power & voice of workers.

Trade:

Global treaties benefjt corporations, not workers or communities.

Taxes:

Taxes shifued from big investors and corporations to workers.

Budget:

Public services cut. Corporate subsidies expand.

Minimum Wage: Not raised to keep up with infmation & increased cost of living.

Privatization:

Government outsourcing plus no-bid contracts hurts taxpayers, workers, and public safety.

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16

The Wheel of Misfortune

• Scapegoating
• Divided communities
• Individualism
• Escapism

Rule changes that favor the top 1%

Power shifts to corporations & big investors

Greater economic inequality

• Big

money in politics

• Longer work hours
• Rising personal

debt

Decline in political participation

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Percentage of the Workforce in a Union - 1930-2012

35% 30% 25% 20% 15% 10% 5% 0%

1930 1940 1950 1960 1970 1980 1990 2000 2010

Anti-union policies weaken the power & voice of workers

1981: Reagan Breaks PATCO 1937: Wagner Act 1936: Sit-Down Strike in Flint, MI Manufacturing Declines in U.S. 2012: 11.3% Unionized 1947: Taft-Hartley Act

Source: Bureau of Labor Statistics

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“Free” Trade Treaties Help Corporations, Not Workers or Communities

Treaties such as NAFTA reduce “barriers” to trade. The worldwide result:

• Jobs shifued to low-wage countries
• Lower wages and living standards
• Weakened worker rights
• Environmental damage
• Weakened economies in developing nations
• Cuts in social safety nets
• Rise in poverty
• Migration

New trade & investment agreements, such as the Trans-Pacifjc Partnership (TPP) . . .

• Permit foreign corporations operating in the U.S. to

ignore domestic U.S. laws regarding protections for the environment, fjnance or labor rights;

• Tireaten laws that protect community lending, health and

safety, pay equity, pro-human rights government purchasing rules, public control of water & education, etc.

F O R S A L E

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Federal Tax Rates for the T

• p 1% and the Median Family

1947-2013

Big tax breaks for the wealthy - No tax relief for working families

80% 70% 60% 50% 40% 30% 20% 10% 0% 1947 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 90%

91%

Top 1%

70% 50%

Median Family

19% 31% 40% 35% 22% 25% 28% 25%

Source: Tax Foundation <http://www.taxfoundation.org/fjles/federalindividualratehistory-200901021.pdf>. Note: In 2013, the Bush tax cuts were made permanent for all taxpayers except individuals earning $400,000 or more and families earning $450,000 or more.

39.6%

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Top Tax Rates on Wealth & Investment Income Top Tax Rate

• n Work

0% – 25% – 50%

– 50% – 46% + 8.5%

Estate Tax Capital Gains Tax Payroll Tax

Change in T

• p Federal

Tax Rates on Wealth & Work since 1980

Sources: For Payroll Tax: UFE calculations from Tax Policy Center data <www.taxpolicycenter.org> “Historical SS Tax Rates” for 1980, and IRS Publication 15 (Circular E) <www.irs. gov> for 2011. For Capital Gains Tax: UFE calculations from Tax Policy Center data, “Individual & Corporate Capital Gains 1955-1999” for 1980, and Wall Street Journal, “Tax Changes for 2011: A Checklist” for 2011. For the Estate Tax: UFE calculations from the IRS, “The Estate Tax: Ninety years and counting” for 1980, and HR. 4853 - Title III of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010” for 2011.

Taxes have been shifted from wealth to work

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21% 77% 17% 80% 12% 84% 9% 87% 87% 10% Corporations Individuals 1962 1970 1980 1990 2000 85% 9% 2010

70% 60% 50% 40% 30% 20% 10% 0% 90% 80%

Source: Congressional Budget Offjce, “Revenues by Major Source, 1962 to 2004”; for 2007: “Revenues by Major Source, 1968 to 2007”; for 2010: The Tax Policy Center.

Taxes:

Percent of Federal Tax Collections from Individuals & Corporations

Taxes have been shifted from corporations to individuals

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Payroll Tax Rates, 1950 & 2013

In 2013, only the fjrst $113,700 in earned income is taxed for Social Security at 6.2%. Tie efgective Social Security tax rate drops as income rises.

7% 6% 5% 4% 3% 2% 1% 0%

$0 - 3,000 $7,000 $100,000 $0 - 113,700 $250,000 $5 million

2013 Effective Rates 1950 Effective Rates

1% .4% .03% 6.2% 2.6% .01%

Annual Earned Income (from wages & salaries only)

Source: Social Security Administration <www.ssa.gov>.

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Despite profjts of over $5 billion in 2010, GE paid no income taxes! In 2008, Goldman Sachs, had 29 subsidiaries located in ofgshore tax havens and reported profjts of over $2 billion. It paid federal taxes

• f just $14 million on those profjts.

Archer Daniels Midland, the world’s largest agricultural commodity fjrm, received more than $3 billion to subsidize production of the gasoline additive ethanol.

Corporate Welfare Expands While Neccessary Programs are Cut

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The Minimum Wage and the “Living Wage,” 1968-2013

$11.00 $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0

Tie federal minimum wage does not keep pace with the rising cost of living.

Sources: Living wage is calculated by dividing that year’s poverty threshhold for a family of four by 2080 hours (52 weeks x 40 hours). Poverty threshholds for 1968 and 1979 from U.S. Census Bureau, Historical Poverty Tables, Table 1. Poverty threshholds for 2013 from the U.S. Census Bureau, Poverty thresholds by Size

• f Family and Number of Children.

Living Wage $1.71

Minimum Wage $1.60

1968

94% of the “living wage”

Minimum Wage $2.90

1979

81% of the “living wage”

Minimum Wage $7.25

Living Wage $11.36 Living Wage

$3.56

2013

64% of the “living wage”

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Privatizing Public Services Helps Investors, Hurts Consumers and Workers

Social Security can remain solvent well into this century with only minor changes...

• but Wall Street fjrms and wealthy investors are actively lobbying for the chance to manage
• ur public pension system — and pocket $125 billion a year in fees.

The U.S. public school system sufgers from disinvestment and unequal funding...

• but the number of students using publicly-

funded vouchers to attend private schools has increased to 61,700 in 2008, up 9% from 2007, and nearly double the level in 2002.

T en percent of US prisons & jails have been privatized...

• Investment fjrm Smith Barney is part owner
• f a prison in Florida. American Express &

GE invested in private prison construction in Oklahoma & Tennessee. Correctional Corp. of America, operates more than 48 facilities in 11 states, Puerto Rico, the UK, and Australia.

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120% 100% 80% 60% 40% 20% 0%

+116% +100% +111% +114% +99% +86%

$9,861 - $16,215 $16,215 - $22,972 $22,972 - $31,632 $31,632 - and up Bottom 20% Second 20% Middle 20% Fourth 20% Top 20% Top 5%

We All Grew

Real Family Income Growth by Quintile & for T

• p 5%,

1947 - 1979

Sources: Analysis of Census Bureau data from The State of Working America 1994-95, Mishel, Lawrence and Bernstein, Jared, p. 37. Income ranges in 1979 dollars, from March 2000 Census Current Population Survey, Table F-1.

In 1979: up to $9,861 $50,746 - and up

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• Cooperation
• Social cohesion
• Interdependence
• Celebration of

diversity

• More time

for democracy

• Meaningful

elections

• Strong unions

Political participation rises Broadly shared prosperity Rule changes that benefjt everyone Power shifts to

• rdinary

people

The Wheel of Shared Prosperity

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We Need New Rules to Reduce Wealth & Income Inequality

Lift the Floor for Lower Income People

H Establish Living Wage standards H Raise the Federal minimum wage H Invest in job creation & training H Increase the supply of afgordable housing

Level the Playing Field for Everyone

H Fair taxes that treat income from investments and work the same H Medicare for All H Trade policies that benefjt wage-earners, consumers, & the environment H Quality education as a Constitutional right

Address the Concentration of Wealth and Power

H Progressive taxation of wealth and income H Reduced subsidies for excessive CEO pay H Campaign fjnance reform to get big money out of politics H Accountability for corporations receiving public subsidies

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Program for a Fair Economy

H Educate & Change the Conversation H Campaign to Build Power & Change the Rules H Build a Movement

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Principles of a Fair Economy

H Equity in all dimensions (race, class, ethnicity, gender, etc.) H Solidarity and Cooperation H Political & Economic Democracy H Sustainability H Pluralism and Diversity H People and Planet First

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What You Can Do T

• day

Educate Yourself and Others

H Host a UFE Popular Economics

Education workshop.

H Learn to lead UFE workshops. H Educate yourself — look at the

resources on our list.

Infmuence the Media

H Write articles or letters to the editor. H Organize a writers’ group. H Stage a fmash mob creative action.

Build Power

H Use your religious congregation as an

• rganizing base.

H Support workers’ right to organize. H Get involved in coalitions or civic groups.

Support United for a Fair Economy

H Make a donation and become a UFE member. H Encourage friends and colleagues to join. H Organize a fund raising house party. H Help us reach out to a specifjc constituency.

Join Campaigns to Change the Rules

H Support progressive tax proposals, such as the Robin Hood Tax. H Support local Living Wage campaigns, and raising the federal minimum wage. H End deferral of taxes on income of U.S.-controlled corporations abroad.