An updated study by the prominent economists Emmanuel Saez and Thomas Piketty shows that the top 1 percent of earners took more than one-fifth of the country’s total income in 2012, one of the highest levels recorded in the century that the government has collected the relevant data.
The top 10 percent of earners took more than half of all income. That is the highest recorded level ever.
The figures underscore that even after the recession the country remains in a kind of new Gilded Age, with income as concentrated as it was in the years that preceded the Great Depression, if not more so.
High stock prices, rising home values and surging corporate profits have buoyed the recovery-era incomes of the rich, with the incomes of the rest still weighed down by high unemployment and stagnant wages for many blue- and white-collar workers.
“These results suggest the Great Recession has only depressed top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s,” Mr. Saez, of the University of California, Berkeley, wrote in his analysis of the data.
The income share of the top 1 percent of earners in 2012 returned to the same level as before both the Great Recession and the Great Depression: just above 20 percent, jumping to about 22.5 percent in 2012 from 19.7 percent in 2011.
In response to a question from New York Magazine about whether de Blasio’s campaign represents “class-warfare,” Bloomberg piped in “class-warfare and racist.” Pressed to explain himself, Bloomberg said that though de Blasio himself is not racist, his “appeal” is such. Going in on the point, the mayor said that the public advocate was “using his family to gain support” and concluded, “I think it’s pretty obvious to anyone watching what he’s doing.”
To many New Yorkers, it seemed that de Blasio was doing what all political candidates do, and what Bloomberg himself did during three races for mayor: surround himself with loved ones at what is an inherently trying time. The current mayor campaigned extensively with his spry, elderly mother in 2001. His daughters have also been frequently by his side. As Buzzfeed’s Andrew Kaczynski noted, Bloomberg emphasized his Jewish heritage in order to appeal to that pivotal New York constituency. The mayor’s double standard on this matter is curious.
But what has truly set off the billionaire mayor is de Blasio’s emphasis on the city’s pervasive economic inequality, and that is where Bloomberg belabored his de Blasio comments to New York Magazine.
This “whole campaign that there are two different cities here … I’ve never liked that kind of division,” the mayor complained.
Though Bloomberg may not like the idea of economic divisions, the fault lines that have developed under his leadership are real and among the worst on the planet. As The New York Times reported last fall, the top 20 percent of the city’s income earners now make up to 40 times what the bottom 20 percent garner. This is a dubious distinction, according to the Times, “surpassed by a few developing countries, including Namibia and Sierra Leone.”
This almost unimaginable split between rich and poor in fact should not come as a surprise. It is the consequence of an economic policy in which the stated goal was to entice the world’s rich to live in New York by transforming the city into a luxury product. Bloomberg sums up his economic vision this way, “If we can find a bunch of billionaires around the world to move here, that would be a godsend, because that’s where the revenue comes in to take care of everybody else.”
As New York Times labor writer Steve Greenhouse has noted, until 1975, “wages nearly always accounted for more than 50 percent of our nation’s GDP.” But in 2012 they fell to a record low of 43.5 percent. Those who make the economic engine run are receiving less of what they produce. And it’s not because employees aren’t working harder, or smarter. From 1973 to 2011, according to the Economic Policy Institute, employee productivity grew by 80.4 percent while median hourly compensation after inflation grew by just 10.7 percent.
Thursday’s one-day strike of fast-food workers in dozens of cities was one of the new forms of labor creativity aimed at doing something about this. The folks who serve your burgers are demanding that instead of an average fast-food wage of $8.94 an hour, they ought to be paid $15. Assuming two weeks of unpaid vacation, this works out to $30,000 a year, hardly a Ronald McDonald’s ransom.
The protests have the benefit of putting low-wage workers in the media spotlight, a place they’re almost never found in a world more interested in the antics of Miley Cyrus and Donald Trump. “They want a raise with those fries,” the New York Daily News cheekily led its story on the strike.
Key unions are helping to organize these efforts, but they don’t necessarily expect formal union recognition. They want to raise wages, which is what could happen if the public responds. Companies have been frantically painting themselves green to attract environmentally conscious customers. Employers might discover, to paraphrase the old McDonald’s slogan, that their workers deserve a break today if consumers (who are also workers themselves) started pressuring them to be more employee-friendly.
The fast-food campaign feeds into efforts to hike the current $7.25-an-hour minimum wage nationwide and to enact higher “living wages” in localities around the country. In Long Beach, Calif., as my Post colleague Harold Meyerson reported recently in the American Prospect, voters last November overwhelmingly enacted a measure to boost the hourly pay of some 2,000 of the city’s hotel employees to $13.
From The Grio:
Poverty-wage workers, including union workers, are more likely to be women, young and of color in the new service economy. According to EPI, one-quarter of Americans work in low-paying jobs, which is at or below the federal poverty level for a family of four, which was $23,005 per year in 2011. White women are less than half the workforce, but 55.1 percent of poverty-wage workers. Workers between ages 18 and 25 were 15.5% of the workforce in 2011, but were 35.5 percent of poverty-wage workers.
Blacks and Latinos are overrepresented among low wage workers. African-Americans were 11 percent of the workforce in 2011, yet made up 14.1 percent of all poverty-wage workers. Similarly, Hispanics constituted 15.3 percent of the workforce in 2011, but 23.6 percent of poverty-wage workers. Whites are underrepresented among the poverty-wage workforce, accounting for 66.9 percent of all workers, but only 55.9 percent of all poverty-wage workers.
Meanwhile, in 2011, only 31.5 percent of poverty-wage workers lived in households with greater than $50,000 in family income, while 31% lived in households with less than $25,000 in family income. These figures counter the notion that many fast-food workers live in high income households, such as a teenager with well-to-do parents, or an adult with a higher-earning spouse.
In addition, there are educational disparities among low wage workers. For example, workers with a high school diploma or less were 36.4 percent of the total workforce in 2011 but 54.3 percent percent of low-wage workers. Yet, workers with some college education are overrepresented as well, accounting for 19.7 percent of the national workforce but 26.4 percent of poverty-wage workers.
The workers in the $200 billion a year fast food industry are dependent on food stamps at twice the rate of the rest of the U.S. workforce, and rely on other government programs such as Medicaid just to make ends meet. This comes as Don Thompson, the CEO of McDonald’s, saw his compensation more than triple to $13.75 million.
The strain of poverty may mean people are more likely to make bad decisions that exacerbate their financial problems. Photograph: Dan Kitwood/Getty Images
From The Guardian:
Poor people spend so much mental energy on the immediate problems of paying bills and cutting costs that they are left with less capacity to deal with other complex but important tasks, including education, training or managing their time, suggests research published on Thursday.
The cognitive deficit of being preoccupied with money problems was equivalent to a loss of 13 IQ points, losing an entire night’s sleep or being a chronic alcoholic, according to the study. The authors say this could explain why poorer people are more likely to make mistakes or bad decisions that exacerbate their financial difficulties.
Anandi Mani, a research fellow at the Centre for Competitive Advantage in the Global Economy at the University of Warwick, one of the four authors of the study, said the findings also suggest how small interventions or “nudges” at appropriate moments to help poor people access services and resources could help them break out of the poverty trap. Writing in the journal Science, Mani said previous research has found that poor people use less preventive health care, do not stick to drug regimens, are tardier and less likely to keep appointments, are less productive workers, less attentive parents, and worse managers of their finances. “The question we therefore wanted to address is, is that a cause of poverty or a consequence of poverty?”
She said the team of researchers, which included economists and psychologists in the UK and the US, wanted to test a hypothesis: “The state of worrying where your next meal is going to come from – you have uncertain income or you have more expenses than you can manage and you have to juggle all these things and constantly being pre-occupied about putting out these fires – takes up so much of your mental bandwidth, that you have less in terms of cognitive capacity to deal with things which may not be as urgent as your immediate emergency, but which are, nevertheless, important for your benefit in the medium or longer term.”
(h/t: Judy Edwards)
It has long held true that elderly people have higher suicide rates than the overall population. But numbers released in May by the Centers for Disease Control and Prevention show a dramatic spike in suicides among middle-aged people, with the highest increases among men in their 50s, whose rate went up by nearly 50 percent to 30 per 100,000; and women in their early 60s, whose rate rose by nearly 60 percent (though it is still relatively low compared with men, at 7 in 100,000). The highest rates were among white and Native American and Alaskan men. In recent years, deaths by suicide has surpassed deaths by motor vehicle crashes.
As youths, boomers had higher suicide rates than earlier generations; the confluence of that with the fact that they are now beginning to grow old, when the risk traditionally goes up, has experts worried. The findings suggest that more suicide research and prevention should “address the needs of middle-aged persons,” a CDC statement said.
There are no large-scale studies yet fleshing out the reasons behind the increase in boomer suicides. Part of it is likely tied to the recent economic downturn — financial recessions are in general associated with an uptick in suicides. But the trend started a decade before the 2008 recession, and psychologists and academics say it likely stems from a complex matrix of issues particular to a generation that vowed not to trust anyone older than 30 and who rocked out to lyrics such as, “I hope I die before I get old.”
Instead, compared with their parents’ generation, boomers have higher rates of obesity, prescription and illicit drug abuse, alcoholism, divorce, depression and mental disorders. As they age, many add to that list chronic illness, disabilities and the strains of caring for their parents and for adult children who still depend on them financially.
Extended unemployment benefits Congress put in place at the outset of the Great Recession didn’t discourage people from taking jobs, according to new research from the Federal Reserve Bank of San Francisco.
Princeton University economics professor Henry Farber and San Francisco Fed economist Rob Valletta found that extended benefits might have encouraged people to continue to look for work longer so that they could remain eligible for benefits. While the longer searches for jobs could have boosted the unemployment rate by four-tenths of a percentage point, the compensation didn’t make the long-term jobless unwilling to work.
“It did not reduce the job finding rate,” Farber told HuffPost. He added the benefits probably helped the economy, however, not to mention the individual people who otherwise might have had no income. “These are people who spend the money you give them.”
The findings are similar to 2011 research by Jesse Rothstein of the University of California, Berkeley.
From The Atlantic:
Above is a picture I took of a chart showing how the scheme could work. The chart was produced by activist lawyers in the late 60s trying to demonstrate the effects of contract buying. There are four columns “Documented Price Paid By Speculator,” “Documented Price Change To Negro Buyer,” “Markup,” “Approximate Additional Interest,” and “Total Additional Charges.” In that chart you can literally see black wealth leaving one neighborhood and migrating to another. It was not just legal. It was the whole point.
Jim Crow — Northern or Southern — is usually rendered to us as an archaic system in which people irrationally decide to separate from each other just based on skin color. There’s a reason that so many of us remember Martin Luther King’s line about little white boys and little black boys holding hands. It’s comforting to us. Less comforting is that fact that Jim Crow amounted to the legal pilfering of resources from the black communities to advantage white people across generations. In Mississippi, it meant the right to reduce someone to sharecropping, or to benefit politically from their census numbers while not giving them any representation, or to tax them for services they did not enjoy equal access to. In Chicago, it meant the legalized theft of black wealth by white agents.
It is very hard to accept this — the wealth gap is not a mistake. It is the logical outcome of policy and democratic will. From the streets of Cicero on up, the point was to imprison black people in the black belt and then exploit them. The goal was pursued through public policy, private action, and open terrorism. The goal was accomplished.