Danger: Income Inequality Threatens National Stability
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Income inequality has become so severe in this nation that people in Really Important Positions (except for most Republicans in Congress) are starting to take note—and issue warnings.
Saying “income inequality is just getting worse and worse and worse,” James Chanos, president and founder of the New York-based investment firm Kynikos Associates, told Bloomberg this week that the widening gap between rich and poor is reshaping the U.S. economy, leaving it more vulnerable to recurring financial crises and less likely to generate enduring expansions. As Bloomberg paraphrased his comments:
Left unchecked, the decades-long trend toward increasing inequality may condemn Wall Street to a generation of unimpressive returns and even shake social stability….
Separately, Nouriel Roubini, chairman of Roubini Global Economics and economics professor at New York University, published an article yesterday describing “The Instability of Inequality.” In it, Roubini argues that “globalization, unfettered financial capitalism, and Read the rest of this entry »
Supreme Court Backs Wal-Mart in Pay Discrimination Case
The U.S. Supreme Court today ruled 5-4 that as many as 1.6 million women who are current or former Wal-Mart employees cannot sue Wal-Mart for pay discrimination in a class-action suit. A lower court had ruled that the women could join together in a class action.
But the court did not rule on the women’s claims of systematic and company-wide pay and promotion discrimination.
Ten years ago, a group of women who worked at Wal-Mart stores, led by Betty Dukes, filed a lawsuit alleging the corporation engaged in company-wide gender discrimination by paying women less than men, promoting fewer women to management positions and promoting male employees more quickly.
United Food and Commercial Workers (UFCW) President Joe Hansen called the decision “deeply disturbing.” The UFCW has been a longtime supporter of Wal-Mart workers’ fight for justice.
AFL-CIO President Richard Trumka says working people are disappointed by today’s Supreme Court ruling in favor of Wal-Mart.
Our courts should be available to working men and women who seek to challenge discriminatory promotion and pay practices by their employers. Today’s decision continues a disturbing trend of closing the courthouse doors to workers seeking redress against corporations.
The ruling means the already uphill battle for women to fight pay discrimination will get even worse. John Nichols at The Nation writes that the ruling is “a big win for Wal-Mart, and for other large firms that may not choose to treat employees fairly.” The court ruled on the grounds that
the class-action status that could potentially involve hundreds of thousands of current and former female workers was too large.
Taxes Go Down for the Wealthy, Income Gap Worsens
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Just in time for April 15, new data shows that since 1979, the nation’s overall average tax rate—the share of income paid in taxes—has fallen slightly, but for those at the top of the earnings ladder, this share has fallen dramatically. The analysis by the Economic Policy Institute (EPI) also points out:
At the same time that the tax burden has shifted away from the wealthy, this same top income group has enjoyed massively disproportionate income gains. Between 1992 and 2007, a time in which income for the average household and top one percent grew 13 percent and 123 percent, respectively, the income for the top 400 households grew fully 399 percent.
Corporations Demand Tax Holiday for Wealthy That Didn’t Work Before
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The nation’s richest are trying to sell us on yet another shell game to keep from paying their fair share of taxes. Their lobbyists are pushing a so-called repatriation tax holiday—a huge cut in the tax rate on money companies are holding outside of the country.
The trick here is that we tried this before and it didn’t work out so well for taxpayers, so of course they want to do it again.
Dave Johnson, writing for the Campaign for America’s Future, spells out how this shell game works: companies manufacture a product in China or some other low-wage country and then sell and resell it through another shell company in a tax haven like the Cayman Islands. That shell then sells it to the U.S. company at a high price. So the profit is in the Caymans, where the cost was low and the sell price was high. And the U.S. company, which made a little profit, pays a low tax. Researchers say this shell game costs taxpayers $100 billion a year.
As long as the actual money isn’t brought into the United States, the company’s owners–the very rich (see chart above) don’t pay U.S. taxes on it. So after years of this scheme, a ton of cash—about $1 trillion– is sitting in these tax-haven countries. But the rich can’t use the cash to buy mansions, yachts and whatever else in the United States, if it’s sitting in a bank in the Caymans, but they don’t want to taxes on it.
So their lobbyists are trying to get Congress to pass a “repatriation tax holiday” on the profits they are holding outside of the country. They claim bringing the money home at a reduced tax rate would create jobs. But we’ve been burned once by that scheme. In 2004 Congress let corporations bring profits back to the U.S. at a tax rate of 5.25 percent, instead of the top corporate rate of 35 percent.
And the companies that got the money kept on cutting jobs and used the money to repurchase stock or pay dividends — and to send more jobs overseas according to the Congressional Research Service.
So, rather than trying to balance the budget by cutting services, Congress should look at figuring out way to put that $100 billion to work for ordinary Americans and not the very wealthy.
Click here to read Johnson’s full column, “Lobbyists Admit Corporate Tax ‘Holiday’ Didn’t Work, But Demand It Again.”
U.S. Workers Earned Less in 2009 Than in 2008
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Looks like Santa is bringing a lump of something to working families, and it isn’t a fatter paycheck.
New data show America’s workers earned less in 2009 than in 2008, according to the Bureau of Labor Statistics. Compensation was down by 3.2 percent in 2009 with declines in construction and manufacturing fueling the plunge. St. Louis County, the hardest hit, saw a decline of 11.5 percent. Read the rest of this entry »
Senate Republicans Block Paycheck Fairness Again
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Just three days into the lame-duck Congress, Republicans returned to their obstructionist ways. Today, all the Senate Republicans voted in lockstep to prevent the Paycheck Fairness Act (S. 182) from coming to the floor. The final vote, 58-41, fell two votes short of the 60 needed to break the Republican-imposed logjam. The House passed the bill last year. If enacted, it would help close the wage gap between women and men. Check out the roll call vote here.
AFL-CIO President Richard Trumka said:
Senate Republicans today disrespected America’s working women by voting to prevent any debate on the Paycheck Fairness Act. Simply put, blocking the Paycheck Fairness Act encourages discrimination of women in the workplace.
Efforts like this legislation to close the income gap in our country are an essential component to long-term economic recovery. Republicans in the Senate have remained content to leave the middle-class and the poor out in the cold in pursuit of their political goals and interests of their Wall Street allies. They have had but one message to the elderly, the unemployed, the uninsured and now even women, “No.”
Equal Pay Day 2010: Women, 78 Cents, Men, $1
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Today’s the day when women workers finally catch up with the pay men received last year—the day we mark as Equal Pay Day. Being three months and 20 days behind men’s wages means women who work full-time still are paid, on average, 78 cents for every dollar men are paid. According to the most recent data from the U.S. Bureau of Labor Statistics, the median wages of full-time, year-round workers in 2008 stood at $35,745 for women and $46,367 for men.
The wage gap is even worse for women of color. In 2008, the earnings for African American women were $31,489, 67.9 percent of men’s earnings (a drop from 68.7 percent in 2007), and Latinas’ earnings were $26,846, 58 percent of men’s earnings (a drop from 59 percent in 2007).
The chart here shows the molasses-like movement in closing the wage gap. One way to speed up the progress is to urge lawmakers to support the Paycheck Fairness Act, which was passed by the U.S. House in 2009. It updates the Equal Pay Act by giving employees the tools they need to close the wage gap and providing the government with enforcement power to correct pay inequities. Momsrising has an action here to urge your senator to close the wage gap and back the Paycheck Fairness Act.
CEOs Get One-Third of All Pay; Bank of America Uses Taxpayer $$ for Lobbying
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Two news items out today highlight how far the nation needs to go in re-balancing the economy toward working people.
First, Think Progress points to a Wall Street Journal analysis that shows more than one-third of all pay in the U.S. now goes to executives and other highly-paid employees.
Highly paid employees received nearly $2.1 trillion of the $6.4 trillion in total U.S. pay in 2007, the latest figures available. The compensation numbers don’t include incentive stock options, unexercised stock options, unvested restricted stock units and certain benefits.
The Wall Street Journal based its analysis on Social Security Administration data, which doesn’t count billions of dollars more in pay that remain off federal radar screens that measure wages and salaries.
Next, it turns out that Bank of America, which received $45 billion in taxpayer-funded bailout support, has spent more than $1.5 million lobbying on Capitol Hill.
The Charlotte, N.C., company wants flexibility on spending the bailout funds and also wants to fend off restrictions on executive compensation, home mortgage lending and credit card fees. The bank also is lobbying on a consumer rights bill, on student lending issues, on a bill that would’ve allowed bankruptcy judges to alter mortgages and on a proposed federal regulatory oversight agency.
And none of its positions on any of these bills would help working families.
As we noted in April when we released the AFL-CIO Executive PayWatch data, the Bank of America lost nearly $2.4 billion in the fourth quarter of 2008 due to deeper than expected trading and loan losses. Even after receiving billions of dollars in taxpayer money, the bank plans to eliminate up to 35,000 jobs over the next three years—but CEO Kenneth Lewis collected nearly $10 million in 2008, more than 400 times the average amount a bank teller is paid each year. Since becoming CEO in April 2001, Lewis received $134 million in pay, bonuses, stock awards and pension accruals.
As Think Progress notes, between 1979 and 2006, the inflation-adjusted after-tax income of the richest 1 percent of households increased by 256 percent, compared with 21 percent for families in the middle income quintile.
While U.S. worker productivity has skyrocketed over the past 30 years, wages have not kept pace.
America’s working middle class made it clear last November that they wanted change—and reshaping the nation’s economic framework to strengthen the middle class and close the wage disparity between the very top and the rest of us, is fundamental to that change.
