Category Archives: Income Inequality/Gap

Martin Luther King Jr., union man

Source: Peter Cole, The Conversation, January 18, 2019

If Martin Luther King Jr. still lived, he’d probably tell people to join unions.

King understood racial equality was inextricably linked to economics. He asked, “What good does it do to be able to eat at a lunch counter if you can’t buy a hamburger?”

Those disadvantages have persisted. Today, for instance, the wealth of the average white family is more than 20 times that of a black one.

King’s solution was unionism…..

Related:
Economic justice was always part of MLK Jr.’s message
Source: Peter Kelley, Futurity, January 20, 2019

Labor rights and economic justice were always part of Dr. Martin Luther King Jr.’s progressive message, historian Michael Honey reminds us in a new book.

The book, To the Promised Land: Martin Luther King and the Fight for Economic Justice, (W.W. Norton, 2018) came out April 3—the day before the 50-year anniversary of King’s assassination. ….

When King Was Dangerous
Source: Alex Gourevitch, Jacobin, January 21, 2019

Martin Luther King Jr is remembered as a person of conscience who only carefully broke unjust laws. But his militant challenges to state authority place him in a much different tradition: radical labor activism.

Treading Water: The Current Challenges of Women’s Work

Source: Shilpa Phadke and Diana Boesch, Center for American Progress, January 18, 2019

…. This column reviews how women’s work is segmented and undervalued; how workers at the margins—such as domestic workers, farm laborers, part-time workers, and gig economy workers—face persistent barriers and inequality; and how policymakers must prioritize centering workers’ voices and holistic needs and experiences as they craft meaningful economic policy. While this column does not detail the myriad ways in which women often struggle to maintain their economic security to the detriment of their health, it is important to emphasize that women do not live their lives in silos, and access to a range of programs and policies, such as comprehensive reproductive health services, as well as access to affordable education and skills-based learning, are critical to women’s economic success. ….

Trump’s Tax Cuts: The Rich Get Richer

Source: Center for Public Integrity, 2019

An in-depth look at how the Tax Cuts and Jobs Act of 2017 avoided scrutiny and made the rich richer.

The first part in our new series, “Trump’s Tax Cuts: The Rich get Richer,”  investigating the origin and impact of the 2017 tax law: 

THE TRUMP TAX LAW HAS BIG PROBLEMS. HERE’S ONE BIG REASON WHY
Source: Peter Cary, Allan Holmes, Pratheek Rebala, Center for Public Integrity, January 15, 2019

There’s no shortage of agenda items for the new Congress that’s just been seated in Washington. But lost among the anguished cries to reopen the government and enact ethics reform will be a lesser-advertised but crucial item: addressing major problems in the 2017 tax bill that President Donald Trump signed into law a year ago.

That the law needs fixing is not in dispute. Why it needs fixing is most vividly illuminated by contrasting it with another massive piece of tax legislation, the Reagan-era Tax Reform Act of 1986.

In the months leading up to passage of the 2017 tax act, Trump administration officials and Republican leaders in Congress giddily compared the scope of their bill to that very law. House Ways and Means Committee Chairman Kevin Brady, R-Texas, called their new bill, “the first action in 31 years since President Reagan’s reforms in 1986.” Then-National Economic Director Gary Cohn said the legislation represented the “most significant tax reform legislation since 1986.”

Measured by the magnitude of changes to the tax code, that is true. But in terms of how the bills were developed, deliberated and drafted by Congress — not to mention their substance — the bills could not be less alike. And therein lies an illuminating — some would say frightening — story.

What labor market changes have generated inequality and wage suppression?

Source: Josh Bivens and Heidi Shierholz, Economic Policy Institute, December 12, 2018

Employer power is significant but largely constant, whereas workers’ power has been eroded by policy actions.

What this report finds: Labor markets in capitalist economies are fundamentally tilted against individual workers’ ability to bargain effectively with employers. Policy does not have to be rigged for employers to give them particular clout in labor markets; instead, the very nature of these labor markets gives them clout. In the past, when economic growth was broadly shared across the population, it was because policymakers understood this basic asymmetry and used policy levers to bolster the leverage and bargaining power of workers. Conversely, recent decades’ rise of inequality and anemic wage growth has resulted from a stripping away of these policy bulwarks to workers’ labor market power.

Why it matters: Recent research on “monopsony power”—the leverage enjoyed by employers to set their workers’ pay—is a valuable contribution to our understanding of the asymmetry inherent in labor markets. However, “monopsony power” is often a confusing term to even the most savvy economic writers and researchers, and too often it is used only to describe markets that are concentrated (i.e., where there are relatively few employers). Market concentration can indeed suppress workers’ wages, but employer power exists even in markets with lots of employers. If only the narrow conception of “monopsony power” is recognized and policymakers focus only on interventions that target the effect of market concentration (antitrust, for example), then other measures that could more effectively restore the balance of power in labor markets might not get the consideration they should.

What can be done about it: There is no one panacea for restoring workers’ leverage and bargaining power in labor markets. Policymakers must be committed to working on every available margin, including restoring genuine full employment as a macroeconomic policy priority; reforming labor law so that workers who want to form a union to collectively bargain to improve their wages and working conditions are able to do so; raising the minimum wage; and strengthening enforcement of labor standards and workplace civil rights laws.

Pay Inequity in U.S. Is Widening

Source: Dana Wilkie, HR Magazine, November/December 2018

In many cases, wages for many low- and middle-income employees have not even kept pace with inflation.
Four decades ago, in 1979, the typical low-income worker—perhaps a waitress or a cashier—earned about $9.42 an hour when adjusted to today’s dollars. In 2016, a person in that same job earned about $9.33 an hour—roughly 1 percent less than what his or her counterpart was making 40 years ago.

The economy in 2018 has been strong, unemployment is at an all-time low, many businesses are turning healthy profits and the financial markets have surged. Yet that has not translated into robust wage growth for many U.S. workers, even though basic economic theory holds that this should have happened. Instead, pay for many low- and middle-income employees has remained relatively flat, in some cases not even keeping pace with inflation.

Theories abound as to why:
– Automation and global outsourcing have reduced the demand for lower-skilled workers and the pressure to increase their pay.
– A four-year college degree no longer promises the financial bargaining power in the labor market that it once did.
– The decline in labor unions has made it more difficult for low-wage employees to negotiate higher pay.
– The minimum wage doesn’t have the buying power it had decades ago.
– Company leaders, boards and shareholders grew gun-shy following the Great Recession and prefer to keep labor costs low in case of another economic downturn…..

Union Membership Narrows the Racial Wealth Gap for Families of Color

Source: Christian E. Weller and David Madland, Center for American Progress, September 4, 2018

Wealth is critical to families’ immediate and long-term economic well-being. It helps families pay their bills if their income drops due to unforeseen events such as a layoff or medical emergency. It also allows them to invest in their future by sending their children to college; moving to a desirable neighborhood due to, for instance, better schools; switching jobs; or starting a business. Yet wealth is highly unequally distributed in the United States—particularly by race and ethnicity. (see Appendix for more information) White families, for instance, have significantly more wealth than nonwhite families. There are a few institutions that help shrink this systematic divide; unions are one such institution.

Unions help increase the wealth for all workers. Indeed, previous Center for American Progress Action Fund research showed that a typical worker covered by a union contract has roughly twice the wealth of a typical nonunion worker. And new Center for American Progress analysis shows that unions boost wealth the most for those who are nonwhite.

Still a Man’s Labor Market: The Slowly Narrowing Gender Wage Gap

Source: Heidi I. Hartmann and Stephen J. Rose, Institute for Women’s Policy Research (IWPR), ID: C474, November 26, 2018

From the press release:
Women today earn just 49 cents to the typical men’s dollar, much less than the 80 cents usually reported, according to a new study by economists Heidi I. Hartmann and Stephen J. Rose released today by the Institute for Women’s Policy Research (IWPR).

The study, Still a Man’s Labor Market: The Slowly Narrowing Gender Wage Gap, uses the Panel Study on Income Dynamics, a longitudinal dataset to look at the gender earnings gaps between men and women in 15-year time spans. When measured by total earnings across the most recent 15 years for all workers who worked in at least one year, women workers faced a wage gap of 51 percent in the 2001-2015 period. The analysis also found that while the long-term earnings gap has narrowed significantly since 1968, progress has slowed in the last 15 years.

Related:
Abstract

Educational Inequality, Educational Expansion, and Intergenerational Income Persistence in the United States

Source: Deirdre Bloome, Shauna Dyer, Xiang Zhou, American Socialogical Review, Online First, November 14, 2018
(subscription required)

From the abstract:
The children of high-income parents often become high-income adults, while their low-income peers often become low-income adults. Education plays a central role in this intergenerational income persistence. Because education-based inequalities grew in recent decades, many scholars predicted that intergenerational income persistence would increase. However, previous research suggests that it remained stable across recent cohorts. We address this puzzle. Analyzing National Longitudinal Surveys of Youth data, we find that growing educational inequality by parental income, along with rising economic returns to education, increased intergenerational persistence, as scholars expected. However, two countervailing trends offset this increase. The expansion of higher education reduced persistence, because completing college helps low-income children become high-income adults. Yet, this reduction in persistence was far from enough to offset the increase in persistence associated with growing educational inequality and rising educational returns. Intergenerational persistence would have increased if not for another change: within educational groups, parental income became less predictive of adult income. New methodological tools underlie these findings, tools that quantify, for the first time, education’s full force in intergenerational income persistence. These findings suggest that to reduce intergenerational persistence, educational policies should focus less on how many people complete college and more on who completes college.