Category Archives: Income Inequality/Gap

Income, Poverty and Health Insurance Coverage in the U.S.: 2016

Source: U.S. Census Bureau, Press Release, Release Number: CB17-156, September 12, 2017

Real median household income increased by 3.2 percent between 2015 and 2016, while the official poverty rate decreased 0.8 percentage points. ….

….These findings are contained in two reports: Income and Poverty in the United States: 2016 and Health Insurance Coverage in the United States: 2016. This year’s income and poverty report marks the 50th anniversary of the first poverty estimates released by the Census Bureau in the Current Population report series.

Another Census Bureau report, The Supplemental Poverty Measure: 2016, was also released today. The supplemental poverty rate in 2016 was 13.9 percent, a decrease from 14.5 percent in 2015. With support from the Bureau of Labor Statistics, the Supplemental Poverty Measure shows a different way of measuring poverty in the United States and serves as an additional indicator of economic well-being. The Census Bureau has published poverty estimates using the supplemental poverty measure annually since 2011.

The Current Population Survey, sponsored jointly by the Census Bureau and Bureau of Labor Statistics, is conducted every month and is the primary source of labor force statistics for the U.S. population; it is used to calculate the monthly unemployment rate estimates. Supplements are added in most months; the Annual Social and Economic Supplement questionnaire is designed to give annual, national estimates of income, poverty and health insurance numbers and rates. The most recent Annual Social and Economic Supplement was conducted nationwide and collected information about income and health insurance coverage during the 2016 calendar year. ….

Why American Workers Pay Twice as Much in Taxes as Wealthy Investors

Source: Ben Steverman, Bloomberg, September 12, 2017

What’s best for the country? What’s fair? And will either matter when Congress takes up tax reform this fall? ….

…. Let’s say you and I are neighbors. You’re an emergency room doctor, and I don’t work, thanks to a pile of money my grandparents left me.

You spend your days and nights stitching up gunshot wounds and helping children survive asthma attacks. I’ve gotten really good at World of Warcraft, winning EBay auctions, and frying shishito peppers to just the right crispiness.

Let’s also say we both report $300,000 in income to the Internal Revenue Service this year. Who pays more in taxes?

You do, by a lot. You owe the IRS about $38,500 more, assuming each of us pays the maximum with no special deductions. I also have more flexibility to lower my burden with tax planning strategies and other tricks, and I get to skip about $24,000 in payroll taxes that you and your employer must fork over each year. ….

…. By taxing investors less, some economists argue, you give taxpayers more of an incentive to save. The more savings in the economy, the more capital that companies and entrepreneurs can invest in ways that expand the economy and make workers more productive. Everyone, including workers, wins, according to this theory.

But there are potential negative consequences to such a policy. By lowering taxes on investors, you shift more of the tax burden to well-paid workers. This may give highly skilled and creative people a disincentive to work hard or improve their skills so they can earn more money, while also giving children of wealthy parents another reason not to work at all. ….

Corporate Tax Cuts Boost CEO Pay, Not Jobs – 24th Annual Executive Excess

Source: Sarah Anderson, Sam Pizzigati, Institute for Policy Studies, August 30, 2017

From the summary:
House Speaker Paul Ryan is proposing to cut the statutory federal corporate tax rate from 35 to 20 percent. President Trump wants to slash the rate even further, to just 15 percent. Their core argument? Lowering the tax burden will lead to more and better jobs. To investigate this claim, this report is the first to analyze the job creation records of the 92 publicly held U.S. corporations that reported a U.S. profit every year from 2008 through 2015 and paid less than 20 percent of these earnings in federal income tax. Did these reduced tax rates actually lead to greater employment within the 92 firms? The data we have compiled give a definitive — and sobering — answer.

Young Women Are Losing Ground in U.S. Race for Equal Pay

Source: Jeanna Smialek, Bloomberg, August 22, 2017

Women between 25 and 34 years old are slipping when it comes to pay equality with men, data from the Bureau of Labor Statistics show. In that age group, of mostly millennials, women made just under 89 cents on a man’s dollar in 2016, down from a high of 92 cents in 2011. That means the gender gap in median weekly earnings is the widest in seven years.

Young women’s experience stands in contrast to that of their older counterparts, who are starting from a lower level but continue to creep toward equality. The dip is surprising, given that millennial women are increasingly highly-educated relative to their male peers. Part of the explanation could be that in recent years, a big chunk of gender-wage parity had come because men’s wages weren’t doing well…..

The fall of the US middle class and the hair-raising ascent of Donald Trump

Source: Steven Pressman, Real-World Economics Review, no. 78, March 2017

…. This paper focuses on one particular political consequence of a shrinking middle class. It contends that this was a key factor in Donald Trump becoming President of the United States. Then it argues that the policies promulgated by Trump will not help the US middle class but will exacerbate recent inequality trends. The paper concludes with some suggestions for reviving the middle class. ….
Related:
Trumponomics: causes and consequences – Part I
Source: Real-World Economics Review, Issue no. 78, March 22, 2017

Articles include:
Trump through a Polanyi lens: considering community well-being
Anne Mayhew

Trump is Obama’s legacy. Will this break up the Democratic Party?
Michael Hudson

Causes and consequences of President Donald Trump
Ann Pettifor

Explaining the rise of Donald Trump
Marshall Auerback

Class and Trumponomics
David F. Ruccio

Trump`s bait and switch: job creation in the midst of welfare state sabotage
Pavlina R. Tcherneva

Trumponomics: causes and consequences – Part II
Source: Real-World Economics Review, Issue no. 79, March 30, 2017

Articles include:
Economic policy in the Trump Era
Dean Baker

Major miscalculations: globalization, economic pain, social dislocation and the rise of Trump
William Neil

Is Trump wrong on trade? A partial defense based on production and employment
Robert H. Wade

President Trump and free-trade
Jacques Sapir

U.S. private capital accumulation and Trump`s economic program
Jim Stanford

Trump` s contradictions and the future of the Left
Boris Kagarlitsky

Trumponomics, firm governance and US prosperity
Robert R Locke

Nearly Half of Trump ’s Proposed Tax Cuts Go to People Making More than $1 Million Annually

Source: Institute on Taxation and Economic Policy (ITEP), August 2017

From the summary:
A tiny fraction of the U.S. population (one-half of one percent) earns more than $1 million annually. But in 2018 this elite group would receive 48.8 percent of the tax cuts proposed by the Trump administration. A much larger group, 44.6 percent of Americans, earn less than $45,000, but would receive just 4.4 percent of the tax cuts.

The first group, the millionaires, would receive an average tax cut of more than $217,000 in 2018, equal to 7 percent of their income. The second group, those making less than $45,000, would receive an average tax cut of just $230, equal to less than one percent of their income….
Related:
Trump’s $4.8 Trillion Tax Proposals Would Not Benefit All States or Taxpayers Equally
Source: Institute on Taxation and Economic Policy (ITEP), July 2017

Opinion: How philanthropic dynasties are exerting their power over US policy

Source: David Callahan, The Guardian, July 25, 2017

As a nation built in opposition to the aristocracy, is it right that US billionaires are creating foundations to confer power and privilege on to future generations? ….

….Studies have found that wealth that is directly passed down to heirs tends to disappear pretty quickly. It’s gone in most cases by the second or third generation, according to one 2015 analysis.
Private foundations, on the other hand, offer a way to preserve – and grow – estates over many decades and even centuries. There are more than 90,000 private foundations in the US, with over $800bn in assets, almost half of which are under family control. ….

The Status of Black Women in The United States

Source: Asha DuMonthier, Chandra Childers, and Jessica Milli, Institute for Women’s Policy Research, July 2017

From the summary:
Black women are integral to the well-being of their families, their communities and the nation as a whole. Through their work, entrepreneurship, caregiving, political participation, and more, Black women are creating opportunities for themselves, their loved ones, and improving the our economy and society. They have all the makings of what should be success, yet their contributions are undervalued and under compensated. Black domestic workers are particularly vulnerable because of the ways in which racial disparities, gender discrimination, and immigration status serve to further marginalize and disempower the very people who power our economy and push our democracy to be the best that it can be. Whether one examines Black women’s access to healthcare, earnings, or access to much needed social supports like childcare and eldercare, Black women are getting the short end of the stick, despite having contributed so much to the building of this nation. …. The report analyzes data by gender, race and ethnicity for all 50 states and the District of Columbia across six topical areas: political participation, employment and earnings, work and family, poverty and opportunity, health and well-being, and violence and safety. In addition, the report includes basic demographic data for each state and a set of policy recommendations. ….
Related:
Executive Summary

Equal Pay for Black Women

Source: Brandie Temple and Jasmine Tucker, National Women’s Law Center, Fact Sheet, July 2017

From the summary:
When comparing all men and women who work full time, year round in the United States, women are paid just 80 cents for every dollar paid to their male counterparts.  But the wage gap is even larger when looking specifically at Black women who work full time, year round—they are paid only 63 cents for every dollar paid to white, non-Hispanic men.  This gap, which amounts to a loss of $21,001 a year, means that Black women have to work more than 19 months—until the very last day of July—to make as much as white, non-Hispanic men did in the previous 12-month calendar year.

CEO pay remains high relative to the pay of typical workers and high-wage earners

Source: Lawrence Mishel and Jessica Schieder, Economic Policy Institute, July 20, 2017

From the summary:
What this report finds: This report looks at trends in CEO compensation using two measures of compensation. The first measure includes stock options realized (in addition to salary, bonuses, restricted stock grants, and long-term incentive payouts). By this measure, in 2016 CEOs in America’s largest firms made an average of $15.6 million in compensation, or 271 times the annual average pay of the typical worker. While the 2016 CEO-to-worker compensation ratio of 271-to-1 is down from 299-to-1 in 2014 and 286-to-1 in 2015, it is still light years beyond the 20-to-1 ratio in 1965 and the 59-to-1 ratio in 1989. The average CEO in a large firm now earns 5.33 times the annual earnings of the average very-high-wage earner (earner in the top 0.1 percent).

Because the decision to realize, or cash in, stock options tends to fluctuate with current and potential stock market trends (since people tend to cash in their stock options when it’s most advantageous for them to do so), we also look at another measure of CEO compensation to get a more complete picture of trends in CEO compensation. This measure tracks the value of stock options granted, reflecting the value of the options at the time they are granted. By this measure, CEO compensation rose to $13.0 million in 2016, up from $12.5 million in 2015.

By either measure CEO compensation is very high relative to the compensation of a typical worker or even that of an earner in the top 0.1 percent, and it has grown far faster than stock prices or corporate profits. The explanation for the falloff in CEO compensation associated with realized stock options is unclear: neither stock prices nor an accumulation of unexercised options provide an explanation. It will be interesting to see if this trend continues….
Related:
Press release