Category Archives: Income Inequality/Gap

The Koch Effect – The Impact of a Cadre-Led Network on American Politics

Source: Theda Skocpol and Alexander Hertel-Fernandez, Harvard University, Prepared for presentation at the Inequality Mini-Conference, Southern Political Science Association San Juan, Puerto Rico, January 8, 2016 – Slightly corrected version, January 27, 2016

Presidential election years attract attention to the rhetoric, personalities, and agendas of contending White House aspirants, but these headlines do not reflect the ongoing political shifts that will confront whoever moves into the White House in 2017. Earthquakes and erosions have remade the U.S. political terrain, reconfiguring the ground on which politicians and social groups must maneuver, and it is important to make sure that narrow and short-term analyses do not blind us to this shifting terrain. In this paper, we draw from research on changes since 2000 in the organizational universes surrounding the Republican and Democratic parties to highlight a major emergent force in U.S. politics: the recently expanded “Koch network” that coordinates big money funders, idea producers, issue advocates, and innovative constituency-building efforts in an ongoing effort to pull the Republican Party and agendas of U.S. politics sharply to the right. We review the major components and evolution of the Koch network and explore how it has reshaped American politics and policy agendas, focusing especially on implications for right-tilted partisan polarization and rising economic inequality.

The Steep Climb to Economic Opportunity for Vulnerable Families

Source: Kasey Wiedrich, Lebaron Sims, Jr., Holden Weisman, Solana Rice and Jennifer Brooks, Corporation for Enterprise Development (CFED), January 2016

The Assets & Opportunity Scorecard is a comprehensive look at Americans’ financial security today and their opportunities to create a more prosperous future. It assesses the 50 states and the District of Columbia on 130 outcome and policy measures, which describe how well residents are faring and what states can do to help them build and protect assets. Despite the nation’s ongoing economic recovery, millions of low- and moderate-income Americans are, like the Greek mythological character Sisyphus, perpetually forced to push an outsized boulder up a steep hill with little prospect of reaching stable financial ground. The 2016 Assets & Opportunity Scorecard shows how today’s economic status quo offers little hope to these struggling families. This report summarizes the key findings from the 2016 Assets & Opportunity Scorecard and provides a deeper look at the racial wealth divide and the outcome and policy data trends over time and across states in the Scorecard’s five issue areas: Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Education and Health Care. The report also includes an infographic of the overall adoption of the 69 Scorecard policies across the states, which allows you to see at-a-glance which states have adopted the most policies and which policies have been adopted by the most states.
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How Computer Automation Affects Occupations: Technology, Jobs, and Skills

Source: James E. Bessen, Boston University – School of Law, Law and Economics Research Paper No. 15-49, January 16, 2016

From the abstract:
This paper investigates basic relationships between technology and occupations. Building a general occupational model, I look at detailed occupations since 1980 to explore whether computers are related to job losses or other sources of wage inequality. Occupations that use computers grow faster, not slower. This is true even for highly routine and mid-wage occupations. Estimates reject computers as a source of significant net technological unemployment or job polarization. But computerized occupations substitute for other occupations, shifting employment and requiring new skills. Because new skills are costly to learn, computer use is associated with substantially greater within-occupation wage inequality.

Class Warfare: The Disappearance of Low-Income Litigants from the Civil Docket

Source: Myriam E. Gilles, Emory Law Journal, Vol. 65, No. 6, 2016

From the abstract:
In recent years, much attention has been paid to the startling disparities in income and wealth in contemporary U.S. society. The enormous concentration of economic power in the top 1% is the culmination of decades of significant income and wealth gains for the top, combined with stagnant or decreasing growth for the majority – a trend that continues apace. But nowhere is the gap more glaring than in the civil docket, where class actions brought by or on behalf of low-income consumers and employees are on the verge of disappearing.

To be sure, the decline in class actions is only part of the larger story, as procedural and substantive constraints on legal access are visible everywhere – from the “justice gap” and problems of non-representation, to cuts in funding for legal aid and court administration, to heightened pleading standards, increasingly restrictive views of standing to sue, and the modern penchant for the privatization of justice. But the thesis of this essay is that the unavailability of class litigation is disproportionately more harmful to low-income groups – in ways both real and expressive, short- and long-term – than any other, single factor for a number of interrelated reasons. For one, economically-disadvantaged groups are more susceptible to abusive practices in the marketplace and the workplace, suffering disproportionate instances of predatory lending, consumer fraud, unfair wages, and discrimination. More brutally, the impact of class relief – particularly injunctive relief – is more acutely felt by low-income groups. Recent studies show that, to a large and disturbing extent, the poor stay poor. So when members of low-income groups suffer from group-based wrongdoing, they are likely to experience the same or similar wrongdoing again in the future. The failure to detect and deter bad actors who prey on the poor only promotes chronic exploitation and the perpetuation of intractable poverty.

The essay ends by examining an important by-product of the disappearance of low-income claims from the civil docket: as contemporary judges see fewer civil cases brought by or on behalf of poor people, one might expect that they grow will further out of touch with and ill-equipped to manage these claims; and as this reservoir of wisdom empties, judicial attitudes towards the poor harden, growing disdainful and ungenerous. Accordingly, when judges are sporadically faced with the legal claims of low-income groups, it becomes harder to spot (or easier to ignore) patterns of exploitative, abusive conduct by corporate or governmental actors.

Fighting for a Better Life: How Working People Across America are Organizing to Raise Wages and Improve Work

Source: AFL-CIO, January 2016

From the blog post:
Marking nearly one year since the first ever Raising Wages Summit, the AFL-CIO today released a new report detailing the successes, struggles and path ahead to raise wages for working people. The report, “Fighting for a Better Life: How Working People Across America are Organizing to Raise Wages and Improve Work,” finds that over the last year income inequality has shifted from a problem we discuss to a problem we can solve. The report points to clear and unequivocal steps for a path forward. Armed with the solutions outlined in the report, the central conclusion is that America is ready to move beyond the discussion of income inequality and is beginning to write new rules that will shape the economy….. The report goes well beyond direct wage increases, highlighting successes that demonstrate the all-encompassing nature of the raising wages agenda. Numerous organizing victories, paid sick leave laws in multiple states and municipalities and new protections against wage theft if five states are outlined as part of the effort to create an economy built on raising wages. The report also outlines hurdles to further victories, and challenges that remain as the raising wages agenda grows…..

The Dynamics of Inequality

Source: Xavier Gabaix, Jean-Michel Lasry, Pierre-Louis Lions, Benjamin Moll, Centre for Economic Policy Research (CEPR), CEPR Discussion Paper No. DP11028, December 2015
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From the abstract:
The past forty years have seen a rapid rise in top income inequality in the United States. While there is a large number of existing theories of the Pareto tail of the long-run income distributions, almost none of these address the fast rise in top inequality observed in the data. We show that standard theories, which build on a random growth mechanism, generate transition dynamics that are an order of magnitude too slow relative to those observed in the data. We then suggest two parsimonious deviations from the canonical model that can explain such changes: “scale dependence” that may arise from changes in skill prices, and “type dependence,” i.e. the presence of some “high-growth types.” These deviations are consistent with theories in which the increase in top income inequality is driven by the rise of “superstar” entrepreneurs or managers.

An Economy For the 1%: How privilege and power in the economy drive extreme inequality and how this can be stopped

Source: Deborah Hardoon, Sophia Ayele and Ricardo Fuentes-Nieva, Oxfam International, ISBN 978-1-78077-993-5, January 2016

From the press release:
Pre-Davos report shows how 1% now own more than rest of us combined.

Runaway inequality has created a world where 62 people own as much as the poorest half of the world’s population, according to an Oxfam report published today ahead of the annual gathering of the world’s financial and political elites in Davos. This number has fallen dramatically from 388 as recently as 2010 and 80 last year.

An Economy for the 1%, shows that the wealth of the poorest half of the world’s population – that’s 3.6 billion people – has fallen by a trillion dollars since 2010. This 41 per cent drop has occurred despite the global population increasing by around 400 million people during that period. Meanwhile the wealth of the richest 62 has increased by more than half a trillion dollars to $1.76tr. Just nine of the ’62’ are women.

Although world leaders have increasingly talked about the need to tackle inequality, the gap between the richest and the rest has widened dramatically in the past 12 months. Oxfam’s prediction – made ahead of last year’s Davos – that the 1% would soon own more than the rest of us by 2016, actually came true in 2015, a year early….
English summary
English methodology note
English Excel data file
Spanish paper
Spanish summary
French paper
French summary

Martin Luther King Jr. Celebrations Overlook His Critiques of Capitalism and Militarism

Source: Zaid Jilani, The Intercept, January 18, 2016

America’s celebrations of Martin Luther King Jr. typically focus on his civil rights activism: the nonviolent actions that led to the Civil Rights Act of 1964 and the Voting Rights Act of 1965.
The last few years of King’s life, by contrast, are generally overlooked. When he was assassinated in 1968, King was in the midst of waging a radical campaign against economic inequality and poverty, while protesting vigorously against the Vietnam War…..

Basic income for all could lift millions out of poverty – and change how we think about inequality

Source: Ralph Callebert, The Conversation, January 15, 2016

The idea of a basic income for every person has been popping up regularly in recent years. Economists, think tanks, activists and politicians from different stripes have toyed with the idea of governments giving every citizen or resident a minimum income off which to live. This cash transfer could either replace or supplement existing welfare payments. Pilot projects and feasibility studies have been run or are under way in the Netherlands, India, Canada, Finland, France and elsewhere. Even in the U.S., the idea finds support. Alaska, for example, already divides its oil revenues among its residents. Most arguments in favor or against basic income have focused on its feasibility, simplicity, promotion of personal independence or effectiveness at reaching those who fall through the cracks of the welfare state. However, the most important advantage of basic income may not be in its practical application but rather in how it could change the way we think and talk about poverty and inequality…..