Category Archives: Income Inequality/Gap

A Dollar Short: What’s Holding Women Back from Equal Pay?

Source: Emily Liner, Third Way, March 18, 2016

– The 79 cents to the dollar figure cited as the gender pay ratio for full-time workers is real.
– Hourly wage data show a pay ratio of 85 cents, indicating that the pay gap cannot be fully explained by the fact that men tend to work more hours than women.
– The pay ratio worsens from 90 cents to 81 cents as women move from the early to middle stages of their careers.
– Occupations with more female workers pay less than those with more male workers, by a ratio of 83 cents to the dollar.
– Women still make less than men after accounting for differences in job type, job level, experience, education, hours worked, and location—which proves bias in the workplace also contributes to the gender pay gap.
– A single fix alone will not close the gap; rather, it will require targeted solutions to its various causes.

The Gender Wage Gap: Extent, Trends, and Explanations
Source: Francine D. Blau, Lawrence M. Kahn, IZA Discussion Paper, IZA DP No. 9656, January 2016

Occupational Feminization and Pay: Assessing Causal Dynamics Using 1950–2000 U.S. Census Data
Source: Asaf Levanon, Paula England, Paul Allison, Social Forces, Vol. 88 no. 2, 2009
(subscription required)

Book Review: Making Technology Masculine: Men, Women, and Modern Machines in America, 1870-1945
Source: American Historical Review, Vol. 106 no. 1, February 2001

Equal Pay Equal Say: Our Voices – A Snapshot of Working Women Results from a National Survey of Nearly 25,000 Working Women

Source: American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), March 2016

From the summary:
Today, more and more women are the primary breadwinners and financial decision-makers in their households. Working women embrace these new roles as progress. It’s time for our public policies and workplaces to catch-up.

The AFL-CIO is uniquely positioned to lead on leveling the playing field for women. This is why it has committed to Equal Pay, Equal Say, an economic issue advocacy and political mobilization initiative for working women.

Women must have equal pay. Despite their financial leadership, women overall still earn 79 cents for every dollar a man earns. For women of color, the gap is even larger when compared to the average wages of white men. Only when women get a raise can working families thrive.

Women must have an equal say. Women make up nearly half of the American workforce and must have fair representation—in their workplaces, in their unions and in politics. Women need a greater say in the laws that impact their lives and demand equal pay for equal work, fair scheduling, paid sick leave, paid family leave and quality child care. Women must become the lawmakers who champion working families and set the nation’s economic policy.

About The National Survey of Working Women:
More than 6.8 million women in the United States are part of a union. Our mission at the AFL-CIO is to give each one a voice on the job, in the economy and throughout our democracy. In the fall of 2015, we launched a comprehensive survey to better understand the experiences and aspirations of working women to guide the AFL-CIO working women’s policy agenda and political action plans. Nearly 25,000 working women responded in just six weeks.

The National Survey of Working Women is more than just a job assessment. It zeroes in on how working women spend time at home, tackle financial challenges and engage in our communities. The results paint a clear picture of the economy and society working women are committed to building: where equal pay, paid leave and fair scheduling are the law of the land.

We received so much information about working women’s priorities, day-to-day experiences, challenges, aspirations and commitments that we decided to release our findings in a series of short reports over the next few months. The first issue brief presents a snapshot of our entire sample: the economic conditions working women face, key issues and what drives us to action. Later briefs will examine young women, mothers, women of color and other topics that provide a further window into our experiences.

What’s Behind the Rise in Income Inequality? Technology or Class Struggle?

Source: Matt Vidal, CounterPunch, March 17, 2016

…..The prevailing explanation for rising inequality – the mainstream economics explanation – is that technology did it. There are no capitalists making investment decisions, no managers making employment decisions and certainly no class struggle. Only technical change, supply and demand. Here I want to make the case for the centrality of class struggle in driving inequality…..If technical change is the main driver of income inequality, then either version of the technology explanation predicts that inequality should trend similarly in countries that are comparable in terms of level of economic development, industrial structure and vocational training and educational systems. To examine this, I’ve plotted income inequality for Canada, the UK and the USA. In addition to having similar industrial structures, these countries are all conventionally understood to be institutionally similar, highly liberal economies with minimal government intervention and only a residual social safety net. Further, they have comparable vocational training and education systems with similar outcomes on a range of indicators……

U.S. Inequality, Fiscal Progressivity, and Work Disincentives: An Intragenerational Accounting

Source: Alan J. Auerbach, Laurence J. Kotlikoff, Darryl R. Koehler, NBER Working Paper No. 22032, February 2016

From the blog post:
….In a just-released study, we provide the first picture of actual U.S. inequality. We account for inequality in labor earnings and wealth, as Thomas Piketty and many others do. And we get to the bottom line: what does inequality in spending look like after accounting for government taxes and benefits? Our findings dramatically alter the standard view of inequality and inform the debate on whether and how best to reduce it. ….The facts revealed in our study should change views. Inequality, properly measured, is extremely high, but is far lower than generally believed. The reason is that our fiscal system, properly measured, is highly progressive. And, via our high marginal taxes, we are providing significant incentives to Americans to work less and earn less than they might otherwise. Finally, traditional static measures of inequality, fiscal progressivity and work disincentives that a) focus on immediate incomes and net taxes rather than lifetime spending and lifetime net taxes and b) lump the old together with the young create highly distorted pictures of all three issues. ….

Pay ratios could curb excessive CEO pay and counter inequality

Source: Tobore Okah-Avae, The Conversation, February 17, 2016

….CEO compensation has grown at an alarming rate over the last three decades. In 1980 most CEOs at major British companies earned around 15 times the average salary. By 1998 the ratio of CEO to average worker pay was 47:1. In 2014 it had ballooned to roughly 183:1.

In the US, the ratio is even higher. According to the AFL-CIO, a federation of labour organisations, the salary of a typical S&P 500 company CEO in 2014 was 373 times the salary of an average rank-and-file worker – that’s US$13.5m compared to US$36,000.

Some commentators aim to justify high pay on the grounds of company performance and that the efforts of these highly-skilled individuals is pivotal for a company’s success. These claims, however, are not supported by the research. CEO skill has been found to have more influence over captive corporate boards, not-so-independent remuneration committees and beholden compensation consultants in the ratcheting up of CEO pay. And the runaway train that is excessive compensation, shows no sign of slowing down…..

Taxing Wealth Seriously

Source: Edward J. McCaffery, USC Gould School of Law, USC Law Legal Studies Paper No. 16-10, February 26, 2016

From the abstract:
The social and political problems of wealth inequality in America are severe and getting worse. A surprise is that the U.S. tax system, as is, is a significant cause of these problems, not a cure for them. The tax-law doctrines that allow those who already have financial wealth to live, luxuriously and tax-free, or to pass on their wealth tax-free to heirs, are simple. The applicable legal doctrines have been in place for nearly a century under the income tax, the primary social tool for addressing matters of economic inequality. The analytic pathways to reform are easy to see once the law is properly understood. Yet our political systems show no serious interest in taxing wealth seriously. We are letting capital off the hook, and ratcheting up taxes on labor, at precisely a time when deep-seated and long-running economic forces suggest that this is precisely the wrong thing to do. It is time — past time — for a change. This Article canvasses a century of tax policy in the United States to show that we have never been serious about taxing wealth seriously, and to lay out pathways towards reform.

Revealed: the 30-year economic betrayal dragging down Generation Y’s income

Source: Caelainn Barr and Shiv Malik, The Guardian, March 7, 2016

Exclusive new data shows how debt, unemployment and property prices have combined to stop millennials taking their share of western wealth. ….

….A combination of debt, joblessness, globalisation, demographics and rising house prices is depressing the incomes and prospects of millions of young people across the developed world, resulting in unprecedented inequality between generations. A Guardian investigation into the prospects of millennials – those born between 1980 and the mid-90s, and often otherwise known as Generation Y – has found they are increasingly being cut out of the wealth generated in western societies. Where 30 years ago young adults used to earn more than national averages, now in many countries they have slumped to earning as much as 20% below their average compatriot. Pensioners by comparison have seen income soar…..

Who’s winning? Find out how your income compares with every other generation

When I Was Your Age: Millennials and the Generational Wage Gap

Source: Brendan Duke, Center for American Progress, March 3, 2016

From the summary:
By all rights, Millennials—people born between 1981 and 1997—should be the highest-paid generation in American history. They are, after all, the most likely to hold a college degree and are working in a period of unsurpassed productivity. Unfortunately, more education and a more productive economy have not paid off for working Millennials.

Median compensation—wages plus the value of benefits from employers such as health care premiums and 401(k) contributions—for a 30-year-old in 2014 was below that of a 30-year-old 10 years earlier. Indeed, 30-year-olds today make around the same amount of money as 30-year-olds in 1984, despite the facts that they are 50 percent more likely to have finished college and that they work in an economy that is 70 percent more productive.

This issue brief argues that a labor market where the deck is stacked in favor of employers at the expense of employees is a primary cause of this poor median compensation growth. Millennials have spent almost their entire working lives in a labor market that is loose—with too many job seekers and too few jobs—and where private-sector labor unions are almost entirely absent. Certainly, monetary policy that promotes employment while making it easier for workers to form unions would help Millennials make up lost ground…..

Unions and Income Inequality: A Panel Cointegration and Causality Analysis for the United States

Source: Dierk Herzer, Economic Development Quarterly, Published online before print March 3, 2016
(subscription required)

From the abstract:
In this research note it is shown that by applying cointegration and causality techniques to U.S. state-level panel data there is a negative long-run relationship between unionization and income inequality in the United States and that causality is unidirectional from unionization to inequality.