Category Archives: Income Inequality/Gap

It Doesn’t Pay To Be An Early-Childhood Teacher

Source: Elissa Nadworny, NPR, June 14, 2016

Why would she teach preschool when she could make a heck of a lot more money teaching kindergarten? It’s a question I’ve heard over and over again reporting on education. In some places, we pay early childhood teachers less than fast-food workers, less than tree trimmers. As a country, we’ve acknowledged the importance of early learning and yet, when you look at what we pay those educators, it doesn’t add up.
Related:
Troubling Pay Gap for Early Childhood Teachers
Source: U.S. Department of Education, Fact Sheet, June 14, 2016

Social Inequality and the Access Myth

Source: Heather A. Howley, Academe, Volume 102, Number 3, May–June 2016
(subscription required)

Is lack of opportunity the real problem? …. Social inequality needs to be addressed, but the solution is not simply to provide opportunity for moving up the economic ladder. The conditions of those on the bottom rungs are best improved by increased pay and better working conditions. …

County Pay Practices: Although the Counties We Visited Have Rules in Place to Ensure Fairness, Data Show That a Gender Wage Gap Still Exists

Source: California State Auditor, Report 2015-132, May 2016

From the summary:
Our audit concerning county pay practices and policies at four California counties—Fresno, Los Angeles, Orange, and Santa Clara—revealed the following:
– From fiscal years 2010-11 through 2014-15, the aggregate gender wage gap has widened slightly at each of the four counties.
– In the aggregate, female employees earned between 73 percent and 88 percent of what male employees earned.
– Men outnumbered women in classifications with average total compensation greater than $160,000 in fiscal year 2014-15, even though women accounted for between 54 percent and 60 percent of all full time employees.
– When we looked more closely at groups of job classifications with similar compensation amounts, we found that pay disparities between men and women varied between less than 1 percent and nearly 9 percent.
– Three of the four counties did not document why a particular candidate was selected for employment over other qualified candidates.
– County officials could only provide documentation explaining their rationales for 39 of 154 competitive employment decisions we reviewed.
– The counties followed their own salary setting pay policies, but a variety of factors unrelated to an employee’s skills or abilities can influence salary rates.
– Current law does not require counties to consistently monitor gender-based pay equity issues in the hiring and salary-setting process.
– Requiring public employers to report gender information when submitting employee specific data to the State Controller’s Office would enhance transparency on gender pay equity issues.

One third of a nation: Strategies for helping working families

Source: Isabel V. Sawhill, Edward Rodrigue and Nathan Joo, Brookings Institution, May 2016

From the summary:
When Franklin Roosevelt delivered his second inaugural address on January 20, 1936 he lamented the “one-third of a nation ill-housed, ill-clad, ill-nourished.” He challenged Americans to measure their collective progress not by “whether we add more to the abundance of those who have much; [but rather] whether we provide enough for those who have too little.” In our new paper, “One third of a nation: Strategies for helping working families,” we ask a simple question: How are we doing?

In brief, we find that:
– The gulf in labor market income between the haves and have-nots remains wide. The median income of households in the bottom third in 2014 was $24,000, just a little more than a quarter of the median of $90,000 for the top two-thirds.
– The bottom-third households are disproportionately made up of minority adults, adults with limited educational attainment, and single parents.
– The most important reason for the low incomes of the bottom third is a “work gap”: the fact that many are not employed at all, or work limited hours.

The True Story of the Gender Pay Gap

Source: Stephen J. Dubner, Freakonomics Radio, January 7, 2016

The gist: discrimination can’t explain why women earn so much less than men. If only it were that easy. …. In some ways it’s a self-inflicted wound — women make choices that lead to smaller monetary returns. On the other hand, society is set up in such a way that those choices are often not really very optional. So, what’s to be done about it? …..

Worker-Owned and Unionized Worker-Owned Cooperatives: Two Tools to Address Income Inequality

Source: Carmen Huertas-Noble, Clinical Law Review, Vol. 22 no. 2, 2016

From the abstract:
This article evaluates worker-owned and unionized worker-owned cooperatives as alternatives to the conventional corporate structures for businesses in the United States. With their focus on democratic governance and shared ownership, worker-owned cooperatives offer an antidote to the extreme inequality of income and deterioration of working conditions that workers are experiencing. These are inequities for which corporate prioritization of executive compensation and shareholder enrichment are at least partly responsible. While questions have been raised concerning the sustainability of the cooperative form, two examples of large, well established cooperatives – Mondragon and Cooperative Home Care Associates – demonstrate how capitalization strategies, cooperative ecosystems, and strategic affiliations with unions can leverage resources to start and keep cooperative businesses functioning. The article also documents the growth of municipal and institutional support for the cooperative form of business ownership, and the role that the City University of New York’s Community Economic Development Law Clinic (CEDC) has played in supporting that movement domestically and internationally. That support has included developing curricula to build the capacity of worker cooperatives, participating in creating and sustaining the creation of a city-wide advocacy coalition, organizing annual conferences, and successfully working with local legislatures to increase funding for cooperatives. Law students in CEDC have gained skills of transactional lawyering, movement lawyering and coalition-building through their representation of individual worker cooperatives and their work with a city-wide advocacy coalition for cooperatives. Of particular note in the pedagogy of this representation are the advanced skills of integrative counseling and inclusive problem solving that assistance for complex actors requires.

Growth of Income and Welfare in the U.S, 1979-2011

Source: John Komlos, NBER Working Paper No. w22211, April 2016
(subscription required)

From the abstract:
We estimate growth rates of real incomes in the U.S. by quintiles using the Congressional Budget Office’s (CBO) post-tax, post-transfer data as basis for the period 1979-2011. We improve upon them by including only the present value of earnings that will accrue in retirement and excluding items included in the CBO income estimates such as “corporate taxes borne by labor” that do not increase either current purchasing power or utility. We estimate a high and a low growth rate using two price indexes, the CPI and the Personal Consumption Expenditure index. The major consistent findings include what in the colloquial is referred to as the “hollowing out” of the middle class. According to these estimates, the income of the middle class 2nd and 3rd quintiles increased at a rate of between 0.1% and 0.7% per annum, i.e., barely distinguishable from zero. Even that meager rate was achieved only through substantial transfer payments. In contrast, the income of the top 1% grew at an astronomical rate of between 3.4% and 3.9% per annum during the 32-year period, reaching an average annual value of $918,000, up from $281,000 in 1979 (in 2011 dollars). Hence, the post-tax, post-transfer income of the 1% relative to the 1st quintile increased from a factor of 21 in 1979 to a factor of 51 in 2011. However, income of no other group increased substantially relative to that of the lowest quintile. Oddly, the income of even those in the 96-99 percentiles increased only from a multiple of 8.1 to a multiple of 11.3. We next estimate growth in welfare assuming diminishing marginal utility of income. A logarithmic utility function yields a growth in welfare for the middle class of roughly 0.01% to 0.07% per annum, which is indistinguishable from zero. With interdependent utility functions only the welfare of the 5th quintile experienced meaningful growth while those of the first four quintiles tend to be either negligible or even negative.

Executive PayWatch 2016

Source: AFL-CIO, 2016

In 2015, CEOs of S&P 500 Index companies received, on average, $12.4 million in total compensation, according to the AFL-CIO’s analysis of available data. In contrast, production and nonsupervisory workers earned only $36,875, on average, in 2015—a CEO-to-worker pay ratio of 335 to 1.

Avoiding corporate income taxes is one way CEOs boost their companies’ profits and thereby increase their own pay. This corporate tax avoidance reduces the amount of money that is available for public goods like roads and schools. As a result, our economy increasingly has become out of balance.

TAX AVOIDERS CONTRIBUTE TO BUDGET SHORTFALLS
Corporations like to complain that their federal income tax rates are too high. But lost amid the clamor to cut taxes for corporations is the fact that many U.S. corporations are not paying taxes on their offshore profits. By “permanently reinvesting” these profits overseas, they can forever defer paying federal income taxes. The table to the right presents the biggest offenders.

CORPORATE PROFITS CLIMB, TAX BURDEN FALLS
The top federal income tax rate for corporations is 35%. But corporations have been paying a lower share of our nation’s total taxes. Overall, the nation’s federal revenue from corporate income tax receipts dropped dramatically to half of that in the 1950s.

U.S. CORPORATE TAX LEVELS ARE LOWER THAN MOST
Many companies complain that the statutory U.S. corporate income tax rate is too high. They’re wrong. In reality, the effective tax rate (what U.S. corporations actually pay) is lower than many developed countries. As a result, the corporate income tax in the U.S. represents a smaller percentage of our economy compared to other countries.

Related:
Press release

The Simple Truth about the Gender Pay Gap

Source: American Association of University Women (AAUW), Spring 2016

From the abstract:
You’ve probably heard that men are paid more than women are paid over their lifetimes. But what does that mean? Are women paid less because they choose lower-paying jobs? Is it because more women work part time than men do? Or is it because women have more caregiving responsibilities?

AAUW’s The Simple Truth about the Gender Pay Gap succinctly addresses these issues by going beyond the widely reported 79 percent statistic. The report explains the pay gap in the United States; how it affects women of all ages, races, and education levels; and what you can do to close it.
Related:
The Gender Pay Gap by State and Congressional District
The gender pay gap exists in almost every congressional district according to the most recent statistics from the U.S. Census Bureau. Not only do some districts in the 114th Congress lag especially far behind, but some states also have large disparities between districts. How do your state and district stack up?