From 1954 thought 1974, American workers brought home most of the wealth that they produced. Since 1974, they’ve steadily lost power—and they’re getting just a fraction of the wealth they produce today….What no one grasped at the time was that this wasn’t a one-year anomaly, that 1974 would mark a fundamental breakpoint in American economic history. In the years since, the tide has continued to rise, but a growing number of boats have been chained to the bottom. Productivity has increased by 80 percent, but median compensation (that’s wages plus benefits) has risen by just 11 percent during that time. The middle-income jobs of the nation’s postwar boom years have disproportionately vanished. Low-wage jobs have disproportionately burgeoned. Employment has become less secure. Benefits have been cut. The dictionary definition of “layoff” has changed, from denoting a temporary severance from one’s job to denoting a permanent severance….
The global financial crisis and ensuing Great Recession reduced the income and wealth of many families, but older families generally fared better than young and middle-aged families. The Federal Reserve’s Survey of Consumer Finances reveals that being young was a significant risk factor during the downturn, regardless of a family’s race, ethnicity, or education level. Among older families, those headed by someone 70 or over fared slightly better than those headed by someone between 62 and 69. Income and wealth also increased most strongly among older families during the two decades preceding the crisis. Part of the explanation for favorable income and wealth trends among currently living older Americans is a positive birth-year cohort effect. After controlling for a host of factors related to income and wealth, we find that cohorts born in the late 1930s and 1940s have experienced more favorable income and wealth trajectories over their life courses than earlier-or later-born cohorts. While it is too soon to know how cohorts born in recent decades will fare over their lifetimes, it appears that the median Baby Boomer (born in the 1950s and early 1960s) and median member of Generation X (born in the late 1960s and 1970s) are on track for lower income and wealth in older age than those born in the 1930s and 1940s, holding constant many factors other than when a person was born.
From the summary:
…Today it is not only poor families but many middle class families who are furiously running in place. Millions are working hard to move forward, or just to make ends meet, and getting nowhere. Anyone who wishes to address poverty and strengthen economic opportunity needs to connect the dots between the needs of the working poor and those of the middle class.
Stagnant social mobility, increasing inequality, and the rise of low wage jobs without benefits are affecting both groups. For the working poor, these trends mean that the ability to move forward and upward economically is not only stunted, it is often cut off. For the middle class, these trends mean an ongoing susceptibility to financial shocks like job loss, unexpected medical expenses and predatory mortgages and an inability to adequately prepare for the future.
In this environment, no amount of individual effort, self-improvement, or thrift can guarantee a secure middle-class lifestyle. If current circumstances continue, even those who are able to move from poverty to the middle class on paper (in terms of education, job title, or income level) may never know long-term financial stability….
…In the aftermath of decades of increasing income inequality and of 2008 economic recession, the challenges and hardships facing lower-income and middle class Americans have grown more severe. These challenges make it harder to move from poverty into the middle class, and to experience middle class financial stability. Today’s dire circumstances can serve as a rallying point to unite the needs of poor and middle class families and renew our commitment to policies that support widespread economic health.
Source: Greg Ruel, GMI Ratings, 2013
GMI Ratings’ 2013 CEO Pay Survey, among the largest surveys of CEO compensation in North America, is based on analysis of North American publicly traded companies. The survey considers 2,259 CEOs whose tenure spanned the whole of the last two years in order to determine changes in executive compensation from 2011 to 2012. Total Annual Compensation represents annual forms of pay including base salary, bonus, and perquisites, while Total Realized compensation includes all elements of annual compensation in addition to equity profits, pension value increases as well as gains in the value of deferred compensation plans.
• CEO Pay increased 8.47% at the median across a matched sample of more than 2,200 North American CEOs.
• S&P 500 pay increased 19.65% at the median.
• Median realized compensation increases were far more prominent at larger companies. While the Russell 2000 saw a 7.62% increase at the median, the figure more than doubles to 15.74% in the Russell 1000.
• Interestingly, median annual compensation increased far more in the Russell 2000 (4.13%) than in the Russell 1000 (1.80%) or the S&P 500 (0.29%).
• This is the first time in the 11-year history of GMI’s CEO Pay Survey that two CEOs named in the Top Ten List of Highest Paid CEOs earned more than $1 billion in a single year, and the first where all 10 CEOs made at least $100 million…
…Our 2013 CEO pay survey marks a third straight year of significant realized compensation increases for North American CEOs. Indeed, the median change in realized compensation from 2011 to 2012 was more than 8%, less than the double-digit increases of the prior two years but still substantial. However, with minimal increases in Total Annual Compensation across our sample, including base salary, the primary trend throughout the survey is that large pay increases in 2012 were mainly fueled by the exercise of large blocks of stock options and the vesting of outsized restricted stock grant…
Although wealth is one of the pillars of the economic system, reliable data on personal wealth ownership is in short supply. The Credit Suisse Global Wealth Report aims to help bridge this deficit by providing the most comprehensive, reliable and timely source of information on global household wealth. Global wealth has reached a new all-time high of USD 241 trillion, up 4.9% since last year, with the US accounting for most of the rise. Average wealth hit a new peak of USD 51,600 per adult, but inequality remains high, with the top 10% of the world population owning 86% of global wealth, compared to barely 1% for the bottom half of all adults….
New Census Bureau data released today further highlight the economic challenges faced by today’s middle class. As U.S. household incomes further declined in 2012, families in the middle class continued to watch their share of the national economic pie stagnate at record-low levels and see those at the very top disproportionately claim the little income growth that has occurred since the end of the Great Recession.
The following three charts present these latest Census figures in a historical context and illustrate the extent to which the middle class has struggled to make headway in an increasingly unequal economy.
While middle-class households suffered deeply during the Great Recession, the underlying trends that have left them increasingly excluded from the nation’s economic growth date back much further than 2007. The typical American household’s annual income peaked in 1999 and has since declined by 9 percent, while the share of the nation’s total income going to the middle class has been falling since topping out at 53.2 percent in 1968. What economic growth has occurred in recent years has been distributed more and more unequally, with the wealthiest households—and the super-rich in particular—claiming almost all of the income gains seen in the past three years as the middle class has fallen further behind….
From the summary:
The role of women in the United States has changed dramatically over the past few decades. For one, more and more women have taken on new responsibilities outside the home by joining the paid workforce. While women made up only about one-third of the workforce in 1969, women today make up almost half of all workers in the United States. Women are also stepping up to lead the country; a record number of women ran for public office in 2012, and a record-high percentage of women are serving in Congress. In addition to making progress on issues of economics and leadership, women have made progress on health issues, which impact women’s personal well-being, as well as their economic security. Over the past few years, women have been able to end gender discrimination by big insurance companies and gain free contraception coverage because of the Affordable Care Act.
Despite women’s advancements, however, substantial inequalities remain. Although an increasing number of women are either the sole breadwinner for their family or share the role with their partners, women in the United States are paid only 77 cents for every dollar a man makes. The pay gap is even larger for women of color. On average, African American women make 64 cents for every dollar that white men make. While 2012 was a watershed year for women in terms of getting elected to public office, women still comprise only 18.1 percent of Congress, despite making up more than half of the U.S. population. They also face challenges on health issues, as 2012 saw continued conservative efforts to erode women’s ability to make their own decisions about their health and well-being.
A deeper examination shows that disparities for women also exist among states. Women in Vermont, for example, make on average close to 85 cents for every dollar a man makes, while women in Wyoming make only 64 cents—more than 25 percent less than women in Vermont. On leadership, 15 states have no female elected leaders in the House of Representatives or the Senate. Lastly, while less than 10 percent of women in Vermont, Wisconsin, Hawaii, and Massachusetts are uninsured, nearly 25 percent of women in Texas do not have health insurance…
– Mapping the State of Women in America
– Explore the Data: The State of Women in America
How do undergraduate business students in Canada and the United States feel about employment regulation, unions and collective bargaining, and income inequality? Do they see the world of work law differently?…
…We both distributed an anonymous, 5 question survey at the beginning of the term, before we had started teaching any substantive material on the law. Therefore, we were interested in the student opinions that they bring to the class. The survey asked about three substantive areas: (1) the appropriateness of minimum wage regulation; (2) the value (or lack thereof) of unions and collective bargaining; and (3) whether income inequality in the two countries is a cause for concern necessitating a legal response.
Here is the survey, with the comparative results from the students in the two countries. Obviously the sample size is too small to draw any big conclusions, but the results are nevertheless interesting. …
From the summary:
…In this brief, we extrapolate from the GAO study to estimate that the federal government is spending an estimated $20.8 to $23.9 billion a year to pay private contractors for the compensation of top executives. $6.97 to $7.65 billion in taxpayer dollars is spent annually on pay that exceeds the U.S. Vice President’s salary of $230,700 a year. Yet this gross misuse of taxpayer dollars is not inevitable. If the government cut the billions of dollars in excessive subsidies it pays for the salaries of executives at contracting companies, those savings could pay the lowest-paid contract workers a more livable wage, all without additional cost to taxpayers. Public officials should also evaluate cases where work can be done more efficiently and effectively by government employees than private contractors. …
The federal government spends an estimated $23.9 billion a year paying private contractors for the compensation of top executives. If taxpayer-funded payouts for these executives were capped at $230,700—the salary of the U.S. Vice President—the pay of hundreds of thousands of low-wage federal contract workers could be raised by as much as $6.69 per hour or $13,902 per year for a full-time worker, without costing taxpayers an additional dime.
This brief uses the results of a recent Government Accountability Office (GAO) study on contracting compensation4 to estimate the amount the government could save if it lowered the cap on the maximum amount of employee compensation that contractors can charge to the federal government. Current law dictates that the federal government must reimburse or price into contracts up to $763,039 in compensation for any one employee—an amount pegged to the salaries of the most highly-paid private sector executives. This maximum, which has risen by 48 percent (adjusted for inflation) since 2004, is set to rise to more than $950,000 later this year if no action is taken to change the formula….
Since the 1970s there has been a well-documented and persistent increase in income inequality in the United States. As the country slowly emerges out of a deep recession, it is instructive to seek out the geographic variation by states in the degree of inequality and the variation in both median and mean incomes.
Data in this article are for households (basically IRS data), for 2009-2011. Median household income is considered the “typical” income of an area. The mean income is the aggregate income of all households in an area, divided by the number of households. This latter measure can be heavily influenced by high numbers of very affluent as well as poor households.
Inequality is a measure of how far the distribution of incomes differs from if all households had the same income. The gini coefficient is the most popular measure of income inequality. But for my maps I instead use a simple measure of the difference between the median and mean, divided by the median, or the percent by which the mean is higher (or lower) than the median. Values above .39 (the figure for the US as a whole) are considered quite high. It should be noted that areas of highest or lowest incomes are not necessarily very unequal, if mostly all are rich or all are poor. Rather it is the juxtaposition of poor and rich households in the same state or area that best demonstrates the true geography of inequality….
Inequality of the Largest U.S. Metropolitan Areas