The growing gap
The gap between the richest and poorest families, and between the richest and middle-income families, is growing at an accelerating rate in most states. A new study of the latest Census Bureau data shows that the nation’s decades-long trend of growing inequality picked up last year, as incomes fell for the poor and stagnated for middle-income families in a number of states. Read the full report, Pulling Apart—A State-by-State Analysis of Income Trends, and fact sheets on every state co-published by the Center on Budget and Policy Priorities and the Economic Policy Institute.
Corporations get a pass on taxes
Over the last 60 years, the U.S. tax code has dramatically shifted away from corporate taxes and toward taxes on individuals, according to an analysis by EPI Research and Policy Director John Irons. Much of that shift is due to increased reliance on the payroll tax, the financial backbone of Social Security and Medicare. In the 1950s, corporate income taxes brought in one of every four dollars in federal tax revenues. By the 2000s, the share had shrunk to one of every 10 tax dollars. The shift has been an important factor “leading to the drop in average federal tax rates for the very highest earners,” Irons wrote.
No action as unemployment rises
The latest federal jobs report found a rising unemployment rate and a continuing loss of jobs. As senior economist Jared Bernstein wrote in his monthly analysis: “Since employment peaked in December, payrolls have contracted by 232,000. Private sector payrolls were down 98,000 last month and 109,000 in February. Since hiring in the government sector is less susceptible to cyclical swings in the overall economy, private sector job patterns provide a clearer signal of the weakening labor market. Private sector jobs are down 300,000 from their peak in November.” In testimony to the House Subcommittee on Income Security and Family Support on Thursday, EPI economist Heidi Shierholz said that the current unemployment rate of 5.1% is high for the start of a recession, and that long-term unemployment—measuring those who have been out of a job for six months or more—is unusually high. The findings cry out for an extension of the normal six-month unemployment benefit period. As Shierholz said, “It is important to note that extending unemployment insurance benefits would be effective on two fronts. First, it would support the families who have lost the most in the current economic slowdown, and second, it would provide an important and effective economic stimulus.” EPI has urged the extension of benefits for several months, but efforts by Congressional Democrats have so far been defeated.
Time for another New Deal
On the 75th anniversary of FDR’s first days in office and the beginnings of the New Deal, the Franklin and Eleanor Roosevelt Institute and the Roosevelt Institution staged a daylong symposium on the package of reforms that changed America. As organizers pointed out, the timing was propitious. Under the threat of another financial collapse with many parallels to events of the early 1930s, policy makers are reexamining what Roosevelt and his staff did and looking for applications today. Discussions ranged from the role of unions to the use of emerging media. Speakers included EPI President Lawrence Mishel, who noted that workers have not shared in the productivity gains of the last two decades, in part because of economic reforms that reversed New Deal legislation.