The rich have gotten richer at the expense of the rest of us.
The rise in income inequality of the past few decades has taken money from the pockets of the lower and middle class and added it to the coffers of the rich, according to a new paper from the Economic Policy Institute, a think tank focused on worker issues.
There was income inequality 30 years ago, to be sure. But inequality has widened dramatically since then, not because the top 1 percent have suddenly gotten more talented or lucky, but because of economic policies designed to help the top 1 percent suck up more of the value being created in the economy by higher productivity. Meanwhile, the wages of average workers — the ones who keep producing more and generating much of that extra wealth — have stagnated.
The liberal-leaning think-tank estimates missing wages by considering real average annual household income, which rose by 53.4 percent from 1979 to 2007. While that might seem healthy, the increase was mostly due to huge gains by the country’s wealthiest earners. For 90 percent of American households, income growth was actually below that average rate.
If inequality hadn’t worsened during those years, middle-class households would have had annual incomes that were $18,000 higher by 2007, the study notes.
“This growing inequality of income has a real effect on everyday people,” said Elise Gould, author of a new study and director of health policy research at EPI. “The top 1 percent and top 1/10th of 1 percent have grown so much that it pulls up average wages” but that fails to reflect the reality for most Americans, who have suffered from stagnating wage growth.
Wages for workers at every pay level except the bottom 10 percent declined from the second half of 2013 through the second half of 2014, according to a report from the Economic Policy Institute released Wednesday. Furthermore, there’s no sign of wage acceleration that might prompt the Federal Reserve to raise interest rates.
For 70 percent of the workforce, inflation-adjusted hourly wages are still lower than they were in 2007, and wages for all groups are lower than they were at the end of the recession in 2009.
This year’s trend isn’t new. Overall median hourly wages rose 6.1 percent over the entire 1979 and 2013 period, but for those in the bottom 10 percent of the income scale, hourly pay fell 5.3 percent over that time. Meanwhile, the richest 5 percent of Americans experienced hourly pay growth of 40.6 percent. The late 1990s were the only period when wage growth was broad-based, and even strongest for the lowest-income earners.
Inflation-adjusted wages have fallen for every income group in the past year except very low-paid workers, says an Economic Policy Institute study out Wednesday.
The report casts doubt on the perception that more educated, highly skilled employees are experiencing sharper-than-average pay increases and that low-paid workers are stuck in the deepest earnings rut.
Median U.S. hourly wages in the first half of 2014 were $16.59, down 0.9% the past year after figuring inflation, the study says.
But pay was also lower for other income groups, including a 0.7% drop for workers at the 95th wage percentile who earn $52.23 an hour — meaning they make more than 95% of workers and less than 5%.
Wage growth for most workers remains stagnant and will need to pick up pace for the economy to hit full recovery mode, a new report said on Wednesday.
During the first half of 2014 year inflation-adjusted hourly wages fell for the majority of workers, even for those with a bachelor’s or advanced degrees, compared with the same period in 2013, according to a new study from the Economic Policy Institute’s Raising America’s Pay initiative.
The wage stagnation is evidence that the economy is far from full employment and shows that the Federal Reserve should not consider raising interest rates, the report said.
“Despite a recovering economy and growing productivity, employers are not putting anything more in their employees’ paychecks,” said report author EPI economist Elise Gould.
By now, anyone following the debate over income inequality in the U.S. has likely seen the rise of income inequality charted over the years orover decades. But how about income inequality hour by hour?
A new study by the Economic Policy Institute, a left-leaning think tank, breaks down Labor Department data on hourly earnings to show income disparity even at the level of hourly wages. Someone earning $8.38 an hour is in the 10th percentile, meaning they earn more than 10% of workers, but less than 90%. At the 50th percentile, workers have been earning $16.59. At the top of the distribution, workers at the 90th percentile earn $40 an hour and those at the 95th percentile earn $52.23.
And since the recession began, wages have only been growing (and even then only modestly) for those at the top, according to the analysis by EPI economist Elise Gould.
Real hourly wages declined for almost every segment of the U.S. workforce in the first half of 2014, according to a briefing paper released Wednesday morning by the Economic Policy Institute, a liberal think tank.
“The last year has been a poor one for American workers’ wages,” economist Elise Gould, who directs EPI’s health policy research, writes in the report. Analyzing data from the government’s Current Population Survey, Gould found that workers at the 20th, 30th, 40th, 50th, 60th, 70th, 80th, 90th, and 95th percentiles all experienced declines (ranging from 0.5 percent to 2.0 percent) in their real wages in the first half of 2014 compared with the same period last year. Real wages declined among workers with no high school degree (0.6 percent), with just a high school degree (1.1 percent), with some college (1.0 percent), with a college degree (1.6 percent), and with an advanced degree, too (2.7 percent).
Consumer spending accounts for more than two-thirds of the economy, and although businesses have added more than 200,000 jobs a month for the past six months, incomes have remained stagnant.
“Many consumers still have very tight budgets,” says Jack Kleinhenz, chief economist at the National Retail Federation. “Wages haven’t increased as fast as we would like them to. At that end, it puts more pressure on them for making purchases and certainly it’s expected that they’re going to trade off purchases from time to time.”
Kleinhenz says cheaper prices at the pump could start freeing up spending power for Americans with cars. At $3.45 a gallon, the national average price of gas on Monday was the cheapest it’s been since February and was the lowest August price since 2010, according to AAA.
“You could definitely say the desire to find the cheapest prices possible is a coping mechanism people use when economic times are tough, and they certainly have been for most Americans, let alone those at the bottom half of the wage distribution and labor market,” says Josh Bivens, research and policy director at the Economic Policy Institute.
Fed Chair Janet Yellen will deliver the keynote address at an annual economic symposium in Jackson Hole, Wyoming, this week at a gathering of central bankers and academics that will focus on labor markets. All attendees, which include central bankers, academics and the media, pay their own entrance fee of $1,000 as well as their own travel costs to attend.
Including the rather exclusive Jackson Hole summit, many worry there isn’t enough access for “everyday” Americans to share their stories to policymakers as they make monetary policy decisions.
“Low-wage and middle-income working folks don’t necessarily understand what the Fed does, and even people who are unemployed and underemployed have other pressing concerns,” says Peter Brownell, research director at the Center on Policy Initiatives. “Efforts need to be made to actually affirmatively reach out to people and get their perspective, whereas Wall Street and business leaders are not shy about putting their views forward.”
Brownell’s organization is one of about 60 – including the Economic Policy Institute and the National Employment Law Project – that cosigned a letter to Fed policymakers saying that the job market remains weak enough – particularly in light of the flat wages for hourly workers – to necessitate its easy-money policies.
Hourly wages for most Americans either stagnated or declined from 2000 to 2013, the Economic Policy Institute, a liberal-leaning think tank, said in a June report. Like the National Employment Law Project, the EPI found that the worst-hit groups were those at the lowest of the wage distribution.
It doesn’t take a rocket scientist to figure out why some people are saying yes to silence: many of us are starved for quiet time, thanks to our increasingly hectic lives. According to a 2013 report by the Economic Policy Institute, the average American worker works 181 more hours in a year than he did in 1979, which represents a nearly 11% increase in work hours over roughly 30 years. That’s the equivalent of every worker working an additional 4.5 weeks per year.
“Too many workers continue to be sidelined from the workforce for an exceptionally long period of time,” Hilary Wething, a senior research assistant at the Economic Policy Institute, a left-leaning think tank based in Washington, wrote in a research note. “Though the labor market is improving across the country, job growth has yet to meaningfully accelerate for most states.”
The Center for Popular Democracy is slated to release a letter Tuesday signed by more than 60 left-leaning organizations, ranging from community groups to bigger players such as the Economic Policy Institute, Public Citizen and Demos. They are calling on the Fed to keep its easy-money policies in place until wages start to rise and what has been an exceptionally uneven recovery begins to broaden out. Butler, along with several other workers and activists, intend to trek through the mountains to deliver that message in person before the conference begins Thursday.
In the past, ballot initiatives have been used to push minimum wage laws through especially stubborn states. Take New Jersey for example. In January 2013, Republican Governor Chris Christie vetoed minimum wage legislation that state lawmakers had passed. At the polls ten months later, New Jersey voters approved a ballot initiative to boost the state’s minimum pay from $7.25 to $8.25 with 61% of the vote.
“A higher minimum wage is incredibly poplar,’ says David Cooper, an economic analyst at the Economic Policy Institute. “If legislature is not being responsive to the public’s desires, advocates are going the ballot measure route because it’s been successful.”
Voters in Montana and Missouri voted down hikes in 1996, but since then, every minimum wage initiatives that have appeared on statewide ballots — 13 in total — have gained voter approval, according to the Ballot Initiative Strategy Center.
A pending decision by President Barack Obama on whether to use his executive powers to make interim immigration reforms because Congress failed to could make the already heated immigration issue even more volatile. The Economic Policy Institute, a liberal leaning, non-profit think tank, released a report Thursday aiming to dispel many myths and provide some fundamentals before politics sends things into a frenzy. Here are the five biggest takeaways from the institute’s report on immigrants:..
Recently, a number of upscale restaurants have eliminated tipping—in New York City, Sushi Yasuda and Restaurant Riki are among the latest—fueling debate about the subject. But the issue is complex, and there are pluses and minuses to the custom:
Restaurants may pay tipped workers a very low sub-minimum wage, which helps lower menu prices. Diners don’t pay sales tax on gratuities. And tips significantly boost the income of servers; however, diners may tip generously, poorly or not at all, and many things besides quality of service affect tips, leaving servers vulnerable to the habits of capricious diners.
“Income flows on a weekly basis are extremely erratic,” said David Cooper, an analyst at the Economic Policy Institute, a liberal think tank in Washington, D.C., and co-author with Ms. Allegretto of the tipping report. “Weather impacts the number of customers. Appearance, age, and gender significantly influence how much people tip.”
As a result, said Michael Lynn, a professor of consumer behavior and marketing at Cornell University School of Hotel Administration, servers may have difficulty qualifying for a car loan or mortgage.
States that cut unemployment benefits following the Great Recession didn’t help the jobless or taxpayers, according to a recent report by the Economic Policy Institute (EPI), a left-leaning think tank.
The results matter in the context of North Carolina’s handling of unemployment benefits last year, which received national media attention. In July 2013, Gov. Pat McCrory and the state legislature reduced the duration and weekly amount of unemployment benefits, explaining the cuts as necessary to tackle $2.5 billion in debt to the federal government. Since then, McCrory has said that kicking people off unemployment insurance compelled them to find work, a point that EPI and other research groups have disputed.
While the cuts in North Carolina were the most dramatic, other states used similar approaches to deal with accruing debt from unemployment insurance. Arkansas, Florida, Georgia, Illinois, Michigan, Missouri and South Carolina also reduced unemployment benefits some time between 2011 and 2013. Another 27 states were borrowing from the federal government to pay for unemployment benefits, but opted not to make cuts to their programs.
According to the Labor Department, the jobless rate was 6.2 percent in July, and businesses added 209,000 workers, representing the sixth straight month of job gains greater than 200,000. The Economic Policy Institute estimates that given the pace of population growth since the recession, in July there were 5,860,000 “ missing workers,” which include potential workers who aren’t in the labor force – many because they’re discouraged. EPI estimates if these workers were looking for jobs, the actual unemployment rate would be about 9.6 percent.
In contrast with unadjusted figures that show a drop in disparity, the World Bank’s Gini coefficientmeasuring the extent of income inequality barely budged during those decades, according to preliminary adjustments by economists Christoph Lakner and Branko Milanovic.
“With a ‘top heavy’ adjustment, the decrease in inequality — present when we use all other adjustments — almost entirely dissipates,” they wrote in a December paper.
That’s surprising for a period when poverty was falling sharply: The number of people living on less than $1.25 a day dropped to 1.22 billion in 2010 from 1.91 billion in 1990 after adjusting for inflation, World Bank data show.
If earning gaps haven’t narrowed around the world even as the impoverished population declined, that could “really change the way economists think about the last 30 years,” said Lawrence Mishel, president of the Economic Policy Institute in Washington, which advocates for workers’ rights.
The Labor Department characterized the unemployment rate in July as “little changed,” with an uptick of one tenth of a point to 6.2 percent. The labor-force participation rate of 62.9 percent “has been essentially unchanged since April,” the report said.
In other words, the job market is moving along at a decent, steady pace. But the upswing is still not strong enough to change the prospects for the long-term unemployed or the involuntary part-timers, or to drive significant raises for workers.
“July’s 209,000 jobs is solid, but is a decline from the strong second quarter, when 277,000 jobs were added each month on average,” said Heidi Shierholz, an economist with the Economic Policy Institute. “At July’s pace, it would take nearly four more years to get back to pre-recession labor market conditions.”
The White House said the report confirms that the economic recovery has made huge progress, but has left behind millions of Americans.
Many workers aren’t even getting the pay they’ve been promised for the work they do. Complaints of wage theft, like that experienced by NFL cheerleaders, jumped by 400 percent between 2000 and 2011. It’s rampant in some industries: 89 percent of fast food workers say they’ve been made to work for free off the clock, denied overtime pay, or simply paid less than minimum wage. More is stolen from low-wage workers than is robbed from banks, gas stations, and convenience stores combined. Lawmakers in a handful of cities and two states, Colorado and New York, have passed anti-wage theft ordinances to crack down on companies that steal wages and make it easier for workers to bring claims.
But that’s just a start. There are other ways to reconnect hard work and decent pay that don’t involve government action, but instead hand employees more power so they can ask for more. Historically unions have played a significant role in this equation. But falling unionization rates have coincided with a drop in middle class incomes and an increase in income inequality. It’s become harder to unionize, but easing the way for workers to band together and demand better pay would start to balance the power. “We’re not really going to get wages to grow in line with productivity without a more robust system of collective bargaining,” Lawrence Mishel, president of the Economic Policy Institute, told me. One way to get there would be to “develop a system where collective bargaining can emerge that covers an entire occupation or an entire industry,” he suggested, rather than shop by shop as it is now, particularly in sectors like fast food, where each location is owned by a different franchisee. (Although the path to unionizing fast food workers may now be easier with the National Labor Relations Board saying that McDonald’s is responsible for what happens in all of its stores, franchises or no.)
Retail workers who don’t have a supervisory role earned an average of $14.02 an hour in 2013, according to calculations of government wage data compiled for NBC News by the Economic Policy Institute. There were 12.9 million such workers in the U.S. in 2013, according to EPI, accounting for nearly 86 percent of all retail workers.
After adjusting for inflation, that’s a 12.2 percent decrease from the average hourly wage those workers earned in 1979.
Over that same period, the overall pool of similar production and nonsupervisory workers — who accounted for nearly 83 percent of all private-sector workers in 2013 — saw hourly wages increase by 6.2 percent, according to EPI’s calculation.
The declines follow a period in which retail wages grew substantially. According to EPI, average wages for those nonsupervisory retail workers increased by 62.7 percent, after adjusting for inflation, between 1947 and 1979.
That was a time when department stores and other retail innovations were coming into vogue, providing relatively good jobs both to men and to the growing number of women coming into the workforce, Plunkett said.
Mishel, of the Economic Policy Institute, said the wage declines that followed are at least partly a result of the dramatic changes that took place after that, when retail became more concentrated among big-box stores competing to get Americans their favorite goods for the lowest price.
Nearly 40 million Americans — almost 40% of the private-sector workforce — don’t have paid sick leave, according to a report by the Economic Policy Institute. And two-thirds of them are at the bottom 25% of the pay scale — the country’s lowest earners, according to the Labor Department.
In fact, according to the Economic Policy Institute in Washington, the vast majority of unaccompanied children crossing the border are designated for deportation once they come before a judge. The problem is that wait time for a hearing in immigration court is measured not in weeks or months, but in years.
According to Syracuse University’s Transactional Records Access Clearinghouse (TRAC), there was a backlog of 375,503 cases in the immigration court system as of the end of June. That’s more than twice the number of pending cases in 2008. It also translates into an average wait time, according to TRAC, of 587 days for an initial hearing, with wait times in some jurisdictions averaging much longer.
If you’re familiar with American history and housing policy, this shouldn’t come as a surprise. The explicit housing discrimination of the mid-20th century has left a mark—arguably a scar—on the landscape of American homeownership. The combination of redlining, block-busting, racial covenants, and other discriminatory measures means that, even now, a majority of blacks live in neighborhoods with relatively poor access to capital and mortgage loans. What’s more, this systematic discrimination has left many black households unable to afford down payments or other housing costs, even if loans are available.
And in the event that black households are able to save and afford a home, they aren’t as financially secure as their white counterparts. To wit, middle-class African-Americans are more likely to belong to the lower middle class of civil servants and government workers—professions that, in the last five years, have been slashed as a consequence of mass public-sector downsizing. All else being equal, a black schoolteacher who loses her job to budget cuts is less likely to have savings—and thus a safety net—than her white counterpart.
The long-term unemployment rate, which soared in 2009 to heights not seen since the Great Depression, is finally declining rapidly. The proportion of the work force that has been unemployed for at least 27 weeks has fallen to 1.98 percent, less than half the record high of 4.4 percent reached in 2010.
Since the end of 2013, “the long-term unemployment rate dropped 0.5 percentage point, thereby accounting for almost the entire decline” in the overall unemployment rate, pointed out two Federal Reserve Board economists, Tomaz Cajner and David Ratner, in a note published by the Fed this week.
As a result, for the first time in five years, less than a third of all unemployed workers have been out of work for at least six months. In the first six months of 2014, that figure dropped at the fastest rate in more than half a century.
“The improvement in the labor market is reaching the long-term unemployed,” said Heidi Shierholz, an economist at the Economic Policy Institute. “They are benefiting from the modest but measurable improvement in the labor market.”
Evidence, however, tells a different story, namely that the economy is and has long been too weak to create enough jobs, even for experienced and skilled workers and for young people graduating from college. According to the latest federal labor data, there were still more than twice as many job seekers as job openings in May. That means that if all the job openings were filled tomorrow, more than five million of the nation’s 9.8 million officially unemployed workers would still be out of work, as would an estimated six million nonworking people who are not included in the unemployment statistics but who most likely would be working or looking for work if the labor market were stronger.
Equally telling, unemployed workers outnumber job openings in every industry. Even in health care, a field that creates many jobs, there are significantly more jobless workers than job openings. Such findings indicate that the problem is lack of demand for workers, not a widespread lack of skills. In addition, if there were a skills gap in the economy, wages and salaries would be rising in fields where employers had to compete for scarce skilled labor. Wages and salaries have long stagnated, even for college-educated workers.