JPMorgan Chase’s Jamie Dimon is really proud about giving his employees a raise, heartily patting himself on the back in a New York Times op-ed. JPMorgan will raise its lowest wage to $12, but over the next three years, and only starting in 2017. That’s a roughly 3.2 percent annual boost after taking projected future inflation into account. This hardly seems to deserve a parade.

Has it really come to this? Has providing a modest wage increase really become breaking news that corporate chieftains send crowing press releases about? Let’s be clear about this—this is not the way it’s supposed to be. Wages rising faster than the rate of inflation should be the norm in the American economy and should occur all the time, without fanfare and self-congratulation from employers. That wage increases are newsworthy even while unemployment is below five percent is quite telling. Even at such a low unemployment rate, all the power in the employment relationship still rests with employers.

Dimon points out that some of his current employees earn $10.15 an hour, and brags that this is $3.00 over the current federal minimum wage. Left unsaid is that the current minimum wage of $7.25 is roughly 25 percent below the inflation-adjusted value of the minimum wage in 1968, despite the fact that productivity has more than doubled since then. (Of course, the bank’s employees in New York City will be receiving $15.00 at the end of 2018 because of the recently passed minimum wage legislation that applies to the city.)

Read more

Gretchen Carlson is doing working Americans a real service by suing Roger Ailes, the CEO of Fox News, for sexual harassment. First, when a powerful, high profile CEO like Ailes is called out for disgusting behavior, it reminds workers and their bosses everywhere that women have a legal right to be treated with respect in the workplace.

Carlson is doing something else: she is boldly fighting the latest technique employers are using to avoid justice, to get away with sex or race discrimination, and to escape lawsuits for wage theft—putting binding arbitration clauses in employment contracts, which keeps cases out of the state and federal courts and push them into private dispute resolution systems that systematically favor employers.

Millions of working Americans are subject to arbitration clauses that they don’t even know about. More and more employers are forcing their employees, as a condition of being hired or of remaining employed, to waive the right to sue in a court if their employer violates the law. Workers must accept a process they often don’t understand, where the costs of seeking justice might be far higher even as their chances of winning or obtaining a just award of damages are reduced dramatically.

Read more

In a couple of previous posts, I outlined some clear problems with Paul Ryan’s recent tax plan. The final major pieces of Speaker Ryan’s House GOP tax reform are the changes to the corporate income tax. The headline here is bad enough, cutting the top corporate income tax rate from 35 to 20 percent. But it gets worse, and as with the rest of this tax plan, it does so in a way that clouds how much of a giveaway Paul Ryan and the House GOP actually intend.

The corporate income tax is steeply progressive, making it an important tool for curbing inequality. This is because the vast majority of the incidence of the corporate income tax falls on the owners of capital, with capital income heavily concentrated at the very top of the income distribution. For instance, the Congressional Budget Office’s reading of the economic evidence assigns 75 percent of the incidence of the corporate income tax to capital owners. And taxes on capital income are eroding. Foreigners and retirement plans now hold 63 percent of U.S. stock and are nontaxable. So that erosion at the shareholder level has made the corporate income tax the main way through which shareholders are taxed, either explicitly or implicitly. Far from worries about so-called double taxation, Steve Rosenthal and Lydia Austin have shown that the percentage of corporate stock that is taxable has fallen from 83.6 percent in 1965 to 24.2 percent as of 2015. This makes pairing a reduction of the corporate income tax to 20 percent, along with the 50 percent tax exemption for capital gains, dividends, and interest that I touched on previously, a spectacular giveaway to the rich.

Despite its progressivity, and despite the erosion of other taxes on capital income, the corporate income tax base has also eroded substantially in recent decades. Since 2010 after-tax corporate profits have averaged 9.1 percent of GDP, while corporate income tax revenues have averaged 1.6 percent of GDP. Driving this erosion are business reclassification and income shifting, points we will make more detailed and visual in an upcoming joint Americans for Tax Fairness/EPI chart book. But for now, let’s focus on how Ryan’s House GOP tax plan would lock in current income shifting and worsen future income shifting considerably.

The most damaging part of Ryan’s corporate tax reform isn’t the stark cut in the headline rate—it’s the much less obvious change towards a territorial system of taxation. Territorial taxation gives multinational firms a quick and easy way to avoid all the taxes they owe on their U.S. profits, further eroding the corporate tax base.

Read more

Paul Ryan’s election-year tax reform agenda shocked some people with its 33 percent top marginal income tax rate on earned income. This is much lower than today’s rates—or even what prevailed after the George W. Bush tax cuts—but at the same time, it’s high relative to the world of wildly unrealistic Republican tax plans. Have Republicans realized that slashing taxes on the rich won’t lead to booming growth and hence be self-financing? Or have they realized that they shouldn’t exacerbate inequality by continuing to fight tooth and nail for enormous tax cuts for the rich? Sadly, no, they are still fighting for enormous tax cuts for the rich—they’re just being a bit more subtle about it now. One example of this subtlety was detailed in my previous post: the 33 percent statutory rate masks the fact that high-income individuals could easily pay a top rate of 25 percent under Ryan’s plan by simply reclassifying their income as pass-through income. So the extent to which the House Republican caucus is no longer calling for drastic cuts to top marginal income tax rates is highly exaggerated. They’ve simply traded in their very-apparent tax reductions for less-obvious tax loopholes.

Another example highlights how House Republicans are doubling down on tax breaks for an even-richer subset of high income individuals—people who make their income from capital earnings instead of working.

The Ryan tax plan drastically slashes taxes on both corporate income and income from capital gains, dividends, and interest. It cuts the corporate income tax to 20 percent and shifts the United States to a territorial system that would spur income shifting and tax avoidance. I’ll discuss the effects of those proposals in a later post, but for now I want to focus on Ryan and the House GOP’s 50 percent exclusion on income earned from capital gains, dividends, and interest.

Read more

Yesterday, presumptive Republican nominee Donald Trump gave a speech on trade, extensively citing EPI’s research which shows that trade deficits as a result of NAFTA and other trade deals, as well as trade with China, have cost U.S. jobs and driven down U.S. wages. It’s true that the way we have undertaken globalization has hurt the vast majority of working people in this country—a view that EPI has been articulating for years, and that we will continue to articulate well after November. However, Trump’s speech makes it seem as if globalization is solely responsible for wage suppression, and that elite Democrats are solely responsible for globalization. Missing from his tale is the role of corporations and their allies have played in pushing this agenda, and the role the party he leads has played in implementing it. After all, NAFTA never would have passed without GOP votes, as two-thirds of the House Democrats opposed it.

Furthermore, Trump has heretofore ignored the many other intentional policies that businesses and the top 1 percent have pushed to suppress wages over the last four decades. Start with excessive unemployment due to Federal Reserve Board policies which were antagonistic to wage growth and friendly to the finance sector and bondholders. Excessive unemployment leads to less wage growth, especially for low- and middle-wage workers. Add in government austerity at the federal and state levels—which has mostly been pushed by GOP governors and legislatures—that has impeded the recovery and stunted wage growth. There’s also the decimation of collective bargaining, which is the single largest reason that middle class wages have faltered. Meanwhile, the minimum wage is now more than 25 percent below its 1968 level, even though productivity since then has more than doubled. Phasing in a $15 minimum wage would lift wages for at least a third of the workforce. The most recent example is the effort to overturn the recent raising of the overtime threshold that would help more than 12 million middle-wage salaried workers obtain overtime protections.

Read more

Last Friday, Speaker Paul Ryan released his long awaited tax reform proposal, the final piece of the House GOP’s election year agenda, “A Better Way.” This agenda, as Ryan noted, is meant to highlight the policies Republicans are for, not simply what they are against. So what kind of tax reform are Republicans for?

It will come as no surprise that the consensus view of House Republicans is that tax reform means more tax cuts for the rich (a point I’ll highlight more in later posts). What is surprising, however, is how Paul Ryan and the House GOP propose cutting taxes for the rich.

Ryan has decided that the House GOP should take tax advice from noted fiscal policy experts Sam Brownback and Donald Trump. Specifically, Ryan’s House GOP tax reform agenda creates a new loophole for “pass-through” income. Pass-through entities are businesses whose incomes are not taxed at the corporate level, but instead “passed through” entirely to the business owners and then taxed at their individual income tax levels. Trump’s tax plan called for cuts to the top individual income rate that would reduce it from today’s 39.6 percent to 25 percent. But, on top of this already generous tax cut for the very top, he also introduces a special, lower rate for pass-through income—15 percent.

Read more

The British vote to leave the European Union is a watershed event—one that marks the end of an era of globalization driven by deregulation and the ceding of power over trade and regulation to international institutions like the EU and the World Trade Organization. While there were many contributing factors, the 52 percent vote in favor of Brexit no doubt in part reflects the fact that globalization has failed to deliver a growing standard of living to most working people over the past thirty years. Outsourcing and growing trade with low-wage countries—including recent additions to the EU such as Poland, Lithuania, and Croatia, as well as China, India and other countries with large low-wage labor forces—have put downward pressure on wages of the working class. As Matt O’Brien notes, the result has been that the “working classes of rich countries—like Brexit voters—have seen little income growth” over this period. The message that leaders in the United Kingdom, Europe, and indeed the United States should take away from Brexit is that the time has come to stop promoting austerity and business-as-usual trade deals like the Trans-Pacific Partnership (and the now dead Transatlantic Trade and Investment Partnership) and to instead get serious about rebuilding manufacturing and an economy that works for working people.

Conservative austerity policies in Britain over the past two decades, which have slashed government spending and limited government’s ability to deliver public services and support job creation, fueled the anger towards elites that encouraged Brexit. At the same time, the neoconservative, anti-regulatory views of public officials in Brussels—who are disdainful of government intervention in the economy and who consistently pushed for the “liberalization of labor markets” and other key elements of the neoconservative model—left Europe unprepared for the Great Recession. It’s no surprise, then, that there has been a revolt against the EU. When the financial crisis hit in 2008, EU authorities, especially banking officials in Germany and other wealthy countries that have a dominant influence over the European Central Bank, reacted by blaming public officials in Greece, Spain, Portugal and other countries hardest hit by the crisis. The budget cuts they demanded led to further contractions in spending and soaring unemployment which still persists in much of southern Europe, putting further downward pressure on employment in the UK and setting the stage for widespread populist revolts from the left and right that have gained traction across much of Europe.

Read more

This morning the Supreme Court of the United States issued its decision in United States v. Texas, the State of Texas’s challenge to the most significant of the executive immigration actions—known as the DAPA and DACA+ initiatives—which were announced by President Obama on November 20, 2014. The Court was deadlocked in a 4-4 tie, which results in the Fifth Circuit’s decision being upheld, which had affirmed the District Court’s preliminary injunction that prevented the president from moving forward with DAPA and DACA+.

At issue in U.S. v. Texas was the president’s authority to defer the deportation of unauthorized immigrants who are the parents of children who are either U.S. citizens or legal permanent residents, if the parents have resided in the United States for at least five years, and are not an enforcement priority for deportation. This is known as DAPA—Deferred Action for the Parents of Americans and Legal Permanent Residents. The president also would have updated and expanded DACA, the Deferred Action for Childhood Arrivals initiative (in place since 2012), which to date has provided deferred action to over 700,000 people who entered the country as minors without authorization. Combined, over five million people are eligible for DAPA, DACA, and expanded DACA (sometimes referred to as DACA+), out of a total unauthorized immigrant population of 11 million.

Since implementation of the DAPA and DACA+ initiatives has been prevented, millions of unauthorized immigrants will not be eligible to apply for and obtain an employment authorization document from the Department of Homeland Security that allows them to work legally. This means that millions of workers will continue to lack access to basic labor standards and employment law protections—a terrible outcome for both unauthorized immigrants and American workers.

Read more