Over the past year, discussion of the conditions faced by workers in Apple’s supply chain has focused almost exclusively on what changes have, or have not, occurred at certain factories of its largest supplier, Foxconn. In light of the deplorable working and living conditions faced by Foxconn employees, many of which persist despite some reports to the contrary, that discussion is warranted. But it only covers part of the story: less than one-fifth of the workers in Apple’s supply chain are employed at the three Foxconn factories receiving the most public scrutiny. An illuminating new report and a video by China Labor Watch (CLW) underscore that labor rights violations would likely be found to be even worse if one were able to get an in-depth view of Apple’s entire supply chain.

The CLW study examined three Pegatron factories with more than 70,000 workers combined. Pegatron is Apple’s second largest supplier, and CLW gathered information by placing undercover investigators at the factories. The study describes 86 labor rights violations, including relying on scurrilous dispatch labor companies that exploit placed workers, widespread hiring discrimination, the significant misuse of underage workers and pregnant women, low wages, forced and uncompensated overtime, and harsh working and living conditions. It discusses 17 specific commitments in Apple’s supplier code of conduct that Pegatron violates.

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According to various media outlets, President Obama will propose, in a speech today, changes to the corporate income tax “so long as the initial revenue generated goes toward job creation.” Increasing corporate tax revenue to fund job creation, infrastructure improvements, and strengthening U.S. manufacturing is very welcome news. The not so welcome news is he is proposing a revenue-neutral corporate tax reform with a one-time corporate tax revenue increase by granting a tax break on foreign earnings of U.S. corporations. The proposed tax break appears to be a low tax on all $2 trillion of deferred foreign earnings. This one-time revenue increase will be used to pay for job creation and infrastructure improvements.

U.S. corporations are holding almost $2 trillion overseas. This income is not subject to the U.S. corporate tax until it is brought back to the U.S. or “repatriated”—this loophole is known as deferral. A common misperception is the firms will pay 35 percent of the repatriated earnings to the federal government. However, because of various deductions and other loopholes (some legitimate, some not), the multinational ultimately pays considerably less to the government. Also, the corporations get a credit for foreign taxes paid. This deferral of taxes on overseas profits is one of the costliest corporate tax loopholes, reducing tax revenue by up to $50 billion per year.

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Tomorrow, the U.S. House Committee on the Budget is holding a hearing on the progress of the War on Poverty. While the United States is still slowly recovering from the worst recession since the Great Depression, fortunately this time around government safety net programs have been in place to keep more people from falling into poverty. The Supplemental Poverty Measure (SPM) shows the strength of the government to mitigate the incidence of poverty.

As the figure below shows, Social Security is, by far, the most effective anti-poverty program in the United States. Without Social Security, an additional 8.3 percent of Americans, or over 25 million more people, would fall below the SPM poverty threshold. Refundable tax credits, such as the Earned Income Tax Credit, kept 2.5 percent, or nearly 8 million Americans above the SPM poverty threshold. Other programs such as SNAP (food stamps), unemployment insurance, Supplemental Security Income, and housing subsidies also have a significant impact on the ability of families to stay afloat.

Source: http://www.census.gov/hhes/povmeas/methodology/supplemental/research/Short_ResearchSPM2011.pdf

In a recent New York Times interview, president Obama reminded readers that “there was a massive economic component” to the 1963 March on Washington for Jobs and Freedom. He added, “When you think about the coalition that brought about civil rights, it wasn’t just folks who believed in racial equality. It was people who believed in working folks having a fair shot.”

EPI has been using this 50^th anniversary year of the march to make the same point. Our Unfinished March project highlights the fact that most of the marchers’ demands, demands with big economic impacts for working folks, were not achieved. The marchers’ demands for full employment, a living wage, adequate and integrated education, and decent housing have yet to be realized.

The video from our recent Unfinished March symposium can be seen here. Our Unfinished March publications can be found here. Register at the site to be updated about future publications and events.

Here’s what we read today. Read anything interesting lately? Share it in the comments.

• Fast Food, Low Pay (New York Times)
• The Affordable Care Act: A Hidden Jobs Killer? (CEPR)
• Bronx Carwasheros Latest to Win Union Voice (AFL-CIO)
• Proof Of Politics: Indiana Fudges Truth On Health Exchange Rates To Make Obamacare Look Bad (Forbes)
• Big Data Analysis Adds to Guest Worker Debate (New York Times)
• In Climbing Income Ladder, Location Matters (New York Times)

Yesterday, President Obama gave a speech at Knox College outlining his vision for the US economy. As EPI President Larry Mishel notes, the speech did a great job diagnosing the failure of our economy (and our economic policies) to strengthen and reward the middle-class, even if it was a bit light on prescriptions to address these failures. We look forward to hearing the president’s more specific proposals in the upcoming speeches he has planned.

EPI has researched and documented much of what the president described in his speech. (For a great overview on how the economy has not been working for most Americans over the past 35 years, and what you can do about it, visit our new website, inequality.is.)

Here’s 10 figures that illustrate many of the president’s points, as well as links to some of EPI’s research on these topics.

Productivity/Wages and Top 1% Income:

Obama: “The link between higher productivity and people’s wages and salaries was severed – the income of the top 1% nearly quadrupled from 1979 to 2007, while the typical family’s barely budged.”

EPI: “The economy’s failure to ensure that typical workers benefit from growth is evident in the widening gap between productivity and median wages. In the first few decades after World War II, productivity and median wages grew in tandem. But between 1979 and 2011, productivity – the ability to produce more goods and services per hour worked – grew 69.2 percent, while median hourly compensation (wages and benefits) grew just 7.0 percent.”

– The State of Working America, 12th edition (page 7)

EPI: “Comprehensive income trends show a striking pattern in average income growth by income group: Income growth is strongly positively correlated with a household’s rank in the income distribution, and the gap in income growth between the highest-income households and the rest is enormous. For example, the top 1 percent of households registered cumulative income growth of 240.5 percent between 1979 and 2007, while households in the bottom and middle fifths of the income distribution posted gains of 10.8 and 19.2 percent, respectively.”

– The State of Working America, 12th edition (page 79)

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Rep. Susan Bonamici of Oregon has a great idea that will simultaneously help young people with limited means pay for college, get them job experience, and stimulate our stumbling economy. She proposes to have the federal government pay for tens of thousands of internships, making them available to low-income, Pell Grant-eligible students who could otherwise not afford to take them. Under Bonamici’s Opportunities for Success Act, H.R. 2659, the federal government would send funds to colleges and universities, which would use them to provide stipends equaling at least the minimum wage, but potentially more in situations where a student was not currently attending school (such as a summer internship) and would have to pay for food, lodging and transportation. The maximum grant would be $5,000.

The need for such a program is clear. Paid internships are increasingly important to the ability of college students to gain skills, make professional connections, and find jobs after graduation. As Rep. Bonamici says in the bill’s “Findings” section:

• Many students struggle to make ends meet; 66 percent of young community college students dedicate more than 20 hours a week to an outside job, and the need of many students to maintain a part-time or full-time job reduces or eliminates the time available for an internship.
• Internships often require significant time commitments or temporary relocation, which many students are unable to afford; these additional living expenses include housing, meals, and travel, and these costs make unpaid internships with employers like non-profit organizations and government even more inaccessible for those with low and middle incomes.

Unless we want to exclude students from low-income and middle-income families from important opportunities to participate in government, to make important connections, and to get their foot in the door for future paid employment opportunities, it is particularly important that we provide a means of supporting them financially while they work in government internships. This is not just a matter of economic justice but a way to ensure full democratic participation and to combat economic elitism.

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In Seattle, San Francisco and Salt Lake City, a child raised in the poorest 20 percent of families has more than a one in ten chance of ending up in the top 20 percent of earners as an adult. In the Atlanta area, by contrast, only one poor child in 25 will make it to that top quintile during adulthood.

Why does geography matter so much to your odds of moving up the economic ladder? One reason may lie in differences in state and local policies. In a new study, which is being presented this week at a conference of the National Bureau of Economic Research, four economists explore the link between intergenerational income mobility, and a particular subset of such policies, tax expenditures. In Monday’s New York Times, David Leonhardt used the authors’ dataset to produce a fantastic interactive piece, painting a picture of economic mobility (and immobility) across America.

The study’s authors—Raj Chetty and Nathaniel Hendren of Harvard, and Patrick Kline and Emmanuel Saez of Berkeley—find that the level and progressivity of tax expenditures are associated with increased economic mobility between generations. Even when controlling for a broad range of local characteristics, the authors find that local and state tax expenditures contribute significantly to the likelihood that a child who grows up poor will experience significant upward mobility as an adult. The economists also identify particular state-level tax expenditures (such as the earned income tax credit) that are associated with greater economic mobility. “Overall,” they conclude, “these results suggest that tax expenditures aimed at low-income taxpayers can have significant impacts on economic opportunity.”

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The president did a great job framing the economic problems we face, providing a narrative on what’s happened to the broad middle class.

“…a growing middle class was the engine of our prosperity.  Whether you owned a company, swept its floors, or worked anywhere in between, this country offered you a basic bargain – a sense that your hard work would be rewarded with fair wages and benefits, the chance to buy a home, to save for retirement, and, above all, to hand down a better life for your kids.”

And then he got to the core issue, “The link between higher productivity and people’s wages and salaries was severed—the income of the top 1% nearly quadrupled from 1979 to 2007, while the typical family’s barely budged.” Couldn’t have said it better, though my colleagues and I have tried many times, (here on the productivity-wage divergence and here on the top one percent).

The question I want to raise is whether the solutions being discussed are of sufficient breadth and scale to overcome the forces driving the dismal outcomes just delineated. Let me identify some issues that stand out for me. The president makes the appropriate case for public investments in infrastructure, in clean energy and in education. In fact, these investments are critical to our future growth. But he shouldn’t pretend that there will be anything but DISINVESTMENT in the future, as  overall spending on domestic programs will be reduced by at least a fifth over the next ten years, even if the sequester is reversed. Looking specifically at public investments, Obama’s FY14 budget had nondefense public investment fall to 1.7% of GDP in 2023—the lowest since 1947—from 2.7% in 2008. And, we’ll never raise the revenues we need for these and other investments if we brag about “locking in tax cuts for 98% of Americans,” as the president did.

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In a speech today outlining his economic agenda for the next two-and-a-half years, President Obama repeated his call for raising the minimum wage.

At the same time, today was a national day of action in support of a higher minimum wage. Americans throughout the country rallied to support legislation that would raise the minimum wage to $10.10 per hour and index it to inflation.

EPI has long supported raising the minimum wage, and it’s great to see the president, lawmakers and activists making the case for a minimum wage increase. Raising the minimum wage would boost the incomes of millions of Americans, provide a modest economic stimulus, and slow the growth of income inequality.

The inflation-adjusted value of the minimum wage is lower today than it was in 1968. If the value of the minimum wage had kept pace with average wages since then, it would be $10.50 today. If it had increased alongside productivity, it would be $18.75 today. And if it had increased at the same rate as the wages of the top 1.0 percent, it would be over $28 per hour.

In support of the national day of action, we made a series of graphics with facts about who would be affected by a minimum wage increase, and why it’s a good idea. They’re quick, to the point and easily shareable. The data points come from this paper. Check them out:

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