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Poll: Many pessimistic about improving standard of living

According to the Economic Policy Institute, the federal minimum wage in 2021 was worth 34% less than in 1968, when its purchasing power peaked.

Click on Detroit October 14, 2022
CEO Pay Has Soared by Nearly 1,500% Since 1978, While Workers Have Been Left Behind

Between 1978 and 2021, according to new research from the Economic Policy Institute (EPI), CEO compensation at the 350 largest publicly traded U.S. companies rose by an inflation-adjusted 1,460%, far outstripping the 18.1% pay increase that the nation’s typical worker saw during that period.

The trend of soaring CEO pay has continued during the coronavirus pandemic, which caused mass economic chaos and job loss among ordinary workers. EPI found that “while millions lost jobs in the first year of the pandemic and suffered real wage declines due to inflation in the second year, CEOs’ realized compensation jumped 30.3% between 2019 and 2021.”

“Typical worker compensation among those who remained employed rose 3.9% over the same time span,” note EPI’s Josh Bivens and Jori Kandra, the authors of the new report.

Bivens and Kandra write in their new analysis that the chief executive pay surge in recent decades is not the “result of a competitive market for talent but rather reflect[s] the power of CEOs to extract concessions.”

In 2021, the CEOs of top U.S. companies raked in nearly 400 times more pay than the typical worker.

“Some observers argue that exorbitant CEO compensation is merely a symbolic issue, with no consequences for the vast majority of workers,” Bivens and Kandra note. “However, the escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of top 1% and top 0.1% incomes, generating widespread inequality.”

Bivens and Kandra write in their new analysis that the chief executive pay surge in recent decades is not the “result of a competitive market for talent but rather reflect[s] the power of CEOs to extract concessions.”

In 2021, the CEOs of top U.S. companies raked in nearly 400 times more pay than the typical worker.

“Some observers argue that exorbitant CEO compensation is merely a symbolic issue, with no consequences for the vast majority of workers,” Bivens and Kandra note. “However, the escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of top 1% and top 0.1% incomes, generating widespread inequality.”

“Another option,” Bivens and Kandra write, “is to set corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation,” an idea proposed by Sen. Bernie Sanders (I-Vt.) in his 2021 Tax Excessive CEO Pay Act.

In These Times October 14, 2022
The coalition argues a flat tax is fundamentally unfair in a state with a high wealth gap. According to the Economic Policy Institute, Massachusetts has the sixth highest income gap of any state.

David Cooper, the director of the economic analysis and research network at the Economic Policy Institute, a progressive think tank, contends that when wage laws are changed to a single-tier system, business owners can have the assurance that “every single person they compete with is making the same exact adjustment,” reducing the specter of a competitive disadvantage.

“This is not costless,” Mr. Cooper said. “But for a long time, we haven’t been internalizing the costs of paying workers less than they can live on.”

New York Times October 14, 2022
What to know about Question 1, which asks voters if Mass.’ top earners should pay higher taxes

The coalition argues a flat tax is fundamentally unfair in a state with a high wealth gap. According to the Economic Policy Institute, Massachusetts has the sixth highest income gap of any state.

WBUR October 14, 2022
Maryland School Districts Navigate Teacher Shortage

Economic Policy Institute research said in 1979, teachers made 7% less than those peers, but this year, the pay gap has grown to 23%, a record high.

Heidi Shierholz, president of the Economic Policy Institute, citing 300,000 public education vacancies nationwide, said the issue boils down to two factors.

“What’s happening is that it’s becoming more and more difficult to find teachers, and other education personnel, who will take those jobs under current working conditions and at current wages,” Shierholz explained.

Public News Service October 14, 2022
Social Security benefits will jump next year. Here’s why.

It’s counterintuitive, but higher inflation is actually good for the Social Security Trust Fund, said Monique Morrissey, an economist at the left-leaning Economic Policy Institute.

When prices rise while the number of Social Security recipients and the benefits paid to them increase, it would seem like a bad thing for the trust fund. But the opposite is true, Morrissey said, because one of the main drivers of inflation is rising wages. Since wages and COLAs are increasing, more money is taxable, both from payroll taxes and some of the increased Social Security benefits.

“Generally speaking, the actuaries will say it’s a wash,” Morrissey said, “but to the extent that it has an impact, it’s a positive one.”

The Washington Post October 14, 2022
What is inflation? Understanding why prices rise, what causes it and who it hurts most.

Inflation is a “generalized rise in prices,” said Josh Bivens, the director of research at the Economic Policy Institute. For example, goods like gas, rent or food can be impacted by inflation.

“Inflation, though, really is meant to only refer to all goods and services, together, rising in price by some common amount,” he explained.

Inflation can be caused by several factors. The most common is “a macroeconomic excess of spending over the economy’s relative ability to produce goods and services,” Bivens said.

“If everyone in the economy, tomorrow, decided they weren’t going to save any money from their paychecks, and they’re just going to spend every last dollar out of the blue, they would all run to the stores and try to buy things,” Bivens said. “But, producers haven’t produced enough to accommodate that big surge of across-the-board spending. So, you would see prices bid up.”

Another cause of inflation is a lack of producers. If there are not enough workers to produce the demanded good or service, this would lead to an increase in prices as well, Bivens said.

Inflation is both good and bad, Bivens said.

“The inflation we have today (in 2022) is just bad. It’s too high. It’s too fast,” he said. But consistent and positive, yet low rates of inflation can be beneficial, he added.

“Inflation is sort of greasing the wheels of the labor market,” Bivens said. “It is a way to do some adjustments without actually having to cut nominal wages, and the economy just seems to operate better like that.”

“Whatever your target is, you don’t want to go really far above that. You want people to be able to make plans and have a predictable sense of how much prices and wages will rise over the next year,” Bivens said. “That’s why inflation, well in excess of the target, is clearly a bad thing.”

It is hard to determine exactly who is hurt most by inflation, in a generalized sense. However, whoever is spending most on the goods or services can be negatively impacted by inflation.

For instance, when gas or food prices are inflated, low and moderate income families are hurt since they spend a higher share of total income on energy and food, said Bivens.

“Any specific inflation tends to be sparked and driven by a particular set of goods and services,” he said. “For that, who has a really high share of those, and they’re spending, that’s who’s going to be hurt.”

Inflation and recession are strongly related, said Bivens, but the two economic concepts are not completely mutually exclusive.

“A big rise in the unemployment rate is going to put a lot of downward pressure on inflation,” he said. “As the economy slows, inflationary pressures tend to relent.”

USA Today October 14, 2022
Short-term rentals ‘gobbled up’ homes, worsening housing supply, Philly Fed president says. But Airbnb pushes back, saying it’s too easy an explanation.

But when Airbnbs pop up in residential neighborhoods, that hits housing supply as it takes away properties from the long-term residential market into the short-term travel market, a 2019 report from the Economic Policy Institute said.

MarketWatch October 14, 2022
Where Is the Minimum Wage Going Up in 2023?

According to the Economic Policy Institute, 30 of America’s 50 states and Washington, D.C., have enacted minimum wages that are higher than the federal standard. That leaves 20 where employers are still allowed to pay their workers as little as $7.25 an hour. Five of them — Alabama, Louisiana, Mississippi, South Carolina and Tennessee — have no minimum wage at all. Two others — Georgia and Wyoming — still have their minimum wages set at $5.15 an hour. In all seven of those states, the federal threshold of $7.25 applies.

Yahoo Finance October 14, 2022
Cheers for Social Security’s Cost-of-Living Adjustment

According to the Economic Policy Institute, the median savings of American workers, including plans such as 401(k)s, was just $60,000. For the 40 percent of Americans aged 60–69 who even have a 401(k), the median holding is about $82,000. But that is enough for maybe six or seven years, while the average life expectancy for a 65-year-old is 18.2 years for men and just under 20 years for women.

American Prospect October 14, 2022