Posts from Sam Pizzigati

Are America’s Rich Getting Tired of Winning Yet?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

The obituaries for Paul Volcker, the former Federal Reserve chair who died last Sunday at age 92, have been consistently echoing a truly heroic narrative. Between 1979 and 1987, as one prominent obit pronounced, Volcker’s bold and sweeping interest rate hikes shocked “the U.S. economy out of a cycle of inflation and malaise and so set the stage for a generation of prosperity.”

But prosperity for who?

Economist Gabriel Zucman has just delivered the most telling answer yet.

In a special analysis prepared for the Washington Post’s Greg Sargent, the University of California at Berkeley scholar has compared current average American incomes — in six different income ranges — to average incomes at the start of every decade since 1970.

Zucman’s income figures take into account both the taxes Americans pay federal and state governments and the transfers — everything from Social Security checks to veteran assistance — that go from government to individual Americans. In other words, his new breakdown shows what Americans had left in their wallets after paying their taxes and pocketing their benefits.

Some Americans, the new numbers show, had much more left than others. Phenomenally more. For America’s richest, the past half-century could hardly have been more prosperous.

In 1970, the nation’s top 1 percent averaged $328,816, in today’s dollars. By 2018, that top 1 percent average had more than tripled, to $1,152,232.

But the most striking after-tax, after-transfer gains have gone to Americans even higher up in the economic pecking order. Average top 0.1 percent incomes have more than quintupled since 1970, from just over $1 million to over $5 million. Average top 0.01 incomes have jumped over six-fold, from $3.7 million in 1970 to $24.2 million in 2018.

In essence, America’s very richest — the top one-hundredth of our top 1 percent — have on average added about $427,000 to their incomes every year since 1970.

The bottom 50 percent of Americans have added to their incomes, too — all of an average $167 a year.

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Putting the Brakes on Corporate America’s Inequality Engine

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Why has the United States become so much more unequal over the last four decades? Any number of factors have been driving our increased inequality. But no single factor may have been more significant than the behavior of the modern American corporation.

Corporations are contributing to inequality on two fronts. On the one hand, they’re systematically depressing incomes for average Americans, via everything from outsourcing to pension cuts. On the other, they’re just as systematically stuffing the pockets of America’s executive class.

These two vile sets of behaviors are relentlessly reinforcing each other. Outrageously huge rewards give corporate executives an incentive to behave outrageously, to squeeze their workers at every opportunity.

So how can we fight these corporate pay outrages? We change the incentive structure. We start giving Corporate America reason to narrow income divides, not stretch them ever wider. New legislation just introduced in Congress does just that.

The legislation — the Tax Excessive CEO Pay Act — raises the corporate tax rate on companies that pay their top executives over 50 times more than what they pay their most typical workers. The wider the pay-gap multiple over 50 times, the higher the tax rate.

Not that long ago, no one could have possibly dreamed that this sort of tax penalty would be so necessary. In mid-20th century America, CEOs at major U.S. firms seldom made much more than 30 or 40 times average worker pay. Today, by contrast, the nation’s top CEOs average nearly 300 times more. In 2018, a new Institute for Policy Studies report details, 50 top execs grabbed over 1,000 times more.

The proposed Tax Excessive CEO Pay Act carries some heavyweight sponsors. In the Senate, Bernie Sanders (I-Vermont) introduced the legislation November 13, the same day that veteran lawmaker Barbara Lee (D-California) and outspoken first-termer Rashida Tlaib (D-Michigan) introduced the bill in the House. And, on the Senate side, Senator Elizabeth Warren (D-Massachusetts) is co-sponsoring the legislation.

Over two dozen national labor, religious, and policy organizations have already endorsed the new Tax Excessive CEO Pay Act. They range from the AFL-CIO and the National Council of Churches to the Coalition on Human Needs and Public Citizen.

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How Much in ‘Inequality Tax’ Are You Paying?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

What nation ranks as the world’s richest? A simple question to answer, right. Well, not so much, suggests the just-released tenth annual Global Wealth Report from the banking giant Credit Suisse. Everything turns out to depend on how we define “richest.”

If we mean by “richest” the nation with the most total wealth, we have a clear worldwide number one: the United States. The 245 million adults who call the United States home held, as of this past June, a combined net worth of $106 trillion. No other nation comes close to that total. China ranks a distant second, with a mere $64 trillion, Japan even farther back at $25 trillion.

But if we mean by richest the nation with the most wealth per person, top billing goes to Switzerland, not the United States. The average Swiss adult is sitting on a $565,000 personal nest-egg. Americans average $432,000, a figure only good enough for second place.

So does Switzerland merit the title of the world’s wealthiest nation? Not necessarily. The Swiss may sport the world’s highest average wealth, but that doesn’t automatically mean that their nation has the world’s richest average people.

We’re not playing word games here. We’re talking about the important distinction that statisticians draw between mean and median. To calculate a national wealth mean — a simple average — researchers just divide total wealth by number of people. The problem with this simple average? If some people have fantastically more wealth than other people, the resulting average will give a misleading picture about economic life as average people live it.

Medians can paint a more realistic picture. Statisticians calculate the median wealth of a nation by identifying the amount of wealth that represents the midpoint in the nation’s wealth distribution, that point at which half the nation’s population has more wealth and half less. Medians, in other words, can give us a nation’s most typical net worth, the wealth that a nation’s most ordinary people hold.

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A CEO’s Defense: His Scientists Made Him Do It!

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Late last year, Reuters reported that the global Big Pharma powerhouse Johnson & Johnson “knew for decades that asbestos lurked in its Baby Powder” — and kept that knowledge from consumers. J&J immediately disputed those charges in a series of full-page newspaper ads. But that didn’t stop lawsuits from thousands of cancer victims. Earlier this month, J&J CEO Alex Gorsky sat for a full-day deposition in one of those suits and emphasized that his company stands by the safety of its talc powders “unequivocally.” Two weeks later, the U.S. Food and Drug Administration revealed that new FDA testing had discovered asbestos in a Johnson’s Baby Powder bottle. J&J the next day recalled 33,000 bottles. J&J flacks have since insisted that Gorsky deserves no blame in this entire Baby Powder situation since, as a lay person, he has to depend on scientists “to advise him.” What Gorsky does still apparently deserve: his $20.1 million 2018 compensation.

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Can an Economic Stat Help Narrow Our Grand Economic Divide?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Why do so many Americans deeply distrust government? One part of the reason, two top economists suggested to a key congressional committee this week, just might be the most basic — and familiar — of the economic statistics the federal government produces.

That stat — gross domestic product, or GDP — “measures the market value of the goods, services, and structures produced by the nation’s economy,” as calculated by the federal Bureau of Economic Analysis. The Bureau generates new GDP figures for every quarter of the year, and the release of these figures regularly makes headlines. Are we heading for a recession? Is the economy booming? Reporters and pundits scour the GDP stats for clues to our future, and presidents and lawmakers rush to hail a rising GDP as proof their policies are working.

But these journalists and pols are all ignoring the most basic of questions: Working for whom?

A half-century ago, in an America much more equal than the nation we have now, this distributional question seldom came up. Back then, average Americans shared in the nation’s economic growth. If the GDP figures had the national economy growing nicely, economist Heather Boushey told the congressional Joint Economic Committee yesterday, most Americans saw their personal incomes growing nicely as well.

In our strikingly unequal contemporary economy, notes Boushey, this linkage no longer holds. GDP growth has become “decoupled from the fortunes of most Americans.” Growth is benefiting “only those at the very top of the economic ladder.”

“Incomes for the working class and the middle class have grown slowly for decades,” explains Boushey, the co-founder of the Washington Center for Equitable Growth, “while incomes at the very top have exploded.”

Today’s GDP numbers don’t capture any of this reality. As an aggregate figure, GDP fudges the difference between our economy’s winners and losers. You can drown, the old quip puts it, in a lake with an average depth of six inches. By the same token, you and your neighbors can be taking it on the chin in an economy with a rapidly rising GDP.

And average Americans have been taking it on the chin. Our rising GDP numbers are masking the chronic economic insecurity that huge swatches of the American people have been living.

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A Top Exec Gets His Kicks Kicking Passengers

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Free-marketeers have been trying to strangle Amtrak, America’s quasi-public passenger railroad, for years now, and the Trump White House has tightened the chokehold, partly by pushing changes that make Amtrak’s food service ever less appealing. The latest victims? Passengers on long hauls who can’t afford Amtrak’s premium tickets. Among other changes, these ordinary passengers can no longer sit in the railroad’s dining cars and buy cooked-to-order meals. Amtrak CEO Richard Anderson, meanwhile, is sugarcoating the railroad’s new economic segregation, describing the widely disliked squeezes as “enhanced services.” No one should be surprised. In his previous life, as the CEO at Delta, Anderson helped turn his airline into a high-profit Wall Street darling by putting the squeeze on frequent fliers. Delta’s SkyMiles program became, as one travel journalist put it, “offensively, aggressively awful,” with good seats for popular destinations more than doubling in mileage price. Anderson himself retired from Delta in 2016. On the way out the door, he collected $72 million in Delta stock awards.

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The Key to Distributing Wealth More Equitably

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

CEO compensation in the United States may have finally crossed the line — from outrageously unfair to intolerably obscene. In 2018, a new Institute for Policy Studies report details, 50 major U.S. corporations paid their top execs over 1,000 times the pay that went to their most typical workers.

What can we do about obscenity this raw? Plenty. We can start by placing consequences on the CEO-worker pay ratios that publicly traded U.S. corporations must now annually disclose.

In Oregon, the city of Portland already has. Since 2017, major companies that do business in Portland have had to pay the city’s business tax at a higher rate if they compensate their top execs at over 100 times what they pay their median — most typical — workers.

State lawmakers have introduced similar legislation in seven states, and, earlier this week, White House hopeful Bernie Sanders announced a plan to hike the U.S. corporate income tax rate on all large firms that pay their top execs over 50 times their worker pay. Some context: A half-century ago, few U.S. corporations paid their chief execs over 25 times what their workers earned.

The new Sanders plan has drawn predictable scorn from the usual suspects. One analyst from the right-wing Manhattan Institute, for instance, told the Washington Post that a pay-ratio tax “could dramatically affect industries such as fast food and retail that naturally pay lower wages.”

Corporations pay “what the market demands,” added Adam Michel from the equally conservative Heritage Foundation, “and levying new taxes on high pay will just make U.S. businesses less able to compete globally, expand their workforces, or raise wages of rank and file workers.”

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America’s Wealthy: Ever Eager to Pay Their Taxes!

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Why do many of the wealthiest people in America oppose a “wealth tax,” an annual levy on grand fortune? Could their distaste reflect a simple reluctance to pay their fair tax share? Oh no, JPMorganChase CEO Jamie Dimon recently told the Business Roundtable: “I know a lot of wealthy people who would be happy to pay more in taxes; they just think it’ll be wasted and be given to interest groups and stuff like that.” Could Dimon have in mind the interest group he knows best, Wall Street? In the 2008 financial crisis, federal bailouts kept the banking industry from imploding. JPMorgan alone, notes the ProPublica Bailout Tracker, collected $25 billion worth of federal largesse, an act of generosity that’s helped Dimon lock down a $1.5-billion personal fortune. Under the Elizabeth Warren wealth tax plan, Dimon would pay an annual 3 percent tax on that much net worth. Fortunes between $1 billion and $2.5 billion would face a 5 percent annual tax under the Bernie Sanders plan.

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Executive Excess 2019: Making corporations pay for big pay gaps

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

INTRODUCTION:

For two full years now, publicly held corporations in the United States have had to comply with a federal mandate to report the gap between their CEO and median worker compensation. The resulting disclosures, this report makes clear, have produced truly staggering statistical results.

Americans across the political spectrum have been decrying the yawning gaps between CEO and worker compensation for several decades now. Yet Americans still, the research shows, vastly underestimate how wide these gaps have become. Today, with corporations required to disclose their pay ratios, the public can finally see the actual size of pay gaps at individual firms. These excessively wide compensation gaps hurt us on three major fronts:

  • Corporate pay gaps help drive extreme inequality in the U.S.
  • Wide pay gaps undermine business efficiency and effectiveness
  • Runaway CEO pay endangers our democracy and the broader economy
 

KEY FINDINGS:

  • At the 50 publicly traded U.S. corporations with the widest pay gaps in 2018, the typical employee would have to work at least 1,000 years to earn what their CEO made in just one..
  • Among S&P 500 firms, nearly 80 percent paid their CEO more than 100 times their median worker pay in 2018, and nearly 10 percent had median pay below the poverty line for a family of four.
  • S&P 500 corporations as a whole would have owed as much as $17.2 billion more in 2018 federal taxes if they were subject to tax penalties ranging from 0.5 percentage points on pay ratios over 100:1 to 5 percentage points on ratios above 500:1.
  • Walmart, with a pay gap of 1,076 to 1, would have owed as much as $794 million in extra federal taxes in 2018 with this penalty in place, enough to extend food stamp benefits to 520,997 people for an entire year..
  • Marathon Petroleum, with a 714-to-1 gap, would have owed an extra $228 million, more than enough to provide annual heating assistance for 126,000 low-income people.
  • CVS, with a 618-to-1 ratio, would have added a revenue stream that could have provided annual Medicare prescription benefits for 33,977 seniors.
  • The report also includes the most comprehensive available catalog of CEO pay reform proposals.

Download the full report here.

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From the Institute for Policy Studies

A Superstar CEO Takes One Greedy Step Too Far

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Gigs! Disruption! Cubicle killers! Adam Neumann figured he could parlay trendy buzzwords into an office rental goliath that could make him rich. WeWork, the company he co-founded nine years ago, took out long-term office building leases and subleased space to start-ups and freelancers, a business model that soon flopped. In 2018, WeWork collected $1.8 billion in revenue and still ended the year $1.6 billion in the red. But Neumann himself has done quite well, in part by buying up buildings and renting the space back to WeWork. Neumann also tried trademarking — in his own name — the “We” in WeWork. Amid the resulting furor, he later returned the $5.9 million he charged WeWork for rights to the “We.” That furor only intensified this summer when Neumann sold off $700 million of his WeWork shares before a planned IPO, a clear case of trying to get out while the getting seemed good. That maneuver chopped two-thirds off WeWork’s $47 billion market value and had WeWork investors demanding Neumann’s head. They got it. Neumann last week stepped down as WeWork CEO. The good news for Neumann? He still has plenty of pillows to rest his head on. He owns five homes worth a combined $80 million.

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Reposted from Inequality.org

Union Matters

The Big Drip

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities. 

A rash of water main breaks in West Berkeley, Calif., and neighboring cities last month flooded streets and left at least 300 residents without water. Routine pressure adjustments in response to water demand likely caused more than a dozen pipes, some made of clay and more than 100 years old, to rupture.

West Berkeley’s brittle mains are not unique. Decades of neglect left aging pipes susceptible to breaks in communities across the U.S., wasting two trillion gallons of treated water each year as these systems near collapse.

Comprehensive upgrades to the nation’s crumbling water systems would stanch the flow and ensure all Americans have reliable access to clean water.

Nationwide, water main breaks increased 27 percent between 2012 and 2018, according to a Utah State University study.  

These breaks not only lead to service disruptions  but also flood out roads, topple trees and cause illness when drinking water becomes contaminated with bacteria.

The American Water Works Association estimated it will cost at least $1 trillion over the next 25 years to upgrade and expand water infrastructure.

Some local water utilities raised their rates to pay for system improvements, but that just hurts poor consumers who can’t pay the higher bills.

And while Congress allocates money for loans that utilities can use to fix portions of their deteriorating systems, that’s merely a drop in the bucket—a fraction of what agencies need for lasting improvements.

America can no longer afford a piecemeal approach to a systemic nationwide crisis. A major, sustained federal commitment to fixing aging pipes and treatment plants would create millions of construction-related jobs while ensuring all Americans have safe, affordable drinking water.

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There is Dignity in All Work

There is Dignity in All Work