Income Inequality News ArticlesExcerpts of key news articles on income inequality
Citizens United v. Federal Election Commission in 2010 tossed aside decades of legislative restrictions, freeing corporations and unions to spend as much as they wished. Six months ago, the Supreme Court took its Citizens United decision further. In McCutcheon v. Federal Election Commission, it struck down long standing caps on what an individual may contribute to all federal candidates, collectively, in any two-year election cycle. With conservative justices dominant, the court expanded the concept that money is equivalent to speech, protected by the First Amendment. Corporations, it said, enjoy the same political rights as individuals. A study by the Sunlight Foundation, an advocate for government transparency, found that 31,385 people — that is 1 percent of 1 percent of the United States population — accounted for 28 percent of all disclosed contributions in the 2012 elections. This year, an analysis by The New York Times shows, more than half of broadcast advertising in the midterm elections has been paid for by groups that reveal little or nothing about their donors. Overwhelmingly, the main beneficiaries have been conservative organizations.
Note: For more along these lines, see concise summaries of deeply revealing election news articles from reliable major media sources. For more along these lines, see the excellent, reliable resources provided in our Elections Information Center.
Imagine a system of college education supported by high and growing government spending on elite private universities that mainly educate children of the wealthy and upper-middle class, and low and declining government spending on public universities that educate large numbers of children from the working class and the poor. You can stop imagining. That's the American system right now. The annual government subsidy to Princeton University, for example, is about $54,000 per student, according to an estimate by economist Richard Vedder. Other elite privates aren't far behind. Public universities, by contrast, have little or no endowment income. They get almost all their funding from state governments. But these subsidies have been shrinking. State and local financing for public higher education came to about $76 billion last year, nearly 10 percent less than a decade before. Since more students attend public universities now than ten years ago, that decline represents a 30 percent drop per student. That means the average annual government subsidy per student at a public university comes to less than $4,000, about one-tenth the per student government subsidy at the elite privates. So what justifies the high per-student government subsidies at the elite private universities, and the low per-student subsidies in public universities? There is no justification.
Note: For more along these lines, see concise summaries of deeply revealing news articles about income inequality from reliable major media sources.
In recent weeks, the managers, employees and customers of a New England chain of supermarkets called Market Basket have joined together to oppose the board of directors' decision in June to oust the chain's popular chief executive, Arthur T. Demoulas. Their demonstrations and boycotts have emptied most of the chain's 71 stores. What was so special about Arthur T., as he's known? Mainly, his business model. He kept prices lower than his competitors, paid his employees more, and gave them and his managers more authority. Late last year, he offered customers an additional 4 percent discount, arguing they could use the money more than the shareholders. In other words, Arthur T. viewed the company as a joint enterprise from which everyone should benefit, not just shareholders. Which is why the board fired him. Patagonia, a large apparel manufacturer based in Ventura, has organized itself as a "B corporation." That's a for-profit company whose articles of incorporation require it to take into account the interests of workers, the community and the environment as well as shareholders. The performance of B corporations according to this measure is regularly reviewed and certified by a nonprofit entity called B Lab. To date, more than 500 companies in 60 industries have been certified as B corporations, including the household products firm Seventh Generation. In addition, 27 states have passed laws allowing companies to incorporate as "benefit corporations." This gives directors legal protection to consider the interests of all stakeholders rather than just the shareholders who elected them.
Note: What would the world be like if each corporation put the welfare of its workers and quality of its products at the same level of priority as profits for its stockholders? For more on this, see concise summaries of deeply revealing income inequality news articles from reliable major media sources.
This summer, [Raymond Burse,] the interim president at Kentucky State University, made a large gesture to his school's lowest-paid employees. Burse announced that he would take a 25 percent salary cut to boost their wages. The 24 school employees making less than $10.25 an hour, who mostly serve as custodial staff, groundskeepers and lower-end clerical workers, will see their pay rise to that new baseline. Some had been making as little as $7.25, the current federal minimum. Burse, who assumed the role of interim president in June, says he asked the school's chief financial officer how much such an increase would cost. The amount: $90,125. "I figured it was easier for me to forgo that amount, rather than adding an additional burden on the institution," Burse says. The school ratified his employment contract on the spot — decreasing it from $349,869 to $259,744. He has pledged to take further salary cuts any time new minimum-wage employees are hired on his watch, to bring their hourly rate to $10.25. Burse describes himself as someone who believes in raising wages, and who also has high expectations and demands for his staff. "I thought that if I'm going to ask them to really be committed and give this institution their all, I should be doing something in return," Burse says. "I didn’t have any examples of it having been done out there and I didn’t do it to be an example to anyone else," Burse says. "I did it to do right by the employees here."
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It seems safe to say that Capital in the Twenty-First Century, the magnum opus of the French economist Thomas Piketty, will be the most important economics book of the year — and maybe of the decade. Mr. Piketty, arguably the world’s leading expert on income and wealth inequality, does more than document the growing concentration of income in the hands of a small economic elite. He also makes a powerful case that we’re on the way back to “patrimonial capitalism,” in which the commanding heights of the economy are dominated not just by wealth, but also by inherited wealth, in which birth matters more than effort and talent. Six of the 10 wealthiest Americans are already heirs rather than self-made entrepreneurs, and the children of today’s economic elite start from a position of immense privilege. As Mr. Piketty notes, “the risk of a drift toward oligarchy is real and gives little reason for optimism.” Business income, and income from capital in general, is increasingly concentrated in the hands of a few people. In 1979 the top 1 percent of households accounted for 17 percent of business income; by 2007 the same group was getting 43 percent of business income, and 75 percent of capital gains. Both Koch brothers are numbered among the 10 wealthiest Americans, and so are four Walmart heirs. Great wealth buys great political influence — and not just through campaign contributions. Many conservatives live inside an intellectual bubble of think tanks and captive media that is ultimately financed by a handful of megadonors.
Note: For more on income and wealth inequality, see the deeply revealing reports from reliable major media sources available here.
Limitless growth is the fantasy of economists, businesses and politicians. It is seen as a measure of progress. As a result, gross domestic product (GDP), which is supposed to measure the wealth of nations, has emerged as both the most powerful number and dominant concept in our times. However, economic growth hides the poverty it creates through the destruction of nature, which in turn leads to communities lacking the capacity to provide for themselves. In effect, “growth” measures the conversion of nature into cash, and commons into commodities. Today, economics is separated from and opposed to both ecological processes and basic needs. While the destruction of nature has been justified on grounds of creating growth, poverty and dispossession [have] increased. While being non-sustainable, it is also economically unjust. The dominant model of economic development has in fact become anti-life. Nobel-prize winning economists Joseph Stiglitz and Amartya Sen have admitted that GDP does not capture the human condition and urged the creation of different tools to gauge the wellbeing of nations. This is why countries like Bhutan have adopted the gross national happiness in place of gross domestic product to calculate progress. We need to create measures beyond GDP, and economies beyond the global supermarket, to rejuvenate real wealth. We need to remember that the real currency of life is life itself.
This week marks the fifth anniversary of the collapse of Lehman Bros., heralding the Great Recession. The better off are better off than ever. Most of the rest are right where they started, or worse. For example, earnings of the top 1 percent (those families making more than $394,000 a year) commanded 95 percent of the income gains generated between 2009 and 2012. Their earnings grew by 31 percent in the period, compared with 0.4 percent for the less fortunate. That's according to a study published last week by UC Berkeley economist Emmanuel Saez, whose finding in 2011 that income inequality in the United States is the widest since 1928 was highly publicized. In fact, according to the latest study by Saez, whose numbers are drawn from IRS data, America's top 10 percent (those households earning above $114,000) account for more than half of the nation's total income, the highest percentage since 1917. Despite improvements in the economy, "it seems unlikely that U.S. income concentration will fall much in the coming years," Saez concludes. Or it could intensify. Factoring in inflation, median household income ($52,000) has actually fallen by 4.4 percent since June 2009, according to Sentier Research, a Maryland consultancy, in a report last week based on government statistics. Then there's the Federal Reserve, which reported that American families have recovered just 45 percent of the $16 trillion in wealth that went down the tubes in the recession. And most of the recovery has gone to the wealthy, whose income bounced back largely thanks to the recovery of the stock market, according to an analysis by the Federal Reserve Bank of St. Louis in May.
George Ross is no longer an official member of the labor force. Out of work for the past two years, he didn't figure in the government's [latest] employment numbers. He's a "marginally attached" worker, although he doesn't see himself that way. Ross, 60, is among the 12.2 million Americans classified as "not in the labor force" by the Bureau of Labor Statistics, which compiles the monthly reports. Why? Because if they have been looking for a job for more than a year - but not in the past four weeks - they're considered "discouraged" - they just don't feel they can find a job. Or they're "marginally attached," those like Ross, who had to stop looking for other reasons, like family responsibilities. Or they're working fewer than 35 hours a week - their employer cut their hours, it's the best they can find - which means they're "part time for economic reasons" or "involuntary part time." None of them is counted, but if you added the 2.3 million "discouraged" and "marginally attached" to the 11.7 million officially unemployed, you'd have an unemployment rate closer to 9 percent - not the 7.5 percent reported [on May 3]. Add in the reluctant part-timers (7.2 million) and the rate jumps to 13.9 percent. For the long-term unemployed - those out of work for more than six months - like Ross and 4.4 million others, the prospects are especially daunting. The longer you're out of work the less likely prospective employers will even take a look at you. That goes double if you're older. A Government Accountability Office report last year found "employer reluctance to hire older workers as a key challenge" to reducing unemployment.
Note: For deeply revealing reports from reliable major media sources on extremes of income inequality, click here.
The U.S. has gone through two recoveries. The 1.2 million households whose incomes put them in the top 1 percent of the U.S. saw their earnings increase 5.5 percent last year, according to estimates released last month by the U.S. Census Bureau. Earnings fell 1.7 percent for the 96 million households in the bottom 80 percent -- those that made less than $101,583. The recovery that officially began in mid-2009 hasn’t arrived in most Americans’ paychecks. In 2010, the top 1 percent of U.S. families captured as much as 93 percent of the nation’s income growth, according to a March paper by Emmanuel Saez, a University of California at Berkeley economist who studied Internal Revenue Service data. The earnings gap between rich and poor Americans was the widest in more than four decades in 2011, Census data show, surpassing income inequality previously reported in Uganda and Kazakhstan. The notion that each generation does better than the last -- one aspect of the American Dream -- has been challenged by evidence that average family incomes fell last decade for the first time since World War II. In this recovery it’s proved better to own stock than a house. For stockholders ... the value of all outstanding shares has soared $6 trillion to $17 trillion since June 2009, the recession’s end. Even after a recent rebound, the value of owner-occupied housing, the chief asset of most middle- income families, has dropped $41 billion in the same period, part of a $5.8 trillion loss in home values since 2006.
Note: For deeply revealing reports from reliable major media sources on income inequality, click here.
Capitalism's recurring tendencies toward extreme and deepening inequalities of income, wealth, and political and cultural power require resignation and acceptance. [It] entails and reproduces a highly undemocratic organization of production inside enterprises. Believers insist that no alternatives to ... capitalist organizations of production exist or could work nearly so well. Of course, alternatives exist. The city of Arrasate-Mondragon, in the Basque region of Spain ... is the headquarters of the Mondragon Corporation (MC). MC is composed of many co-operative enterprises grouped into four areas: industry, finance, retail and knowledge. In each enterprise, the co-op members (averaging 80-85% of all workers per enterprise) collectively own and direct the enterprise. The largest corporation in the Basque region, MC is also one of Spain's top ten biggest corporations (in terms of sales or employment). And MC has expanded internationally, now operating over 77 businesses outside Spain. MC has proven itself able to grow and prosper as an alternative to – and competitor of – capitalist organizations of enterprise. MC worker-members collectively choose, hire and fire the directors, whereas in capitalist enterprises the reverse occurs. One of the co-operatively and democratically adopted rules governing the MC limits top-paid worker/members to earning 6.5 times the lowest-paid workers. In US corporations, CEOs can expect to be paid 400 times an average worker's salary – a rate that has increased 20-fold since 1965.
A World Bank report shows a broad-based reduction in extreme poverty - and indicates that the global recession, contrary to economists' expectations, did not increase poverty in the developing world. The report shows that for the first time the proportion of people living in extreme poverty - on less than $1.25 a day - fell in every developing region between 2005 and 2008. And the biggest recession since the Great Depression seems not to have thrown that trend off course, preliminary data from 2010 indicate. The progress is so dramatic that the world has met the United Nations' Millennium Development Goals to cut extreme poverty in half five years before its 2015 deadline. That is contrary to the World Bank's own expectations. In a year-end 2008 report, the Washington-based development institution warned: "Unemployment is on the rise in industrial countries and poverty is set to increase across low- and middle income countries, bringing with it a substantial deterioration in conditions for the world's most vulnerable." But that did not happen. Surveys for 2010 show that the proportion of people in the developing world living in extreme poverty fell. That is because of strong growth in countries like Brazil, India and especially China, growth that helped buoy economies in Africa and South America.
88 million. That's how many working-age Americans don't have a job and aren't trying to find one. The increase in people dropping out of the labor market altogether skews the otherwise-positive unemployment numbers released last week. While the jobless rate fell to 8.3 percent in January - a three-year low - it doesn't [take into account] this army of nonworking Americans. The percentage of people participating in the labor market dropped to 63.7 percent last month, the lowest level since May 1983.
Note: This one small article reveals an astounding statistic the media and government are all but ignoring. The actual rate of jobless Americans is well over 30%. The U.S. government definition of unemployed covers only those who "do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work."
Inequality in America. It's a subject that's getting more attention in light of the weak economy and the ongoing debate around budget cuts and raising revenues. Billionaire businessman ... Warren Buffett, who has argued in favor of higher taxes on the wealthiest, [discusses] the growing disparity. WARREN BUFFETT: It should be a land of opportunity. But the ... market system has led to extremes. Everybody in this country owes their good fortune in some way to the rest of the country. DAN ARIELY: People don't understand how much wealth the top 20 percent have. They actually have 84 percent of the wealth. And more disturbingly, people don't understand how little wealth the bottom of the distribution have. The bottom 40 percent of the U.S. have about 0.3 percent of the wealth, basically zero. RICHARD FREEMAN: In the last 30 years or so, the share of national [income] -- of income that has gone to the upper 0.1 percent -- not to the upper 1.0 percent -- 0.1 percent -- rose by 10 percentage points. That is one of the most astounding patterns I have ever seen in data. People sometimes say, oh, the rich, it's the upper 10 percent, it's the upper 5 percent. No, no, this is the 0.1 percent. Warren Buffett has this wonderful statement where he says: Yes, there's been a class war in the United States. And my class, namely the super rich people, have won.
Note: For key articles from major media sources on the extreme income inequality in the US, click here.
The World Economic Forum’s annual meeting [in Davos, Switzerland is] a heady power gathering that mixes business, politics and Champagne in the Swiss Alps. It is an event that draws a wide range of [chief executives, government leaders and academics], ostensibly to contemplate how to solve the world’s problems. An invitation to the meeting is supposed to be considered an exclusive honor. But for corporate executives, the cost of being a Davos Man, or, yes, a Davos Woman, even for just a couple of days, does not come cheap. Just to have the opportunity to be invited to Davos, you must be invited to be a member of the World Economic Forum. There are several levels of membership: the basic level, which will get you one invitation to Davos, costs 50,000 Swiss francs, or about $52,000. The ticket itself is another 18,000 Swiss francs ($19,000), plus tax, bringing the total cost of membership and entrance fee to $71,000. But that fee just gets you in the door. To participate in private sessions among your industry’s peers, you need to step up to the “Industry Associate” level. That costs $137,000, plus the price of the ticket, bringing the total to about $156,000.
Note: After attending this event, author David Rothkopf quoted AOL's founder as saying,"You always feel like ... the real Davos is happening in secret somewhere." Might this suggest that Davos is a breeding ground for the secret plots of the global elite? For more along these lines, see concise summaries of news articles on secret societies which manipulate global politics.
The class war that no one wants to talk about continues unabated. Even as millions of out-of-work and otherwise struggling Americans are tightening their belts for the holidays, the nation’s elite are lacing up their dancing shoes and partying like royalty as the millions and billions keep rolling in. Recessions are for the little people, not for the corporate chiefs and the titans of Wall Street who are at the heart of the American aristocracy. They have waged economic warfare against everybody else and are winning big time. The ranks of the poor may be swelling and families forced out of their foreclosed homes may be enduring a nightmarish holiday season, but American companies have just experienced their most profitable quarter ever. The corporate fat cats are becoming alarmingly rotund. Their profits have surged over the past seven quarters at a pace that is among the fastest ever seen, and they can barely contain their glee. On the same day that The Times ran its article about [record corporate] profits, it ran a piece on the front page that carried the headline: “With a Swagger, Wallets Out, Wall Street Dares to Celebrate.” Anyone who thinks there is something beneficial in this vast disconnect between the fortunes of the American elite and those of the struggling masses is just silly. It’s not even good for the elite. The rich may think that the public won’t ever turn against them. But to hold that belief, you have to ignore the turbulent history of the 1930s.
Note: For many reports from reliable souces on corporate profiteering, click here.
For most of the moneyed class, an inquiry into their wealth elicits silence and cringes. Not so with 28-year-old Jamie Johnson, heir to the Johnson & Johnson pharmaceutical fortune. For the Emmy-nominated documentary filmmaker, wealth is the focus of his life's work. In Johnson's first documentary, Born Rich, he exposed how 10 children from families like the Trumps and the Newhouses spent their time – and their fortunes. Now he turns the camera on his own family in The One Percent. Johnson's documentary ... offers a rarefied view of the scandalously secretive world of "the one percent," a small segment of the U.S. population that owns roughly 40% of the country's wealth. Through a series of interviews with high-profile figures like Bill Gates Sr., U.S. Secretary of Labor Robert Reich and economist Milton Friedman, Johnson explores the disparity of wealth in America. Forbes.com: You got your own father, as well as other phenomenally wealthy people, to talk to you. How did you get these folks to open up about such an intensely private topic? Johnson: It wasn't easy. A lot of patience – there was a lot of waiting around. Forbes: I imagine you'll have critics who will call this "rich boy's guilt." What do you say to them? Johnson: That both liberal and conservative economists agree that there is a growing wealth gap, and that it's a problem. It's important to get wealthy people to think about this and think about solving this problem. They are the most influential people in our society and therefore, they should be working on treating this and coming up with a solution.
Note: The films of Jamie Johnson give very rare views into the lives of the upper crust that are incredibly revealing. For another article at CNN on his excellent documentary Born Rich, click here. To see revealing video clips, click here.
It is no secret that the gap between the rich and the poor has grown, but the extent to which the richest are leaving everyone else behind is not widely known. The people at the top of America's money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population. They have even left behind people making hundreds of thousands of dollars a year. The share of the nation's income earned by those in this uppermost category has more than doubled since 1980, to 7.4 percent in 2002. The share of income earned by the rest of the top 10 percent rose far less, and the share earned by the bottom 90 percent fell. Under the Bush tax cuts, the 400 taxpayers with the highest incomes - a minimum of $87 million in 2000, the last year for which the government will release such data - now pay ... taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000. From 1950 to 1970 ... for every additional dollar earned by the bottom 90 percent, those in the top 0.01 percent earned an additional $162. From 1990 to 2002, for every extra dollar earned by those in the bottom 90 percent, each taxpayer at the top brought in an extra $18,000. An Internal Revenue Service study found that the only taxpayers whose share of taxes declined in 2001 and 2002 were those in the top 0.1 percent. Some of the wealthiest Americans, including Warren E. Buffett, George Soros and Ted Turner, have warned that such a concentration of wealth can turn a meritocracy into an aristocracy and ultimately stifle economic growth.
Gabriel Zucman started his first real job the Monday after the collapse of Lehman Brothers. A decade later, Zucman, 32, is an assistant professor at the University of California at Berkeley and the world’s foremost expert on where the wealthy hide their money. His doctoral thesis ... exposed trillions of dollars’ worth of tax evasion by the global rich. For his most influential work, he teamed up with his Berkeley colleague Emmanuel Saez. Their 2016 paper, “Wealth Inequality in the United States Since 1913,” distilled a century of data to answer one of modern capitalism’s murkiest mysteries: How rich are the rich in the world’s wealthiest nation? The answer - far richer than previously imagined - thrust the pair deep into the American debate over inequality. Zucman and Saez’s latest estimates show that the top 0.1% of taxpayers - about 170,000 families in a country of 330 million people - control 20% of American wealth, the highest share since 1929. The top 1% control 39% of U.S. wealth, and the bottom 90% have only 26%. The bottom half of Americans combined have a negative net worth. The shift in wealth concentration over time charts as a U, dropping rapidly through the Great Depression and World War II, staying low through the 1960s and ’70s, and surging after the ’80s as middle-class wealth rolled in the opposite direction. Zucman has also found that multinational corporations move 40% of their foreign profits, about $600 billion a year, out of the countries where their money was made and into lower-tax jurisdictions.
Note: For more along these lines, see concise summaries of deeply revealing news articles on income inequality from reliable major media sources.
The Federal Reserve recently reported that about half of Americans have virtually no wealth at all, with four in 10 unable to afford a $400 emergency expense. That means that if their car breaks down or their child gets sick, they have to charge those expenses to a credit card. And when they do that, they get ripped off — big time. Despite the fact that banks can borrow money from the Fed at less than 2.5%, the median credit card interest rate ... is now over 21%. Last year, Wall Street banks made $113 billion in credit card interest alone, up by nearly 50% in just five years. In other words, while working class Americans pay outrageously high interest rates, Wall Street banks get rich. And if you live in a low-income community without a bank or cannot get a credit card, what do you do when you need to borrow money? You may have to turn to a predatory payday lender where the average interest rate on an annual basis is a jaw-dropping 391%. When banks and payday lenders charge these unconscionably high interest rates, they are not engaged in the business of making credit available. They are involved in extortion. We need a national usury law that caps interest rates ... at 15%. And that's exactly what the legislation I introduced with Representative Alexandria Ocasio-Cortez would do. Under our Loan Shark Prevention Act, we would make sure that no bank or store in America could charge an interest rate higher than 15%. 88% of Americans support a cap on credit card interest rates.
Rutger Bregman had not really intended to stick it to the global elite. But when the Dutch historian decided to go off-piste at the World Economic Forum and tell the assembled billionaires they should stop avoiding paying tax, he became an overnight social media sensation. “It’s been a crazy week and just for stating the obvious,” said Bregman, when asked about a panel discussion at the WEF last month in which he said the issue was “taxes, taxes, taxes, and all the rest is bullshit in my opinion”. Bregman had not been to Davos before. He was invited on the basis of the book Utopia for Realists, which argued for a basic income and a shorter working week. But he grew more irritated as the week wore on. He was surprised and maddened by the pushback when he mentioned tax. As a result, Bregman decided to change his plan for a panel on inequality. What Bregman said, put simply, was the Davos emperors have no clothes. They talk a lot about how something must be done about inequality and the need to address social unrest, but cavil at the idea they might be a big part of the problem. He told his audience that people in Davos talked about participation, justice, equality and transparency, but “nobody raises the issue of tax avoidance and the rich not paying their share. It is like going to a firefighters’ conference and not talking about water.” As a historian, Bregman noted the most successful period for capitalism occurred in the years after the second world war, when the top rate of tax in the US was above 90%.
Note: This historian later confronted Tucker Carlson of Fox News, who had a few choice dirty words for him. For more along these lines, see concise summaries of deeply revealing news articles on income inequality and corporate corruption.
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