The stock market boom has given CEOs a raise. What about average workers?

From today’s PBS News Hour:

Over the past few years, many economic indicators have returned to where they were before the Great Recession — among them, the unemployment rate, which has dropped below the 5 percent mark of 2007, housing prices and the stock market, which has nearly doubled its pre-recession peak.

Another, buoyed by rising stock prices: the enormous pay difference between CEOs of the largest U.S. companies and their employees, who earn more than 300 times less than those at the top, according to new data.

Here’s a closer look at the issue.

How has CEO compensation changed?

In 2000, the average CEO was paid 343 times more than the average worker, according to the liberal-leaning Economic Policy Institute. That number dropped to about 188-to-1 in 2009.

It has since rebounded to 312-to-1 last year, according to a report from the Economic Policy Institute.

From 2016 to 2017, the average pay of CEOs from the top 350 publicly traded firms increased 17.6 percent — to $18.9 million — even after being adjusted for inflation, the group found.

How to close the gap

The reason for the pay disparity between CEOs and employees is relatively simple. Closing the gap is much more complex.

A number of methods have been proposed to close the gap, including a cap on compensation, clawbacks for poor performance or executive misconduct, and, as mentioned previously, mandatory publishing of CEOs’ salaries.

James Galbraith, the director of the University of Texas Inequality Project who also served as an adviser to Sen. Bernie Sanders’ presidential campaign, said U.S. companies should look to other countries where laws encourage business leaders to reinvest in their tangible products instead of their stocks.

Read the complete article here.

Americans Want to Believe Jobs Are the Solution to Poverty. They’re Not.

From today’s New York Times:

U.S. unemployment is down and jobs are going unfilled. But for people without much education, the real question is, Do those jobs pay enough to live on?

These days, we’re told that the American economy is strong. Unemployment is down, the Dow Jones industrial average is north of 25,000 and millions of jobs are going unfilled. But for people like Vanessa, the question is not, Can I land a job? (The answer is almost certainly, Yes, you can.) Instead the question is, What kinds of jobs are available to people without much education? By and large, the answer is: jobs that do not pay enough to live on.

In recent decades, the nation’s tremendous economic growth has not led to broad social uplift. Economists call it the “productivity-pay gap” — the fact that over the last 40 years, the economy has expanded and corporate profits have risen, but real wages have remained flat for workers without a college education. Since 1973, American productivity has increased by 77 percent, while hourly pay has grown by only 12 percent. If the federal minimum wage tracked productivity, it would be more than $20 an hour, not today’s poverty wage of $7.25.

American workers are being shut out of the profits they are helping to generate. The decline of unions is a big reason. During the 20th century, inequality in America decreased when unionization increased, but economic transformations and political attacks have crippled organized labor, emboldening corporate interests and disempowering the rank and file. This imbalanced economy explains why America’s poverty rate has remained consistent over the past several decades, even as per capita welfare spending has increased. It’s not that safety-net programs don’t help; on the contrary, they lift millions of families above the poverty line each year. But one of the most effective antipoverty solutions is a decent-paying job, and those have become scarce for people like Vanessa. Today, 41.7 million laborers — nearly a third of the American work force — earn less than $12 an hour, and almost none of their employers offer health insurance.

Read the complete article here.

On Labor Day and Your Day Off, Learn About the Work of Others

From today’s New York Times:

For roughly five years, The New York Times has profiled people with a variety of jobs in its Vocations column. Some of those jobs are unusual, some are mundane, but all are performed by people with stories to tell. For Labor Day, we’re revisiting selected Vocations entries from 2018 to highlight some of the different forms work can take.

Joe Finora is a marine engineer based in New York City who investigates the condition of floating docks and underwater structures. He spoke about some of the hazards he encounters in the depths, such as low visibility and frightening fish.

Jeremy Morris is an actor who plays various 18th Century characters at Colonial Williamsburg. He said his goal is to help visitors understand the social conditions under which black people had to live at that time.

Christina Tan is the state epidemiologist at the New Jersey Department of Health in Trenton. She said that understanding how diseases spread can be data-heavy work, but it is an important component in preventing dangerous epidemics.

Read the complete article here.

Why You Should Tell Your Co-Workers How Much Money You Make

From today’s New York Times:

So how much do you make?

It’s a loaded, deeply personal and often uncomfortable question. Along with our weight and age, our salary is a number to which we’ve assigned almost incomparable value.

And, when we’re asked, what many of us really hear is this: What’s your worth as a person?

“Money is so tied up with really complex and difficult emotions, like shame, success, fear of failure and how people view you,” said Brianna McGurran, a money expert at the personal finance blog NerdWallet. “So when you’re talking about how much you earn, or how much you’re saving, a lot of people end up tying that to their self-worth.”

She added: “Salary is so close to our identity. It’s the core part of all of this.”

That money — along with sex, politics and religion — is a topic best avoided in polite conversation is a cultural concept many of us are raised on, and taboos around discussing income can be particularly sensitive.

Read the complete article here.

Student Loan Watchdog Quits, Says Trump ‘Turned Its Back’ On Borrowers

From today’s NPR News:

The federal official in charge of protecting student borrowers from predatory lending practices has stepped down.

In a scathing resignation letter, Seth Frotman, who until now was the student loan ombudsman at the Consumer Financial Protection Bureau, says current leadership “has turned its back on young people and their financial futures.” The letter was addressed to Mick Mulvaney, the bureau’s acting director.

In the letter, obtained by NPR, Frotman accuses Mulvaney and the Trump administration of undermining the CFPB and its ability to protect student borrowers.

“Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting,” it read. “Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”

The letter raises serious questions about the federal government’s willingness to oversee the $1.5 trillion student loan industry and to protect student borrowers.

Read the complete article here.

In victory for unions, judge overturns key parts of Trump executive orders

From today’s Washington Post:

A federal judge late Friday dealt a victory to federal employees and the unions that represent them, invalidating overnight key provisions of a series of Trump administration executive orders aimed at making it easier to fire employees and weaken the unions.

The overnight ruling by U.S. District Judge Ketanji Brown Jackson in Washington was a setback to the White House’s efforts to rein in the power of federal unions. Though federal employees’ pay is set by Congress, their unions have retained significant power even as private-sector unions have been in decline.

The three executive orders, issued just before Memorial Day, had sought to severely restrict the use of “official time” — on-duty time that union officials can spend representing their members in grievances and on other issues. The rules also limited issues that could be bargained over in union negotiations. And it rolled back the rights of workers deemed to be poor performers to appeal disciplinary action against them.

Read the complete article here.

Senators urge CFPB not to ‘abandon’ duty to protect troops, families

From today’s Military Times:

In the wake of reports that a key federal consumer protection agency is considering pulling back from efforts to protect service members from predatory lenders, 49 senators have signed a letter asking for a commitment that the bureau will continue to ensure troops are protected.

The Consumer Financial Protection Bureau “should not be abandoning its duty to protect our service members and their families” the senators wrote in a Wednesday letter to Mick Mulvaney, director of the Office of Management and Budget, and acting director of the Consumer Financial Protection Bureau. The lawmakers — all 48 Senate Democrats and independent Vermont Sen. Bernie Sanders — asked for a commitment that the CFPB will use “all of the authorities available to the CFPB to ensure that service members and their families continue to receive all of their [Military Lending Act] protections.”

Rather than actively examining lenders’ records to determine whether they are following the law under the Military Lending Act, several sources say the CFPB instead would rely on complaints from service members and their families to trigger potential investigations. CFPB officials reportedly have expressed a concern that they don’t have the authority to conduct these lender examinations, although they have been doing so for years.

According to the CFPB, their enforcement actions have resulted in about $130 million that has been provided in relief to service members, veterans and their families.

The possible change was first reported in the New York Times. The move wouldn’t change the law itself, only the enforcement techniques. In the past, some lenders have expressed concern to Military Times about what they perceived as aggressive and unfair practices by the CFPB.

Read the complete article here.

The Wrong Way to Do Paid Family Leave

From today’s New York Times:

Senator Marco Rubio just made a small bit of history: He became the first of his party to put forward a national paid family leave program. On Aug. 2, he introduced a bill that would allow any American to take paid time off to be with a new child.

It marks a surprising step forward: Paid family leave has become bipartisan. Unfortunately, smart policy design has not. Instead of creating a new, desperately needed benefit, Mr. Rubio’s bill would make parents cash in their retirement to take care of their children today.

All developed countries — except for the United States — guarantee at least some paid maternity leave, ranging from six weeks in Portugal to 43 weeks in Greece. Americans are only entitled to up to 12 weeks of unpaid leave.

Even securing unpaid time off was a bruising political battle. The former speaker of the House, John Boehner, called unpaid family leave “another example of yuppie empowerment,” and Representative Cass Ballenger reportedly smeared it as “socialism.” The unpaid Family and Medical Leave Act suffered two vetoes from President George H.W. Bush, a Republican, and was signed into law only after Bill Clinton, a Democrat, won the White House.

Read the complete article here.

DeVos proposes another rollback on for-profit college rules, hurting consumers

From today’s Washington Post:

The Trump administration plans to roll back another major Obama-era rule that was created to police the for-profit college industry, according to a proposal issued by the Education Department on Friday.

Education Secretary Betsy DeVos said the gainful employment regulation should be scrapped entirely, arguing that it wasn’t backed up by research and created burdensome reporting requirements for schools. The rule sought to punish for-profit college programs that left graduates with heavy debt compared to their incomes

DeVos’ proposal represents the Education Department’s second planned rollback of a major Obama-era rule in a matter of weeks.

On July 25, DeVos proposed changes to the so-called borrower defense rule to toughen the process by which defrauded students can get their loans erased, saying it had become too easy for students to skip out on their debt.

The rules were part of the Obama administration’s crackdown on for-profit colleges, which was fueled by widespread complaints of fraud against chains including Corinthian Colleges and ITT Technical Institute. Both chains collapsed under pressure from Obama officials.

Under the 2014 gainful employment rule, college programs could be cut off from federal funding if the average debt ratio of their graduates stayed above a certain limit for two out of three straight years.

The rule also required schools to publicize debt and earnings data for their programs, which aimed to help students avoid programs with poor outcomes.

Read the complete article here.

In America, wage growth is getting wiped out entirely by inflation

From today’s Washington Post:

Rising prices have erased U.S. workers’ meager wage gains, the latest sign strong economic growth has not translated into greater prosperity for the middle class and working class.

Cost of living was up 2.9 percent from July 2017 to July 2018, the Labor Department reported Friday, an inflation rate that outstripped a 2.7 percent increase in wages over the same period. The average U.S. “real wage,” a federal measure of pay that takes inflation into account, fell to $10.76 an hour last month, 2 cents down from where it was a year ago.

The stagnant pay comes despite accelerating U.S. growth, which has increased in the past year and topped 4 percent in the second quarter of 2018 — the highest rate since mid-2014.

The lack of raises have befuddled economists and policymakers, who hoped that after job openings hit record highs and the unemployment rate dipped to the lowest level in decades, employers would give beefy raises to attract and retain employees. But so far, gains have been slight, and small recent increases are now being eclipsed by rising prices.

Inflation hit a six-year high this summer, driven in part by a jump in energy costs. The price of a gallon of gas has increased 50 cents in the past year, up to a national average of $2.87, according to AAA. Some analysts expect the climb in energy prices to halt soon, which should bring the overall inflation rate down and possibly lift real wages slightly.

Consumers are also paying more for housing, health care and car insurance, the federal government reported Friday. Additional price hikes could be coming as President Trump’s new tariffs boost prices of cheap imported products U.S. consumers rely on. And many economists warn that growth might have peaked for this expansion.

Read the complete article here.