Better Your Chance For Equal Pay – What You Need To Know Now

From today’s Forbes Magazine:

The gender pay gap is the most entrenched barrier to equality women face. It seems so simple: equal pay for equal work. But the formula is complicated in many companies because men outnumber women in C-suites, in leadership and management, in the most lucrative industries like banking, and in the higher-risk, higher-reward jobs – all of which skews the data and creates a rationale that is used to justify the pay gap.

The fact is, there is no valid reason for paying women less for equal performance, and doing so hamstrings the growth of our economy. A 2017 report by the Institute for Women’s Researchdemonstrates how equal pay for women could increase the U.S. economy by an incredible $512.6 billion.

Meanwhile, a confluence of factors continues to inhibit a woman’s ability to earn her worth, though many of them can be changes. Here are four things all women need to know to better their chances for equal pay:

1.Where you live and work dramatically impacts your potential for equal pay.

Smart Asset researched the pay gap in 507 metro areas around the country and found that nationally, women make an average 70% of what men do in the same jobs. However, there are 51 Metro areas where the gap closes to 80% or better. Cities like LA, Las Vegas, Flagstaff, Arizona; Jefferson City, Missouri; and Bangor, Maine all have narrower pay gaps than average. But the title goes to Rochester, Minnesota as the top place for working women for the second year in a row. Women in that metro earn the highest income in the nation, after deducting housing costs.

If you live in a state capitol, you have an even better chance of equal pay: nearly half of the top 12 metros were around capitals.

The women who live in Tallahassee, Florida’s state capital, will be relieved to know that they enjoy one of smallest pay gaps in the nation, with the average woman in the metro area earning roughly 94% of what the average man does. Florida, overall, had the most metros in the top 51, with 13 cities outperforming the national average. Gainesville, Tampa, Fort Meyers, and Miami all did better than 80%.

But there’s bad news for the women of Utah. Provo-Orem is the worst-performing metro area in the study. Smart Asset’s data shows that the average woman there earns about 42% of what the average man does.

Read the complete article here.

American households finally earn more than they did in 1999, but poverty and inequality are on the rise

From today’s Los Angeles Times “Business” section by Don Lee:

Income inequality

After a long period of plodding economic growth, significant earnings gains over the past two years have finally enabled the average American household to surpass the peak income level it reached in 1999.

The median household income in the U.S. climbed to $59,039 last year, up 3.2% from 2015 after adjusting for inflation, the Census Bureau reported Tuesday.

That comes on the heels of a 5.2% jump in income in 2015, the highest annual percentage increase on record.

The back-to-back increases brought the median income — in which half of households earn more and half less — above the previous peak of $58,665 in 1999.

The median household income in California rose 3.4% last year to $66,637, surpassing the earlier high of $65,852 in 2006.

The national measure of poor people in America also improved significantly for the second year in a row: The poverty rate fell last year to 12.7%, from 13.5% in 2015 and 14.8% in 2014.

That translates into a decline of about 6 million people in poverty over the last two years.

The latest poverty rate is comparable to 2007, the year before the Great Recession took hold. But there were still 40.6 million poor people in the nation last year. A household with two adults and two children is considered poor if their total income was less than $24,339.

“We consider 2015 and 2016 to be the turning point on the real median household income front, as employment and wage gains, combined with modest consumer price inflation, have boosted the well-being of many American households,” said Chris G. Christopher Jr., executive director of IHS Markit, an economic research firm.

“Real median household income has finally completed its nine-year slog of digging out of the ditch,” he said.

But the annual Census report was not as glowing beneath the surface, and economists are concerned that budget proposals curtailing things like food stamps could thwart continuing progress.

The impact of Trump’s promised tax reform could also change trends for the poor and middle class.

While the latest data showed solid gains for blacks and Latinos and younger adults, median incomes for full-time, year-round workers, men and women, were essentially flat in 2016, reflecting sluggish wage growth that has persisted into this year.

What’s more, a key measure of income disparity remains at the highest level in at least a half century.

And although the median income for urban dwellers jumped 5.4% last year to $61,521, households in rural areas saw their earnings basically stagnate at less than $46,000.

Read the entire article here.

Brookings study finds income inequality in America’s largest cities

From the Brookings Institute “Metropolitan Opportunity Series” Papers:

In December 2013, President Obama gave a speech on economic mobility, in which he called income inequality and lack of upward mobility “the defining challenge of our time.”

That challenge is front and center in America’s big cities today. Obama’s speech followed a series of municipal elections in November 2013 in which inequality figured prominently as a campaign issue. Foremost among these was in New York City, where Bill de Blasio won a landslide election after campaigning to address what he called a “Tale of Two Cities.” Similar themes were sounded in the successful campaigns and first days in office of Marty Walsh in BostonEd Murray in Seattle, and Betsy Hodges in Minneapolis. The “Google Bus” in San Francisco’s Mission District has shone a spotlight on growing economic divisions within that city. And income inequality will no doubt be a central issue in mayoral elections during the next couple of years in cities like Chicago and Washington, D.C.

Inequality may be the result of global economic forces, but it matters in a local sense. A city where the rich are very rich, and the poor very poor, is likely to face many difficulties. It may struggle to maintain mixed-income school environments that produce better outcomes for low-income kids. It may have too narrow a tax base from which to sustainably raise the revenues necessary for essential city services. And it may fail to produce housing and neighborhoods accessible to middle-class workers and families, so that those who move up or down the income ladder ultimately have no choice but to move out.

There are many ways of looking at inequality statistically; one useful way to measure it across places is by using the “95/20 ratio.” This figure represents the income at which a household earns more than 95 percent of all other households, divided by the income at which a household earns more than only 20 percent of all other households. In other words, it represents the distance between a household that just cracks the top 5 percent by income, and one that just falls into the bottom 20 percent. Over the past 35 years, members of the former group have generally experienced rising incomes, while those in the latter group have seen their incomes stagnate.

The latest U.S. Census Bureau data confirm that, overall, big cities remain more unequal places by income than the rest of the country. Across the 50 largest U.S. cities in 2012, the 95/20 ratio was 10.8, compared to 9.1 for the country as a whole. The higher level of inequality in big cities reflects that, compared to national averages, big-city rich households are somewhat richer ($196,000 versus $192,000), and big-city poor households are somewhat poorer ($18,100 versus $21,000).

Read the entire study here.

Tech start-up publishes employee salaries, encourages transparency

San Francisco tech start-up Buffer has been making waves with its transparency campaign, jump starting a national conversation about salaries and, by implication, the way businesses conduct their business in this country.

“We hope this might help other companies think about how to decide salaries, and will open us up to feedback from the community,” CEO Joel Gascoigne wrote in a blog post published on the company’s website Thursday. See the full post with published salaries here. By creating a transparent formula and paying above market rate, Gasciogne says he hopes to promote long-term commitment from employees. “In Silicon Valley, there’s a culture of people jumping from one place to the next. That’s why we focus on culture. Doing it this way means we can grow just as fast—if not faster—than doing it the ‘normal’ cutthroat way.”

The move is a radical departure from the normal but profoundly unjust practice of concealing salaries from other employees and the public in a country with a growing income inequality problem and a troubling trend of executive compensation that tops all other advanced industrialized countries. Despite the Great Recession and ongoing budget crises as a consequence of financial deregulation and corporate corruption, executive pay was 354 times greater than the average American worker’s salary.

In addition to regulatory reforms on the financial and banking industries the Dodd-Frank Wall Street Reform and Consumer Protection Act now requires companies to disclose their CEO-to-worker pay ratio. The SEC proposed the following rules to implement the law:

  • Section 951 requires advisory votes of shareholders about executive compensation and golden parachutes. This section also requires specific disclosure of golden parachutes in merger proxies. This section further requires institutional investment managers subject to Section 13(f) of the Securities Exchange Act to report at least annually how they voted on these advisory shareholder votes.
  • Section 952 requires disclosure about the role of, and potential conflicts involving, compensation consultants. This statute also requires the Commission to direct that the exchanges adopt listing standards that include certain enhanced independence requirements for members of issuers’ compensation committees. The Commission is also directed to establish competitively neutral independence factors for all who are retained to advise compensation committees.
  • Section 953 requires additional disclosure about certain compensation matters, including pay-for-performance and the ratio between the CEO’s total compensation and the median total compensation for all other company employees.
  • Section 954 requires the Commission to direct the exchanges to prohibit the listing of securities of issuers that have not developed and implemented compensation claw-back policies.
  • Section 955 requires additional disclosure about whether directors and employees are permitted to hedge any decrease in market value of the company’s stock.

Hopefully, the recent action taken by Buffer to make transparent the ratio between its executive pay and staff will help facilitate this national conversation about establishing appropriate limits to executive salaries and what to do about the more troubling question concerning the unsustainable growth of income inequality in this country.

What Obama Left Out of His “Inequality Speech”: Regulation

By THOMAS O. MCGARITY, From the “Great Divide” Blog, New York Times Onine

AUSTIN, Tex. — President Obama’s speech on inequality last Wednesday was important in several respects. He identified the threat to economic stability, social cohesion and democratic legitimacy posed by soaring inequality of income and wealth. He put to rest the myths that inequality is mostly a problem afflicting poor minorities, that expanding the economy and reducing inequality are conflicting goals, and that the government cannot do much about the matter.

Mr. Obama also outlined several principles to expand opportunity: strengthening economic productivity and competitiveness; improving education, from prekindergarten to college access to vocational training; empowering workers through collective bargaining and antidiscrimination laws and a higher minimum wage; targeting aid at the communities hardest hit by economic change and the Great Recession; and repairing the social safety net.

But there’s a crucial dimension the president left out: the revival, since the mid-1970s, of the laissez-faire ideology that prevailed in the Gilded Age, roughly the 1870s through the 1910s. It’s no coincidence that this laissez-faire revival — an all-out assault on government regulation — has unfolded over the very period in which inequality has soared to levels not seen since the Gilded Age.

History tells us that in periods when protective governmental institutions are weak, irresponsible companies tend to abuse their economic freedom in ways that harm ordinary workers and consumers. The victims are often less affluent citizens who lack the power either to protect themselves from harm or to hold companies accountable in the courts. We are in such a period today.

Read the full article here.

Economic inequality is a problem, as is gap between ideal and reality

 

 

 

 

 

 

 

 

 

Check out this informative video that provides a graphic representation of wealth inequality in the U.S. and the gap in perception between what people think an ideal distribution of wealth should look like and what it really is in fact.

On America’s Sinking Middle Class

From the New York Times
September 18, 2013
By Eduardo Porter

In some respects, 1988 has the feel of an alien, distant era. There was no such thing as the World Wide Web then. The Soviet Union was still around; the Berlin Wall still standing. Americans elected a Republican president who would raise taxes to help tame the budget deficit.

On Tuesday, however, the Census Bureau reminded me how for most Americans 1988 still looks a lot like yesterday: last year, the typical household made $51,017, roughly the same as the typical household made a quarter of a century ago.

The statistic is staggering — hardly what one would expect from one of the richest and most technologically advanced nations on the planet.

I have written several times before about how measures of social and economic well-being in the United States have slipped compared to other advanced countries. But it is even more poignant to recognize that, in many ways, America has been standing still for a full generation.

It made me wonder what happened to progress.

Consider: 36 years ago this month, when NASA launched the Voyager 1 probe into space, 11.6 percent of Americans were officially considered poor. The other day Voyager sailed clear out of the solar system into interstellar space — the first man-made object to do so — recording its environment on an 8-track deck.

Using the same official metric — which actually undercounts the poor compared to new methods used by the Census today — the poverty rate is 15 percent.

To be sure, we have made progress over the last 25 years. The nation’s gross domestic product per person has increased 40 percent since 1988. We’ve gained four years’ worth of life expectancy at birth. The infant mortality rate has plummeted by 50 percent. More women and more men are entering and graduating from college.

We also have access to far more sophisticated consumer goods, from the iPhone to cars packed with digital devices. And the cost of many basic staples, notably food, has fallen significantly.

Carl Shapiro, an economist at the University of California, Berkeley and an expert on technology and innovation who stepped down from President Obama’s Council on Economic Advisors last year, calls the progress in information technology and biotechnology over the last 25 years “breathtaking.”

“Most Americans partake in the benefits offered by these new technologies, from smartphones to better dental care,” Professor Shapiro said. Still, he acknowledged, “somehow this impressive progress has not translated into greater economic security for the American middle class.”

In key respects, in fact, the standard of living of most Americans has fallen decidedly behind. Just take the cost of medical services. Health care spending per person, adjusted for inflation, has roughly doubled since 1988, to about $8,500 — pushing up health insurance premiums and eating into workers’ wages.

The cost of going to college has been rising faster than inflation as well. About two-thirds of people with bachelor’s degrees relied on loans to get through college, up from 45 percent two decades ago. Average student debt in 2011 was $23,300.

In contrast to people in other developed nations, who have devoted more time to leisure as they have gotten richer, Americans work about as much as they did a quarter-century ago. Despite all this toil, the net worth of the typical American family in the middle of the income distribution fell to $66,000 in 2010 — 6 percent less than in 1989 after inflation.

Though the bursting of the housing bubble and ensuing great recession takes a big share of the blame for families’ weakening finances, it is nonetheless startling that a single financial event — only a hiccup on the road to prosperity of Americans on the top of the pile — could erase a generation worth of progress for those in the middle.

Though the statistics may be startling, the story they tell is, unfortunately, not surprising. It is the story of America’s new normal. In the new normal the share of the nation’s income channeled to corporate profits is higher than at any time since the 1920s, while workers’ share languishes at its lowest since 1965.

In the new normal, the real wages of workers on the factory floor are lower than they were in the early ’70s. And the richest 10 percent of Americans get over half of the income America produces.

“Almost all of the benefits of growth since the trough of the Great Recession have been going to those in the upper classes,” said Timothy Smeeding, who heads the Institute for Research on Poverty at the University of Madison-Wisconsin. “Middle- and lower-income families are getting a smaller slice of a smaller economic pie as labor markets have changed drastically during our recovery.”

This story is about three decades old.

In 2010, the Department of Commerce published a study about what it would take for different types of families to achieve the aspirations of the middle class — which it defined as a house, a car or two in the garage, a vacation now and then, decent health care and enough savings to retire and contribute to the children’s college education.

It concluded that the middle class has become a much more exclusive club. Even two-earner families making almost $81,000 in 2008 — substantially more than the family median of about $60,000 reported by the Census — would have a much tougher time acquiring the attributes of the middle class than in 1990.

The incomes of these types of families actually rose by a fifth between 1990 and 2008, according to the report. They were more educated and worked more hours, on average, and had children at a later age. Still, that was no match for the 56 percent jump in the cost of housing, the 155 percent leap in out-of-pocket spending on health care and the double-digit increase in the cost of college.

So either we define the middle class down a couple of notches or we acknowledge that the middle class isn’t in the middle anymore.

The hidden cost of income inequality

Today’s NYT features a commentary by Nobel economist Joseph Stiglitz that makes a compelling argument related to his newest book The Price of Inequality.

The argument runs like this:  The single greatest obstacle facing renewed American prosperity is the creation and widespread acceptance of massive income inequality because the latter has severe social, economic, and political costs that frustrate economic growth.

The social costs of inequality are well known and widely documented. Individuals with less education are less employed in the labor market and make less money as a result. Both these facts correlate with poverty and crime. Consider the price of the drug war. Every year the country spends billions of dollars on this war with no end, because every year more and more young (black) poor males grow up with restricted educational opportunities. The drug prohibition we are trying to enforce itself creates a black market that makes the drug trade highly lucrative:  cash only and tax-free. As a result, we are under-investing in an unemployed army of workers whose only job prospects are in the drug trade, and as a consequence the life expectancy of black males is significantly less than their counterparts.

The economic costs of massive income disparity are becoming more evident as the gap between the wealthiest earners and the middle-class and poor grows wider. The data and trend are irrefutable, and no one can deny that growing inequality is a principle cause of many other social and political problems. The graph below represents real facts and figures and therefore speaks volumes for itself:

The graph shows that opportunity and prosperity have not been widely shared in post-war America.

 

 

 

 

 

 

 

 

 

 

The political costs are also more evident as politicians who are funded by wealthy campaign contributors increasingly tailor both their legislative and policy priorities around the agendas of big business. The recent Supreme Court decision in Citizens United, holding that corporations are persons and for that reason can give nearly unlimited money to political causes and elected officials means simply that those with more dollars wield proportionally more influence. Consider this analysis of the 2012 Federal Election Commission study by Adam Lioz and Blair Bowie from the website Demos:

A new analysis of data through Election Day from the Federal Election Commission (FEC) and other sources by U.S. PIRG and Demos shows how big outside spenders drowned out small contributions in 2012: just 61 large donors to Super PACs giving an average of $4.7 million each matched the $285.2 million in grassroots contributions from more than 1,425,500 small donors to the major party presidential candidates.

Because of their wealth and the Supreme Court’s equation of money with speech, those very large donors are able to amplify their voices to more than 23,000 times the volume of an average small donor.

Stiglitz is a Nobel winning economist and hardly an ideological propagator of anything but the values of a free market system, sensibly constrained by democratic accountability in the service of fair and shared prosperity. Yet, he will be painted that way of thousands, perhaps millions, of Americans who prefer to believe a different story, one in which the poor are poor because of their own actions, the rich are rich because god intended it that way, and income inequality is natural. That story is a house of lies, and those who believe it and use it to justify their greed, incompetence, and vicious disregard of the lives of their fellow citizens must be pointed out and condemned for their foolish thinking.

Debating the Economics of Decline

Thomas Edsall, a professor of journalism at Columbia University and author of The Age of Austerity, has an interesting discussion in the New York Times “Opinionator” section today in which he compares two prominent theses about American decline.

The first thesis is articulated and defended by prominent conservatives such as Charles Murray and David Brooks. The basic claim made by Murray among others is that the radical cultural shifts of the 1960’s led to the destruction of basic social norms that had governed public life in America in the post-war era of prosperity, including “self-restraint, responsibility, family, faith and country.”

Some of the evidence for the decline of “conventionally defined moral standards” include the following indicators:  “The percentage of children born to unwed mothers has grown from 20 percent in 1984, when Murray published his seminal work, Losing Ground, to 41 percent in 2011; the rate among black women has gone from 59 percent to 72 percent, among white women from 12 percent to 29 percent and among Hispanic women 25 percent to 53 percent.”

Alan Krueger, who is Chairman of President Obama’s Council of Economic Advisors, defends the second thesis that America’s decline can primarily be traced to rampant corporate greed unleashed by deregulation of the economy in the 1980’s. Consider this selection from his recent speech to graduates at Oberlin College:

In considering reasons for the growing wage gap between the top and everyone else, economists have tended to shy away from considerations of fairness and instead focus on market forces, mainly technological change and globalization. But given the compelling evidence that considerations of fairness matter for wage setting, I would argue that we need to devote more attention to the erosion of the norms, institutions and practices that maintain fairness in the job market. We also need to focus on the policies that can lead to more widely shared – and stronger – economic growth. It is natural to expect that market forces such as globalization would weaken norms and institutions that support fairness in wage setting. Yet I would argue that the erosion of the institutions and practices that support fairness has gone beyond market forces.

Although there are important cultural factors to consider in the first thesis, particularly the entry of women as a class into the workforce and the decline of racial segregation, what is compelling about the latter thesis is the economic evidence. In a nutshell, Krueger points to several trends that are alarming:

First, corporate profits as a percentage of GDP have risen exponentially along with executive compensation. If that’s the case, he asks, they why hasn’t a percentage of that record profiteering led to an increase in real wages. If corporations are doing so well, the thought is that workers ought to receive some share of the benefits they helped to create. But this hasn’t happened.

The second trend is that real wages have not kept up with rising output. One reason why corporate profits are so high is that workers are more productive, a trend that has accelerate in the last 20 years due to technological innovations, as well as social media and communication improvements. While rising output has improved profits, real wages have declined.

Finally, the growth of income inequality is telling. Professor Emmanuel Saez, a Berkeley economist, released a study in January showing that the first 2 years of recover after 2008, “average family income grew by a modest 1.7 percent, ‘but the gains were very uneven. Top 1 percent incomes grew by 11.2 percent while bottom 99 percent incomes shrunk by 0.4 percent.’” This means, in effect, that the rich are getting richer and the poor are getting poorer, and this signals more than anything that America’s decline is primarily rooted in economic and political factors rather than the moral and cultural factors cited by conservatives.

Mediation ordered for Hostess, union

Today in New York a judge for the Federal Bankruptcy Court all-but-ordered mediation between Hostess Brands and the Bakery, Confectionary, Tobacco Workers and Grain Millers Union (BCTGM) in an effort to avoid the demise of the company and one of it quintessential American snack brands, the Twinkie.

In January, the company filed for Chapter 11 bankruptcy protection for a second time, nearly three years after emerging from an earlier stint. The company said it could not meet its debt obligations during the first round of bankruptcy, but BCTGM and the Teamsters were furious that the company continued to pay executives exorbitant compensation while demanding major concessions from them. The company then offered a contract to workers of BCTGM with an eight percent pay cut for bakers and a 32 percent reduction of benefits, while its CEO was given a 300 percent raise above his basic compensation.

In this new round of contract negotiations financial disclosures revealed the company gave its top nine executives 60 to 100 percent raises, even though the company stopped paying its pension obligations to workers. The Teamsters agreed to more steep concessions but the workers of BCTGM refused, citing the egregious abuse of company executives as key factor of its fiduciary problems. When the union refused to accept an additional $100 million in cost concessions, the company’s management announced it was ending operations and liquidating its assets.

Today’s announcement by Judge Robert Drain effectively puts those plans on hold as mediation takes place between management and BCTGM. Although the union refused steeper cuts, the Teamsters agreed to more cuts in their last round of contract negotiations, adding pressure to all parties to come to an agreement and avoid the dissolution of the company.

Note:  The average Teamsters driver makes $20 an hour, and the average baker makes $16, while the compensation of the company’s top executives ranges in the tens of millions. Over 18,000 middle-class workers are on the verge of destitution, while company executives remain insulated from financial hardship.

There is very little oversight of executive compensation in this country, but there is a growing awareness that insolvent companies regularly pay executives exorbitant and unjustified compensation packages that are unlinked from their financial performance. The question is whether Congress has the political will to regulate this form of economic transaction that increases wealth inequality and hampers long-term economic performance. This is doubtful as Congress is increasingly the coordinating committee for an unregulated and predatory form of capitalism that simultaneously encourages wealth maximization and wealth inequality.