Income Inequality News Stories

Excerpts of Key Income Inequality News Stories in Major Media

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Market economies need a certain amount of inequality to function. But American inequality has become so extreme that it’s inflicting a lot of economic damage. And this, in turn, implies that redistribution — that is, taxing the rich and helping the poor — may well raise, not lower, the economy’s growth rate. There is solid evidence, coming from places like the International Monetary Fund, that high inequality is a drag on growth, and that redistribution can be good for the economy. [This] view about inequality and growth got a boost from Standard & Poor’s, the rating agency, which put out a report supporting the view that high inequality is a drag on growth. There is, at this point, no reason to believe that comforting the comfortable and afflicting the afflicted is good for growth, and good reason to believe the opposite. If you look systematically at the international evidence on inequality, redistribution, and growth — which is what researchers at the I.M.F. did — you find that lower levels of inequality are associated with faster, not slower, growth. Furthermore, income redistribution at the levels typical of advanced countries (with the United States doing much less than average) is “robustly associated with higher and more durable growth.” That is, there’s no evidence that making the rich richer enriches the nation as a whole, but there’s strong evidence of benefits from making the poor less poor. Incentives aren’t the only thing that matters for economic growth. Opportunity is also crucial. And extreme inequality deprives many people of the opportunity to fulfill their potential.

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Sen. Elizabeth Warren has built a sizable political profile — including the requisite presidential speculation — by espousing a simple idea: that the system is "rigged" against average Americans. And you might be surprised who agrees with her: A whole bunch of conservatives. According to a new Pew survey, 62 percent of Americans think that the economic system unfairly favors the powerful, and 78 percent think that too much power is concentrated in too few companies. The discontent isn't limited to those who share Warren's liberal ideology; 69 percent of young conservative-leaning voters and 48 percent of the most conservative voters agree that the system favors the powerful, according to Pew. Although Warren seems an outlier in the legislative branch for her fiery discontent with inequality — and the role she says Wall Street plays in exacerbating it — the Pew survey suggests that the vast majority of Americans are at least open to her underlying premise.

Note: Watch Chris Matthews of Fox News interview Elizabeth Warren to see how the right is opening to support of good people on the left. For more on this, see concise summaries of deeply revealing income inequality news articles from reliable major media sources.

New York City’s budget for the 2015 fiscal year includes a new item that supporters of a fairer economy will want to celebrate: $1.2 million set aside for the development of worker-owned cooperative businesses. The spending is a small fraction of the $75 billion budget, which the City Council approved on June 26. But, according to a statement by U.S. Federation of Worker Cooperatives, it's the largest investment in the sector ever made by a city government in the United States. Cooperative businesses are both owned and operated by employees. They focus on maximizing value for all their members as well as creating fair and quality jobs. “This is a great step forward for worker cooperatives,” Melissa Hoover, executive director of the U.S. Federation of Worker Cooperatives, said in a press release. According to Hoover the co-op funding received widespread support from city council members, which “shows that they understand cooperatives can be a viable tool for economic development that creates real opportunity." Here’s how the city’s newly adopted budget describes the program: "Funding will support the creation of 234 jobs in worker cooperative businesses by coordinating education and training resources and by providing technical, legal and financial assistance. The initiative will fund a comprehensive citywide effort to reach 920 cooperative entrepreneurs, provide for the start-up of 28 new worker cooperative small businesses and assists another 20 existing cooperatives."

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UN Secretary General Ban Ki-moon on [June 14] opened a Group of 77 plus China summit in Bolivia, with developing countries calling for a more fair new world economic order. Ban spoke to a vast audience that included some 30 heads of government and representatives of more than 100 nations, about two-thirds of the world's countries. The destiny of billions of poor people and the state of the planet depends on their work, Ban told the group. Dignitaries at the event include the presidents of Venezuela, Ecuador, Cuba and host nation Bolivia. China, which is not a G77 member, is participating in the summit, partly in a nod to its expanding trade ties in Latin America. Leaders at the summit are pressing a "fight for fair and sustainable economic growth, and for a new world economic order," said Venezuelan President Nicolas Maduro. Ecuador's President Rafael Correa slammed the current global economic system as morally flawed. "Only when we are united across Latin America and united around the world, will we be able to make our voice heard and change an international order that is not just unfair -- it is immoral," Correa said. The summit closes [with a document that] sets forth ambitious new commitments to reduce poverty and inequality, foster sustainable development, protect sovereignty over natural resources and promote fair trade and technology transfers.

Note: This important news was reported almost nowhere in the US media other than this one MSN article. For more on this, see concise summaries of deeply revealing income inequality news articles from reliable major media sources.

Talk of economic mobility and the wealth gap is hardly new. From the Occupy movement to President Obama's re-election campaign, income inequality has been in the spotlight for years. Even so, the "inclusive capitalism" conference in London ... broke new ground. Not because of the conversation, but because of the people having it. The 250 people from around the world invited to attend this one-day conference do not represent "the 99 percent," or even the 1 percent. It's more like a tiny fraction of the 1 percent. "We have $30 trillion of assets under management in the room," says conference organizer Lynn Forester de Rothschild, who runs E. L. Rothschild, a major investment firm she and her husband, of the storied Rothschild banking family. That amount — $30 trillion — is roughly one-third of the total investable wealth in the world. "If this bulk of capital decides that they are going to invest in companies that aren't only thinking about the short-term profit," says Rothschild, "then we will see corporate behavior change." The titans of commerce and finance didn't necessarily fly to this meeting in London out of a sense of ethics or moral duty, though that may be a motivation for some. For many, says Rothschild, it's a sense of self-preservation. Capitalism appears to be under siege. "It's true that the business of business is not to solve society's problems," she says. "But it is really dangerous for business when business is viewed as one of society's problems. And that is where we are today."

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Yesterday's Conference on Inclusive Capitalism ... brought together the people who control a third of the world's liquid assets – the most powerful financial and business elites – to discuss the need for a more socially responsible form of capitalism that benefits everyone, not just a wealthy minority. Leading financiers referred to statistics on rising global inequalities and the role of banks and corporations in marginalising the majority while accelerating systemic financial risk – vindicating the need for change. While the self-reflective recognition by global capitalism's leaders that business-as-usual cannot continue is welcome, sadly the event represented less a meaningful shift of direction than a ... transparent effort to rehabilitate a parasitical economic system on the brink of facing a global uprising. Central to the proceedings was an undercurrent of elite fear that the increasing disenfranchisement of the vast majority of the planetary population under decades of capitalist business-as-usual could well be its own undoing. The Conference on Inclusive Capitalism is the brainchild of the Henry Jackson Society (HJS), a little-known but influential British think tank with distinctly neoconservative and xenophobic leanings.

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Recent data from the Luxembourg Income Study Database [is] shocking. While median per capita income in the United States has stagnated since 2000, it's up significantly in Canada and Northern Europe. Their typical worker's income is now higher than ours, and their disposable income -- after taxes -- higher still. Most of them get free health care and subsidized child care. And if they lose their jobs, they get far more generous unemployment benefits than we do. (In fact, right now, 75 percent of jobless Americans lack any unemployment benefits.) If you think we make up for it by working less and getting paid more on an hourly basis, think again. There, at least three weeks paid vacation is the norm, along with paid sick leave and paid parental leave. We're working an average of 4.6 percent more hours more than the typical Canadian worker, 21 percent more than the typical French worker, and a whopping 28 percent more than your typical German worker. But at least Americans are more satisfied, aren't we? Not really. According to opinion surveys and interviews, Canadians and Northern Europeans are. They also live longer, their rate of infant mortality is lower, and women in those countries are far less likely to die as result of complications in pregnancy or childbirth. But at least we're the land of more equal opportunity, right? Wrong. Their poor kids have a better chance of getting ahead. While 42 percent of American kids born into poor families remain poor through their adult lives, only 30 percent of Britain's poor kids remain impoverished -- and even smaller percentages in other rich countries.

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The 25 highest-paid hedge fund managers ... made a combined $21 billion in 2013. In particular, let’s think about how their good fortune refutes several popular myths about income inequality in America. Apologists for soaring inequality almost always try to disguise the gigantic incomes of the truly rich by hiding them in a crowd of the merely affluent. Instead of talking about the 1 percent or the 0.1 percent, they talk about the rising incomes of college graduates. The goal of this misdirection is to soften the picture, to make it seem as if we’re talking about ordinary white-collar professionals who get ahead through education and hard work. But many Americans are well-educated and work hard. The vast gulf that now exists between the upper-middle-class and the truly rich didn’t emerge until the Reagan years. Second, ignore the rhetoric about “job creators” and all that. Conservatives want you to believe that the big rewards in modern America go to innovators and entrepreneurs, people who build businesses and push technology forward. But that’s not what those hedge fund managers do for a living; they’re in the business of financial speculation. Once upon a time, you might have been able to argue with a straight face that all this wheeling and dealing was productive, that the financial elite was actually providing services to society commensurate with its rewards. But, at this point, the evidence suggests that hedge funds are a bad deal for everyone except their managers; they don’t deliver high enough returns to justify those huge fees, and they’re a major source of economic instability. We’re still living in the shadow of a crisis brought on by a runaway financial industry.

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Until the 1980s, corporate CEOs in America were paid, on average, 30 times what their typical worker was paid. Since then, CEO pay has skyrocketed to 280 times the pay of a typical worker; in big companies, to 354 times. Meanwhile, over the same 30-year span, the median American worker has seen no pay increase at all, adjusted for inflation. Even though the pay of male workers continues to outpace that of females, the typical male worker between the ages of 25 and 44 peaked in 1973 and his pay has been dropping ever since. Wages of the median male worker across all age brackets have dropped 10 percent, after inflation, since 2000. CEOs and other top executives use their fortunes to fuel speculative booms followed by busts. CEOs and top corporate executives in Europe, Canada and Japan don't get paid vast multiples of what their employees earn. At the same time, their workers are starting to command better pay than the typical American. The median wage in Canada is already higher than the median wage in the United States. There's no easy answer for reversing this trend, but ... a bill introduced in the California Legislature ... creates the right incentives. The proposed legislation sets corporate taxes according to the ratio of CEO pay to the pay of the company's typical worker. Corporations with low pay ratios get a tax break. Those with high ratios get a tax increase. For the last 30 years, almost all the incentives for companies have been to lower the pay of their workers while increasing the pay of their CEOs and other top executives. It's about time some incentives were applied in the other direction.

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Corporate profits are at their highest level in at least 85 years. Employee compensation is at the lowest level in 65 years. The Commerce Department last week estimated that corporations earned $2.1 trillion during 2013, and paid $419 billion in corporate taxes. The after-tax profit of $1.7 trillion amounted to 10 percent of gross domestic product during the year, the first full year it has been that high. In 2012, it was 9.7 percent, itself a record. Until 2010, the highest level of after-tax profits ever recorded was 9.1 percent, in 1929, the first year that the government began calculating the number. Before taxes, corporate profits accounted for 12.5 percent of the total economy, tying the previous record that was set in 1942, when World War II pushed up profits for many companies. But in 1942, most of those profits were taxed away. The effective corporate tax rate was nearly 55 percent, in sharp contrast to last year’s figure of under 20 percent. The trend of higher profits and lower effective taxes has been gaining strength for years, but really picked up after the Great Recession temporarily depressed profits in 2009. The effective rate has been below 20 percent in three of the last five years. Before 2009, the rate had not been that low since 1931. The Commerce Department also said total wages and salaries last year amounted to $7.1 trillion, or 42.5 percent of the entire economy. That was down from 42.6 percent in 2012 and was lower than in any year previously measured.

Note: For more on income inequality, see the deeply revealing reports from reliable major media sources available here.

The US is dominated by a rich and powerful elite. So concludes a recent study by Princeton University Prof Martin Gilens and Northwestern University Prof Benjamin I Page. Multivariate analysis indicates that economic elites and organised groups representing business interests have substantial independent impacts on US government policy, while average citizens and mass-based interest groups have little or no independent influence. In English: the wealthy few move policy, while the average American has little power. The two professors came to this conclusion after reviewing answers to 1,779 survey questions asked between 1981 and 2002 on public policy issues. They broke the responses down by income level, and then determined how often certain income levels and organised interest groups saw their policy preferences enacted. "A proposed policy change with low support among economically elite Americans (one-out-of-five in favour) is adopted only about 18% of the time," they write, "while a proposed change with high support (four-out-of-five in favour) is adopted about 45% of the time." When a majority of citizens disagrees with economic elites and/or with organised interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favour policy change, they generally do not get it. They conclude: "We believe that if policymaking is dominated by powerful business organisations and a small number of affluent Americans, then America's claims to being a democratic society are seriously threatened."

Note: For more on the antidemocratic impacts of income inequality, see the deeply revealing reports from reliable major media sources available here.

The American middle class, long the most affluent in the world, has lost that distinction. While the wealthiest Americans are outpacing many of their global peers, a New York Times analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades. After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans. The numbers ... suggest that most American families are paying a steep price for high and rising income inequality. The struggles of the poor in the United States are even starker than those of the middle class. A family at the 20th percentile of the income distribution in this country makes significantly less money than a similar family in Canada, Sweden, Norway, Finland or the Netherlands. Thirty-five years ago, the reverse was true. The findings are striking because the most commonly cited economic statistics — such as per capita gross domestic product — continue to show that the United States has maintained its lead as the world’s richest large country. But those numbers are averages, which do not capture the distribution of income. With a big share of recent income gains in this country flowing to a relatively small slice of high-earning households, most Americans are not keeping pace with their counterparts around the world.

Note: For more on income inequality, see the deeply revealing reports from reliable major media sources available here.

Mark Zuckerberg has decided he’s a $1-a-year man. Zuckerberg, who is Facebook Inc.’s chief executive officer and also the 22nd richest person in the world as ranked by the Bloomberg Billionaires Index, was paid $1 in salary for 2013, according to a regulatory filing with the U.S. Securities and Exchange Commission yesterday. That’s down from a base salary of $503,205 in 2012, the year that Facebook went public. Zuckerberg is following the well worn path of other Silicon Valley technology moguls who also chose to take on the symbolic annual salary of $1 after they were already wealthy. Apple Inc.’s late co-founder Steve Jobs helped popularize the practice, which is today also espoused by Google Inc. co-founders Larry Page and Sergey Brin, among others. All own sizable equity stakes in their own companies. Zuckerberg, whose wealth totals around $27 billion, owns Facebook shares that give him 61.6 percent of voting power in the Menlo Park, California-based social network, according to the filing. He saw his net worth balloon last year as Facebook’s stock more than doubled in value. The 29-year-old has ramped up his public service and philanthropy, including starting a group called Internet.org to connect the world to the Web. Zuckerberg’s total compensation last year was $653,165, down from $1.99 million in 2012. The amount, besides the $1 salary, was for the passenger fees, fuel, crew and catering costs for his use of private planes for personal reasons, as part of his security program, according to the filing. The CEO also made $3.3 billion last year after exercising stock options to purchase 60 million shares, according to the filing.

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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.

Oxfam International, a poverty fighting organization, made news at the World Economic Forum in Davos earlier this year with its report that the world’s 85 richest people own assets with the same value as those owned by the poorer half of the world’s population, or 3.5 billion people (including children). Both groups have $US 1.7 trillion. That’s $20 billion on average if you are in the first group, and $486 if you are in the second group. By the time Forbes published its 2014 Billionaires List in early March, it took only 67 of the richest peoples’ wealth to match the poorer half of the world. Each of the 67 is on average worth the same as 52 million people from the bottom of the world’s wealth pyramid. Bill Gates, the world’s richest man, with a net worth of $76 billion, is worth the same as 156 million people from the bottom. Who are the 67? The biggest group—28 billionaires, or 42% of them—is from the United States. No other country comes close. Germany and Russia have the second-highest number, with six each. The rest are sprinkled among 13 countries in Western Europe, APAC and the Americas. That the biggest group of the super rich comes from the U.S. should not be a surprise, as the country holds almost a third of the world’s wealth (30%), significantly more than any other country, according to the Global Wealth Databook, from Credit Suisse Research Institute.

Note: For more on income and wealth inequality, see the deeply revealing reports from reliable major media sources available here.

The paths that many of today’s wealthiest Americans have taken on their road to riches have not bettered most people’s lives. Many have actually hurt most people’s lives. Their riches have come at most other people’s expense. Since the recession officially ended in June 2009, for instance, the wages for all private-sector jobs have fallen, on average, by 0.5 percent. The wages for jobs in financial services, however, have risen by 5.5 percent. Inasmuch as the recession was brought about by the financial services industry, it’s understandable that this disparity would strike most people as unjust. Or consider the mechanisms by which some CEOs earn huge salaries. Last week, the board of directors of JPMorgan Chase voted to raise chief executive Jamie Dimon’s annual pay to $20 million — up from $11.5 million — despite the fact that the bank paid the federal government around $20 billion last year to settle charges stemming from its multiple misdeeds. Laying off workers and depressing their pay has become the key factor in boosting corporate profits in recent years. With profits at a record high as a share of the nation’s gross domestic product and wages at a record low, it’s entirely proper that Americans question the legitimacy of the 1 percent’s wealth.

Note: For more on income inequality, see the deeply revealing reports from reliable major media sources available here.

Eighty-five people control the same amount of wealth as half the world's population. That is 85 people compared with 3.5 billion. A new report from Oxfam has been published in time for the World Economic Forum in Davos this week. It shows the world's ultra-wealthy have not only recovered from the global financial crisis, they have positively blossomed. The report shows the wealth of the 1 per cent richest people in the world is worth about $US110 trillion, 65 times the total wealth of the bottom half of the world's population. It also shows the world's richest 85 people control about $US1.7 trillion in wealth, equivalent to the bottom half of the world's population. And far from hindering the wealthy, the political response to the global financial crisis - including the actions of central banks and the austerity measures introduced by national governments - has made the rich fabulously richer. In the US, the wealthiest 1 per cent of the population grabbed 95 per cent of post-financial crisis growth between 2009 and 2012, while the bottom 90 per cent became poorer. An Oxfam survey of six countries - the United States, UK, Spain, Brazil, India and South Africa - has found that the majority of people believe laws and regulations are skewed in favour of the rich, so people are noticing.

Note: For more on income inequality, see the deeply revealing reports from reliable major media sources available here.

2013 marked one of the biggest redistributions in recent American history - a redistribution upward, from average working people to the owners of America. The stock market ended 2013 at an all-time high, giving stockholders their biggest annual gain in almost two decades. Most Americans didn't share in those gains, however, because most people haven't been able to save enough to invest in the stock market. More than two-thirds of Americans live from paycheck to paycheck. Even if you include the value of individual retirement accounts, most shares of stock are owned by the very wealthy. The richest 1 percent of Americans owns 35 percent of the value of American-owned shares. The richest 10 percent owns more than 80 percent. So in the bull market of 2013, America's rich hit the jackpot. Stock prices track corporate profits. And 2013 was a banner year for profits. Where did those profits come from? Here's where redistribution comes in. American corporations didn't make most of their money from increased sales (although their foreign sales did increase). They made their big bucks mostly by reducing their costs - especially their biggest single cost: wages. They push wages down because most workers no longer have any bargaining power when it comes to determining pay. The continuing high rate of unemployment - including a record number of long-term jobless and a large number who have given up looking for work altogether - has allowed employers to set the terms.

Note: For more on income inequality, see the deeply revealing reports from reliable major media sources available here.

To many Americans, the war on poverty declared 50 years ago by President Lyndon B. Johnson has largely failed. The poverty rate has fallen only to 15 percent from 19 percent in two generations, and 46 million Americans live in households where the government considers their income scarcely adequate. Half a century after Mr. Johnson’s now-famed State of the Union address, the debate over the government’s role in creating opportunity and ending deprivation has flared anew, with inequality as acute as it was in the Roaring Twenties and the ranks of the poor and near-poor at record highs. High rates of poverty ... have remained a remarkably persistent feature of American society. About four in 10 black children live in poverty; for Hispanic children, that figure is about three in 10. According to one recent study, as of mid-2011, in any given month, 1.7 million households were living on cash income of less than $2 a person a day, with the prevalence of the kind of deep poverty commonly associated with developing nations increasing since the mid-1990s. The 1996 Clinton-era welfare overhaul drastically cut the cash assistance available to needy families, often ones headed by single mothers. Over the last 30 years, growth has generally failed to translate into income gains for workers — even as the American labor force has become better educated and more skilled.

Note: For more on income inequality, see the deeply revealing reports from reliable major media sources available here.

France's constitutional council has given President Francois Hollande the green light to introduce a 75 per cent tax rate taking aim at the super rich. Under the new plan, which the French council found constitutional, companies will have to pay 50 per cent tax on all salaries exceeding one million euros, or the equivalent of approximately Ł833, 000. Including social contributions, the rate will effectively stand at 75 per cent, although the total amount will be capped at 5 per cent of a company's turnover. The levy is set to affect income earned this year and in 2014. The 'millionaire tax' could affect more than 450 companies and several football clubs, and could raise more than 200 million euros on an annual basis. The super tax, a flagship pledge in Hollande's political manifesto, has infuriated business leaders, high earners and celebrities. President Hollande, who once admitted that he dislikes the rich and has been accused of taking an anti-business stance, has fired back at critics insisting that high earners should do more to boost the country's public finances. But the super tax has sparked fears of a mass exodus of businesses, bankers and celebrities. Last year, Prime Minister David Cameron said he would "roll out the red carpet" and "welcome more French businesses to Britain" if Hollande raised taxes on the wealthy.

Note: A New York Times article shows that the tax rate for those earning over $8 million per year in the U.S. dropped from 41% in 1995 to 31.5% in 2005. For more on income inequality, see the deeply revealing reports from reliable major media sources available here.

Important Note: Explore our full index to revealing excerpts of key major media news stories on several dozen engaging topics. And don't miss amazing excerpts from 20 of the most revealing news articles ever published.