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Top 1% Got 93% of Income Growth as Rich-Poor Gap Widened — “The recovery that officially began in mid-2009 hasn’t arrived in most Americans’ paychecks.”

While the U.S. economy was recovering from the Great Recession, Reyes, 52, a casino dealer from Minneapolis, was dining on $1.67 cans of soup and searching for a way to keep her house, which was foreclosed on last October.

“I went backwards,” Reyes said. “Two years ago, three years ago, I didn’t know I’d be looking at being homeless.”

Stephen Hemsley’s salary has been frozen too. His income hasn’t.

The chief executive officer of Minnetonka, Minnesota-based health insurer UnitedHealth Group Inc. (UNH) earned $1.3 million in salary every year since 2007. Still, as the economic recovery took hold from 2009 to 2011, Hemsley, 60, exercised stock options worth more than $170 million and made at least $51 million from share sales, making him the object of an “Occupy Lake Minnetonka” protest on the ice outside his lakeside home each winter.

The divergent fortunes of Reyes and Hemsley show that 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.

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This is what especially pisses me off when people start talking about “personal responsibility” and how people who are struggling financially “just aren’t working hard enough.”

I’ve been in the IT/Customer Service field for over 16 years, it used to be I made a pretty good living at it too. Somewhere around 2008,  it seemed like while everything else kept getting more expense, my income stayed about the same. I know exactly what they mean in the article by “going backwards”.

It’s fucking bullshit to work your ass off at a thankless fucking job for years upon years only to be rewarded jack shit for it. 

I like the job I have now, but $20 an hour doesn’t go as far as it used to just a few years back, and if you complain about things being tight, there will always be some fucker that wants to say shit like, “Well, maybe you shouldn’t have had kids you couldn’t afford.” and various other dismissive bullshit.

I’m sick of that kind of bullshit. The working class is getting shit on and everyone just wants to dismiss it like it’s our own fault. 

The average [government] subsidy for those earning $200,000 to $500,000 is three times that for those earning $10,000 to $20,000.

The latest gaffe by Mitt Romney (not so much Romneygate, as Romney-gated community) brings up a related issue, of how modern states have tended to extend benefits to the better-off, partly because of lobbying and partly as a way of buying the support of the wealthy for the welfare state. All this is well illustrated in Suzanne Mettler’s book “The Submerged State”, which shows how these hidden subsidies can distort voters’ view of the way that government policy works; a 2008 poll found that 57% of Americans denied ever using a government programme. But when shown a list of 21 actual programmes, including student loans and home-mortgage interest deduction, 94% of the deniers turned out to have benefited after all.

Some of these programmes are heavily skewed towards the better-off. According to Ms Mettler, 69% of the benefits of the mortgage interest deduction went to those who earned $100,000 or more; 55% of the benefits from employer-provided retirement benefits* went to those earning $100,000 or more. Only 16% of workers in the lowest income quintile had employer-sponsored (and tax deductible) health insurance compared to 85% of those in the top quintile.

In cash terms, the average subsidy for those earning $200,000 to $500,000 is three times that for those earning $10,000 to $20,000.

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Caterpillar Corporation Pushes Six-Year Pay Freeze On Workers While Making Record Profits, Paying CEO $17 Million

Back in June, ThinkProgress noted that the manufacturing giant Caterpillar was seeking major concessions during contract negotiations with striking workers, even as it was making billions in profits and giving its CEO a 60 percent pay boost. The New York Times’ Steven Greenhouse added more details today, noting that the company wants to implement a six-year pay freeze and a pension freeze, at a time when it is making record profits:

Despite earning a record $4.9 billion profit last year and projecting even better results for 2012, the company is insisting on a six-year wage freeze and a pension freeze for most of the 780 production workers at its factory here. Caterpillar says it needs to keep its labor costs down to ensure its future competitiveness. […]

Caterpillar, which has significantly raised its executives’ compensation because of its strong profits, defended its demands, saying many unionized workers were paid well above market rates.

“A company that earned a record $4.9 billion in 2011 and $1.586 billion in the first quarter of this year should be willing to help the workers who made those profits for them,” said Timothy O’Brien, president of Machinists Local Lodge 851. “Caterpillar believes in helping the very rich, but what they’re doing would help eliminate the middle class.” Several labor experts told the Times that Caterpillar is a pioneer in tough labor negotiations meant to drive down workers’ wages.

Last year, Caterpillar’s CEO made nearly $17 million in total compensation. At the moment in the U.S., the typical worker would have to work 244 years in order to earn what the average CEO makes in one year.

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This right here is what more people need to be talking about, on the news, in the papers, on the radio, everywhere.

This kind of shit is why people are struggling right now. This kind of thing is what people are talking about when they say all the money is staying at the top, and all the while they were telling us it was going to trickle down.

People will be told they are whining or being entitled when they complain about this type of thing, but it’s not fucking right.

Labor needs to get organized again to create a push back against this sort of thing.

This is exactly the kind of shit they were pulling at my old job right before I was laid off and replaced with guys making half of what I did.

Photo of boy in public housing with an iPad prompts debate over what the poor should have: Jarvis DeBerry

In a story that appeared on Wednesday’s front page some residents of the Iberville public housing development talked about their fears that today’s scheduled implosion of the nearby Pallas Hotel will make them sick or aggravate the asthma or other respiratory problems they already have. The 17-story hotel is being brought down to make room for the University Medical Center the state is building.

Concerns about airborne particles prompted state officials to offer hotel rooms for residents who live within a 600-foot radius of the demolition site, but the Pallas Hotel and Iberville are separated by 725 feet. So, before Wednesday at least, there was nothing special being planned for folks in the 400-apartment complex. The state’s plan was reminiscent of the good old days in Louisiana when at some restaurants there’d be nothing but open air separating the non-smoking section from the smoking one.

But forget about the residents’ health worries. Some readers were more worked up over a Rusty Costanza photograph that accompanied Wednesday’s story. He showed an 8-year-old boy at the development busying himself with an iPad. That’s a relatively expensive piece of technology. Predictably, outrage ensued.

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I just got into this with my mother of all people the other day (we were on public assistance off and on growing up).

After I told her it was none of her business what people on assistance were doing, she then went on about what horrible people her neighbors were, how badly they treated their children, how often they fought and how the cops were over there all the time.

That’s when I told her that they sounded like horrible people and it had nothing to do with them being on public assistance.

I mean, we had video game consoles, we had a VCR (they were expensive when I was a kid) we had a computer when I was in high school and a lot of what we owned we got as gifts from relatives, not that I should have to justify that just because we were on assistance. 

I really get sick of the “poor people shouldn’t be allowed to have anything ever” folks. 

Americans are working approximately 11 more hours per week now than they did in the 1970’s, yet the average income for middle-income families has declined by 13% since the 1970s

Americans are literally working themselves to death. America is the most overworked nation in the developed world and Americans have become hostage to their jobs that has made their work-life balance unattainable.

President Franklin Roosevelt in 1937 signed into law the Fair Labor Standards Act (FLSA) as part of his New Deal agenda, establishing the five-day, 40-hour maximum workweek. The unions pushed it, and business leaders went along with it, since the research conducted in the five decades before that consistently found that 8-hour work days and 40-hour work weeks kept workers productive, safe, healthy, and efficient over a long period of time.

The 40-hour workweek, however, has slowly become a thing of past.  More people in the middle-income bracket, as well as those in managerial positions are working longer hours.

In the 1970’s, 34% of men in professional-managerial positions worked 50-hours or more per week.  Today that number has increased to 38%.  As far as middle-income male workers are concerned, 21% worked more than 50-hours per week in the 1970’s, whereas today they account for 23% . With professional women, only 6% worked 50-hours or more per week in the 1970’s, whereas this figure has since more than doubled.

Tragically, Americans are working approximately 11 more hours per week now than they did in the 1970’s, yet the average income for middle-income families has declined by 13% since the 1970s. 

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Something to remember next time someone says that people complaining about having difficulty making ends meet aren’t “working hard enough” or that people complaining that their wages are too low are being “whiny” or “entitled”.

It’s also worth noting that all this is going on while corporate profits are at record highs and CEOs are making 185 times more than the average worker.

The Five Best Quotes in Bloomberg’s Outrageous Banker Bonuses Story

Bloomberg’s Max Abelson, who’s carved out a fantastic beat providing Wall Street types with lengths of hangman’s rope, has anotherfantastic story today, this time about the tragic lives of bankers dealing with smaller bonus checks. (Spoiler alert: some of them have to do their dishes by hand.)

It’s a harrowing tale of discounted salmon and supermarket circulars, and you can and should read the whole thing to understand exactly why we need to set about one-fifth of New York City on fire. But just to give you a taste of the rage you will feel, here are five of our favorite moments:

5:

[Law professor M. Todd Henderson] wrote two years ago that his family was “just getting by” on more than $250,000 a year […] “Yes, terminal diseases are worse than getting the flu,” he said. “But you suffer when you get the flu.”

4:

“They have a circular that they leave in front of the buildings in our neighborhood,” said [Wall Street headhunter Daniel] Arbeeny, 49 […] “We sit there, and I look through all of them to find out where it’s worth going.”

3:

“I can’t imagine what I’m going to do,” [Marketing Director Andrew] Schiff said. “I’m crammed into 1,200 square feet. I don’t have a dishwasher. We do all our dishes by hand.”

2:

Arbeeny said his “income has gone down tremendously.” On a recent Sunday, he drove to Fairway Market in the Red Hook section of Brooklyn to buy discounted salmon for $5.99 a pound.

1:

“People who don’t have money don’t understand the stress,” said Alan Dlugash, apartner at accounting firm Marks Paneth & Shron LLP in New York who specializes in financial planning for the wealthy.

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The 1 Percent Club’s Misguided Protectors

By EDUARDO PORTER | The New York Times

The Republican right is pushing back hard against the 99 percent movement and its focus on the widening chasm between the fortunes of the few at the summit of the income scale and everybody else. Newt Gingrich, who led the field of Republican presidential candidates last week, argued that the concept of the 99 percent versus the 1 percent is “un-American.” His rival Rick Perry, who led the Republican pack in September, answered a question about taxes and inequality by saying “I don’t care about that.”

This indifference is grounded in a proposition that has for decades dominated American debate over redistributive policies like steeper taxes for the rich: that inequality is an expected outcome of economic growth, and that efforts to tamp down inequality would slow growth down. As President Obama said in his speech in Kansas last week, this strain of thought goes back to at least the turn of the last century when “there were people who thought massive inequality and exploitation of people was just the price you pay for progress.”

Why, conservatives ask, would people exert themselves, study more and work harder if they could not reap extra rewards from the effort? Trying to fix inequities would only blunt incentives to work and invest. As Mr. Gingrich put it, “You are not going to get job creation when you engage in class warfare because you have to attack the very people you hope will create jobs.”

This argument is — at best — incomplete. Some inequality may be necessary to encourage investment for growth. But as recent research shows, intense inequality actually stunts growth, making it more difficult for countries to sustain the sort of long economic expansions that have characterized the more prosperous nations of the world.

The first chart, based on research by Andrew Berg and Jonathan Ostry, economists at the International Monetary Fund, reveals the link between inequality and the sustainability of economic growth. Igniting growth is easier than maintaining it. They found that in high-inequality nations spurts of growth ended more quickly, and often in painful contractions.

The chart reports inequality with the so-called Gini index, which is 0 when all households have the same income and 100 when all the income goes to only one household. It shows that regions with high inequality, like sub-Saharan Africa and Latin America, have recorded shorter periods of sustained economic growth since 1950 than regions with lower inequality like East Asia. The average stretch of robust growth among relatively equitable industrial countries lasted more than 24 years. In Africa the average was less than 14 years.

The economists found that income distribution contributes more to the sustainability of economic growth than does the quality of a country’s political institutions, its foreign debt and openness to trade, the level of foreign investment in the economy and whether its exchange rate is competitive.

It’s not too hard to see why. Extreme inequality blocks opportunity for the poor. It can breed resentment and political instability — discouraging investment — and lead to political polarization and gridlock, splitting the political system into haves and have-nots. And it can make it harder for governments to address economic imbalances and brewing crises.

Republicans might be tempted to dismiss such analysis as irrelevant to the United States, which is already highly developed. But as the second chart shows, inequality in Americahas soared over the last 30 years, approaching and even surpassing that in many poor countries. Today, America is an outlier among industrial nations. Its distribution of income looks closer to that of Argentina than, say, Germany.

So it is perhaps unsurprising that our recent economic crisis had some characteristics of boom-and-busts in less developed nations. It was triggered, in part, by 1 percenters on Wall Street persuading regulators to remove restrictions on their casino. It led workers to pile on debt to supplement falling incomes. It ended with a vast deployment of tax dollars to bail out fallen plutocrats. And our political system seems unable to deal with the aftermath. 

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Paul Krugman: We have a society in which money is increasingly concentrated in the hands of a few people, and in which that concentration of income and wealth threatens to make us a democracy in name only.

Oligarchy, American Style

By PAUL KRUGMAN

Inequality is back in the news, largely thanks to Occupy Wall Street, but with an assist from the Congressional Budget Office. And you know what that means: It’s time to roll out the obfuscators!

Anyone who has tracked this issue over time knows what I mean. Whenever growing income disparities threaten to come into focus, a reliable set of defenders tries to bring back the blur. Think tanks put out reports claiming that inequality isn’t really rising, or that it doesn’t matter. Pundits try to put a more benign face on the phenomenon, claiming that it’s not really the wealthy few versus the rest, it’s the educated versus the less educated.

So what you need to know is that all of these claims are basically attempts to obscure the stark reality: We have a society in which money is increasingly concentrated in the hands of a few people, and in which that concentration of income and wealth threatens to make us a democracy in name only.

[FULL STORY]

Executive pay has jumped by leaps and bounds, far outstripping the income made by workers. CEOs at America’s largest companies now earn 343 times more than the typical worker - this increase occurred at the same time that worker pay was actually falling, in inflation adjusted dollars.

By Pat Garofalo | thinkprogress.org

Ongoing protests on Wall Street (which have inspired similar efforts around the country) are now in their third week, with no sign of slowing down. One of the issues galvanizing the protesters is the country’s growing income inequality, which is currently the worst its been since the Great Depression.

There are several factors driving this income inequality — including preferential treatment of investment income, weak estate taxes, and stagnant middle-class wages — but one of the problems is that executive pay has jumped by leaps and bounds, far outstripping the income made by workers. CEOs at America’s largest companies now earn 343 times more than the typical worker. In 1970, the average CEO earned 28 times as much as the typical worker. As the Washington Post noted today, this increase occurred at the same time that worker pay was actually falling, in inflation adjusted dollars:

The gap between what workers and top executives make helps explain why income inequality in the United States is reaching levels unseen since the Great Depression.

Since the 1970s, median pay for executives at the nation’s largest companies has more than quadrupled, even after adjusting for inflation, according to researchers. Over the same period, pay for a typical non-supervisory worker has dropped more than 10 percent, according to Bureau of Labor statistics.

And much of the increase was driven by nothing more than companies simply trying to ensure that their CEO’s pay was above the median for their industry, regardless of that CEO’s performance:

Companies have long hid the way they set executive pay, but in late 2006, the Securities and Exchange Commission began compelling companies to disclose the specifics of how they use peer groups to determine executive pay.

Since then, researchers have found that about 90 percent of major U.S. companies expressly set their executive pay targets at or above the median of their peer group. This creates just the kinds of circumstances that drive pay upward.

For those keeping score, the median CEO pay in 2010 was $9 million. For “top executives,” the median pay package comes in at about $4.9 million. This cuts across industries, while companies tend to target their pay within their respective industry, but it gives you a sense for the scale of the pay packages these companies are looking at when deciding what to pay their own people.

The nation’s biggest banks could be the poster children for this sort of corporate excess, as their CEOs received huge salaries and bonuses, even as their firms were blowing up themselves (and the global economy) on toxic mortgages. The Post noted that Countrywide CEO Angelo Mozillo “earned more than $180 million as he led the company to the brink of ruin during the five years before the housing bust. At times, his pay had been set at the 90th percentile of peers.” For those looking to address income inequality, it seems that reining in executive pay is a good place to start.

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Yet Another Wall Street Billionaire Asks Working Americans to Sacrifice — Why Do the Media Still Listen to These Guys?

Working America has sacrificed a great deal in the last 40 years, yet wealthy Wall St. CEOs keep asking for more.

Working America has sacrificed a great deal in the last 40 years: its share of the national income, its economic security and the dignity that comes with decent health and retirement benefits. Those at the top of the pile have sacrificed nothing – they’re grabbing more income and paying less in taxes today than they did during the mid-century boom years. Yet, we are being asked by those very elites for “shared sacrifice.” The question is, how much “sacrifice” the little guy has to make before the big boys start sharing it.

[FULL STORY]