U.S. – Top 1% Owns More than Bottom 90%

SourceThe Blue Street Journal  on Facebook

When I saw this graphic in my Facebook News Feed, I immediately recalled the days (early 1980’s) when we thought how unjust and oppressive it was that 14 families owned 90% of the land in El Salvador, and we said no wonder the people revolted. Now the U.S. is the same, but where is the revolt?

A Facebook Friend commented “The problem is that the 90% are easily distracted by lotteries, Faux News, terrorist attacks, wars, immigration, right to life issues and gay rights. They get sucked into voting for special issues. The 1% NEVER get distracted by those things. For them, every issue is only about how it affects their pocketbooks. The issues are adopted by Republicans because they draw votes; not because the 1% care or are even affected by them.”

Income Gap: Dramatic Increase 1967-2010

The chart below vividly illustrates how the gap between the wealthy and the middle class has steadily grown since 1967.  Note the chart is in current dollars (1957 income reported in 1967 dollars and 2010 income reported in 2010 dollars).  And we all know that a dollar today won’t buy nearly as much as a dollar would in 1967, so the next chart reports in constant dollars.

Household-Inc-Current-Dollars

The chart below shows the mean (average) household income with all years reported in the equivalent of 2010 dollars.  This chart makes clear that the vast majority of Americans have hardly improved their economic status since 1967.  U.S. economic policies have NOT raised all boats – only the boats of the top 20% and the super rich (top 1%).  This helps us understand why the rising stock market is not an accurate indicator of the economic well-being of the majority.  Gains in productivity and profits have gone to the top earners (& dividend receivers), they have not been equitably distributed to the workers who actually produce more per hour.

Household-Inc-InflationAdj

Source:  Doug Short,  “U.S. Household Incomes: A 44-Year Perspective,:  dshort.com, Sept. 18, 2012.  Online at http://www.advisorperspectives.com/dshort/updates/Household-Income-Distribution.php

Growing Gap between Rich and Everyone Else

According to a recent Pew Research Center study, between the years of 2009 and 2011:

  • Average Net Worth per Household of richest 7% INCREASED by 28%
  • Average Net Worth per Household of other 93% DECREASED by 4%

PEW-HouseholdWealth-ChangedTitle

  • There are 8 million households in the upper 7% and their mean net worth in 2011 was $3,173,895
  • Of the 111 million households in the other 93%, mean net worth in 2011 was $113,817

The richest 7% of households owned 63% of all household wealth in 2011.

The income gap is also increasing

The top 20% of earners received half of all household income.

Between 1979 and 2007

Incomes for the richest 1% increased by a whopping 275%, while

Incomes for middle 60% of Americans increased only 40%.

Sources:

For Household Net Worth Data: Richard Fry and Paul Taylor  “A Rise in Wealth for the Wealthy; Declines for the Lower 93%,” Pew Research Center.

For Income Data: Pauline Jelinek, Associated Press, in “Pew: 93% of households lost net worth 2009-11,” USA Today, April 23, 2013.

Corporations pay few taxes, but benefit mightily from gov’t

“America isn’t broke, but it is being ripped off,” writes The Other 98% on Facebook when posting this infographic.  Seems like the 10% that corporations contribute to government revenues is way out of proportion to the benefits they receive (roads, educated workers, police, etc.,  and especially protection of the courts).

To read more and find the sources for the stats in the infographic, see “American Taxpayers Increasingly Picking Up the Tab for Unpaid Corporate Taxes, ” April 4, 2013 at http://thecontributor.com/economy/american-taxpayers-increasingly-picking-tab-unpaid-corporate-taxes.

Job-Skills Gap: Real Reasons

Employers frequently complain that they can’t increase their workforce because they can’t find enough qualified workers.  But to what extent is there an actual shortage of qualified workers, and to what extent are employers finding it difficult to fill job vacancies because they don’t offer high enough wages and/or are too picky about previous experience?

Skills-Gap ChartAccording to a recent survey of 213 employers by the Minnesota Department of Employment and Economic Development (DEED), for 13 percent of difficult-to-fill vacancies, the surveyed employers said the problem was unattractive wages, hours, location, etc. NOT having too few applicants with the right qualifications.  (DEED, p. 9)  It would be interesting to compare the results from a survey of job applicants.

Employers may be contributing to their own difficulties in filling jobs by unrealistic experience requirements and unwillingness to provide on-the-job training.  The DEED report noted that “when questioned about the types of experience they were looking for, employers often cited specific skills and background that were missing as a result of not enough (or the wrong type of) work experience. The lacking skills were more frequently those that could be learned on the job, not necessarily through a training program.” (DEED, p.13)

The DEED report also shows that reasons for jobs being hard to fill vary by occupation.  The employer survey revealed that among difficult-to-fill nursing jobs, lack of required skills was the main factor in only 18% of the cases, while 26% was due to unattractive wages and hours. (DEED, Fig. 11)

When looking at hard-to-fill job vacancies in the skilled production occupations, the surveyed employers reported that 51% of the problem was due to skill deficiencies, while in 49% of the cases low wages, unattractive hours, and lack of requested experience (often 3 years requested) were a contributing factor.  (DEED, Fig 13)

“There’s really no way around it.  They are really going to have to step up and make these occupations a little more attractive to people and also provide some on-the-job training,” according to one DEED spokesman (as quoted in the Star Tribune).

Sources:

  • Minnesota Department of Employment and Economic Development (DEED), “Hiring Difficulties in Minnesota,”  March 2013.  Download PDF here.
  • Dee DePass, “Study demystifies job-skills gap,” Star Tribune, March 8, 2013, p. D1-2.
  • Chart from Chris Newmarker, “Report: Minnesota skills gap?  Not so much (Update), Finance & Commerce, March 7, 2013.  Online here.

The Swiss take action to reduce income inequality

According to today’s post on US Uncut’s Facebook page, Swiss citizens voted Sunday to place strict limits on CEO pay and in 2012 voted themselves the highest minimum wage in the world: $50,000/year USD.

Sources cited by US Uncut:  http://nyti.ms/Z1xj5A, Min. wage: http://bit.ly/103LVnN

SAT scores reveal effect of income inequality

“socioeconomic disadvantages are far more significant in predicting SAT scores for today’s students than racial disadvantages are”

On the math and verbal sections of the SAT, socioeconomic disadvantage imposes a 399-point penalty on low-income students compared with the most advantaged, while being African American imposes a 56-point disadvantage compared with being white.

Quotes above are from “How Much Do You Pay for College” in the Feb. 15, 2013 Review section of The Chronicle of Higher Education.  The article addresses the growing awareness among students of class issues and the rise of organizations like U/Fused to address these issues. The author notes that today’s students “have come of age at a time of growing economic inequality . . . and the gap in spending between wealthy and poor families has tripled since the 1970’s.”

The low SAT scores and poor academic preparation of low-income students is another manifestation of the growing inequality in the U.S.  Cuts in gov’t spending, focus on ‘teaching to the test’ in K-12, need for parents to work 2, 3 or 4 jobs to survive (with less time to nurture children), all combine to produce this poor academic preparation.

Growing Income Inequality

Income of top 1% has grown by 281$ since 1979, but only 16% for bottom 20%

Source of Infographic: Derek Thompson, “Income Inequality Is Not a Myth,” The Atlantic, Oct. 15, 2011.  Online at http://www.theatlantic.com/business/archive/2011/10/income-inequality-is-not-a-myth/247389/