2013 CEO-to-worker pay ratio in the USA

from David Ruccio

According to the AFL-CIO’s latest “Executive Paywatch” report, the CEO-to-average-worker-pay ratio rose last year to 331:1. And the ratio of CEO pay to the minimum wage was much higher: 774:1.

That’s because, in both cases, workers’ wages remained more or less constant while the amount of surplus those workers created that ended up in the pockets of the CEOs of the nation’s largest corporations continued to rise.

As the AFL-CIO argues in their report:

Top 0.1% wealth share in the U.S., 1913-2012

from David Ruccio

This chart, from the work of Emmanuel Saez and Gabriel Zucman [pdf], illustrates the large increase in top 0.1% wealth share since the 1980s (top 0.1% = wealth above $20 million today. In other words, the inequality in the distribution of wealth in the United States is back to what it was just prior to the first Great Depression.

21st century changes in the distribution of income in the USA

from David Ruccio

As Ed Dolan explains,

The chart [above] assigns a value of 100 to each component’s share in 2007, the year before the recession began. This chart shows that corporate profits were hit hard in the first months of the recession, but began to recover already by the end of 2008, when GDP was still falling. By the time the economy had officially entered the recovery phase in mid-2009, corporate profits were surging to new highs.

Compensation of employees and proprietors’ income behaved differently. During the downslope of the recession, the shares of those two components held fairly steady, that is, they decreased but only at about the same rate as GDI [Gross Domestic Income] as a whole. After mid-2009, when the economy began to recover, the two diverged. Proprietors’ income grew faster than GDI as a whole, so that its share increased. Compensation of employees grew less rapidly than GDI, so its share began to fall, and is still falling.

These trends in the shares of GDI components provide another view of the substantial changes in the distribution of income and wealth that are underway in the twenty-first century United States. The data shown in our charts are only indirectly related to the more widely publicized increase in the share of total income accruing to top earners, but they explain part of what is going on. It is true that some high earners receive the major part of their income in the form of salaries and bonuses, and that many middle-class families receive some corporate profit income through mutual funds and retirement savings accounts. Still, corporate profits are more unequally distributed and compensation of employees less unequally distributed than income as a whole. That means the rising share in GDI of the former and the falling share of the latter are two of the factors behind the rising fortunes of the super-rich and the relative economic stagnation of the middle class.

Chart from the 2014 Economic Report of the President of the USA

from David Ruccio

This chart, from the 2014 Economic Report of the President [pdf], illustrates the

1% chart

from David Ruccio

Guard labor (chart)

from David Ruccio

Income redistribution in the USA 1992 to 2012 – (3 charts)

from David Ruccio

As the New York Times reports, based on a recent paper by Barry Cynamon and Steven Fazzari [pdf],

Anything but. . .

from David Ruccio

You have to give credit to mainstream economists: they’ll do anything to avoid talking about class.

Take the current discussion about inequality. Right now, eyes are clearly focused on two major trends: the share of national income going to the top 1 percent (and therefore the gap between them and the other 99 percent) and the share of profits and wages in national income (and therefore the growing gap between capital and labor). The issues are on the agenda, the data are easily accessible, and the charts are dramatic.

Here’s what the share going to the top 1 percent looks like (from the World Top Incomes Database):

And here are the profit and wage shares (from FRED, the Economic Research unit of the St. Louis Fed, where blue represents the profit share and red the wage share):

Labor surplus vs. efficiency wages in th United States

from David Ruccio

source

The current situation—what I continue to refer to as the Second Great Depression—presents a real problem for mainstream economists. 

The 40-year disconnect (USA) (chart)

from David Ruccio

As Steven Rattner explains,

Economic winners and losers in the US since 2007

from David Ruccio

As Steven Rattner explains,

Walking and chewing gum at the same time

from David Ruccio

Clearly, liberal economists and columnists are having a difficult time making sense of two key problems at the same time: unemployment and inequality.

Some (like Ezra Klein) think we need to focus on unemployment right now, and leave the issue of inequality until later. Others (like Dean Baker) argue that, since unemployment is a main cause of inequality, economic growth and tighter labor markets will reduce the unequal distribution of gains in the current economy. And then, of course, there are still others (like Paul Krugman) who, while they consider inequality to be a “Big Something Deal,” still think the real issue is how it negatively influences politics and thus prevents policymakers from enacting the obvious unemployment-reducing policies. 

US public sector payroll under 5 presidents – graph

from David Ruccio

‘Tis the season—for inequality

from David Ruccio
USA

Pope Francis challenged the theory of trickledown economics. Now, President Obama has announced his intention to focus on the problem of inequality.

On my reading, Obama’s speech borrows heavily from the ideas in Jacob Hacker and Paul Pierson’s Winner-Take-All Society and Joseph Stiglitz’s The Price of Inequality. Both the best and the worst parts. 

“Such an economy kills”

from David Ruccio

The other day, I posted a few paragraphs from the new Roman Catholic Pope Francis’s apostolic exhortation Evangelii Gaudium (which translates as “The Joy of the Gospel”).

I’ve now had a chance to read the entire text (available here), which seems to have gotten some notice around the world (although, best I can tell, there’s still no comment from the likes of Paul Ryan, who would steal bread from the mouths of the poor in the name of saving them from anything but the market).

The document as a whole is a call to a new kind of evangelization on the part of Catholics, both clerical and lay. (On Michael Sean Winters’s interpretation, “The Pope is calling the Church to be a missionary Church, an evangelizing Church, and the privileged path of fidelity to the Gospel is service to the poor.”) The main sections on economics are located in chapter 2 (“Amid the Crisis of Communal Commitment”) and chapter 4 (“The Social Dimension of Evangelization”).

The paragraphs I posted before are from chapter 2, in which Francis identifies the nature of the world in which he is making his call for a new missionary church. Permit me to repeat them here:

39 country chart of life expectancy and health spending per captia

from David Ruccio

source

As Aaron Carroll observes

Chart of the day – Young and jobless across Europe

from David Ruccio

As the door turns

from David Ruccio

We can now add former Treasury Secretary Tim Geithner to the long list of those who have walked through the revolving door between Wall Street and the White House, which makes Noam Scheiber just a bit worried.

All in the family: Krugman, Summers, Fisher, . . . .

from David Ruccio

My better half has insisted for years that I not be too hard on Paul Krugman. The enemy of my enemy. Popular Front. And all that. . .

But enough is enough.

I simply can’t let Krugman [ht: br] get away with writing off a large part of contemporary economic discourse (not to mention of the history of economic thought) and with his declaration that Larry Summers has “laid down what amounts to a very radical manifesto” (not to mention the fact that I was forced to waste the better part of a quarter of an hour this morning listening to Summers’s talk in honor of Stanley Fischer at the IMF Economic Forum, during which he announces that he’s finally discovered the possibility that the current level of economic stagnation may persist for some time).

Krugman may want to curse Summers out of professional jealousy. Me, I want to curse the lot of them—not only the MIT family but mainstream economists generally—for their utter cluelessness when it comes to making sense of (and maybe, eventually, actually doing something about) the current crises of capitalism.

So, what is he up to?

Horns of a dilemma

from David Ruccio

The Wall Street Journal notes that rising inequality may pose a problem—because of issues like fairness, political dysfunction, and financial instability.