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Two Graphics About Wage And Wealth Inequality In The USA

Today's blog post includes two factual graphics. The first graphic compares the bonuses (not salaries, but the year-end bonuses in addition to salaries) paid to executives at Wall Street firms to the earnings of all full-time minimum-wage workers nationwide:

Comparison of Wall Street bank bonuses to minimum wage earnings

The current Federal minimum wage is $7.25 per hour. Given a 40 hour work week, that equals about $15,000 a year. Tough to live on that. Meanwhile, the average bonus for Wall Street executives was about $170,000 per person. Read this detailed discussion about the bonus culture on Wall Street:

"Wall Street bonuses rose 3 percent last year, despite a 4.5 percent decline in industry profits. The size of the bonus pool was 27 perfect higher than in 2009, the last time Congress increased the minimum wage... The bonus pool is so large it would be far more than enough to lift all 2.9 million restaurant servers and bartenders, all 1.5 million home health and personal care aides, or all 2.2 million fast food preparation and serving workers up to $15 per hour."

Yes, the playing field is tilted this badly. This is another reason to move your money from big banks to smaller, regional banks or to credit unions.

The second graphic (see below) compares the actual distribution of wealth (the top bar) to what Americans perceive it to be (the second bar), and to what Americans think it should be (the bottom bar). Former U.S. Labor Secretary and professor Robert Reich presented this graphic on his Facebook page:

How consumers view inequality compared to the reality

Mr. Reich said on March 10:

"If more Americans knew the truth, we'd have a better shot at changing what must be changed -- raising the minimum wage, expanding the EITC, raising the cap on income subject to Social Security taxes, limiting the deductibility of CEO pay, making it easier to form labor unions, and increasing taxes at the top to pay for world-class education for all our kids. So, please, spread the truth."

Now, you know the truth. Tell your friends, family, coworkers, and classmates. Not only is the situation worse than you thought, but it's easier for the wealthy to retain their wealthy since investments are taxed at a lower rates than wages. (Or depending upon your point-of-view, more difficult for wage earners to amass wealth.) And, some politicians want to eliminate the Federal minimum wage supposedly to increase employment, but more likely to facilitate a race to the bottom in some states to lower wages further and increase company profits.

Notice a trend that benefits the people who are already wealthy?

Take a moment to study both graphics. You can select either graphic to view a larger version. Remember this when you vote.

Comments

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Bill Garner

The truth is income inequality is what makes America the greatest place in the world to live and work! Mr. Reich is dead wrong. Why do people like Mr Reich want to turn America into a country like the rest of the world? The more regulations ... the more Government "guarantees" the less opportunity. Most of us started out at minimum wage and learned that was not where you wanted to stay. So we "worked" our way up the ladder of success. It is not the high income people that are the problem ... there is plenty of money to go around. It is the non achievers and takers that are the problem. When we feed weakness we get more of it not less. Let's help everyone who want to earn the good life be able to do it and enjoy the rewards and those that won't suffer those rewards. Please Mr Reich, move to Europe where your dream world is a live and well and leave the USA and the American dream alone!

George

Bill:

Thanks for sharing your opinions. I find that people who oppose wage inequality usually make several assumption and ignore several facts. Some of those facts I presented in the above graphs. Nobody is arguing for government to GUARANTEE outcomes (another popular assumption by opponents). Mr. Reich presented the facts so we can make informed choices as citizens... as voters.

Many opponents of income inequality make the knee-jerk reaction that ANY federal regulation is bad, and either ignore or don't understand the country's history of abuses (e.g., child labor, 7-day work weeks, no overtime, no benefits, unsafe work conditions, no compensation of on-the-job injuries, wage theft, etc.) of workers that led to the regulations. the regulations didn't just happen spontaneously. The "robber barons" of the 1800s weren't called that by accident. And, labor unions were one direct consequence of those corporate abuses.

I find it disingenuous for politicians today to claim that removing Federal minimum wage rules will decrease unemployment, when in fact it will thrust more people into poverty. Do you really want that? You said we all started in minimum wage jobs and then moved up to better positions. That statement assumes workers have the education to qualify and apply for better positions. Obviously, you and I have. Your statement ignores the fact that many people don't have the education nor opportunity.

You raised the complaint of turning, "America into a country like the rest of the world." That seems to be reference to laws in the European Union that limit bankers' bonuses to 100 percent of their salary. You are entitled to your opinion. Are those limits bad? I say, let's have the discussion to decide what is best for the country. The analysis of Wall Street bonuses found:

"If the $28.5 billion Wall Streeters pulled in on bonuses in 2014 had gone to minimum wage workers instead, our GDP would have grown by about $34.5 billion, over triple the $11.1 billion boost expected from the Wall Street bonuses."

So, EU residents made a decision based upon what is BEST for their countries, not just what's best for bankers. We need to have that discussion here in the USA: what is best for the country. Is your position so weak that you can't tolerate that discussion?

Many opponents of income inequality also ignore the impact of money on a democracy. Once politicians start making decisions only based upon campaign contributions (from wealthy individuals and corporations) and not their voters' interests, a democracy is compromised or lost. We seem headed towards that since a portion of the country believes that the wealthy should run things. I find it instructive to read the U.S. Constitution, which starts with "We the people..." and not "We the rich people..." nor "We the wealthy people..." And, that document assumed people were people, not corporations were people.

Slavery was an extreme example of income (and wealth) inequality. Was that a good thing? I think not and you'd probably agree. Yet, your argument that income inequality was what made this country great suggests otherwise, or suggests that more income inequality is better than less. Where does one stop? It seems reasonable to have that discussion.

While I am sure most people don't want the country to return to slavery, Mr. Reich (and I) am promoting a discussion based upon facts... not fear-mongering based upon some trumped up fear of excessive regulation. It is reasonable and expected to have discussions around balance: balance between regulation and abuses. A situation without any regulations is chaos and a free-for-all. As a country, we've been there before in the 1800s. Do you really want to return to that?

George
Editor
http://ivebeenmugged.typepad.com

George

Readers:

Some sources with FACTS about who minimum-wage workers are:

The Average Minimum Wage Worker Today Is Not Who You Think
http://www.msnbc.com/msnbc/average-minimum-wage-worker-myth

3 Myths About Raising the Minimum Wage
https://blog.dol.gov/2013/02/22/take-three-raising-the-minimum-wage-myths/

The U.S. Department of Labor (DOL) website lists several economic studies about the effects of raising the minimum wage. Go to this page and select the "Sudies" drop-down menu:
http://www.dol.gov/minwage/

Facts is facts, folks. And yes, some of your tax dollars to to the DOL to provide statistics and factual information. I find that highly valuable.

George
Editor
http://ivebeenmugged.typepad.com

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