Posts Tagged ‘chart’

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Sure, senior citizens are one of the only groups whose financial situation has remained relatively steady during the Second Great Depression. But that’s because many of them are being forced to have the freedom to work long into what should be their retirement.

As recently as the late 1990s, only one in five Americans in their late 60s had a job. Now, that number has jumped to almost one in three. And unlike in their parents’ generation, more women are earning paychecks than in the past, contributing to household income.

Researchers say these factors are in large part responsible for the substantial rise in median household income that seniors in their late 60s and early 70s have experienced since 1989, even as Americans in their prime working years have mostly treaded water or lost ground.

Not everyone, of course, can work later in life. Health problems and age discrimination present major hurdles. And many of those who find jobs consider them barely adequate.

Pat Cherry, 72, has been earning minimum wage at a job in the library of the city-run Waxahachie Senior Activity Center. Ms. Cherry, who is divorced, had to retire early from a bookkeeping job after an autoimmune disease caused her to miss too much work. She could barely pay her bills until she found the part-time job through a government-sponsored work program, but it expired last month.

Ms. Cherry is worried no one will hire her again. “I need the money desperately,” she said.

The nearly 30 percent of Americans ages 65 through 69 who were employed in 2012 was more than three times the European average. Among large, highly developed countries worldwide, only a few had more than 20 percent of their 65- to 69-year-olds on the job, and only Japan and Korea topped the U.S. figure.

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According to a new IRS report [pdf], for tax year 2012, the top 0.001 percent of tax returns had an adjusted gross income of $62,068,187 or more. The income threshold for the top 0.001 percent of returns in 2012 was thus close to its highest mark in 2007 of $62,955,875.

This income threshold represents an increase of 47.9 percent—the largest increase of any percentile and year for this group since before 2003—over the previous year when the top 0.001 percent of tax returns had an adjusted gross income of $41,965,258 or more.

The top 0.001 thus managed to capture 21 percent of the income gains of the top 1 percent and accounted for 2.4 percent of total income in 2012.

As David Cay Johnston explains,

Keep in mind that reality is even worse than what the report shows.

Researchers at the IRS Statistics of Income division looked at more than 136 million tax returns. They ignored nine million tax returns filed by dependents, primarily children with jobs or trust funds. That means the IRS analysis understates household incomes at the very top, where trust funds are common.

Also, don’t forget that many of the very richest Americans show little or no income on their annual tax filings because they borrow against their wealth, paying interest at about one tenth of the tax rate on long-term capital gains.

In other words, the tiny group at the top of the distribution of income in the United States continues to obtain a large portion of the surplus produced by everyone else in the economy—and their tax returns only show a portion of those distributions of the surplus.

Just imagine what we could do, then, if that surplus were actually used not to enrich the already-rich top 0.001 percent, but to satisfy the social needs of everyone else.

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The Federal Reserve Bank of Atlanta has confirmed what many of us have suspected for a long time: job tenure is declining not just for millenials, but for workers of all wages.

What we see in this chart—using the 20- to 30-year-olds, for example—is that the median job tenure was four years among those born in 1953 (baby boomers) when they were between 20 and 30 years old. For 20- to 30-year-olds born in 1993 (millennials), however, median job tenure is only one year. Similar—and some even more dramatic—declines occur across cohorts within each age group.

Declining job tenure is not just all about millennials having short attention spans. In fact, there is a greater (five-year) decline in median job tenure between 41- and 50-year-old “Depression babies” (born in 1933) and 41- to 50-year-old GenXers (born in 1973).

The authors of the report dispute the attention-span explanation for declining job tenure. But then they go on to paint a rosy picture of what this means—for workers (“a world of possibilities that our parents and grandparents never dreamt of”!) and for the economy as a whole (“the flexibility of workers seeking their highest rents and the flexibility of firms to seek better matches for their needed skills mean greater productivity—not to mention growth—all around”).

What the authors fail to mention is that declining job tenure across the board means much higher corporate profits (since employers can hire and shed workers more easily) and a lot more work for workers (since they have to spend more time and energy making themselves “attractive” to employers and figuring out how they’re going to survive between jobs).

Declining job tenure—what mainstream economists refer to as “flexible” labor markets—is the natural outcome of the commodification of labor power. The only solution to the problem, then, is to treat people’s ability to work as something other than a commodity. Then, we would have real flexibility in our work and in the rest of our lives.

Chart of the day

Posted: 8 June 2015 in Uncategorized
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The Chronicle of Higher Education has updated its executive-compensation package information with 2014 fiscal-year data on public-college presidents.

Two public-college presidents managed total annual compensation packages of over $1 million: Rodney A. Erickson of Penn State ($1,494,603) and R. Bowen Loftin of Texas A&M ($1,128,957). The median salary for presidents who served a full year was $428,250.

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The median presidential pay for public colleges in 2014 was 50 times the median student tuition. Two presidents managed total compensation more than 100 times student tuition: Judy L. Genshaft of the University of South Florida (112.27) and John C. Hitt of the University of Central Florida (100.03).

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Paul Krugman is right: there is no clear or unambiguous relationship between inequality and capitalist economic growth.

If there were such a relationship, liberal thinkers could make their case that less inequality would promote more growth and everyone would benefit.

The fact is, however, there are more unequal and less unequal forms and periods of capitalist growth. As a result, there’s no general correlation between inequality and growth within capitalism.

The chart above depicts both inequality (the profit-wage ratio, in blue on the left) and economic growth (nominal GDP growth, in red on the right) for the United States. We can clearly see periods of relatively high economic growth accompanied by growing inequality (e.g., in the late 1970s) and periods of very slow economic growth also accompanied by growing inequality (e.g., since 2009). The converse is also true: high economic growth with falling inequality (in the early 1950s) and slow economic growth with falling inequality (e.g., late 1980s).

What this means, at least for me, is we need to pay attention to the particular conditions for economic growth during each period or phase of capitalist development. In general, capitalism can grow (or not) under both more unequal and less unequal conditions.

That’s not to say, however, that within any given period (more or less) growth and (more or less) inequality are not connected. A plausible story can be told that growing inequality during the 2000s fueled the financial bubble that eventually burst in 2007-08.

We also need to reverse the relationship and look at the relationship from growth to inequality. It’s pretty clear that the nature of the growth that has occurred since 2009 has created more inequality, that is, the particular form of the recovery that has been enacted since the crash of 2007-08 has enhanced corporate profits (and incomes at the very top) and made everyone else (who receive wages to get by) pay the costs.

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Finally, while we’re on the topic, there is one general tendency of capitalist growth we need to point out: the role of profitability. In the end, profitability is what makes capitalism work (or not). As we can see from the chart above (which includes just the corporate profit share and growth), each period of a declining profit share is followed by a recession, after which the profit share rises (at least for a time).

So, to paraphrase the Rolling Stones: capitalists can’t always get what they want. When they don’t (leading up to the most recent financial crash), neither will anyone else. And, even when they do (as they have since 2009), there’s no guarantee anyone else will.

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According to a new poll, Americans, regardless of their political affiliation, agree that money has too much influence on elections and candidates who win office promote policies that help their donors.

They also think the system for funding elections needs to be fundamentally changed or rebuilt—and they don’t expect such changes to be enacted.

In a related study, the Center for Responsive Politics and the Sunlight Foundation found that, in 2014, the top .01 percent of Americans accounted for more than $1 billion worth of political donations, up from $732.7 million in the previous midterm in 2010. The 61-percent increase far exceeds the rate of inflation or the increase in the election’s total cost, “meaning this top group of donors assumed a far greater role in financing the most recent election than the previous midterm.”

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And, finally, there’s not much difference between the two major political parties: the top .01 percent gave to them pretty evenly in both 2010 and 2014.

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Pavlina R. Tcherneva (pdf) poses, and then answers, the key questions:

Do the majority of Americans share in the benefits of economic recoveries? Does a rising tide, as we are often told, lift all boats? Growth for Whom?. . .It turns out that in the post-war period, with every subsequent expansion, a smaller and smaller share of the gains in income growth have gone to the bottom 90 percent of families. Worse, in the latest expansion, while the economy has grown and average real income has recovered from its 2008 lows, all of the growth has gone to the wealthiest 10 percent of families, and the income of the bottom 90 percent has fallen. Most Americans have not felt that they have been part of the expansion. We have reached a situation where a rising tide sinks most boats.

Here are the charts for the top 1 percent and the top .01 percent:

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As Tcherneva observes,

The trends illustrated above are neither an accident nor inescapable.

No, they’re not. But the trend toward more inequality will continue unless and until we create a radically different set of economic policies and institutions.