Posts Tagged ‘chart’

capitol investment

We’ve been presenting Jacob Hacker and Paul Pierson’s argument about “politics as organized combat” in their 2010 book, Winner-Take-All Politics, in our Tale of Two Depressions course.

Lee Drutman explains that, while the Citizens United decision opened the door for corporations to spend unlimited amounts of money on elections (as a form of free speech), they’ve actually declined the offer. Instead, they continue to spend their money the old-fashioned way: on corporate lobbying.

From 1998 onward, as far back as there is good data, corporations have consistently spent about 13 times more on lobbying than they have on campaign contributions. That’s not to say they don’t spend on campaigns. In the 2013-14 cycle, corporations, trade associations and business associations spent a combined $381 million through their political action committees. But that’s small potatoes compared with the giant $5.2 billion pot roast of reported corporate lobbying expenses over this period. And about half of lobbying doesn’t even get reported.

Lobbying offers a much better return than election spending because real power lies in influencing how policymakers think about the world, not in getting them elected. Lawmakers’ staffers, who are the key policymakers in most offices, are smart but young. They are often inexperienced and stretched far too thin, trying to understand many complicated subjects with limited time. Large corporations that hire many lobbyists can overwhelm offices by “helping” them make sense of the issues.

Staffers may know that the information is biased, but they just don’t have the time do additional homework. And besides, if there were another view out there, wouldn’t those advocates send in their lobbyists, too? On many issues, though, there is no other side — or at least no other side with anywhere near the same resources as big corporations. By my count, corporations and their associations spend $34 on lobbying for every $1 that labor unions and groups representing diffuse interests, such as citizens and consumers, spend combined. That ratio is up from 22 to 1 in 1998.

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According to the Century Foundation’s analysis of the latest Occupational Employment Statistics report by the Bureau of Labor Statistics, about a quarter of U.S. workers are working full-time, year-round in occupations where they cannot expect to earn enough to keep a family of four above poverty.

The chart above shows median wages for the 30 lowest-paying occupations with over 250,000 employees, which collectively employ 31 million people nationally. All the occupations on the list have annual median wages that fall at or below the poverty level for a family of four ($24,250). At the very bottom are America’s 3.1 million food preparation workers, who earn just $18,410 annually. That’s $8.85 an hour.

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The occupations with the largest employment in May 2014 were retail salespersons and cashiers. These two occupations combined made up nearly 6 percent of total U.S. employment, with employment levels of 4.6 million and 3.4 million, respectively. Of the 10 largest occupations (which accounted for 21 percent of total employment in May 2014), only registered nurses, with an annual median wage of $66,640, had an average wage above the U.S. all-occupations median of $34,540.

As the Century Foundation reminds us,

Many of these jobs are simple, but that doesn’t mean they are easy. Many are commonplace, but that doesn’t make them dispensable. Rather, in our haste to dismiss basic as beneath us, we lose sight of the fact that what is basic is also fundamental, what is mundane is also essential. These jobs matter—they are the substance of simple pleasures, the foundation of daily joys—and they mean more to our interpersonal well-being than any amount of high-flying CEOs ever will. But by labeling its practitioners as “low skill,” we rationalize relegating them to near-poverty wages.

The stark facts collected by the BLS also remind us that, when large numbers of people are forced to have the freedom to sell their ability to work, the wages many U.S. workers receive force them and their families to live in or within striking distance of destitution.

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There are two different ways of reading the information in the chart above.*

One way is that the various programs associated with the War on Poverty have succeeded, at least to some extent. That success can be seen in the difference between the “market poverty” rate (technically, the pretax/pretransfer anchored supplemental poverty rate) of 28.7 percent in 2012 and the “poverty rate with government programs” (technically, the anchored supplemental poverty rate) of 16 percent. Many fewer people are living at or below the poverty line with government transfers and tax credits than if those programs had not existed.

But there’s a second way of reading the chart: capitalism in the United States produces poverty at just about the same rate today (at 28.7 percent) as it did back in 1967 (when 27 percent of the U.S. population lived at or below the market poverty rate)—which makes it all that much more difficult for government transfers and credits to “solve” the problem of poverty. Thus, the War on Poverty still leaves 16 percent of Americans in poverty.

The conclusion, if we combine the two readings, is that the publicly provided social safety net (which lowered the poverty rate by some 40 percent in 2012) is actually a subsidy to large corporations, which continue to pay very low wages to millions of American workers and thus to generate enormous profits they alone appropriate and decide how to use.

The real War on Poverty will only begin when we decide to change how the economy itself is organized.

*The chart is from a column by Thomas B. Edsall, based on data presented in a paper by Christopher Wimer et al. (pdf).

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That’s right: even as the United States is producing more cars than ever, U.S. (and Canadian) workers have never made so few of the parts that go into making those cars.

As the Wall Street Journal explains, this trend casts a long shadow over the much-vaunted comeback of U.S. car manufacturing.

As the inflow of low-cost foreign parts accelerates, wages at the entry level are drifting away from the generous compensation packages that made car-factory jobs the prize of American manufacturing.

At an American Axle & Manufacturing Holdings Inc. car-parts factory in Three Rivers, some new hires are paid as little as about $10 an hour, roughly equivalent to what the local Wal-Mart will pay. John Childers, a 38-year-old assembly-line stocker, said he is grateful for the job but finds it tough to get by on the money he and his fiancée make at the plant.

“Lower class is what we are,” he says. “Let’s be honest.”

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U.S. workers’ wages are going nowhere fast.

According to the latest report from the Bureau of Labor Statistics, the average hourly pay of production and nonsupervisory employees on private nonfarm payrolls was $20.80 in February was exactly what it was in January, just eight cents more than what it was in December 2014 and only 32 cents (or 1.6 percent) higher than it was a year ago.

In other words, nominal wages are just barely keeping up with the rate of inflation. As a result, even though productivity and corporate profits are up, the workers who are producing more and creating those profits are pretty much in the same position as they were at the start of the current recovery.

Here’s the explanation offered by Matt O’Brien:

It’s just the unemployment, stupid. Or maybe the underemployment. Between people who can’t find the full-time jobs they want, people who haven’t been able to find any jobs after looking for at least six months, and people who think things are so hopeless that they’ve given up looking for now, there are a lot more people than normal stuck on the margins of the labor force. And these “shadow unemployed,” according to the Fed, exert just as much downward pressure on wages as the regular unemployed. Put it all together, and wages haven’t recovered because the economy hasn’t fully recovered.

That’s pretty much the same conclusion I arrived at back in January:

The fact is, during the downturn, employers respond to slack demand not by lowering nominal wages (hence the “downward rigidities” mainstream economists so deplore), but by firing workers, replacing full-time workers with part-time workers, and increasing productivity (which mainstream economists can only celebrate). The result is a growth in the Industrial Reserve Army (as we can see in the dramatic growth in, and the still-elevated level of, the so-called U6 unemployment rate).

That pool of unemployed and underemployed workers (plus the availability of workers abroad, in China and elsewhere, together with the low level of unionization and the introduction of new, labor-displacing technologies) serves to regulate the level of wages: keeping nominal wages from rising even as economic growth picks up. In other words, employers don’t need to increase wages, either to keep their existing workers or to hire new ones. There are so many members of the Reserve Army of Unemployed and Underemployed workers willing to take whatever jobs are available that employers simply don’t need to increase wages.

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Yes, according to Andrew Martin, eating bad pizza helps support bad politicians.

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If you watched the Downton Abbey Season 5 finale, you will have seen the elaborately staged grouse shoot:

The bird shooting party is an extraordinary example of what life is like for these fortunate silver-spooners. They have helpers to clean their guns and prepare their guns. They have helpers to carry their guns to the field and to quickly reload for them after they shoot. They have helpers to beat the bushes and scare the birds into flight above their heads. And once the birds have been shot out of the air they have dogs to retrieve them from the fields.

Anything else we can do for you, chaps? Why yes. Once the unlucky birds are brought back to the house, it’s up to Mrs. Patmore and the cooks to clean and prepare them and serve them up as a delicious dinner. It’s amazing how much you can get done when everyone else does it for you. That’s a secret the rich have always tried to keep to themselves.

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As it turns out, those scenes are a good way of understanding the mechanisms behind James Kwak’s chart of wealth distribution in the United States:

Imagine all the families in the United States lined up from left to right along the X-axis, from poorest to richest; the red line shows the total value of (almost) everything they own, minus their debts. All household wealth is represented by the area under the red line. The problem with understanding this picture, however, is that the red line is indistinguishable from zero for the vast majority of the population—all the wealth is crammed into the right-hand part of the chart.

Indeed! Those at the very top today have figured out what those who lived upstairs in Downton Abbey knew almost a century ago: it’s amazing how much wealth you can come to own when everyone else creates it but ends up owning very little of it.