Posts Tagged ‘wages’

iceland-prison-sentences

In Iceland [ht: ra], by the end of 2015, 26 high-level bankers had been sentenced to a total of 74 years in prison.

It’s a move that “would make many capitalists’ head explode if it ever happened here.”

In the United States, all the major Wall Street financial firms nicknamed Too Big To Fail banks—Bank of America, JPMorganChase, Citigroup, Wells Fargo, and Goldman Sachs—have paid out settlements for illegal conduct in the mortgage-security markets that caused the 2007-08 crash. However, no individual executives have gone to jail or even faced prosecution for that conduct.

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In fact, according to report from researchers at Syracuse University, during 2015, federal prosecution for white-collar crime fell to a 20-year low.

The available records show an overall decline that began during the Clinton Administration, with a steady downward trend — except for a three-year jump early in the Obama years — continuing into the current fiscal year.

During the first nine months of FY 2015, the government brought 5,173 white collar crime prosecutions. If the monthly number of these kinds of cases continues at the same pace until the end of the current fiscal year on September 30, the total will be only 6,897 such matters — down by more than one third (36.8%) from levels seen two decades ago — despite the rise in population and economic activity in the nation during this period.

The projected FY 2015 total is 12.3 percent less than the previous year, and 29.1 percent down from five years ago.

Addendum

The argument in the United States has been that prosecuting and jailing banking executives would have disrupted the financial sector and the economy as a whole.

iceland-unemployment-rate

While the recovery in Iceland from the financial crash has been anything but smooth, it’s still the case that unemployment has fallen to 4 percent and wages have been rising at an annual rate of 6.2 percent.

Chart of the day

Posted: 16 January 2016 in Uncategorized
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private-sector-wage-change-2007-2014

source

According to the Bureau of Labor Statistics, since the crash of 2007-08, real wages have declined for the bottom 85 percent of workers (outside of a small bump for those at the very bottom of the pay scale) but increased in real terms for those in the top 15 percent (especially a few percentages at the very top). (The vertical axis shows real wage decline or growth, and the horizontal axis indicates percentages of the wage distribution.)

This picture of pay inequality lends support to other studies (e.g., by David Autor [pdf]) that find positive wage growth among highly paid jobs but wage stagnation among jobs with lower pay.

Since most of those whose wages have increased (CEOs, financial executives, lawyers, and so on) are receiving distributions of the surplus produced by everyone else, we can see once again the connection between the worsening conditions of those at the bottom and the growing fortunes of a small group at the top.

universal_health_care

How could you design a fundamentally unhealthy healthcare system? On one hand, have healthcare and health insurance provided by private, for-profit companies; on the other hand, make sure the rest of the private economy keeps workers’ wages and salaries from increasing.

The result of such a system would be that healthcare costs and insurance premiums continue to increase and workers can’t pay their medical bills.

And, of course, as a new study by the Kaiser Family Foundation and the New York Times confirms, that’s exactly what has happened in the U.S. healthcare system.

Overall, about a quarter (26 percent) of U.S. adults ages 18-64 say they or someone in their household had problems paying or were unable to pay medical bills in the past 12 months.

kaiser-fig1

Not surprisingly, problems paying medical bills are more common among people with lower or moderate incomes, with high deductibles, and with some kind of disability.

Insurance status also has a strong association with medical bill difficulties, with over half (53 percent) of the uninsured saying they had problems paying household medical bills in the past year. However, as previous surveys have shown, insurance is not a panacea against these problems. Roughly one in five of those with health insurance through an employer (19 percent), Medicaid (18 percent), or purchased on their own (22 percent) also report problems paying medical bills. In fact, overall among all people with household medical bill problems, more than six in ten (62 percent) say the person who incurred the bills was covered by health insurance, while a third (34 percent) say that person was uninsured.

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In fact, many of those with medical bill problems report struggling with bills less than $5000, including 24 percent of the insured and 22 percent of the uninsured who say their bills amounted to less than $1,000. While these lower amounts may seem small, even a bill of $500 or less can present a major problem for someone who is living paycheck to paycheck. In fact, when asked to describe their financial situation, about six in ten (61 percent) of those who’ve had problems paying medical bills say they either just meet their basic expenses (43 percent) or don’t have enough to meet basic expenses (18 percent).

The survey also shows that medical bill problems can have real and lasting impacts on individuals and families in terms of their standard of living, their financial stability, and their ability to access needed health care. While insurance provides some protection against incurring medical bill problems in the first place, once these problems occur, the effects on individuals and families are often as serious for the insured as they are for the uninsured.

Kaiser-employee-healthcare-costs-2014

The problem of affordability stems from the combination of rapidly rising healthcare and insurance costs and slowly rising incomes, both of them a product of the way our economy is currently organized.

Clearly, we need a much better prescription for our unhealthy healthcare system.

www.usnews

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hourly earnings

We’re now six and a half years into the official recovery from the Great Recession and, according to the latest report from the Bureau of Labor Statistics, the headline unemployment rate has fallen to 5 percent.

However, just to keep things in perspective, the number of long-term unemployed (workers who have been without a job for 27 weeks or more) was essentially unchanged at 2.1 million in October and has shown little change since June. These individuals accounted for 26.8 percent of the unemployed in October.

And, as we can see from the chart above, workers’ wages, while increasing, have still recovered much more slowly than during the previous three business cycles.

As I wrote yesterday,

it is clear both that the initial downturn was much more protracted than mainstream economists (including central bankers, like Ben Bernanke) had the courage to admit and that the persistent negative effects of that crisis continue to depress actual rates of growth below the earlier trend.

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