A weekly update on our grand divides
A weekly update on our grand divides

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A weekly update on our grand divides

January 9, 2017

This Week

New Presidents can have an enormous impact on the trajectory that inequality takes. Back in January 1953, for instance, the Republican Dwight Eisenhower took office amid worries that the equalizing of the New Deal years might come to a crashing close.

But Ike accepted and even, on some fronts, advanced the New Deal legacy. The United States would soon see the emergence of the first mass middle class nation in world history.

We don't expect the new Trump administration to accept the modest steps toward equity we've seen over the course of the Obama years. We expect the reverse. But none of us have to accept that reversal.

Here at Inequality.org we'll do our best to highlight the machinations of the billionaires who dominate the new Trump administration. And we'll also do our best to highlight the pushback to them.

The New Deal, let's remember, didn't begin with Franklin Roosevelt's election. The New Deal began in the resistance to the inequality that preceded his victory. Tomorrow's history, in other words, starts today.

Chuck Collins, Director, Program on Inequality
and the Common Good, Institute for Policy Studies

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Inequality by the Numbers

US pre-tax income growth

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New This Week
on Inequality.org

Chuck Collins on the dangers of Big Philanthropy.

Bob Lord on the mind games cheerleaders for concentrated wealth like to play.

Joanne Barkan on self-styled billionaire do-gooders and democracy.

Words of Wisdom

Given his cabinet picks so far, ...

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The Inequality Nerd
wants you to know...

Fossil fuels can be fun: Exxon Mobil will be handing its departing CEO Rex Tillerson, the Trump choice for U.S. secretary of state, a retirement package worth $180 million.

The Inequality Nerd Bob Lord practices tax law in Phoenix.

Faces on the Frontlines

Narrowing the Paid-Leave Divide

Getting time off when you're sick or need to care for a new child or sick parent shouldn't be a luxury enjoyed only by those who are financially well off. Yet low-wage workers in the United States — the workers who need paid leave the most — typically have this key benefit denied them.

But not anymore in Washington, D.C. Activists in the city recently overcame stiff opposition from corporate lobbyists to win one of the country's most generous paid-leave policies. The new law guarantees eight weeks of paid time off for new parents, six for those caring for sick family members, and two for personal sick time.

One key to this victory: outspoken support from small business leaders like Ethel Taylor, owner of a local pet grooming parlor called the Doggie Washerette. Taylor first became involved in the paid-leave struggle when an activist with the Main Street Alliance was going door to door in D.C., talking to business leaders about the paid-leave plan the group was backing.

The plan's novel mechanism for paying for paid-leave benefits particularly impressed Taylor. The D.C. law will use a "social insurance model" funded through a 0.62 percent payroll tax on all private-sector employers.

"I would've been gone tomorrow if I'd had to pay out of pocket for the cost of an employee's leave time," Taylor told Inequality.org last week in an interview.

All businesses will pay into the new D.C. paid-leave fund.

The compensation employees will receive under the new D.C. law significantly improves upon leave policies in other jurisdictions. The District will reimburse employees for 90 percent of their first $900 in weekly pay and 50 percent of their remaining weekly pay, with a limit of $1,000 per week. By comparison, private sector employees in California can receive only up to 55 percent of their wages.

Taylor has in the past taken her standard poodle Joy to campaign events for candidates she supported. But the D.C. paid-leave drive has otherwise been her first encounter with political activism. She had some special motivation. Taylor personally had to take a lot of unpaid time off after her husband was diagnosed with cancer.

Under the D.C. law, business owners like Taylor can also tap into the paid-leave fund.

Read more about the new Washington, D.C. paid-leave law.

Take Action
on Inequality

Given the current political landscape at the federal level, most of the action in the near future to pass family-friendly work policies — like Washington, D.C.'s new paid-leave law — will take place at the city and state levels.

Family Values @ Work, a national network of 24 state and local coalitions, will be helping lead the fight for these benefits. You can share on the group's website your own story about the need for family-friendly policies and also find tools for building momentum in your own part of the country.

Must Reads

'Free Money' for Everyone?

The Rich Already Have a UBI
Matt Bruenig
Jacobin, January 2, 2017

Should we consider income a human right? A growing number of thoughtful people think we should. They've been campaigning worldwide for a "universal basic income," a cash payment that goes — as a matter of right — to every individual in society.

Last week, on New Year's Day, Finland actually began a trial of the "UBI" concept that will involve some 2,000 randomly picked citizens currently receiving unemployment benefits. They'll all receive $587 a month over the next two years, even if they find and start a new job.

This idea of "free money" drives a great many mainstream commentators absolutely crazy. If people get money without having to work for it, these pundits argue, they'll lose all meaning in their lives. They'll become rudderless and socially dysfunctional.

But this critique strikes analyst Matt Bruenig as somewhat disingenuous, to say the least. We already have, Bruenig points out, a significant cohort of people who collect monthly checks they never have worked a lick to earn. We call these people the rich.

Half the income of the 1 percent involves no labor on their part.

About half the income that America's top 1 percent grabs every year, Bruenig goes on to explain, comes from income divorced from work. Economists label these "passive" dollars "capital income." The rest of us know these income streams as things like interest and dividends.

No one has to lift a finger to collect this capital income. You just have to own assets. America's deepest pockets own plenty of assets. And that ownership gives them an outsized share of the capital income the U.S. economy annually generates.

In fact, Gruenig calculates, 10 percent of all U.S. national income "is paid out to the 1 percent as capital income." To put the matter more plainly: "One in ten dollars of income produced in this country is paid out to the richest 1 percent without them having to work for it."

These 1 percenters have apparently figured out how to live functional lives while collecting income they haven't worked to earn. Maybe the rest of us would, too — if our society shared its passive income with everyone, not just an awesomely affluent few.

Reports and Retorts

New research from the Brussels-based think tank Bruegel "casts doubt" on the thesis that technological change must inevitably increase inequality. Public policies and measures that shield high-paid professions like law and medicine, notes study co-author Zsolt Darvas, appear to be much more relevant contributors to our growing divides.

Women make up only 16 percent of America's top 1 percent, and that share "has remained essentially flat over the past decade," finds new research from economists Thomas Piketty, Emmanuel Saez, and Gabriel Zucman.

Chief executive pay shows a negligible link to firm performance, says a new business school study of Britain's top 350 companies.

Too Much

An Arrogant Entrance, A Sad Exit

With a new Congress and White House each committed to wealth's concentration, we'll sorely miss the scholar who dedicated his life to documenting wealth's maldistribution.

Republican leaders in Congress have never — in any of our lifetimes — entered a new year with higher hopes. They don't just have a lockgrip on both chambers. They have an incoming president who's itching to sign pretty much any legislation GOP lawmakers plop on his desk.

The plopping, GOP lawmakers have pledged, will begin almost as soon as Donald Trump takes his first steps into the Oval Office. They're now rushing along legislation that would repeal Obamacare and undo a host of new regulations that protect working people.

Tony Atkinson ended his scholarly life setting out an ambitious set of ideas for ending extreme income inequality.

All these initiatives, in the end, will have the exact same impact. They'll all, once signed into law, make America's rich and powerful even richer and more potent.

Repealing Obamacare, for instance, would also erase the pesky taxes on the rich that foot the program's bill.

The enactment of Obamacare — the Affordable Care Act — placed a 0.9 percent Medicare tax hike on paycheck income over $200,000 for individuals and $250,000 for couples. Under Obamacare, these same affluent taxpayers pay an additional 3.8 percent tax surcharge on the capital gains they register trading stocks and other assets.

Repealing Obamacare — and wiping out this surcharge — would put an extra $38,000 in billionaire pockets on every $1 million made wheeling and dealing. All told, the top 0.1 percent — households with incomes over $4.76 million — would average a $197,000 tax cut if Obamacare gets deep-sixed, the Tax Policy Center calculates.

This top 0.1 percent, according to the latest available stats, is already grabbing 11 percent of America's income, over four times the top 0.1 percent share four decades ago. How much higher can this top 0.1 share go?

Read the full Too Much column.

Institute for Policy Studies associate fellow Sam Pizzigati co-edits Inequality.org. His most recent book: The Rich Don't Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900–1970. Follow him on Twitter @Too_Much_Online.

Around the Web

Tim Redmond, Can SF tax economic inequality? 48 Hills, December 27, 2016. San Francisco could raise serious revenue with a Portland-style pay ratio tax on corporations with excessively paid CEOs.

Jean Pisani-Ferry, Why the past appeals more than the future, Euronews, January 2, 2017. Massive spatial inequality creates large communities of people with no future.

Steve Roth, How Do Americans Get Rich? (And Stay Rich?) Evonomics, January 2, 2017. How wealth begets more wealth.

Tom Engelhardt, The Real Face of Washington (and America), TomDispatch, January 3, 2017. America's plutocratic Mar-a-Lago moment arrived well before The Donald threw his hair into the ring.

Lita Kurth, Affordable vs. Attainable Housing, Classism Exposed, January 5, 2017. A house has become a costly and risky bet for average people, posing dangers wealthier people don't face.

This Week’s Last Glance at Greed

Could edible gold be he first luxury fad for 2017?

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Annals of Avarice

Think life would be a bowl of cherries if you happened to be exceedingly rich? Think again. Put yourself, for instance, in the shoes of a mega millionaire at a gift-giving moment.

A rich person can't simply grab anything off a retail shelf. From someone with a special fortune, everyone expects a special gift. And special gifts can be really hard to find.

To the rescue comes the London Concierge Company, a consulting firm that steers its global clientele to special gifts that range from $3.7-million silver Ferraris to $12,000 Chanel watches. The firm's current going daily consulting rate: just $1,250.

Inequality.org | www.inequality.org | inequality@ips-dc.org

Co-Editors: Sarah Anderson, Chuck Collins, Josh Hoxie, and Sam Pizzigati. Contributors: Marc Bayard and Bob Lord. Production: Domenica Ghanem and Mimi Plato

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