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

December 12, 2016

This Week

A secretary of labor who makes himself a fortune fighting higher minimum wages. A secretary of commerce who pumps up his billions shredding pensions. A secretary of education who sees big profits in privatizing public schools. From every angle, the prospects nationally for progress against inequality seem about as grim as they could be.

We need some rays of hope, and this week we have one. Last Wednesday, in Oregon, the Portland city council opened an exciting new front in the battle against runaway CEO pay. The council adopted the world’s first tax penalty on corporations that pay their top execs unconscionably more than what they pay their workers.

Inequality.org co-editor Sarah Anderson went out to Oregon last month to testify in support of this landmark Portland “pay ratio” reform. In this week’s issue, we have lots more from Sarah on the Portland win.

Also this week, we track the enormity of the inequality that excessive CEO pay has helped build up in the United States and review an insightful new memoir by Sam Polk, a hard-driving power suit who walked away from Wall Street for a life with deeper meaning.

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

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Inequality by the Numbers

The Color of Affluence in America

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New This Week
on Inequality.org

Sarah Anderson on Portland’s huge step forward in reining in out of control CEO pay.

Josh Hoxie asks who voted to put Wall Street in power as the Trump administration fills with bankers and big investors.

Fanny Malinen reports on how the wealthy are driving up the cost of housing in London and how students are fighting back.

Words of Wisdom

Inequality remains a defining issue of our time.

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The Inequality Nerd
wants you to know...

Since 1950 we’ve sent a man to the moon, built cars that run on solar power, and combined a donut and a croissant into a cro-nut. What haven’t we done? Increased real income for the bottom half of the country.

The Inequality Nerd Bob Lord practices tax law in Phoenix.

Faces on the Frontlines

The Dawn of Pay Ratio Politics

A new front has just opened in the struggle against inequality. On December 7, the city council in Oregon’s Portland voted to slap a surtax on corporations that pay their chief executive officers more than 100 times what they pay their typical workers.

The Portland move will be the nation’s first tax penalty on corporations with extreme CEO-worker pay gaps. But it’s unlikely to be the last.

Much like the Fight for $15, this bold reform could well spread like wildfire. Indeed, we may look back at the Oregon vote as the dawn of a new “pay ratio politics.”

The key driver of the Portland tax: city council member Steve Novick, who has pressed on doggedly to win passage of this landmark reform.

The Portland surtax will rely on new federal pay ratio data. Thanks to a Securities and Exchange Commission regulation announced last year, publicly held corporations will this year have to start calculating the ratio between their CEO and median worker pay. The first of these ratios will go public in early 2018.

With Portland’s landmark CEO pay tax, Novick hopes to spark a national movement.

These federally mandated pay ratio disclosures will make it easy for states and cities to adopt Portland-style surtaxes — if they have the political will to do so. In Portland, local officials had that will, and their deliberations showed just how broad the potential political support may be for leveraging the public purse against corporate pay practices that increase inequality.

For Novick, the tax is all about sparking a national movement against inequality.

“CEO pay is not just an eye-catching example of, but a major cause of, extreme economic inequality,” he notes. “Extreme economic inequality is — next to global warming — the biggest problem we have in our society.”

Read more about Portland’s cutting edge CEO pay reform.

Take Action on Inequality

Help spread the word about Portland’s landmark surtax on corporations with extreme gaps between CEO and worker pay. This reform will have an enormous impact if other cities and states take similar action.

This Institute for Policy Studies backgrounder details how the new Portland “pay ratio” tax will work and offers tips on rebutting corporate arguments against pay ratio initiatives.

Check also this solid media coverage in the New York Times and the Guardian and share with people who want to help build a national movement to crack down on excessive CEO pay.

Must Reads

Walking Away from Wall Street

For the Love of Money
Sam Polk
Scribner, July 1, 2016

For most of us, the prospect of winning a multi-million-per-year job on Wall Street seems as remote as winning the lottery. We do no more than daydream about what we might do if we had two commas in our bank accounts.

Sam Polk didn’t daydream. He devoted his entire life to climbing the social ladder from a working class family to an ultra-lucrative hedge fund job in New York. For many people, Polk’s life rated as the ultimate success story. That is, until he left it all behind.

In his new memoir, For the Love of Money, Sam Polk outlines his checkered past, his successful Wall Street career, and his decision to walk away.

In one scene in his book, Polk is reeling after realizing his anniversary present to his girlfriend had gone way over the top, as compensation for not really loving her.

“Is it enough? What I’d really been asking was, Am I enough?” he writes. “That’s why I always needed more money, a bigger job, a better-looking girl on my arm. I was compensating, because at heart I didn’t believe I was enough.”

All of the obscenely wealthy investors around him, Polk started to realize, were facing the same insecurities. They also lived scared. They expressed that fear in different ways. Some bought real estate and country club memberships in wealthy areas to insulate themselves, others guns to protect themselves.

Polk decided to take the harder route. With the help of a trusted counselor, he began the difficult journey to face down his demons and do the tough internal work that gave him the power to walk away. He would begin a new career as a social entrepreneur.

For the Love of Money offers an engaging look into one man’s journey into the halls of financial power in this country and out the other side. A worthy read indeed for anyone looking to understand the addiction to wealth that permeates our financial sector today.

Read our full review.

Around the Web

Dean Baker, How to Gain Support for Trade: Stop Rigging It to Redistribute Upward, Beat the Press, December 5, 2016. Current trade deals privilege the already privileged.

Amulya Gopalakrishnan, Of elites and underdogs: Right-wing populists strike anti-rich poses but undercut equality in practice, Times of India, December 6, 2016. Using words to create a fog.

Jillian Berman, This college president makes 129 times more than the $42,000 his students earn, MarketWatch, December 6, 2016. Letting corporate CEO pay skyrocket opens door to excessive executive pay in non-corporate sectors.

Jared Bernstein and Ben Spielberg, Watch Out for Even More Tax Breaks — for the Rich, American Prospect, December 8, 2016. How the tax code could get a lot worse in the age of Trump.

David Leonhardt, The American Dream, Quantified at Last, New York Times, December 8, 2016. Kids born in 1980 have a much smaller shot at making more than their parents than kids born in earlier more equal times.

Nomi Prins, The March of the Billionaires, TomDispatch, December 8, 2016. Not yet complete, the Trump cabinet has already quadrupled the combined wealth of Obama cabinet

Too Much

Ike’s Rich vs Trump’s Rich: No Contest

In the years right after World War II, average Americans got ahead. Now Americans are getting headaches — from a ferociously top-heavy distribution of the nation’s income.

In every society, some people hold more wealth than other people. Every society, in other words, has a rich.

But not every society’s rich has enough wealth to really dominate. Not every society’s rich has enough wealth — and power — to rig the rules at the expense of average people.

In the United States today, our rich certainly does have enough. Researchers from the IRS have just delivered the latest evidence.

America’s top 400 in 2014 made, after taxes, over 34 times what 1955’s richest pulled down.

These researchers last week released the latest annual breakdown on America’s 400 highest reported incomes. In 2014, their new IRS report notes, our top 400 collected incomes that individually averaged an astounding $317.8 million.

Want a little more human perspective on that total? If you suddenly found yourself with a nice little job that paid $10,000 per month, you would have to work over 2,600 years at that job to make what America’s top 400 averaged in just 2014 alone.

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.

Reports and Retorts

A new examination of U.S. income trends since the 70s shows the income gap between America’s top 1 percent and bottom 50 percent is now running as wide as the income gap between those in the U.S. and the world’s poorest countries. U.S. government social safety net programs, note study authors Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, “offset only a small fraction” of America’s increase in pre-tax inequality.

An Economic Policy Institute study of 11 major U.S. cities found that the growth of charter schools has increased inequality in education.

Research published in the American Journal of Public Health reveals that American men living in the nation’s poorest counties live on average 10 years less than their counterparts in the nation’s richest counties.

This Week’s Last Glance at Greed

Russian oligarch Andrew Meinichenko's newest super yacht

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Annals of Avarice

The ultra rich get all sorts of special treatment in eateries and hotels. You can, too — if you look the part. That’s where a new Manhattan luxury watch rental service comes in.

For just $799 a month and a minimum one-year rental commitment you can choose a new luxury watch costing upwards of $25,000 every three months.

“I wear a luxury timepiece every second of every day, except for when I sleep,” says one satisfied customer, a New York real estate broker, earlier this month.


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

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

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