narrated public lecture of growing u.s. income inequality

Growing U.S. Income Inequality

A Lecture Presented for the OsherProgram

San Diego State University

April 18, 2011

Denny Braun, Ph.D.

Professor Emeritus of Sociology

Minnesota State University1

Major Findings in my Book:

• Absolute income inequality is increasing

(the rich are “getting richer”!)




• The middle class is shrinking





• Poverty has been increasing






• U.S. Multinational Corporations cause more

inequality both in the U.S. and in the World








• Huge inequalities exist between U.S. locales








• Huge inequalities exist between U.S. locales

• The growth of relative income inequality is

not only continuous but has become explosive

A basic truth about absolute income

differences

is that the U.S. is NOT the richest country!

Rank NationGDP/

capita

2009

Rank NationGDP/

capita

PPP

1 Luxemb. 104,512 1 Qatar 83,841

2 Norway 79,085 2 Luxemb. 78,395

3 Qatar 68,872 3 Norway 52,561

4 Switz. 67,560 4 Singapore 50,523

5 Denmark 56,115 5 Brunei 49,110

6 Ireland 51,356 6 U.S.A. 46,381

7 Nether. 48,223 7 Switz. 43,007

8 U.A.E. 46,857 8 Nether. 39,938

9 U.S.A. 46,381 9 Ireland 39,468

10 Austria 45,989 10 Australia 38,911

Source:

Inter-

national

Monetary

Fund

9

Highest

Income

States

Median

Household

Income 2009

Lowest

Income

States

Median

Household

Income 2009

Maryland $69, 272 Mississippi $36,646

New Jersey $68,342 West Virginia $37,435

Connecticut $67,034 Arkansas $37,823

Alaska $66,953 Kentucky $40,072

Hawaii $64,098 Alabama $40,489

Massachusett

s

$64,081 Oklahoma $41,664

The Best and Worst States on Median Household

Income

Source: U.S. Census Bureau, American Community

Surveys, 2008 and 200911

13

19

28

-5

-8

-11

-15 -10 -5 0 5 10 15 20 25 30

2000-2009

1991-2000

African

Latinos

White

Source: Calculated from Census Data, Report P60-238

Percent Change in Median Household

Income

Within Last Two Decades (2009 Dollars)

14

Who are the poor?

• What are their characteristics?

• Where do they live?

• Have their numbers increased over

time?

• How about the rate of poverty? Is

that unchanged?

9.4

25.8 25.3

12.5

0

5

10

15

20

25

30

White Black Hispanic Asian

Percent in Poverty, 2009

Source: U.S. Census, Income, Poverty, and Health Insurance Coverage 16

20.7

12.9

8.9

0 5 10 15 20 25

Children (< 18)

18 - 64 Years

65 & Over


Source: U.S. Census, Income, Poverty, and Health Insurance Coverage

(Sep., 2010)

0

5

10

15

20

25

30

35

All Persons Single (Non-Family)

Married Couple Family

Female Headed with

Children

14.3

22

5.8

32.5


Source: U.S. Census, Income, Poverty, and Health Insurance Coverage

(Sep., 2010)

Facts About U.S. Poverty

• How “poor” is poor? It depends on your

family size and your age. In 2009, if you

were a single mom with 2 kids under

18, you were “poor” if your annual

income was $17,285 or less. For a single

person over 65 years old, the cut off was

$ 10,289.


• How “poor” is poor? It depends on your






$ 10,289.

• Within the past decade, the poverty rate

has increased 27% for all persons, and

30% for all families.

Facts About U.S. Poverty• How “poor” is poor? It depends on your






$ 10,289.

• Within the past decade, the poverty rate

has increased 27% for all persons, and

30% for all families.

• Thus, the poor grew by 12 million in the past

decade, totally obliterating the 4 million

reduction in poor persons that occurred in the


(Cont.)

•The number of Americans who are poor

today, over 43 million, is at an all time

high and surpasses the population of

most nations. One of every 7 persons in

our country is poor!


(Cont.)

• The number of Americans who are poor

today, over 43 million, is at an all time

high and surpasses the population of

most nations. One of every 7 persons in

our country is poor!

• Many, many Americans have such low

incomes that they are on the brink of

poverty at all times. In the four year

period (2004-2007), just before the onset

of The Great Recession, nearly one in

three Americans fell into poverty for 2 or

more months. The 2008-2011 figures will

surely be even grimmer!


(Cont.)

• Lastly, one of 11 elderly (65 and over)

and 1 of 5 children are living under

poverty today.


(Cont.)



poverty today.

• These two innocent, vulnerable groups

comprise 44% of poor

people, approaching the 20 million mark.


(Cont.)



poverty today.

• These two innocent, vulnerable groups

comprise 44% of poor

people, approaching the 20 million mark.

• Unfortunately, the United States does

not do a very good job protecting our

poor through social services and other

governmental programs.


(Cont.)

• The U.S. has an initial poverty rate

lower than many of our industrial peers

(26.3%, compared to Sweden’s

26.7%, Germany’s 33.6%, U.K.’s

26.3%, Japan’s 26.9%).


(Cont.)




26.7%, Germany’s 33.6%, U.K.’s

26.3%, Japan’s 26.9%).

• After taxes and transfers, however, our

poverty rate only declines to 17.1%. Of

the 20 advanced countries, we are last in

reduction.


(Cont.)




26.7%, Germany’s 33.6%, U.K.’s

26.3%, Japan’s 26.9%).

• After taxes and transfers, however, our

poverty rate only declines to 17.1%. Of

the 20 advanced countries, we are last in

reduction.

• For example, Sweden goes down to

5.3%, Germany to 11%, U.K. to 8.3%, and

Japan to 14.9%. (Source: Org. for

Economic Cooperation & Development -

Poorest

States, 2009

Percent in

Poverty

Least Poor

States, 2009

Percent

in

Poverty

Mississippi 21.9 New Hampshire 8.5

Arkansas 18.8 Alaska 9.0

Kentucky 18.6 Maryland 9.1

D.C. 18.4 New Jersey 9.4

New Mexico 18.0 Connecticut 9.4

West Virginia 17.7 Wyoming 9.8

The Best and the Worst in 2009 on Poverty

Rates

Source: U.S. Census Bureau, American Community Survey, 2009

Poverty translates into

Hunger

• About 15% of U.S. Households experienced “food

insecurity” in 2009—which translates to over 17

million American families.

Source: USDA, Economic Research Report No. (ERR-108), Nov. 2010


Hunger


insecurity” in 2009—which translates to over 17

million American families.

• These households were stalked by hunger and at

times did not have enough money to buy enough

food at various times during the year.

Source: USDA, Economic Research Report No. (ERR-108), Nov. 2010


Hunger


insecurity” in 2009—which translates to over 17 million

American families.

• These households were stalked by hunger and at times

did not have enough money to buy enough food at

various times during the year.

• Nearly 7 million households (with one million children)

had such severe financial problems that they were forced

to miss meals on a regular basis.Source: USDA, Economic Research Report No. (ERR-108), Nov. 2010

Poverty translates into Hunger

(Cont.)

• The number of households with hunger is at an all-time high since data began to be gathered in 1995.

Source: USDA, Economic Research Report No. (ERR-108), Nov.

2010

Poverty translates into Hunger

(Cont.)

• The number of households with hunger is at an all-time high since data began to be gathered in 1995.

• The number of households experiencing hunger has tripled in the 3 years between 2006 and 2009.

Source: USDA, Economic Research Report No. (ERR-108), Nov.

2010

How is the American Middle Class

Doing?

In one word—”Badly”!


Doing?


Since peaking in 1999 (at

$38,720), median earnings for male

workers is 6% lower eleven years

later ($36,331 in 2009).


Doing?





later ($36,331 in 2009)

Female workers have done slightly

better, going from $23,738 to $26,030

in the same period—a 9.7% increase.


Doing?





later ($36,331 in 2009)

Female workers have done slightly

better, going from $23,738 to $26,030

in the same period—a 9.7% increase

Thus, in a two-earner, husband/wife

family, earnings have been stagnant

for 10 years.


Doing?


Even more threatening is anemic job

growth. Only 7 million new jobs were

created in 2002-2007 (before the crash)—

compared to 20 million created in the same

5-year period in the 1990s.


Doing?


Even more threatening is anemic job

growth. Only 7 million new jobs were

created in 2002-2007 (before the crash)—

compared to 20 million created in the same

5-year period in the 1990s.

The Bottom Line: Fewer Americans are

employed today than a decade ago, despite

our population growing by 25 million.

How have the very rich been

doing?


doing?

In 2007, just before the Great

Recession hit us, the top 25 CEOs of

investment houses “earned” $22

billion (about the GDP of Costa Rica).

The top 5 managers each got over $1

billion. (Page and Jacobs)


doing?

In 2007, just before the Great

Recession hit us, the top 25 CEOs of

investment houses “earned” $22

billion (about the GDP of Costa Rica).

The top 5 managers each got over $1

billion! (Page and Jacobs)

In 2007, America’s top 1% of earners

received 23% of the nation’s total

income (almost triple the 8% share

they got in 1980). (Robert Reich)


doing?

In the 1960s, CEOs of major American

companies earned 25 times the wages of

their typical workers; by 1980 40 times; by

1990 100 times; by 2007 350 times. (Robert

Reich). As of 2009, Michael Hiltzik (LA

TIMES) reported a Harvard study putting

this ratio at 411 to 1.


doing?

In the 1960s, CEOs of major American companies earned 25 times the wages of their typical workers; by 1980 40 times; by 1990 100 times; by 2007 350 times. (Robert Reich). As of 2009, Michael Hiltzik(LA TIMES) reported a Harvard study putting this ratio at 411 to 1.

The combined wealth in 2005 of Sam Walton’s family at $90 billion (Walmart), Bill Gates (Microsoft) at $46 billion, and Warren Buffet at $44 billion is much more than the $95 billion combined wealth of the bottom 40% in the U.S. In short, 3 families own as much as 120 million Americans. (Robert Reich)

Average Pay of Top 500 Corporate CEOs, 1989 -

2009

Source: Forbes.com. Pay is in constant 2008 dollars52

Most Americans are Woefully Ignorant

about How Exorbitant CEO Corporate

Pay Actually Is

• When asked how much they believe

typical corporate CEOs “earn” in a year,

Americans estimate their pay at $500,000

(20 times that of unskilled workers or sales

clerks).



Pay Actually Is

• When asked how much they believe typical

corporate CEOs “earn” in a year, Americans

estimate their pay at $500,000 (20 times that

of unskilled workers or sales clerks).

• In reality, the CEOs of the largest Standard

and Poors 500 corporations make $14

million per year. (See Jacobs and

Page, CLASS WAR).



Pay Actually Is

• When asked how much they believe typical corporate CEOs “earn” in a year, Americans estimate their pay at $500,000 (20 times that of unskilled workers or sales clerks).• In reality, the CEOs of the largest Standard and Poors 500 corporations make $14 million per year. (See Jacobs and Page, CLASS WAR). • This is 700 times more than the average factory worker and 540 times the salary of the average sales clerk!

Most Americans are Woefully Ignorant about

How Exorbitant CEO Corporate Pay Actually

Is (Cont.)

•Hacker and Pierson (WINNER TAKE ALL

POLITICS) assert that these CEOs form the

bulk of the top 0.1% of income recipients.

Most Americans are Woefully Ignorant about

How Exorbitant CEO Corporate Pay Actually

Is (Cont.)


POLITICS) assert that these CEOs form the

bulk of the top 0.1% of income recipients.

• This top 0.1% increased their share of all

income from 2.7% in 1974 to 12.3% in 2007.



Pay Actually Is


POLITICS) assert that these CEOs and their

lieutenants form the bulk of the top 0.1% of

income recipients.

• This top 0.1% increased their share of all

income from 2.7% in 1974 to 12.3% in 2007.

• When the capital gains of this richest 1-in-

1000 is counted, this equals $1 trillion per

year.

Economic Policy Institute 201159

Company CEO in 2009 Total

2009 Pay

Layoffs

(11/08-4/10)

Schering-

Plough

Fred Hassan $49,653,063 16,000

Johnson &

Johnson

William Weldon $25,569,844 8,900

Hewlett

Packard

Mark Hurd $24,201,448 6,400

Walt Disney Robert Iger $21,578,471 3,400

IBM Samuel Palmisano $21,159,289 7,800

AT&T Randall

Stephenson

$20,244,312 12,300

Wal-Mart Michael Duke $19,234,269 13,350

The 7 Highest Paid CEO Layoff

Leaders

Source: Institute for Policy Studies61

What About “Relative”

Income Inequality?

63


Income Inequality?

• It was PresidentJohn Kennedy who termed the

phrase—”A Rising Tide Lifts All Boats”—meaning

the poor also benefit from economic growth.


Income Inequality?• It was President John Kennedy who termed the phrase—”A Rising Tide Lifts All Boats”—meaning the poor also benefit from economic growth.

• It is true that our Real GDP doubled between 1983-2007 while our population increased only by one-third, i.e., per capita real GDP actually did grow over this past quarter century.


Income Inequality?• It was John Kennedy who termed the phrase—”A Rising Tide Lifts All Boats”—meaning the poor also benefit from economic growth.


• On average, then, Americans should be better off—but this is definitely not the case.





• To get a better idea of who benefits vs. those who do not, researchers often divide income recipients into fifths (called Quintiles, or 20% segments).





• To get a better idea of who benefits vs. those who do not, income recipients are often divided into fifths (Quintiles, or 20% segments).

• If income were even, each pie slice would be the same

Lowest 5th, 3.4%

Second 5th, 8.6%

Middle 5th, 14.6%

Fourth 5th, 23.2%

Highest 5th, 50.3%

Percent of all Household Income Received

by each Quintile (5th): 2009

Note: Top 5% received 21.7%

of ALL household income in

the U.S.

Source: U.S. Census

Bureau, Current Population

Reports, P60-238, Income,

Poverty, and Health

Insurance Coverage in the

United States: 200969

Some Dramatic Shifts

•Between 1945 and 1980, incomes

increased on average by $19,000. While

the richest 10% of our population captured

over 1/3 of this growth in real dollars, the

bottom 90% still received the other 2/3rds

of the income increase.

Some Dramatic Shifts

• Between 1945 and 1980, incomes increased on

average by $19,000. The richest 10% of our

population captured over 1/3 of this growth in real

dollars, but the bottom 90% still received the other

2/3rds of the increase.

• Real income rose another $12,000 in the 27 years

between 1981 and 2008. BUT—the richest 10% got

almost all of this increase of income (96%), while

the bottom 90% received only 4% of the growth. In

short, the very great majority of Americans have

simply been totally shut out of any increase in

73

15.0

17.0

19.0

21.0

23.0

25.0

27.0

1965 1975 1985 1995 2005

Mu

ltip

lic

ati

on

Fa

cto

r

Year

Mean Household Income of Top 5% Divided by Mean Household Income

of Bottom 40% in 2009 Dollars

Source: Calculated from Census Data in 2010 Income and Poverty 74

(X-Axis)

(Y-A

xis

)

75

0.35

0.36

0.37

0.38

0.39

0.4

0.41

0.42

0.43

0.44

0.45

0.46

0.47

0.48

0.49

0.5

1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

Household Gini Ratio by Year: 1968-

Gini

Ratio

Source: Calculated from Census Data, Income, Poverty, and Health Insurance Coverage in the United

States: 2009, P60-238 .

76

Family Income Gini Score by

Country: 2009

Source: CIA- The World Factbook 200978

Sweden .230 Namibia .707

Norway .250 South Africa .650

Luxembourg .260 Lesotho .632

Czech Republic .260 Botswana .630

Slovakia .260 Sierra Leone .629

Serbia .260 Central Africa Republic .613

Malta .260 Bolivia .592

Austria .260 Haiti .592

Albania .267 Columbia .585

Germany .270 Brazil .567

Belarus .279 Bosnia & Herzegovina .562

Iceland .280 Panama .561

Hungary .280 Guatemala .551

Belgium .280 Chile .549

Slovenia .284 Honduras .538

Most Equal Country Most Unequal

Country

Gini Gini

Source: CIA, The World Factbook 200979

inequality?Research shows that high relative income inequality is

associated with:

80

inequality?Research shows that high relative income inequality is associated

with:

High homicide Rates (nations and U.S. states)


with:


High rates of imprisonment (nations and U.S.

States)


with:



States)

High Teen Birthrates (nations and states)


with:



States)


High rates of illegal drug use (nations)


associated with:



States)



High infant mortality rates (nations)


associated with:



States)




Lower life expectancy (nations)


associated with:



States)





High rates of Mental Illness (nations)


with:



States)






Low rates of contraceptive usage (nations)


with:



States)






Low rates of contraceptive usage (nations)

Lower access to safe water (nations)

For detailed charts and graphs

exploring these findings, see:

Richard Wilkinson and Kate

Pickett, THE SPIRIT LEVEL: WHY

GREATER EQUALITY MAKES

SOCIETIES STRONGER, 2009.

See especially their

free, downloadable Power Point

presentation at

www.equalitytrust.org.uk

http://www.equalitytrust.org.uk/

2006

2004

2002

2000

1998

19961994

1993

1991

1990

19891988

1987

1986

1984

1983

1980

1978

1976

1975

1973

1972

45

47

49

51

53

55

57

59

61

63

65

0.39 0.4 0.41 0.42 0.43 0.44 0.45 0.46 0.47 0.48

% C

an

no

t B

e T

rus

ted

Household Gini Ratio

Percent Who Say Others Cannot be Trusted

by Household Income Inequality and Year

Source: General Social Survey (GSS) Data94

AL

AK

AZAR

CA

COPA

FL

GA

HI

IDIL

IN

IA

KSKY

LA

ME

MDMA

MI

MN

MS

MOMTNE

NV

NH

NJNM

NY

NC

ND

OH

OK

ORPA

RI SC

SD

TN

TX

UT

VTVA

WA

WV

WI

WY

45.0

50.0

55.0

60.0

65.0

70.0

75.0

0.41 0.43 0.45 0.47 0.49

% E

lig

ible

wh

o V

ote

d

Household Gini Ratio 2007

Percent of Those Eligible who Voted in 2008 by State Household Income Gini

Score

Source: U.S. Census Bureau, Current Population Reports95

AL

AK

AZ

AR

CA

CO

CT

DE

FL

GA

HI

ID

ILINIA

KS

KY

LA

ME

MD

MA

OR

MN

MS

MO

MT

NE

NV

NH

NJ

NMNY

NC

ND

MI

OK

OR

PA

RI

SC

SD

TN

TX

UT VT

VAWA

WV

WIWY

15

17

19

21

23

25

27

29

31

33

35

0.41 0.42 0.43 0.44 0.45 0.46 0.47 0.48 0.49 0.5

Pe

rce

nt

Ob

ese

20

08

Household Gini Ratio 2007

Obesity Rates By Inequality in U.S. States

Source: Center for Disease

97

AL

AK

AZ

AR

CA

CO

CTDE

FL

GA

HI

ID

ILIN

IAKS

NC

LA

ME

MA

MI

MN

MS

MO

MT

NE

NV

NH

NJ

NMNY

ND

OH

OK

OR

PA

RI

SC

SD

TN

TX

UT

VT

VA

WA WV

WI

WY

2

4

6

8

10

12

14

0.41 0.42 0.43 0.44 0.45 0.46 0.47 0.48 0.49 0.5

% U

ne

mp

loye

d 2

01

0

Household Income Gini Ratio 2007

2010 Unemployment Rate in States by Gini Ratio

Source: Bureau of

Labor Statistics

What is to be Done?

Policies at the National Level

• Allow the Bush-era tax cuts for the very rich to

expire.

• Since 1995, the richest 400 households have had

their taxes cut 45%, or $46 million per household per

year.

• Even for those earning $1 million per year, their tax

cut equals $128,000 annually.

• For those with middle class incomes, our yearly

tax cut savings comes to $300.

• If these “temporary” tax cuts are discontinued, $1

trillion will be gained over the next decade, making it

101

What is to be Done?


Allow the Bush-era tax cuts for the very rich to

expire.

Cut defense spending/stop fighting needless wars

(Stiglitz estimates the Iraq War has cost $3 trillion)

What is to be Done?



expire.



Invest in R & D (cutting-edge Green Technology)

What is to be Done?



expire.




Re-industrialize our country, especially hi-tech

areas!

What is to be Done?



expire.





areas!

Continue to fully fund our public university

system—the envy of the world and the font of our

national productivity.

What is to be Done?



expire.





areas!

Continue to fully fund our public university

system—the envy of the world and the font of our

national productivity.

Reduce our national debt.

What is to be Done?


Allow the Bush-era tax cuts for the very rich to expire.

Cut defense spending/stop fighting needless wars (Stiglitz estimates the Iraq War has cost $3 trillion)


Re-industrialize our country, especially hi-tech areas!

Continue to fully fund our public university system—the envy of the world and the font of our national productivity.

Reduce our national debt.

Reinstate more progressive tax rates to protect the

What is to be Done?Personal Actions You Can Take


• “Thing Globally—Act Locally”. Join local action

groups that address social ills

(hunger, homelessness, political advocacy, etc.)


• “Thing Globally—Act Locally”. Join local action groups that address social ills (hunger, homelessness, political advocacy, etc.)

• Consume less, and when you do—buy carefully, e.g., coops. (Sounds Un-American—right?) Read Annie Leonard, THE STORY OF STUFF.


• “Thing Globally—Act Locally”. Join local action groups that address social ills (hunger, homelessness, political advocacy, etc.)

• Consume less, and when you do—buy carefully, e.g., coops. (Sounds Un-American—right?) Read Annie Leonard, THE STORY OF STUFF.

• Read widely (NEVER STOP LEARNING), use unbiased news sources/avoid hate-mongering broadcast media pundits, e.g., beware of the FOX in the hen-house.


• “Thing Globally—Act Locally”. Join local action

groups that address social ills

(hunger, homelessness, political advocacy, etc.)

• Consume less, and when you do—buy

carefully, e.g., coops. (Sounds Un-American—

right?) Read Annie Leonard, THE STORY OF

STUFF.

• Read widely (NEVER STOP LEARNING), use

unbiased news sources/avoid hate-mongering

broadcast media pundits, e.g., beware of the FOX in

the hen-house.

• Use “social cause” VISA cards like WORKING


(Cont.)

• Invest your retirement, IRAs, 401K money in Social

Responsible Investment (SRI) funding companies

that “Do No Evil”, e.g., Calvert Fund.


(Cont.)




• Avoid simplistic, extremist politicians hawking

know-nothing solutions (cutting taxes will not solve

all of our problems, but only reward the rich).


(Cont.)




• Avoid simplistic, extremist politicians hawking

know-nothing solutions (cutting taxes will not solve

all of our problems, but only reward the rich).

• Network, Network, Network—especially through

the internet. Power accrues to individuals when

they act as groups!


(Cont.)

• Invest your retirement, IRAs, 401K money in Social Responsible Investment (SRI) funding companies that “Do No Evil”, e.g., Calvert Fund.

• Avoid simplistic, extremist politicians hawking know-nothing solutions (cutting taxes will not solve all of our problems, but only reward the rich).

• Network, Network, Network—especially through the internet. Power accrues to individuals when they act as groups!

• Fatal acceptance leads to defeat. Never lose hope! To preserve equality and democracy, we must not fail to act.

Thank You so much!Questions or Comments?

narrated public lecture of growing u.s. income inequality

Education

absolute income inequality

growing income inequality

absolute income differencesis

middle class

income inequalitya lecture

multinational corporations

increasing5major findings

world huge inequalities