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Tag: wealth gap
To Make America Great Again, Deal With Income Inequality

To Make America Great Again, Deal With Income Inequality

IMAGE: mSeattle via Flickr.com

The Racial Wealth Divide In America Is Staggering

The Racial Wealth Divide In America Is Staggering

Reprinted with permission from AlterNet.

After predicating his presidential campaign on racist incitement against Muslims, immigrants and Black Lives Matter, President-elect Donald Trump set to work appointing a cabinet that, so far, is setting new records as the wealthiest, and least diverse, in American history. In less than a month, that administration will take the White House of a country that faces the highest levels of wealth disparities along racial lines in nearly three decades.

The Pew Research Center determined in June that white homes possess roughly 13 times the wealth of their black counterparts. Analysis of federal government data also determined that black people in the United States are at least two times as likely as white people to be poor or unemployed. Meanwhile, homes headed by a black person “earn on average little more than half of what the average white households earns,” Pew concluded.

A separate Pew report concluded in 2014 that the wealth gap between white and black people in the United States is at its highest point since 1989.

Those findings were followed by a separate report released in August by the the Institute for Policy Studies and the Corporation for Enterprise Development found that, if economic trends over the past three decades continue on pace, it “will take black families 228 years to amass the same amount of wealth white families have today.” It would take Latino families 84 years to accrue the same wealth as their white counterparts.

The study projects that, by 2043, when people of color are projected to comprise a majority of the U.S. population, the wealth divide with white families on one side and Latino and black families on the other while be double current levels.

“This growing wealth divide is no accident,” states the report. “Rather, it is the natural result of public policies past and present that have either been purposefully or thoughtlessly designed to widen the economic chasm between White households and households of color and between the wealthy and everyone else. In the absence of significant reforms, the racial wealth divide—and overall wealth inequality—are on track to become even wider in the future.”

This economic divide dovetails with racial segregation on the neighborhood level. A report authored by Century Foundation fellow Paul Jargowsky in 2015 found that “more than one in four of the black poor and nearly one in six of the Hispanic poor lives in a neighborhood of extreme poverty, compared to one in thirteen of the white poor.”

“Through exclusionary zoning and outright housing market discrimination, the upper-middle class and affluent could move to the suburbs, and the poor were left behind,” he writes. “Public and assisted housing units were often constructed in ways that reinforced existing spatial disparities. Now, with gentrification driving up property values, rents, and taxes in many urban cores, some of the poor are moving out of central cities into decaying inner-ring suburbs.”

Impacted communities have long been sounding the alarm about this trend. In their policy platform released earlier this year, the Movement for Black Lives proclaimed, “We demand economic justice for all and a reconstruction of the economy to ensure Black communities have collective ownership, not merely access.”

The platform states, “Together, we demand an end to the wars against Black people. We demand that the government repair the harms that have been done to Black communities in the form of reparations and targeted long-term investments. We also demand a defunding of the systems and institutions that criminalize and cage us.”

Sarah Lazare is a staff writer for AlterNet Follow her on Twitter at @sarahlazare.

IMAGE: AFP Photo/Mladen Antonov

Wealth Gap In America Widens To Record Level, Report Says

Wealth Gap In America Widens To Record Level, Report Says

By Don Lee, Tribune Washington Bureau (TNS)

WASHINGTON — The wealth gap between middle- and upper-income households has widened to the highest level on record, says a new report.

Using the latest Federal Reserve data, the Pew Research Center said Wednesday that the median wealth for high-income families was $639,400 last year — up 7 percent from three years earlier on an inflation-adjusted basis.

For middle-income families, the median wealth — that is, assets minus debts — stood at $96,500 last year, unchanged from 2010.

The result is that the typical wealth of the nation’s upper-income households last year was nearly seven times that of middle-class ones. By Pew’s calculations, that is the biggest gap in the 30 years that the Fed has been collecting statistics from its Survey of Consumer Finances.

“The latest data reinforces the larger story of America’s middle-class household wealth stagnation over the past three decades,” Pew said. “The Great Recession destroyed a significant amount of middle-income and lower-income families’ wealth, and the economic ‘recovery’ has yet to be felt for them.”

In Pew’s definition, middle-income households are those earning between two-thirds and twice the median income, after adjusting for household size. The median marks the halfway point.

For example, a one-person household was categorized as middle income if its earnings last year were at least $22,000 but less than $66,000. For a four-person family to qualify as middle income, earnings would have to be at least $44,000 but less than $132,000.

Based on these thresholds, 46 percent of American households were classified as middle income last year. One-third were considered lower income, and 21 percent upper income.

Incomes represent wages and other earnings such as interest and profits, whereas wealth is the value of stocks and other assets such as homes and cars, minus debts.

The Pew data shows that lower-, middle- and upper-income households all have yet to recover the wealth lost in the Great Recession. But higher-earning families had the smallest percentage loss of wealth from 2007 to 2010. And these same households, thanks in good part to their disproportionately large stock holdings, recovered a substantial part of the lost wealth since then, while lower-income families made no pickup at all.

Seen over a longer period, the typical wealth of upper-income households in 2013 was about double what it was in 1983, after adjusting for inflation.

For middle-income households, there was practically no change in wealth over the 30-year period. The median wealth for the middle class was $94,300 in 1983. That peaked at $158,400 in 2007 and has since retreated to $96,500.

For lower-income households, wealth rose to a high of $19,100 in 2001, but has since fallen to $9,300 last year. Their median wealth was $11,400 in 1983.

Photo: 401(K) 2012 via Flickr

Report: Restaurant CEOs Make 721 Times More Than Their Minimum-Wage Employees

Report: Restaurant CEOs Make 721 Times More Than Their Minimum-Wage Employees

A new report from the Economic Policy Institute highlights the widening earnings gap between minimum-wage workers and restaurant CEOs.

According to the EPI, a full-time employee making minimum wage will earn $15,080 — below the 2013 and 2014 federal poverty lines for a two-person household — over the course of a full year.

Compare that number to the average $10,872,390 that a top restaurant CEO earned in 2013. As the report explains, this means that a restaurant CEO, on average, earned 721 times more than the average minimum-wage worker.

Alarmingly, that 721-1 ratio is much higher than that of just eight years ago. Back in 2006, the ratio of restaurant CEO pay to the minimum wage was 609-1. That gap actually narrowed dramatically just two years later, when Congress passed the most recent minimum-wage hike; that left the ratio at approximately 250-1. After 2008, however, it continuously widened, and peaked between 2011 and 2012.

As demonstrated in the chart below, 2013’s 721-1 ratio is among the largest gaps of the last decade.

EPI Minimum Wage Restaurant CEO chart

One of the first steps towards narrowing the gap would be raising the minimum wage again. CEOs’ pay — which relies more heavily on other economic factors — may continue to rise, but a minimum-wage hike would drastically improve the lives of restaurant employees who often depend on federal safety net programs to provide for themselves and their families.

Many economists and lawmakers — most of whom lean left, such as President Barack Obama — continue to argue for a higher minimum wage to combat the negative economic and social implications of income inequality in the U.S.

Among opponents of a minimum-wage increase, however, is the National Restaurant Association, which represents the CEOs included in the EPI study.

According to the group, a federal minimum-wage hike would force restaurateurs to “limit hiring, increase prices, cut employee hours or implement a combination of all three to pay for the wage increase.” And as several states and even cities across the nation increase their minimum wages on their own — Seattle just passed legislation that will increase its minimum wage to $15 an hour over the next seven years — franchise restaurants warn that the measures are detrimental to businesses and jobs.

But the U.S. Department of Labor calls those claims “myths,” pointing out that employers in California “are required to pay servers the full minimum wage ($9 per hour beginning July 1) – before tips,” and “even with a minimum wage boost coming this summer, the National Restaurant Association projects California restaurant sales will outpace the U.S. average in 2014.” Also, while “employers in San Francisco must pay tipped workers the full minimum wage of $10.74 per hour — before tips,” the Bureau of Labor Statistics still finds that the San Francisco restaurant industry has “experienced positive job growth over the past few years.”

A Congressional Budget Office report also finds that while 500,000 jobs may be lost, a federal wage increase could lift 900,000 Americans out of poverty.

Speaking on the wage hike passed in Seattle, McDonald’s CEO Don Thompson reluctantly gave the increase his stamp of approval.

“McDonald’s will be fine. We’ll manage through whatever the additional cost implications are,” Thompson said in May. If other restaurant CEOs could accept that, they too would “manage,” even if they had to pay their employees just a few dollars more.

Photo: The All-Nite Images via Flickr

Chart via Economic Policy Institute