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Posts Tagged ‘Economic Policy Institute’

The Economic Policy Institute (EPI) reports that US wages grew in real terms (wage growth minus inflation) during 2016. While good news for the people who actually do the work of producing the goods and services necessary to keep the economy humming, this is also bad news.

EPI reports that income inequality continues to rise. “Rising inequality,” the report states, “means that although we are finally seeing broad-based wage growth, ordinary workers are just making up lost ground, rather than getting ahead. The way rising inequality has directly affected most Americans is through sluggish hourly wage growth in recent decades, despite an expanding and increasingly productive economy. For example, had all workers’ wages risen in line with productivity, as they did in the three decades following World War II, an American earning around $40,000 today would instead be making close to $61,000 (EPI 2017c).” That income difference has been redistributed to the very rich since 1981.

The report went on, “A hugely disproportionate share of economic gains from rising productivity is going to the top 1 percent and to corporate profits, instead of to ordinary workers—who are more productive and more educated than ever. This rising inequality is happening largely because big corporations and the wealthy have been rewriting the rules of the economy, particularly the job market, to stack the deck in their favor. This has prevented the benefits of productivity growth from “trickling down” to reach most households.” In other words, trickle down economics was a complete farce.

Now for the bad news. The economy is heading on a crash course with the worst and most prolonged recession since the Great Depression sometime around June of this year, give or take a month or two. The severity of this recession is due to the income and wealth inequality the US and the world has experienced since 1981, the year it pretty much began. I have been watching this current business expansion unravel since before November 2015. See The Coming Recession is Going to Be a Big One-JohnHively.wordpress.com There are always certain variables that precede a recession. Many of those began a year and a half ago.

Typically, the last variables to happen before an economy tanks is that wages rise and the Federal Reserve raises interest rates. Now those variables have officially happened. The Fed will likely raise interest rates again this month.

Somebody might point out that the economy is humming along with wage growth, low unemployment, etc…. How can we go into recession?

The growth of any business expansion has much in common with hiking up a mountain. Once you step on the highest point of any mountain, the next step is down. And so it is with any economic expansion; once it hits a peak, the very next step is down into recession. This month, March 2017, is the 93rd month of this economic expansion, making it the third longest in history. Compared to every economic expansion lasting six or more years, the current is the weakest by almost every measurement. So don’t expect it to go on much longer.

Click here for the entire EPI report on wage growth in 2016.

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A new poll by the Pew Research Center show that 80 percent of US citizens believe that trade agreements have cost the United States jobs. According to the poll:

“The public sees threats to jobs coming from several directions: Eight-in-ten adults say increased outsourcing of jobs to other countries hurts American workers, and roughly the same share (77%) say having more foreign-made products sold in the U.S. has been harmful. Significant shares also cite increased use of contract or temporary workers (57%) and declines in union membership (49%) as trends that are hurting, rather than helping, workers. At the same time, global markets for U.S.-made products are seen as helpful for workers by 68% of adults. And seven-in-ten say the rise of the internet and email has been a net positive.”

The poll suggests the US public is not fooled by these trade scams that redistribute income from working folks to the rich. And they’re spot on.

According an Economic Policy Institute Study shows that over 2 million US jobs were exported to the eleven nations participating in the Trans Pacific Partnership (TPP) in 2015. That doesn’t count China, since it is not a part of the as of yet not approved TPP.

The U.S. trade deficit with China was $365.7 billion in 2015, or about double what it was with the TPP nations. This is a new record, up slightly from last year’s record of $343 billion. Counting the trade deficit with China suggests US companies exported at least 4 million more jobs in 2015, for a total of over 6 million jobs in 2015.

At least one study suggested US corporations have exported 26 million jobs since 2000. The EPI study for jobs loss in 2015 coupled with the US trade deficit with China suggests this is very likely, and perhaps even understates the job loss numbers.

That’s why Americans have wised up to these income redistribution scams falsely marketed as trade agreements. They may not know the exact number of jobs lost, but given that the current economic expansion is the weakest since the Great Depression, most people can see and feel that something has gone terribly wrong with the US economy.

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According to a new study by the Economic Policy Institute and Americans for Tax Fairness, corporate tax dodging is at record levels while corporate profits have reached record highs. U.S. corporations have stashed $2.4 trillion offshore. It is estimated corporations could owe as much as $700 billion on those profits, much of which are earned in the United States. Some of the findings are below. I should like to point out that a recent report in the Guardian stated that US corporations were the best at avoiding taxes.

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1. Corporate profits are way up, and corporate taxes are way down. In 1952, corporate profits were 5.5 percent of the economy, and corporate taxes were 5.9 percent. Today, corporate profits are 8.5 percent of the economy, and corporate taxes are just 1.9 percent of GDP.

2, Corporations used to contribute $1 out of every $3 in federal revenue. Today, despite very high corporate profitability, it is $1 out of every $9.

3. Many corporations pay an effective tax rate that is one-half (or less) of the official 35 percent tax rate.

4. One thing not mentioned by the study is that many US corporations pay no taxes and sometimes receive tax rebates on taxes they never paid, Verizon, for instance, paid no Federal taxes in 2009, 2010 and 2013, and received tax rebates in each of those years.

5. As of 2015, U.S. corporations had $2.4 trillion in untaxed profits offshore. This is roughly a five-fold increase from $434 billion in 2005. It stems largely from anticipation of a tax holiday.
Just two industries—high-tech and pharmaceutical/health care—hold half the untaxed offshore profits.

6. Just 50 companies hold over 75 percent of untaxed offshore profits. Ten companies hold 39 percent of these profits. Just four companies—Apple, Pfizer, Microsoft, and General Electric—hold one-quarter of all untaxed offshore profits.

7. About 55 percent of U.S. corporate offshore profits are in tax-haven countries. Corporations pay an average tax rate of between just 3.0 percent and 6.6 percent on profits in tax havens.

8. U.S. corporations pay very low tax rates—6 percent to 10 percent, mainly to foreign governments—on all their offshore profits. A tax break known as “deferral” allows them to delay paying U.S. taxes until the profits are repatriated to the parent corporation in the United States.

9. The U.S. Treasury will lose $1.3 trillion over 10 years—about $126 billion a year—due to the deferral of taxes on offshore profits.

10. Income shifting—which are making profits earned in the United States look as if they were earned offshore—erodes our corporate tax base by over $100 billion a year. U.S. corporations increasingly manipulate transfer pricing and bilateral tax agreements to make their U.S. profits appear to be earned in tax havens. Think Panama Free Trade Agreement and the looming Trans-Pacific Partnership.

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child labor

A new report from the Economic Policy Institute (EPI) says that the decline of US private sector labor unions has resulted in lower pay for almost everybody. A summary of the report is below.

“Pay for private-sector workers has barely budged over the past three and a half decades. In fact, for men in the private sector who lack a college degree and do not belong to a labor union, real wages today are substantially lower than they were in the late 1970s.” The same holds true for women.

The report went on, “In the debates over the causes of wage stagnation, the decline in union power has not received nearly as much attention as globalization, technological change, and the slowdown in Americans’ educational attainment. Unions, especially in industries and regions where they are strong, help boost the wages of all workers by establishing pay and benefit standards that many nonunion firms adopt. But this union boost to nonunion pay has weakened as the share of private-sector workers in a union has fallen from 1 in 3 in the 1950s to about 1 in 20 today.”

There are some things missing from report. One of them is that the war on US labor unions brought about massive increases in profits for corporations, and much of this was redistributed to politicians in the form of perks (like high paying jobs after leaving office) and campaign contributions.

Martin Luther King

Eviscerating US labor unions via globalization and government legislation also redistributed much of the political power of the unions to corporations. The Republican Party today, for example, is completely owned by US corporations such as Walmart, Apple, Microsoft, JP Morgan/Chase, Goldman Sachs, a variety of hedge funds and Exxon Mobile. Labor unions have taken a back seat in the Democratic Party, and by a wide margin, to such corporate giants as Costco, Apple, Microsoft, JP Morgan/Chase, Goldman Sachs, and a variety of hedge funds. Notice any similarities between the twin political parties?

Globalization has never been inevitable as corporate, news and political leaders claim. Instead, it is an intentional political and economic power play to break US labor unions, bust foreign labor unions, push wages and benefits down, which boosts corporate bottom lines, which increases corporate share prices, all of which redistributes income and wealth from the 99 to the 1 percent.

In other words, globalization is not something that has been God ordained. This policy has been ordained by the rich and powerful. It is not and never has been inevitable except as an instrument wielded by the rich to wage economic war against the 99 percent of the world.

The primary purpose of globalization is to increase income and wealth inequality.

Check out the link below for EPI’s report.

Union decline lowers wages of nonunion workers: The overlooked reason why wages are stuck and inequality is growing

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According to the US Bureau of Labor Statistics (BLS), the U.S. manufacturing sector lost 14,000 jobs in August and has now lost 57,000 jobs since January of this year. This job loss is, according the Economic Policy Institute (EPI), in part, a consequence of the sharp rise of the dollar in 2014 and 2015, which has gained nearly 20 percent on a broad, trade-weighted basis, as shown below.

According to the EPI, these job losses are brought about by Chinese currency manipulation.

“The rising dollar has reduced the cost of imports,” according to EPI, “increased the cost of U.S. exports resulting in growing trade deficits. Growing exports support U.S. employment, but growing imports cost U.S. jobs, so the manufacturing decline was entirely predictable from the expected increase in the U.S. trade deficit, which responds to changes in the dollar with a lag of one to two years. Yet the U.S. government continues to do nothing about destructive exchange rate movements, whether they are caused by intentional currency manipulation or more recent, market-driven misalignments.” Italics mine. 

This is all true, but there’s a reason why the US government and the Federal Reserve do absolutely nothing but cry foul over this manipulation. The government and the Fed could easily counter Chinese manipulation of its currency vis-a-vis the US dollar by simply buying the Chinese Yuan on the open market, but neither will, because they won’t.

That’s because US corporations have exported millions upon millions of US jobs to China. When these corporations, such as Apple, Microsoft and Nike, manufacture things in China and then export their products to the US, their profits increase every time China manipulates its currency. That’s right! US corporate profits grow when China manipulates its currency. So for example, when the Chinese manipulate their currency via the dollar by 15 percent, it increases the profits of their goods made in China and exported to the US by roughly 45 to 225 percent. What corporate CEO would want the US government to counter Chinese currency manipulation under these circumstances? For more on this, click The Trans Pacific Partnership: The Op-ed the Liberal and Conservative Corporate Media Doesn’t Want You to See–JohnHively.wordpress.com.

That’s how corrupt your government is. It will do nothing to save US jobs from being exported because the difference between the old higher US wages and the new and lower Chinese wages goes straight into the pockets of the super wealthy via higher corporate profits, surging dividends and skyrocketing share prices. The super wealthy take billions of those stolen dollars and put them right in the hands and campaign coffers of corrupt politicians.

The Trans Pacific Partnership (TPP) is the latest scam in redistributing income and wealth from the 99 to the 1 percent. Don’t let it happen. Call your congressional representatives. They do not want an aroused public.

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A new study by the Economic Policy Institute (EPI) shows that “Skills such as critical thinking, persistence, and self-control—which are often called noncognitive skills or social and emotional skills—are vitally important to children’s development. In a new report, EPI’s Emma García and Elaine Weiss outline why and how nurturing these skills should be incorporated into the goals and components of public education. García and Weiss argue that since these skills are linked to academic achievement, productivity and collegiality at work, positive health indicators, and civic participation, they should be an explicit goal of public education.”

Currently, corporate profits determine US educational policy. The testing industry runs the show. They’re the corporations that insist on higher standards because higher standards mean higher profits.

When a child takes a state mandated test, a major publishing corporation, such as Pearson Limited of Great Britain, makes a profit on that test. When a child fails a test, that child is given the test again until he or she passes, and every time the student takes a test management and shareholders of Pearson get more profits, higher dividends and rising share prices.

The easiest way to get those pesky five to eighteen year old students to take more and more tests is simply to raise standards. More students will fail to achieve those higher standards, and will be forced to retake the tests, and every time they retake those tests Pearson’s profits rise.

This is precisely why US students are the most tested in the world, and by a wide margin. That’s why US educational policy has become an income redistribution program. It redistributes income from local taxpayers to shareholders of Pearson and other testing corporations via higher profits, rising dividends, and surging share prices.

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According to a new report by the Economic Policy Institute (EPI), the current economic expansion is the worst of all since and including the recovery of 1949. Robert Scott, the author of the report, blames government reduction of expenditures during this recovery for the weakness of it. You can see from the graph below that this recovery in Gross Domestic Product (GNP) is the lowest of the last 11 recoveries. No doubt government spending plays a role in how fast GNP grows, along with other variables, such as wage and job growth. This recovery is the worst on record for government expenditures. But there is another likely culprit that plays a role in making this the weakest of economic expansions.

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You will notice above that all of the economic recoveries since 1949 and through 1990 grew at rates of 4 percent and higher. The recovery under President Ronald Reagan was the last to top 4 percent GNP growth. Under President Bill Clinton GNP growth averaged 3.4 percent, under President George W. Bush it was 2.8 percent, and under President Obama GNP growth is 2.1 percent. Notice growth was less under Bush than under Clinton despite higher government spending. So what else could be going on? Look at the graph below.

Income inequality has grown since and during the presidency of Ronald Reagan, and almost every year since has seen increasing income and wealth inequality. As inequality has grown, the demand for goods and services has been reduced by income stagnation or reduction.

income inequality

Since and including the 1980s, credit has been expanded in the form of credit cards, home equity credit lines, and home equity growth. In other words, much of the current expansion, weak as it is, is spurred on by credit for the 99 percent, with profits and other enrichment going to the 1 percent, who stole 99 percent of all income growth from 2009 to 2014, along with most of the income produced in the USA during 2016. The 1 percent has gone from stealing about 8 percent of all the income produced in the United States to roughly 37 percent, leaving us with less money to demand goods and services, along with historically slow job growth, wage stagnation, and lost opportunities.

Now the rich want more, and a weaker economy, weaker job growth, reduced real incomes, are the price we’ll have to pay for the Trans Pacific Partnership (TPP), should it pass through congress. Wall Street President Obama has already signed it. Wall Street Democratic Presidential Candidate Hillary Clinton has voiced her support for and against it. No doubt Clintonis is really for it, since her vice presidential choice Tim Kaine is for it, as is her newly appointed head of her transition team Ken Salazar. See What the Corporate Propaganda Network Doesn’t Want You to Know: One of the Many Ways the Trans Pacific Partnership Will Destroy US Jobs and Redistribute Massive Income and Wealth From the 99 to the 1 Percent–JohnHively.Wordpress.com

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