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Posts Tagged ‘wealth inequality’

Income inequality is getting worse in the United States, and some new data from Pew Research shows this to be true.

An analysis that weighs the U.S. against 11 countries in Western Europe shows that America holds the tiniest middle class, with just 59% of the United States’ population falling between rich and poor on the income scale. By contrast, 72% of the German population falls into that middle-income bracket — defined by Pew to be between two-thirds the country’s median income and double the median — as does 80% of the Danish population.

“Countries with higher income inequality tend to have smaller middle classes,” said Rakesh Kochhar, the associate director of research at Pew Research Center. The US rates 93rd worst when it comes to income inequality. That’s because the vast majority of new income in the United States is being redistributed from the 99 to the 1 percent, and because the rich control virtually all levers of government that determines income and wealth redistribution.

Tens of millions of US jobs have been exported thanks to Free Trade Treaties since 1990, for example. The difference between the old higher US wages and benefits and the new lower third world wages with no-benefits go straight from the pockets of the middle class to the super wealthy via higher corporate profits, soaring share prices, and surging dividends.

There’s one interesting wrinkle to the Pew data: While the U.S. middle-income segment is smaller than in European countries, it takes a higher income overall to make it into that group. The median income for a middle-class household in Italy is $35,608. It’s $44,000 in France and $46,000 in Denmark.

But in the United States, it’s $60,084. That, however, simply measures how badly income inequality has become in the US since income inequality in the US badly skews the data. Pew defines the middle class to be between two-thirds the country’s median income and double the median. The median is the midpoint. So if the highest earner in a nation earns $1.2 billion a year and the lowest worker earns $50,000, the midpoint is $599,950,000.

The median is the midpoint. So if the highest earner in a nation earns $1.2 billion a year and the lowest worker earns $50,000, the midpoint between the two is $599,950,000. Whereas, if the highest earner garners $1 million while the lowest worker earns $100,000, then the median income is $450,000. The higher income inequality, the more money it takes to get into the middle class. The less income inequality is, the less cash it takes to be in the middle class.

 

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Supporters of the H1-B Visa program continuously tell us of the need for it because of a severe shortage of high-tech employees in the United States. This, of course, is not and has never been true. The program has been used by US corporations to lower the wages and benefits they pay to their employees by switching out US workers for foreign labor. That’s it in a nutshell.

Lowes Home Improvement provides us with the latest example of how the visa scam works. On June 7, 2017, the Charlotte Observer reported that Lowes was laying off 125 of its US high-tech workers, and is sending those jobs to Bangalore India. That means we have another 125 skilled and experienced US high-tech workers to fill jobs anyplace in the states. See Lowes Lays of High-Tech Workers–Charlotte Observer

Actually, the US has hundreds of thousands of highly skilled US high-tech workers who cannot find jobs because corporations have outsourced hundreds of thousands of high-tech jobs using H1-B visa workers, or simply brought in hundreds of thousands of H1-B workers. That’s because US companies can bring in 85,000 foreign workers every year under the subterfuge of the H1-B visa.

“Bangalore has been described as the “Silicon Valley of India.” Other major corporations have a growing presence in the IT hub, including Oracle, Dell, IBM and GE, according to a recent Wired story. Another is Wipro, an outsourcing firm used by Observer parent McClatchy,” according to the Observer.

US high-tech workers have experienced numerous layoffs over the last several years because their jobs were exported, or taken by H1-B Visa workers. Some of the employers exporting high-tech jobs include Disney, Intel, Nike, Oracle, Microsoft, Google, Dell, IBM, General Electric, the University of California at San Francisco, Eversource Energy, Abbott Laboratories, PG and E, and many more. That’s thousands of US high-tech workers who have been replaced. Where is this shortage of US high-tech workers? It isn’t in the USA.

The typical American high-tech worker earns considerably more than foreign H1-B workers. According to the New York Times, US businesses only need to pay the minimum of $60,000 a year to its H1-B workers, and they often don’t get any sort of benefits package.

The H1-B visa scam works like this. A US company will hire H1-B Visa folks through a third party. Then American high-tech workers will train their H1-B replacements. Then the H1-B visa worker will either stay in the US or work in say, India, meaning the job has been exported via the H1-B program. The H1-B Visa is only good for three years, so if US jobs are exported using H1-B workers, after three years, the job is no longer governed by H1-B Visa rules. Then the foreign employee can work for quite a bit less than the $60,000 minimum in India or wherever.

The difference in pay and other compensation between the higher compensated US workers and the lower paid foreign and H1-B visa workers is redistributed to the super rich via higher corporate earnings, rising share prices, and surging dividends. The H1-B visa is an income transfer scam, plain and simple. It is time to eliminate this disaster for US high-tech workers.

The Trump Administration claims it is preparing to propose changes to the system that will benefit US workers over Wall Street investors, but we will see.

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Wall Street Democrats, such as Wall Street-owned president’s Bill Clinton and Barack Obama, as well as Wall Street’s senator’s Hillary Rodham Clinton and Ron Wyden, have led the way toward trade deals that have exported tens of millions of US jobs overseas, with the difference between the old higher US paying jobs and the new lower paying US jobs going directly into the pockets of the rich via higher corporate earnings, rising share prices and surging dividends.

These income redistribution scams are the primary reason income and wealth inequality have grown so lopsided in favor of the billionaires over the previous 35 years or so. Most of the Republican Party have stood right behind the Clinton’s, Wyden and Obama on these income redistribution scams. 86 percent of Republican voters understand these trade scams are intended to export US jobs, compared to 52 percent of Democratic voters. So the Republican leadership is happy to negotiate with the Wall Street DNC Democrats to take the lead on these trade scams. In fact, the two sides have worked together to create the income and wealth inequality in which we now suffer. That’s why Donald Trump is president.

So how do the Democrats get out of being blamed for exporting tens of millions of jobs and creating such massive income and wealth inequality? They lie and spread these lies using a number of corporate news outlets and fake academic studies that come from real universities.

When Barack Obama became president, and for a few years afterward, the US failed to create any net jobs. And so members of the Democratic Party came up with the ingenious lie; automation killed the jobs. Since then the economy has created twelve million new jobs, and you will notice automation hasn’t killed those jobs. Nor has automation killed the tens of millions of US jobs that have been exported to China, Vietnam, Mexico and elsewhere.

I’ve written about this Democratic Party lie many times.

Now in a new report, economists Lawrence Mishel and Josh Bivens of the Economic Policy Institute challenge the Democratic Party lie that the pace of automation is accelerating and that the use of robots will lead to much higher unemployment and greater inequality. They also point out that there is not one shred of evidence in any study showing that technology and automation are killing more jobs than they are creating. The authors argue that if automation actually led to higher overall joblessness, the United States would have seen consistently increasing unemployment over the last 70 years. That didn’t happen because technology and its offshoot called automation actually create more jobs than they displace.

Likewise, if automation were indeed surging and leading to joblessness in recent years, we would not have been able to reduce the unemployment rate from 10 percent in 2010 to under 4.3 percent now. The authors encourage policymakers to focus on the immediate need to create good jobs and robust wage growth—instead of getting worked up about a hypothetical “robot apocalypse.”

The imbalance of political power between the 1 and the 99 percent are the current reason why income and wealth inequality has grown over the last 3 1/2 decades.

For more information, click on the report at “The Zombie Robot Argument Lurches On; There is no evidence that automation leads to joblessness and or Inequality–Economic Policy Institute

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Home mortgage applications

To one my stories about how income had finally begun going up in 2016, somebody wrote, “Yes the 80 bucks more a month I’m getting now completely covers the hundreds of dollars my rent has gone up due to rich developers moving in and gouging us all.”

There are a few things to be said about the comment above. As you can tell by the graph above, applications for home mortgages peaked in 2005 and have dropped quite a bit since then. So why are home and rental prices still shooting through the roof?

The big banks in 2007-11 conspired together to keep over 50 percent of vacant houses off the market so as to jack up prices. Home prices have artificially risen since then. The banks have allowed an increasing dribble of these homes back onto the market as prices have artificially and illegally risen.

Rents are artificially high as well, and for the same reason. What the big banks have done is commit a crime called “a conspiracy in restraint of trade.” This collusion redistributes income from home buyers and renter (the 99 percent) to share and bondholders of the 1 percent.

90 to 95 percent of US population growth is due to immigration. When population constantly increases while large amounts of housing units are illegally taken off the market, the result jacks up housing prices and rents. See Shadow Inventory: More Houses Will Soon Be Available for Sale–Rismedia.com. See also The 7-Million Housing Shadow Inventory Could Trigger A Price Avalanche–Business Insider.

The government has changed the way it measures inflation twenty times since 1981 so as to reflect a lower rate of inflation than actually exists. This means real wages are actually higher than they would have been under the old methods of measuring inflation, so that when the government tells us wages have been stagnant for thirty-six years, it really means real wages have gone down significantly.

Meanwhile, increases in home and rental prices are not actually counted in the inflation rate. See How to Fix the Housing Component of CPI–Slate. Food and energy prices are not included either, but they used to be. There’s a reason for this; inflation measured against wage increases would demonstrate real US wages have plummeted over the last three and a half decades, rather than stagnated. Both Republicans and Democrats in public office don’t want you to know the real story, and neither does their corporate news media.

Both major political parties are controlled by big corporations, billionaires, hedge funds and Wall Street investment banks, and most of these benefit from this conspiracy in restraint of trade. So don’t expect the US government to do anything about this illegal manipulation of prices. It isn’t going to happen until we get honest government back to Washington.

Editor’s note;

The big banks have conspired against Federal law and supply and demand to withhold product from the market in order to manipulate prices and profits upward so it is the renters and buyers who are ripped off. Much, if not all, of this conspiracy has to do with mortgage backed bonds, and the profits and losses to be had from them. A loss in value of 8 percent in the housing that backs triple B rated bonds sends the value of those bonds down to zero, according to Michael Lewis in The Big Short. Likewise, he writes, a 20 percent slump in the price of housing sends the value of AAA home mortgage backed bonds to zero. A lot of billionaires and millionaire investors lose in this instance. So the big banks conspired to keep over 50 percent of the vacant housing off the market in order to prop up the value of those bonds. However, there are other significant benefits to those banks to keep houses off the market. Buyers and renters pay the price of this conspiracy because the obvious result of the actions of the big banks is to redistribute hundreds of billions, if not trillions of dollars, every year from the 99 to the 1 percent.

Dear Democrats, please note then President Bill Clinton refused to sign legislation that would’ve regulated derivatives. Home mortgage backed bonds are a derivative, since their value is derived from an underlying asset. That’s why they’re called derivatives.

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The Great Recession came and went, and so did salaries and other compensation for people graduating with four year college degrees. The corporate news media continues to shower us with propaganda about why this has occurred.

Bloomberg news claims “technology and automation” have caused this decline. Only in the United States does there appear to be a problem with automation. It is strange how there is an overabundance of US manufacturing jobs in China, Vietnam and elsewhere. Those factories employ accountants, bookkeepers, managers, attorneys, and many more white collar employees. Those factories also purchase things from other local businesses that supply materials and designs and other things that employ white collar workers. Those factories used to be in the United States. And now they’re not. See https://www.bloomberg.com/news/articles/2017-03-30/u-s-college-grads-see-slim-to-nothing-wage-gains-since-recession

Those H1-B visa’s are also putting downward pressure on wages, as well as exporting high tech jobs to India and other nations.

Exporting jobs overseas by the tens of millions is why wages have declined on average for new college graduates, and why compensation has stagnated for older workers, and why wages have declined over the last thirty-six years. There are other reasons, but automation is not one of them. See Jobs: The Largest US Export Product–JohnHively.wordpress.com

As for those declining wages for new college graduates, what you study matters for your salary, the data show. Chemical and computer engineering majors have held down some of the best earnings of at least $60,000 a year for entry level positions since the recession, while business and science graduates’s paychecks have fallen. A biology major at the start of their career earned $31,000 on an annual average in 2015, down $4,000 from five years earlier. Some majors, such as petroleum engineers, have seen a bump in earnings for those just coming into the job market.

On the other hand, people with graduate degrees are still getting a bump in their salaries upon graduation.

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A new report from the United Nations shows that Norway has overtaken Denmark as the world’s happiest nation. The study was performed by the Sustainable Development Solutions Network (SDSN), which was launched by the United Nations in 2012.

“Happy countries are the ones that have a healthy balance of prosperity, as conventionally measured, and social capital, meaning a high degree of trust in a society, low inequality and confidence in government,” Jeffrey Sachs, the director of the SDSN and a special advisor to the United Nations Secretary-General, said in an interview.

The United States dropped to 14th this year from 13th last year. Sachs said the United States is falling in the ranking due to inequality, distrust and corruption. Economic measures that the administration of President Donald Trump is trying to pursue, he added, will make things worse.

US Senator Bernie Sanders had a lot to say about these issues.

“Norway,” he wrote, “is now the happiest country on earth followed by Denmark, Iceland, Switzerland, Finland, Netherlands, Canada, New Zealand, Australia and Sweden, according to the United Nations. Meanwhile, the United States has moved down to 14th on the list. Why are the people in Norway so much happier than the U.S.? It’s not that complicated.

While hundreds of thousands of bright, young Americans don’t go to college because they cannot afford the cost, public college is tuition-free in Norway.

While the U.S. is the only major country on earth that does not guarantee health care as a right, Norway has a single-payer health care system that provides high-quality health care to all of its citizens at a far lower cost.

While the U.S. is the only major country that does not guarantee workers some type of paid sick leave, Norway guarantees 50 paid sick days.

The U.S. has the highest childhood poverty rate of nearly any major country on earth, while Norway has one of the lowest followed by Denmark and Finland.

As we strive to be a more just society, we must follow the examples of our brothers and sisters in other countries who have made better progress. What do you think?”

Click here for more on the story from Reuters.

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In 2012, news that wasn’t published hardly at all included the fact that Costco’s CEO Craig Jelinek decided that redistributing income from his employees to his shareholders by cutting wages was not good for the employees or for the shareholders. Wall Street was pressuring him to do exactly that (Click here for the story from http://www.zdnet.com). This was in spite of the fact that Costco’s closing share price hovered slightly below $39 a share in March 2009 and had risen to over $90 a share in March 2012.

That higher wage strategy seems to have worked beautifully. Costco’s share price has been steadily rising, and it closed at $177 on March 2 2017. Wall Street was proven wrong–again.

The truth is simple. When you have a massive income redistribution from the 99 to the 1 percent via federal legislation, as in the last thirty-seven years, you have a government and an economy that are sick with massive corruption. Costco has opted out of that business model. Thirty-six years ago, the 1 percent took home about 8 percent of the nation’s income, now it’s over 30 percent and growing, and it’s been stolen from the rest of us. Thirty-six years ago, the 1 percent owned 7 percent of the nation’s wealth, now they own over 40 percent, and it’s growing at the expense of us all. However, when the latest stock market bubble bursts, and it will, much of that wealth will evaporate.

 

This is why the current economic expansion is long, but historically weak by virtually all measurements, despite a bigger gross domestic product, greater worker productivity and larger population than in years past. Demand should be robust compared to decades ago, but it instead remains comparatively lackluster. That is because the income of the 99 percent has been redistributed to the 1 percent, leaving the rest of us insufficient money to boost this economy in the manner of the past.

It’s time to put a little more balance in the economy by following the Costco model. The government has redistributed income from the 99 to the 1 percent via free trade treaties, privatization scams, corporate welfare and other means. It’s time for the government to move in the opposite direction on behalf of all of us, not just the rich.

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