Category Archives: Salaries

Alabama Republicans Hit A New Low

The Republicans in Alabama are making news again and not in a good way. There are 2 Tea Party candidates running against Jo Bonner (R-AL), Pete Riehm and Dean Young, promising that if they are elected they will impeach President Obama. The crowd present for the debate responded to this with roaring cheer.  

According to the Mobile Press-Register,  

“First, I would cut off his funding. If that didn’t work, I would introduce a resolution describing what he’s done wrong. The last resort, which I am willing to take, would be to impeach him,” Young explained further. Riehm was equally unapologetic, saying, “failure to recognize wrong-doing is moral dereliction and, when you have the authority, failure to uphold the law is accessory to the crime.” Among President Obama’s crimes, argues Riehm, is his failure to defend the Defense of Marriage Act and failure to enforce federal laws on immigration and elections.  

Bonner responded to this saying impeachment “is a serious charge, and you better have good reasons before making it.” Conservative columnist, Quin Hillyer, the moderator said the idea was “pure demagoguery.” 

If that was not enough, Alabama state Senator Shadrack McGill used the bible to justify not raising salaries for teachers. At a prayer breakfast he stated that the bible says increasing teacher salaries would only lead to less-qualified teachers. That doubling teachers’ salaries (starting salary for Alabama teachers begins at $36,144) would not help education. In fact, keeping teacher pay low is a “biblical principle“: 

If you double a teacher’s pay scale, you’ll attract people who aren’t called to teach.   “To go in and raise someone’s child for eight hours a day, or many people’s children for eight hours a day, requires a calling. It better be a calling in your life. I know I wouldn’t want to do it, OK? 

“And these teachers that are called to teach, regardless of the pay scale, they would teach. It’s just in them to do. It’s the ability that God give ‘em. And there are also some teachers, it wouldn’t matter how much you would pay them, they would still perform to the same capacity. 

“If you don’t keep that in balance, you’re going to attract people who are not called, who don’t need to be teaching our children. So, everything has a balance.” 

ThinkProgress reported:

McGill found justification in the Bible for not increasing teacher pay, but he evidently found nothing in scripture preventing him from approving a 67 percent pay increase for legislators in 2007, which increased annual salaries for the part-time legislators from $30,710 to $49,500. He said that the higher pay helped to stop corruption. 

A 2011 report showed that while Alabama teachers have the highest starting salaries in the nation, the state lags far behind the national average for teacher pay. Currently, a part-time legislator in Alabama is making more than a full-time teacher with a Master’s degree and 15 years of experience. 

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CBO Findings Show Extent Of Wealth Inequality

I have been reading the non-partison CBO (Congressional Budget Office) study showing the trends in wealth distribution since 1979. After I read it, I thought to myself how could there be any question as to why the protesters of Occupy Wall Street took to the streets.

Since the Reagan Administration implemented the trickle-down-economics policies, giving large tax breaks to the wealthy in the belief that with more money in their pockets it will result in job growth, the income gap has reached a level that rivals 1928, a year before the Wall Street crash that marked the beginning of the Great Depression.

CBO findings  

Sources of Income — For Middle Class is Wages/Salaries. For Wealthy is Capital Gains 

Two factors accounted for the changing distribution of market income. One was an increase in the concentration of each source of market income, which consists of labor income (such as cash wages and salaries and employer-paid health insurance premiums), business income, capital gains, capital income, and other income. All of those sources of market income were less evenly distributed in 2007 than they were in 1979.  

The other factor was a shift in the composition of market income. Labor income has been more evenly distributed than capital and business income, and both capital income and business income have been more evenly distributed than capital gains. Between 1979 and 2007, the share of income coming from capital gains and business income increased, while the share coming from labor income and capital income decreased.  

More concentrated sources of income (such as business income and capital gains) grew faster than less concentrated sources (such as labor income). 

Between 1979 and 2007:  

    • For the 1 percent of the population with the highest income, average real after-tax household income grew by 275 percent.  
    • For others in the 20 percent of the population with the highest income, average real after-tax household income grew by 65 percent. 
    • For the 60 percent of the population in the middle of the income scale, the growth in average real after-tax household income was just under 40 percent. 
    • For the 20 percent of the population with the lowest income, the growth in average real after-tax household income was about 18 percent.  

Growth in Real After-Tax Income from 1979 to 2007

The share of income going to higher-income households rose, while the share going to lower-income households fell. 

The top fifth of the population saw a 10-percentage-point increase in their share of after-tax income.  

Most of that growth went to the top 1 percent of the population.  

All other groups saw their shares decline by 2 to 3 percentage points. 

Shares of Market Income, 1979 and 2007

How Bad Is The Income Gap In America – A Few Facts About The 1%

Why are Occupy Wall Street protesters out there….they don’t even know what they are protesting about? That is what we are hearing over and over from Fox News and other conservative pundits on an hourly basis.

I can’t speak for them all but here are a few clues: How about protesting to object corporate control of government policies, which has led to unfair tax loopholes, job outsourcing, cuts to public programs and gross overcompensation of executive employees, a widening wealth disparity between the top 1 percent and the rest of the country. 

So what is the disparity? How is wealth distributed in the United States? When you hear your conservative, Tea Party relatives or friends talking down the OWS movement, here are a few fun facts you can mention. These were compiled by staff writer of Life’s Little Mysteries, Natalie Wolchover

FACT #1: The wealthiest 1 percent of households own 34.6 percent of all privately held wealth, and 42.7 percent of all financial wealth (total net worth minus the value of one’s home). 

According to the NYU economist Edward Wolff a 2010 report, the bottom 80 percent of the population holds just 15 percent of the total wealth and only 7 percent of the total financial wealth (as a large portion of their wealth is tied up in their homes). The bottom 40 percent of Americans — that’s 120 million people — hold just 0.3 percent of the wealth. 

FACT #2: The United States has more income and wealth inequality than most countries that have been studied, including India and China — countries that are traditionally viewed as having unequal distributions of wealth. 

The degree of income inequality in each country is assigned a “Gini coefficient” — a number that ranges from zero (if everyone in the country has the same income) to 1 (if one person in the country has all the income). According to data gathered by the Central Intelligence Agency for 2010, the United States has a Gini coefficient of 0.45, on par with such countries as Iran (0.44) and Mexico (0.48); this is higher than the Gini coefficients of 94 of the 134 countries that have been studied, including China (0.42) and India (0.37), and much higher than Canada, Australia and all of Europe. Sweden has the lowest Gini coefficient at 0.23.  

The United States’ Gini coefficient has been rising for decades; it was just 0.35 in the 1960s. 

FACT #3: Among the 299 companies listed in the S&P 500 Index, the average CEO’s compensation was $11.4 million in 2010, or 343 times more than the median pay ($33,190) of American workers. The ratio of CEO pay to median worker pay was just 42:1 in 1980, and is currently 25:1 in Europe. 

Bill Domhoff, a sociologist at UC Santa Cruz, claims the ballooning of chief executives’ salaries in recent years has resulted from the fact that, for the most part, they set their own wages. “If you wonder how such a large gap could develop, the proximate, or most immediate, factor involves the way in which CEOs now are able to rig things so that the board of directors, which they help select — and which includes some fellow CEOs on whose boards they sit — gives them the pay they want,” Domhoff wrote in a 2011 articleon his website. 

FACT #4: Between 1979 and 2005, the average after-tax income for the top 1 percent increased by 176 percent, compared with an increase of only 6 percent for the bottom 20 percent. Between 1990 and 2005, the purchasing power of the federal minimum wage actually declined by 9.3 percent when adjusted for inflation. 

This rapid widening in the income gap between the rich and poor was identified in a 2007 report by the Center on Budget and Policy Priorities. The report attributed the trend to tax policies that favor the wealthy. According to Domhoff, other contributing factors include the diminishing political clout of labor unions and decreased expenditure on social services. 

FACT #5: Most Americans have no idea that the wealth distribution is as concentrated as it is, but regardless of their gender, age, income level or party affiliation, they believe wealth should be much more evenly distributed than they think it is

In 2010, Michael Norton of Harvard Business School and behavioral economist Dan Ariely of Duke University surveyed 5,522 Americans about their views on the country’s wealth distribution. They found that most respondents (regardless of their genders, ages, income levels and party affiliations) guessed that the top 20 percent of Americans hold about 60 percent of the wealth (rather than the 85 percent that they actually hold). Survey respondents also guessed that the bottom 40 percent hold between 8 and 10 percent of the wealth in the U.S. (rather than the 0.3 percent that they actually hold).

GOP Presidential Candidate Michele Bachmann Gets Booed and Heckled

Michele Bachmann was invited to speak at the New Hampshire House of Representatives on October 12.  She was among one of the five Republican presidential candidates invited to speak including Gary Johnson, Newt Gingrich, Herman Cain, and Rick Santorum. 

During her speech (video below), she voiced her support for a current right-to-work bill in the state.  In response to her very vocal support of the bill, the opponents heckled and booed her in the chamber while some Republican lawmakers applauded her support. 

What is a Right-To-Work State 

  • Right to work for less doesn’t guarantee any rights. In fact, by weakening unions and collective bargaining, it destroys the best job security protection that exists: the union contract.  
  • Right to work laws lower wages for everyone.  
  • The average worker in a right to work state makes about $5,333 a year less than workers in other states ($35,500 compared with $30,167).  
  • Weekly wages are $72 greater in free-bargaining states than in right to work states ($621 versus $549).  
  • Working families in states without right to work laws have higher wages and benefit from healthier tax bases that improve their quality of life. 

The Precipice Of Economic Failure

Do Republicans really care if the economy takes a tumble? Do they care if families are unable to send their kids to college, if public schools are unable to adequately teach our children, if the shrinking middle class have wages that are stagnant on top of the fact that healthcare costs are increasing, college tuitions and food prices are sky rocketing and having an effect of lowering wages even more? 

No. Their stance on this debt ceiling debate is proof positive (not to mention Eric Cantor’s portfolio is increasing on the fact that the debt ceiling hasn’t passed). Washington Post columnist Eugene Robinson put it best.

There’s no dispute about where we need to go. The question is what path to take.

Clearly, the federal government cannot continue spending at a rate of 25 percent of GDP while taking in revenues that equal less than 15 percent of GDP, as is the case this year. We would reach the point where debt service crowds out health care, education and other priorities dear to progressives’ hearts. Major investments the nation desperately needs to make — for infrastructure and energy research, for example — would be impossible. Decline would be inevitable. 

The way to avoid this dystopian future is to bring spending and revenues more into balance. Yes, there will be some pain and sacrifice. But it is not necessary — nor is it wise — to heap a disproportionate share of the burden onto the backs of the poor, the elderly and the battered middle class.

Economists around the United States of both parties are all in agreement that the GOP’s stance of only cutting entitlements without raising revenue does nothing but hurt this economy. In order to turn this economy around, we need to employee people who are then able to spend money, which in turn will help businesses and help create more jobs.

Their plan for resolution to our financial crisis, cut as many government jobs as possible, cut our social safety net (Medicare, Medicaid, and Social Security) is not the right plan.  

The fact is, corporate tax rates that are being protected by GOP, and the loop holes used by the wealthiest in this country to skirt around the IRS and pay virtually no taxes is where we need to look. 

The nominal corporate tax rate of 35 percent is a joke, since big corporations don’t actually pay that much; those loopholes, too, could be eliminated. Then we could look at measures that would have broader impact — say, hiking or eliminating the income cap for Social Security payroll contributions. 

The point is that it doesn’t take much imagination to get within shouting distance of $2 trillion in deficit reduction over 10 years — looking at the revenue side alone. That’s half of the $4 trillion that both Republicans and Obama have set as a target. 

There would have to be an equal amount of spending cuts. But what sense does it make to begin with the small slice of the pie — less than 20 percent — that is being called “discretionary” spending? It’s just not possible to find enough savings there. 

Also, Eric Cantor’s plan for all cuts without revenue increase is counterintuitive. In Steven Benen of Washington Monthly’s latest op-ed he writes how this plan is wrong for our economy.

The more pressing problem with Cantor’s contention is that it’s largely Keynesian — and Cantor hates Keynesian economics. Jon Chait had a good item on this. 

[I]f you think the state of the business cycle should influence your fiscal policy, then you should oppose any spending cuts at all, and the tax cuts you support should be as progressive as possible. Alternatively, if you’re worried about the incentive effects of tax cuts on business and the rich, then you don’t care about whether unemployment is high or low at any particular moment. Cantor’s position, which is the universal Republican position, is pure nonsense by absolutely any standard, including the most conservative standard. 

That’s even aside from the fact that nobody is proposing an immediate tax hike. Democrats are perfectly happy to phase in any tax increase slowly. Cantor’s argument is nonsense economics piled on top of a factual misrepresentation.

Most of Cantor’s arguments are.

Regardless, Chait’s point is an important one. Why does Eric Cantor oppose any and all tax increases? Because, as he sees it, the economy is weak, and if there are tax increases, it would take money out of the economy and put into the Treasury. That would be wrong, Cantor believes, because we want that money in consumers’ hands, generating economic activity. 

In the next breath, Cantor then argues that he also wants spending cuts, taking money out of the economy and putting it into the Treasury.

Do you see the disconnect? Well, you probably do, but the Majority Leader doesn’t.

Let’s put this another way: the policy reasoning that tells Eric Cantor that tax increases are a bad idea is the same policy reasoning that makes sweeping budget cuts a bad idea, too.

The fact is Republicans are sending us down a path of economic despariety. The median income of middle and lower classes have stagnated and with their proposed cuts will further reduce incomes and make things like college for our children an impossibility.

Only a select few are feeling the effects right now, but I hope it will not come for the majority of Americans to feel these repercussions before we realize the disastrous path our choices have taken us down.

Republican’s Corporate and Individual Tax Cuts, Job Creation and Wages

In order to raise the debt ceiling which will prevent America from defaulting on our debt, Republicans are insisting on cutting spending by slashing entitlement programs like Medicare and Medicaid while at the same time refusing any revenue increases like ending subsidies on gas and oil or tax increases on the wealthy and corporations. The blanket reason for this they say is raising taxes on the “job creators” will have a negative effect on our economy and will not create new jobs. 

Well, I am here to tell you that is simply wrong. If keeping the tax rate on the above mentioned people at the lowest levels in decades created jobs, the previous decade should have had a plethora of job creation. That would mean our jobless rate should be well below 5% (now it is maintaining at around 9%, however, in minority communities it is much higher). The fact is, under the Bush tax cuts, job creation has been at its lowest.  (click to enlarge graph below)

Also, the wages for the middle and lower classes have stagnated. Pat Garofalo reported:  Over the 2000 to 2009 period, workers experienced a “lost decade,” with incomes falling by nearly five percent and wages hardly growing at all. And according to Jed Graham, the last decade in terms of real wages was actually worse than the Great Depression: 

The increase in total private-sector wages, adjusted for inflation, from the start of 2001 has fallen far short of any 10-year period since World War II, according to Commerce Department data. In fact, if the data are to be believed, economy wide wage gains have even lagged those in the decade of the Great Depression (adjusted for deflation). Over the past decade, real private-sector wage growth has scraped bottom at 4%, just below the 5% increase from 1929 to 1939, government data show. 

CEO Salaries and the Middle Class

USA Today reported on a study that found CEO pay has climbed back to the pre-recession level; however, pay for the newly employeed are not meeting living standards of $30,000 a year based on a study from Wider Opportunities for Women.

“Too few American families are living in economically secure households, with most workers unable to stretch their incomes over basic expenses and savings,” Joan Kuriansky, executive director of WOW said in a statement. “The American Dream of working hard to support your family is being rewritten by the growth of low paying industries and rising expenses.”

On top of falling wages, the programs that usually help keep a family out of poverty, Head Start, Childcare Assistance Program, WIC, are being cut at the state and national levels at an alarming rate. This will hit single parents the hardest, which by a large percentage tend to be women.

This is happening while CEO’s salaries of the very companies that our tax dollars bailed out have jumped 27% in 2010. Meanwhile middle class workers pay grew only by 2%. This is according to the Bureau of Labor and Statics.