Perdido 03

Perdido 03

Wednesday, October 3, 2012

Bloomberg News: Top 1% Got 93% Of The Income Gains In 2010

Somebody from Bloomberg News should tell Bloomberg himself - the U.S. has less social mobility than Uganda:

The 1.2 million households whose incomes put them in the top 1 percent of the U.S. saw their earnings increase 5.5 percent last year, according to estimates released last month by the U.S. Census Bureau. Earnings fell 1.7 percent for the 96 million households in the bottom 80 percent -- those that made less than $101,583.

The recovery that officially began in mid-2009 hasn’t arrived in most Americans’ paychecks. In 2010, the top 1 percent of U.S. families captured as much as 93 percent of the nation’s income growth, according to a March paper by Emmanuel Saez, a University of California at Berkeley economist who studied Internal Revenue Service data.

The earnings gap between rich and poor Americans was the widest in more than four decades in 2011, Census data show, surpassing income inequality previously reported in Uganda and Kazakhstan. The notion that each generation does better than the last -- one aspect of the American Dream -- has been challenged by evidence that average family incomes fell last decade for the first time since World War II.

Of course the Mayor of Money blames income inequality on teachers and schools, so it's doubtful this story on his own news website would upset him too much.

A retired CEO from American Airlines sees the problem, however:

“Income inequality of the scale we have today is destroying our democracy,” retired American Airlines CEO Bob Crandall said in an interview. Crandall, 76, says he became so frustrated at what he sees as selfishness among his peers that he started writing a blog on his Lenovo laptop. “Anyone else willing?” he titled his first entry in August 2011, which argued that people should pay higher taxes.


Crandall, the former American Airlines CEO, said that while his blog isn’t a “burning success” -- he’s heard from 50 readers -- he feels compelled to write about income inequality, taxes and CEO pay. “I wake up every morning and read the newspapers and fly into a rage,” he said. Growing up in Rhode Island during the Great Depression and World War II, he felt a sense of collective effort that’s missing now, he said.
“The whole notion of responsibility kind of went away,” Crandall said. “If the boss is going to get a bonus, then everybody in the company ought to get a profit-sharing check.” 

 The corporate criminal running Caterpillar does not see the problem, however:

Caterpillar Inc. (CAT) made headlines this year for resisting wage demands at a plant in Joliet, Illinois, after reporting a record $1.7 billion in second-quarter profit. Machinist Kathy Keifer, 56, started there in 1994 after a friend in a geometry class at Joliet Junior College raved about the opportunities. She said she was trained in welding, machining and assembly, and by 2007, was making $25 an hour, enough to support a daughter as a single parent. After a career detour as a real estate agent, she said she returned in 2010 to a changed employer.

Joliet machinists, who make $14.74 to $25.88 an hour, in August accepted a six-year contract that provided no pay increase for those hired before May 2005. Workers hired later receive a one-time 3 percent pay raise or “market-based” increases, whichever is higher. Employees also got a $3,100 signing bonus.

Compensation for Caterpillar’s CEO, the 37-year company veteran Douglas Oberhelman, rose 60 percent to $16.9 million last year. Keifer said that over the next six years, the most she can expect is a 55-cent increase from $17.39 an hour.

“At $25, I was feeling pretty good, definitely middle class,” she said. “Now it’s like the bottom’s giving out.” As the strike depleted her savings, Keifer put off plans to buy a two-story frame house for $99,000 in Joliet.

“I don’t see what good it does our country if companies are hiring at minimum wage,” she said.
Caterpillar takes a “market-based approach” for all employees, and comparing a production worker’s pay to the CEO’s isn’t valid, said Rusty Dunn, a spokesman for the Peoria, Illinois-based company. The contract is fair and necessary to keep the company competitive globally, he said.
“It is not in anyone’s best interests to have the type of labor agreement suited to something you would see years ago,” he said.

Keifer’s postponed home purchase helps explain one factor limiting job growth: Americans don’t have the income to spend as much as they used to. Although U.S. consumer spending climbed to its highest level in four years in August, according to Gallup surveys, it still lags 2008 levels by more than 20 percent. Most of the spending came from higher-income households. 

The CEO gets a 60% raise, the worker gets a 55-cent raise over six years.

That's America today.

Less social mobility than Uganda.

That says it all, doesn't it?

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