In this issue, the inequality of social security, poking holes in the safety net, more on the minimum wage, and gutting shareholder resolutions.
Over at the LA Times, Michael Hiltzik looks at the findings of a recent Congressional Research Service report showing a gap in life expectancy between rich and poor people and discusses why that gap is making social security less progressive:
What's happened is that longevity for those in the bottom 20% has stagnated or even moved backward, while it has soared for those at the top. The National Academy calculated that for those born in 1930, males in the bottom 20% who reached age 50 had a life expectancy of 76.6; those with the same characteristics born in 1960 could expect to live only to 76.1. Among the top 20% of income earners, males born in 1930 could expect to live to 81.7, while those born in 1960 could expect to live to 88.8. In other words, a longevity gap of just over five years between rich and poor born in 1930 widened to nearly 13 years for those born in 1960. A similar pattern can be found among women.
What does that have to do with Social Security? The program is structured to give lower-income workers a higher share of their career incomes in retirement than wealthier workers get, a measure known as the replacement rate...But the widening gap in life expectancy throws that balance out of whack. Leaving aside the shame of a national economy that finds ever so many ways to increase inequality between rich and poor, the CRS observes that “policy proposals that increase the retirement age will tend to skew Social Security benefits toward higher earners.” That’s exactly the opposite of what national policy should be aiming for.
In the American Prospect, Harold Meyerson had this to say about the report:
No one can look at these numbers and argue with a straight face that America isn’t riven by chasms of class that have grown steadily wider since the broadly shared prosperity of the postwar decades—a creation of New Deal reforms and a vibrant union movement—has faded into memory. To have been born in 1930 means to have spent young adulthood and middle age in the one period of U.S. history when median income rose steadily. To have been born in 1960 means to have spent young adulthood and middle age in a period when median income no longer rose at all, in which income flatlined save for the wealthy, who saw major income increases. For most Americans, the presidency of Ronald Reagan and the rise of global capitalism ushered in an age—which we have yet to exit—of stagnant incomes and, for many Americans, stagnant or declining lifespans.
Meanwhile, Salon's Erin Keane argues that inequality drives economic anxiety both real and imagined:
As a new book by social psychologist Keith Payne explains, the narratives aren’t mutually exclusive or necessarily contradictory. In “The Broken Ladder: How Inequality Affects the Way We Think, Live and Die,” Payne explains the research that shows that inequality can predict outcomes previously associated solely with poverty, such as higher infant mortality rates, lower life expectancies and higher rates of obesity. Areas with a larger wealth gap tend to have more of these problems than those with more homogeneous standards of living.
Even more relevant to the question of “economic anxiety” is the research that shows perceptions of inequality are just as important as actual numbers. When people feelpoor — regardless of whether or not they objectively are — they exhibit risk-taking behavior and act in their short-term interests. When they feel richer, they practice delayed gratification and plan ahead.
Turning to politics, the GOP's plans for the safety net should worry poor folks, Politico's Rachel Bade and Sarah Ferris:
The proposal, which would be part of the House Budget Committee's fiscal 2018 budget, won't specify which programs would get the ax; instead it will instruct committees to figure out what to cut to reach the savings. But among the programs most likely on the chopping block, the sources say, are food stamps, welfare, income assistance for the disabled and perhaps even veterans benefits. If enacted, such a plan to curb safety-net programs — all while juicing the Pentagon’s budget and slicing corporate tax rates — would amount to the biggest shift in federal spending priorities in decades.
The Nation's Robert Borosage argues that the Trump administration is "making life worse for the middle class"--whether we are talking jobs, healthcare or retirement:
Trump’s budget makes childcare more expensive, and cuts after-school and summer programs. He’s joined with Republicans in Congress to repeal occupational protection rules for miners and construction workers. He has called for cuts in everything from education to protection of clean air and clean water. He would cut the Department of Labor budget by 20 percent, dramatically reducing enforcement of worker rights, occupational health and safety laws, and protection against wage theft. The Economic Policy Institute’s report on Trump’s first 100 days provides a more detailed indictment.
In a bit of hilarity, an Australian real estate billionaire admonished young people for shelling out money on avocados rather than pinching pennies for a house, reports Jennifer Calfas in TIME. "Millennial spending habits have been analyzed from all angles and according to Goldman Sachs researcher Lindsay Drucker, young people place value over convenience and prefer experiences over big-ticket items like homes and cars." Speaking of housing, Brandeis Professor Thomas Shapiro looks at the way in which the tax code privileges homeowners and promotes inequality:
Federal housing programs began in the 1930s with public housing developments owned and operated by the government. Over time, these original efforts have been joined by a large number of other programs that subsidize privately built and operated housing developments and provide housing vouchers for tenants to live in private units of their own choosing. In all, we devote about $40 billion a year to means-tested housing programs for low-income and homeless families.1 By contrast, in 2015, the public invested $205.6 billion in home ownership. Over the six years from 2012 to 2017, $1.2 trillion will have been dedicated to subsidize home ownership, mostly through the mortgage interest tax deduction that permits home owners to deduct from their tax liability the interest paid on their mortgages.2 We invest five times more public money in home ownership for families that can afford homes than in decent, affordable housing for those who cannot.
This week the New York Times editorial board to lambast two states' attempts to end wage hikes agreed to by some cities. "In both states, lawmakers who are fighting to keep wages low, benefits measly and localities subservient to the states are doing the bidding of their corporate backers. But political momentum favors higher minimum wages, because low-wage workers are increasingly unable to survive on prolonged, lousy pay."
Over at Demos Sean McElwee says that raising the minimum wage is a winning strategy:
[T]he minimum wage hike is quite popular, gaining 68 percent support across the general population. In today’s polarized politics, few policy changes garner similar levels of support. The policy was more popular among non-voters (74 percent support) than voters (65 percent). Support for a higher minimum wage is strong across all races. Indeed, it’s even popular among those earning more than $50,000 a year. High-income whites were the least supportive (59 percent) and low-income African Americans the most supportive (91 percent).
Meanwhile a recent report from the Economic Policy Institute looks at the problem of wage theft:
Wage theft is the failure to pay workers the full wages to which they are legally entitled. As explained in Meixell and Eisenbrey (2014), “in essence, it involves employers taking money that belongs to their employees and keeping it for themselves. Amounts that seem small, such as not paying for time spent preparing a work station at the start of a shift, or cleaning up at the end of a shift, can add up.”...In the 10 most populous states in the country, 2.4 million minimum-wage-eligible workers report being paid less than the applicable minimum wage in their state. This represents just over 4 percent of all eligible workers in these states. Of course, minimum wage policy is most relevant for workers at the bottom of the wage distribution, and these 2.4 million victims of minimum wage violations make up more than 17 percent of all low-wage workers who are eligible for the minimum wage.
In the National Review, Rich Lowry argues that fears of robots and job destroying technological innovations might lead to stagnation:
The only way to raise our standard of living is to increase productivity, which is impossible without innovation. This process always destroys some jobs but, by raising wages and cutting prices, makes it possible for new jobs to spring up in their place. This, in a nutshell, is the story of the American economy, as Robert Atkinson and John Wu describe in a new study for the Information Technology & Innovation Foundation. It’s not a tale of stasis but of gales of technological change constantly making the economic landscape anew...We can argue about the best ways to train higher-skilled workers or to cushion the blow to workers of economic change, but technophobia is a formula for stagnation. If we survived the advent of cars, the telephone and electric lighting — truly revolutionary changes around the turn of the 20th century — surely we can endure whatever transformative innovations that will, once again, make our economy and workers more productive than ever.
Occidental shareholders, lead by the Nathan Cummings Foundation and supported by Blackrock, overrode the company's board to pass a climate change reporting resolution, reports Dow Jones. "The Nathan Cummings Foundation, which led the proposal along with Wespath Investment Management, said Friday's passing vote puts the oil-and-gas industry on notice that investors are looking more seriously at climate issues. 'It's hugely significant," said Laura S. Campos, director of corporate and political accountability at the Nathan Cummings Foundation. 'It's the first, but it's not going to be the last.'"
Impact Alpha's Jessica Pothering looks why shareholder resolutions are under threat by the Trumpa administration and members of Congress:
The legislation would require shareholders to own one percent of a company’s shares for three years in order to propose resolutions, a sharp increase from today’s threshold of $2,000 in shares.
The New York State Common Retirement Fund, called it “outrageous and inequitable that we would not be able to make requests of corporate boards through shareholder resolutions,” according to New York State Comptroller Thomas DiNapoli, a trustee.
Also in Impact Alpha, David Bank looks at the work of the Calvert Foundation on their community investment notes. "Calvert’s new line of business is part of a broader effort among impact investing pioneers to establish effective “intermediaries” to smooth the investment process for both investors and enterprises. In addition to syndication, initiatives are underway to provide liquidity, risk-mitigation, credit-rating and securitization — all elements of a mature and well-functioning market."
In the Stanford Social Innovation Review, Judith Rodin and the Open Road Alliance's Laurie Michaels looks at the need for funders to embrace and fund contingencies as part of their overall strategies:
About 15 years ago, funders generally stated “impact” as their goal, without any standard definition or best practices for impact measurement. The word was widely used but poorly understood. As such, its usefulness for our sector was limited. Now, there is a consensus about the differences between output, outcome, and impact; the words have distinct meanings, and therefore they’re useful across the sector. Today, we see “risk” in much the same way that impact was viewed 15 years ago. Many funders like to describe themselves as “risk taking,” but in the absence of a common definition and frameworks for best practices, these statements are difficult to evaluate at best, and meaningless at worst...
Once the topic is broached, funders can inquire about risk on the grantee side by including at least one risk-related question in the RFP. Asking such a question opens a channel for a transparent conversation about risk, and the applicant’s responses will help foundations assess whether a mutual fit exists.