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Pandemic reveals tale of 2 Californias like never before

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As Bay Area tech workers set up home offices to avoid coronavirus exposure, grocers, farm workers and warehouse employees in the Central Valley never stopped reporting to job sites. Renters pleaded for eviction relief while urban professionals fled for suburbs and resort towns, taking advantage of record-low interest rates to buy bigger, better homes. Most of the state’s 6 million public school children are learning remotely, while affluent families opted for private classrooms that are up and running.

California has long been a picture of inequality, but the pandemic has widened the gap in ways few could have imagined. While other states face large budget deficits, California has a $15 billion surplus, thanks to record 2020 gains from Silicon Valley and white-collar workers who pay the bulk of California’s taxes.


Gov. Gavin Newsom unveiled the state’s record-high $227 billion budget last week despite a year in which unemployment soared beyond 10 percent and the homelessness crisis reached devastating levels in Los Angeles and beyond.

He has proposed directing much of California’s bounty toward struggling residents and low-income families, and it remains to be seen whether the state will continue to reap similar tax rewards in future years. If this is a onetime windfall, Newsom and lawmakers will have to find other resources to sustain additional aid — and face pressure to raise tax rates even more on the wealthy.

“There’s a way in which the pandemic has amplified all of these systemic and societal issues we were always aware of,” said Brandon Greene, director of the racial and economic justice program at the ACLU of Northern California. “These gaps persist and are widening. And if it can happen here, in a blue state where you have the political capital, it can happen anywhere.”

California’s low-income workers and people of color have borne the brunt of both the economic fallout of the recession and the physical toll of the virus itself. The Latino Covid-19 death rate is 22 percent higher than the statewide average, and the Black death rate is 16 percent higher, according to California’s health equity tracker.

Even before the pandemic, ZIP codes home to just 2 percent of California’s population held 20 percent of the state’s net worth, according to the nonpartisan Legislative Analyst’s Office. In 2020, more than 40 percent of households making less than $40,000 annually saw reduced work hours or pay, and an equal share had to cut back on food, according to the Public Policy Institute of California.

“Decades-long inequalities, those preexisting conditions around race, around ethnicity, the preexisting conditions around wealth disparities and income disparities, obviously have come to the fore and must be addressed,” Newsom said while outlining his budget proposal last week.

Moments later, he made a stark proclamation about how the other side is doing: “The folks at the top are doing pretty damn well.”

Newsom, 53, is a multimillionaire businessman in addition to being governor, and his own personal life has punctuated the extreme differences in California. His dinner at the French Laundry in November not only enraged the public for his flouting of his own advice against gathering; it served as an optics problem with menu prices that many Californians cannot afford even in normal times. Newsom sent his own children back to private classrooms in late October while most families were stuck in remote learning. When he had to quarantine in November, he said he was “blessed because we have many rooms” in his Sacramento County home.

However, the Democratic governor has prided himself on bridging the equity gap and has branded his efforts as “California for All” since taking office two years ago. He appointed the state’s first surgeon general, Nadine Burke Harris, who has focused her career on addressing childhood trauma in disadvantaged communities and led vaccine discussions mindful of equal distribution. Newsom has pushed hard to reopen public schools this spring because he says students in low-income neighborhoods are struggling the most with distance learning.

Newsom has proposed $600 state stimulus checks to nearly 4 million low-income workers as part of his budget plan. He launched an effort to shelter tens of thousands of homeless Californians in hotel rooms when the outbreak began and then transitioned toward a program that would convert that into permanent housing. He helped enact renter protections from eviction and wants to extend those protections.

Californians saw an array of relief in 2020, as all levels of government tried to lessen the burden. Children who live in communities that have long gone without broadband and quality internet access received hotspots and other Wi-Fi access. Cities stopped using parking tickets and towing as a way to bring in revenue. More lower-level offenders were freed from prisons and jails after virus outbreaks.

Advocates say the jarring juxtaposition in the pandemic, as the state’s richest got richer and its poor got poorer, prove it’s not enough. They are lobbying Newsom and the Legislature to use California’s unexpected windfall to help the state’s neediest by expanding the social safety net and to turn temporary relief granted during the pandemic into permanent solutions. They worry that momentum is already losing steam, and that things will revert to normal when the vaccine reaches the masses and Covid-19 is in the past.

“These things that were implemented as a kind of lifeline are now expiring and folks still need it,” said Jhumpa Bhattacharya, a vice president at the Insight Center for Community Economic Development based in Oakland. “We live in a society where we don’t believe in government intervention, and there’s this narrative that you can pull yourself up by your bootstraps. When the pandemic hit, we saw that’s not true, and my hope is that we will be able to develop a new understanding of how our society works.”

California Democrats have proposed bigger taxes on the ultra-rich as a solution, with groups like the California Teachers Association pushing last year for legislation to hike taxes for residents with more than $30 million in assets. That bill failed, but Assemblymember Luz Rivas (D-Arleta) just proposed raising taxes on corporations by $2 billion to fund housing for people experiencing homelessness.

Newsom made clear last week that he will not entertain major tax proposals, declaring “they’re not part of the conversation.” The pandemic’s remote work culture has shown information-based companies that office location may not matter as much as once thought, while California’s high housing costs, regulations and taxes are a deterrent.

Further taxing the rich is proving to be a political risk and a threat to the very system that makes it possible for California to thrive even in dark times. Just last month, Oracle and Hewlett Packard Enterprise announced they were moving their headquarters to rival state Texas. Elon Musk, now the richest person on the planet, also said he was moving to the Lone Star State, though his company Tesla will remain in California.

“There’s about 1 percent of taxpayers that pay half the income tax in the state, and the reason why state revenues have been so strong is that those taxpayers had a very good year. As long as those people are willing to stay in California and be taxed, the money will come in,” said David Shulman, senior economist emeritus for the UCLA Anderson Forecast. “But there is a point where they will say it doesn’t work anymore. The question is, are we at a tipping point? There’s certainly more evidence that we are getting close to it.”


The last major tax hike in California was a 2012 voter-approved tax on residents making more than $250,000 championed by Gov. Jerry Brown, which voters later extended through 2030. Voters in November, however, rejected a ballot initiative to tax commercial properties at their current value, which would have generated up to $12 billion more annually.

Advocates say another tax hike is overdue, but even without one, the state could change its priorities to make better use of its billions.

“It’s all very frustrating, since with the fifth largest economy in the world, these things are fixable. The money is there,” said Courtney McKinney, spokesperson for the Western Center on Law and Poverty. “It is a question of priorities — whether or not millions of people being plunged into poverty is seen as enough of a destabilizer to encourage the wealthy, business and political class in California to put money into addressing poverty and the trappings of poor environment in smart, sensible ways. Easier said than done.”

Assemblymember Alex Lee (D-San Jose), a coauthor of legislation to extend the eviction moratorium for another year, said resistance to more permanent solutions to help low-income residents is a reminder that California is not as progressive as it claims to be.

In the November election, California proved it’s not the liberal bastion people think it is. Besides rejecting the business property tax increase, they opposed affirmative action and rent control while they sided with gig employers and dialysis companies instead of labor unions.

“Whether or not people should be evicted during a pandemic in a recession … even just having to fight about that says we aren’t where we should be yet,” Lee said. “I think a lot of people are realizing this stuff, and that even though we have Democratic super, ultra majorities, we aren’t living up to the progressive potential we have. I would never characterize us as progressive state.”

This blog originally appeared at Politico on January 17, 2021. Reprinted with permission.

About the Author: Mackenzie Mays covers education in California. Prior to joining POLITICO in 2019, she was the investigative reporter at the Fresno Bee, where her political watchdog reporting received a National Press Club press freedom award.


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Biden’s big challenge: A growing racial wealth gap

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When he takes office on Jan. 20, Joe Biden will face a gap between Black and white wealth that has grown into a yawning chasm during the past 10 months.

The pandemic has shuttered tens of thousands of businesses and left millions out of work. And communities of color have borne the brunt of the economic devastation, particularly Black-owned businesses that have failed at a far greater rate during the pandemic than white-owned businesses. Many that remain may not survive the current pandemic wave without significant help from the federal government before effective vaccines finally arrive.

Biden’s presidency may rise or fall on his ability to execute policies — possibly with a GOP majority in the Senate — that address systemic economic inequality, which often leaves Black families and businesses far more vulnerable to economic shocks. Black families have faced a well-documented pattern of financial discrimination that has stymied their ability to accumulate wealth at the same rate as white families, forcing them to live in neighborhoods with fewer resources. For example, they are denied loans at much higher rates than white families with similar credit profiles — and face higher interest rates when they do qualify.

Biden won the White House with enormous help from African American voters, which he acknowledged in his victory speech: “The African American community stood up again for me. They always have my back, and I’ll have yours.”

Now, his supporters say, he must deliver.

“Had it not been for Black people it would have been difficult for [Biden] to win,” said Ron Busby, president, CEO and founder of the U.S. Black Chambers. Busby said the pandemic exposed inequalities that have long existed: Black people were more likely to get the virus and die from it, more likely to be forced to go into work and less likely to be eligible for federal stimulus programs designed to prop up the economy.

“We’ve got to fix that and hold this administration accountable so we can provide opportunities for our own,” he said.

People close to the Biden transition team say targeting the higher rate of Black-owned business failures — and the racial wealth gap more broadly — will be a central focus of the new administration. Early measures to target the problem will likely include language in any new stimulus package aimed at making sure money from the Paycheck Protection Program, which is focused on aiding small businesses, goes to firms that may not have gotten access to previous funds, especially minority-owned businesses.

“The administration really needs to think creatively to make sure aid gets to some of these small businesses that have been hit so hard,” one person close to the transition said on condition they not be identified because they were not authorized to speak publicly. “We can’t leave them behind. It’s got to be better than what happened before.”

Despite Biden’s intentions, he’ll face significant roadblocks, including a divided Congress, a range of pressing priorities and a problem that has deep historical roots. New census data out this week showed white households with median wealth of $171,000 compared with $25,000 for Hispanic households and $9,567 for Black households in 2017. That gap has only widened among people with college education: Families headed by a college-educated Black person saw their wealth decline by nearly half compared with families headed by a college-educated white person between 1989 and 2016, according to the Federal Reserve Bank of St. Louis.

“The Biden administration can certainly begin to do this work and begin to support policies that will eliminate racism and discrimination in our economy,” said Rep. Maxine Waters, (D-Calif.) who chairs the House Financial Services Committee. Waters said that more banks and other financial institutions have been receptive to addressing the wealth gap and ending lending discrimination since George Floyd’s death in May. “But it certainly is not something that in a few months or a few years, all of a sudden, he’s going to be able to wipe away all the instances and ways by which inequality has grown and developed.”

Many federal government programs created in the stimulus package are set to expire at the end of the year including an eviction moratorium, enhanced unemployment benefits and the Paycheck Protection Program. Black business owners and worker groups say they were largely shut out of the $2 trillion CARES Act.

From April to June of this year, 13 percent of jobless Black workers received unemployment benefits, compared with 22 percent for Hispanic workers and 24 percent for white workers, according to analysis from Nyanya Browne and William Spriggs at Howard University. (Their analysis was based on survey data from the National Opinion Research Center at the University of Chicago.)

Spriggs, also chief economist at the AFL-CIO, said Black people are more likely to work in service industry jobs not covered by unemployment assistance programs and live in Southern states that were slow to roll out benefits. He said that to address the imbalance Congress and the new administration would have to redesign unemployment insurance programs instead of just renewing the current program when it lapses at the end of this year.

“We are going to have a long period of a very disrupted labor market,” Spriggs said. “They have to think, ‘Am I just going to patch this up? Or do I conceive of something different.’” If all they do is put it back together, Spriggs said, they’ll just end up replicating existing inequities.

In addition PPP funds haven’t reached Black businesses owners, which have been especially hard hit because of pandemic related shutdowns and a drop in demand. Between February and April of this year, 41 percent of Black-owned businesses closed, compared with 17 percent of white businesses, according to the New York Federal Reserve.

That’s likely because Black-owned businesses often have thinner financial cushions. According to Goldman Sachs, 43 percent of Black-owned businesses expect cash reserves to be gone by the end of this year without more stimulus from Washington. Overall, that number is 30 percent.

But the problem with using PPP is that the program relies on banks as intermediaries to distribute capital. And Black-owned businesses often don’t have relationships with banks participating in the program.

“There are things implicit in PPP that are detrimental to Black businesses,” said Darrick Hamilton, founding director of the Institute for the Study of Race, Stratification, and Political Economy at The New School. “Using banks as an intermediary won’t help if you don’t have a strong relationship with a commercial bank. It’s a justice issue. Black people should have the same access to capital as white people.”

Hamilton suggested the administration focus on direct grants to heavily impacted minority-owned businesses, either through new legislation or through the Small Business Administration.

Breaking up big companies is another area progressive economists want the Biden administration to pursue. Outside of going after big tech giants the president didn’t like, the Trump administration did not prioritize legally targeting some of the nation’s largest and most dominant companies such as Amazon and Facebook. But those who study the racial wealth gap suggest that the concentration of growth in a smaller number of very large companies is a critical factor in driving inequality.

“For small businesses to thrive you need to have a robust antitrust agenda,” said Heather Boushey, president and CEO of the Washington Center for Equitable Growth. “It’s a super important and under-recognized factor. There is lots of empirical evidence that these things are connected.”

The Biden administration can also take steps to address the wealth gap even if Congress doesn’t cooperate. One way to tackle it is through federal contracting. Federal officials could reverse a Trump administration policy of not sharing which firms get federal funds and reinstate an Obama administration policy of paying suppliers upfront for contracts.

John Rogers, co-CEO of Ariel Investments, said there should be more transparency around how federal funds are spent. The federal government should track contracts by race and category to ensure that Black-owned businesses are getting deals for professional services — and not just contracts forjanitorial or other low-margin industries. What’s more, Rogers said, the administration should use their bully pulpit to ensure private companies are doing the same.

When the state of Illinois mandated diversity in company boards, more Black executives benefited from new opportunities, Rogers said.

“A lot of companies had a Jackie Robinson moment,” he said. But even forcing companies to be transparent about who gets contracts and sits on boards can create more diversity.

“Then pressure builds to move into the 21st century,” Rogers said. “And do the right thing.”

This blog originally appeared at Politico on November 18, 2020. Reprinted with permission.

About the Author: Renuka Rayasam covers Texas politics, policy and health care for POLITICO. Rayasam grew up outside of Atlanta, Ga. She studied political economy and German at the University of California, Berkeley and has a Master of International Affairs from Columbia University.


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Voters pass pro-worker laws where the Congress lags, this week in the war on workers

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The presidential and Senate elections were the headlines on Tuesday and through the rest of the week, but it’s worth noting a few key places where voters said yes to ballot measures making life a little better for working families. In Florida, voters passed a $15 minimum wage amendment. It phases in very slowly, not reaching $15 until 2026, but it’s progress. If you’re wondering WTF is going on with more than 60% support for a minimum wage increase while Donald Trump won the state, welcome to Florida. The state’s voters did the exact same thing in 2004, voting for George W. Bush and a minimum wage increase.

Colorado voters passed paid family leave. The state legislature had failed to pass such a bill, so organizers took it to the voters, and won. The law, which doesn’t go into effect until 2024, will provide up to 12 weeks of paid leave at between 65% and 90% of their pay, up to $1,100 per week. It’s funded by a payroll tax.

And Arizona voters approved a tax on high-income households that will raise hundreds of millions of dollars for education. That comes after Arizona teachers went on strike for school funding in 2018.

This blog was originally published at DailyKos on November 7, 2020. Reprinted with permission.

About the Author: Laura Clawson is labor editor at Daily Kos.


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Women of color suffer as coronavirus takes existing economic inequalities and doubles down on them

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The coronavirus economy is crushing women, people of color, and especially women of color. While the economy added 661,000 jobs between August and September, 865,000 women dropped out of the paid workforce. White women have recovered 61% of the jobs they lost in the early months of the pandemic, while Black women have recovered just 39%. As of a September 30 report in The Washington Post, less than 45% of mothers of children aged six to 12 have gotten back jobs they lost, while fathers of children in that age group have seen employment rebound 70%. Workers with college degrees have gotten back 55% of lost jobs, while for workers with high school degrees it’s less than 40%.

The devastation to state and local government jobs—particularly in education—and to the childcare industry has hit women particularly hard, putting many out of work—and then, in turn, women in other industries feel the squeeze because their kids are at home and household labor and childcare fall disproportionately on them.

Unemployment actually rose among Latinas in the most recent jobs report, going from 10.5% to 11%, and Latinas accounted for 324,000 of the women dropping out of the workforce. Though unemployment among Black women is just as high, at 11.1%, only 58,000 Black women dropped out.

This may be just the tip of the iceberg, though. A study published by Lean In “found that one in four women are considering downsizing their careers or leaving the workforce as a result of the damage wrought by COVID-19,” The 19th reported. “It’s the first time in six years of research that the annual study has found evidence of women intending to leave their jobs at higher rates than men.”

In an unequal economy and an unequal society, go figure. The new burdens of a crisis fall hardest on the people already struggling. This is a challenge to the United States and, in particular, to Democrats should they win big in November: What are we going to do to fix this?

This blog originally appeared at Daily Kos on October 5, 2020. Reprinted with permission.

About the Author: Laura Clawson is a Daily Kos contributing editor since December 2006. Full-time staff since 2011, currently assistant managing editor.


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‘Oil on the inequality fire’: How slashing jobless aid could widen the wealth gap

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Congress appears poised to dramatically reduce a federal program that has been providing an extra $600 per week for jobless workers since the spring.

How Congress decides to help the tens of millions of unemployed workers during the pandemic could determine whether the stark gap between America’s rich and poor will continue to widen amid a crisis that has already hit the lowest earners the hardest.

Economic downturns historically have been more damaging for the poor. But in the coronavirus-induced recession, low-income workers are disproportionately dependent on enhanced unemployment benefits in part because shutdowns have wiped out low-wage, in-person job opportunities in industries like hospitality and retail — and have made it dangerous if not impossible to search for other gigs.

More than two-thirds of those earning a salary of less than $25,000 are now out of a job, according to the most recent Census survey data — a number that has risen in recent weeks even as higher-wage sectors have shown potential signs of recovery.

The bottom quarter of wage earners comprise a full third of all recipients receiving jobless benefits, a larger proportion than any other sector, the Congressional Budget Office found. And they are the least likely to have savings to lean on to weather the crisis.

Now Congress appears poised to dramatically reduce a federal program that has been providing an extra $600 per week for jobless workers since the spring, the consequences of which will fall heavily on the lowest-wage employees, economists warn. That could exacerbate already staggering wealth and income divides, which have been growing for decades and which are larger in the U.S. than in any other nation in the G-7, a group of major developed countries. And it could hurt workers of color in particular, who are overrepresented in low-wage jobs.

“There’s a great risk that it will compound the existing inequalities,” said Chuck Collins, a director with the Institute for Policy Studies, a progressive think tank. “Depending on how both the emergency stimulus response and recovery are designed, it could throw oil on the inequality fire.”

Spiraling inequality has significant ripple effects, economists say, and could contribute to political and financial instability in the country while worsening the economic recession. Moody’s, the credit ratings service, this month flaggedpersistent and growing racial and income inequalities in the U.S. as “potent forces” that are heightening social risk and could adversely affect the country’s economic and institutional strength.

At the same time, many economists argue that it will become more difficult and expensive for society in the long run to not help the most disadvantaged workers today. Hilary Hoynes, a professor at the University of California, Berkeley who focuses on economic disparities, said children who have a lower quality and quantity of food have lower educational outcomes and less economic well-being throughout adulthood.

“So there’s a way in which not doing enough today is going to cost you more in the future,” she said.

Already, the wealth divide is dramatic: The top 20 percent of the country held more than three-fourths of all household wealth in 2016, according to a Brookings Institution analysis of consumer finance data. The bottom 20 percent held just 2 percent.

The coronavirus crisis is almost certain to worsen that. A May report led by economists from the International Monetary Fund found that recent major outbreaks, including H1N1 and Ebola, worsened income inequality for five years beyond the events. Without “deliberate and strenuous attempts to protect the most vulnerable segments of society,” the coronavirus’ effect on inequality could be greater than previous events, they warned.

Slashing the level of unemployment aid now, when new jobless claims are rising and as data shows roughly one job opening for every four unemployed people, will also hinder a recovery by sparking a drop-off in spending and reducing the amount of money flowing through the economy, analysts say.

As of early July, low-income consumers had cut their spending by just 2 percent from January levels, according to an analysis by Harvard economists, largely because their wages were supported by a combination of unemployment benefits and stimulus checks.

As Congress searches for ways to stimulate the economy, most economists say jobless aid is one of the quickest and most effective ways to get cash directly into the hands of those who need it most. Low-wage workers are likely to spend any aid money immediately. And despite its up-front cost, $1 of spending on unemployment benefits sparked an estimated $1.61 in economic activity during the Great Recession, according to a 2010 report by Princeton University economist Alan Blinder and Moody’s chief economist Mark Zandi.

“If we get people unemployment insurance, if we get people the ability to feed their families, our entire economy comes out better on the other side of this,” said Martha Gimbel, a labor economist with the philanthropic group Schmidt Futures.

Meanwhile, the longer unemployment remains elevated, the more cyclical the consequences of joblessness become for the workers currently dependent on their weekly benefit checks. And the Congressional Budget Office forecast earlier this month that without further federal spending, the unemployment rate could remain heightened for years — not recovering to its pre-pandemic level for more than a decade.

“People aren’t going to be able to pay rent. They could face foreclosure. They may rack up huge credit card debts that will stay with them for years. Their credit rating is going to be affected, and that isn’t easy to fix,” said Michele Evermore, a senior policy analyst at the National Employment Law Project. “It’s incredibly expensive to be poor in the United States.”

Republican lawmakers, who initially opposed any extension of enhanced jobless benefits and remain divided over the path forward, are now pushing for a lower level of additional aid to remain in place. They say the $600 boost too often provides workers with more than they were making while at work and therefore provides a disincentive to return to their jobs.

Sen. John Barrasso of Wyoming, the third-ranking Senate Republican, criticized the “bonus” $600 checks on Wednesday as a “heavy wet blanket on our economy” that will “stop people from getting back on the job.”

“You can’t pay people more to not work than to work,” Barrasso said on Fox News.

Democrats, meanwhile, have already voted to extend the extra $600 a week through the end of January.

Rep. Don Beyer (D-Va.), the vice chair of Congress’ Joint Economic Committee, acknowledged that while that step alone won’t reduce income inequality, “what we want to do is at least not make it any worse.”

“So far we’ve avoided the ‘Grapes of Wrath’ scenario of millions of Americans going hungry — of people losing their homes, people losing their cars, people just desperate,” Beyer said, referring to the John Steinbeck novel about the Great Depression. “That’s what we’re facing if we don’t re-up the unemployment insurance.”

This blog originally appeared at Politico on July 23, 2020. Reprinted with permission.

About the Author: Megan Cassella is a trade reporter for POLITICO Pro.


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The thing about systemic racism is it’s systemic: This week in the war on workers

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According to government statistics, the wage gap between white men and Black men has shrunk dramatically since the 1950s. But that’s only true, The New York Times’ David Leonhardt points out, if you compare workers—and the problem is, a lot of Black men have been pushed out of the workforce, in significant part by mass incarceration. When comparing Black men and white men, regardless of if they work, the wage gap is about the same as it was in 1950. “An end to mass incarceration would help,” Leonhardt writes. “So would policies that attempt to reverse decades of government-encouraged racism—especially in housing. But it’s possible that nothing would have a bigger impact than policies that lifted the pay of all working-class families, across races.” 

It’s the combination of racism and inequality we can see in this pattern that set the stage for the disproportionate impact of the coronavirus on Black people. Black people have been more likely to lose their jobs during the pandemic than white people, but they also disproportionately work at essential jobs that require them to expose themselves to possible infection. They’re less likely to have paid sick leave, the ability to work from home, and health insurance. Racism and inequality produce chronic health problems that make Black people more vulnerable to COVID-19. The list goes on and on and on.

This blog originally appeared at Daily Kos on June 27, 2020. Reprinted with permission.

About the Author: Laura Clawson has been a Daily Kos contributing editor since December 2006. Full-time staff since 2011, currently assistant managing editor.


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America’s Rich Just Scored A Triple Jackpot

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At racetracks all across America, lucky bettors every so often rake in small fortunes when the horses they pick to finish one, two, three — a trifecta — just happen to finish in that order. Last spring at the Kentucky Derby, for instance, a $1 trifecta bet returned a tidy little $11,475.30.

But America’s awesomely affluent don’t have to place any bets to rake in windfalls. They’re essentially hitting jackpots on a daily basis, as a “trifecta” of timely just-released research reminds us.

The first of these three newly released blasts came in late September from the Census Bureau. The gap between America’s haves and have-nots, the new Census data show, has grown “to its highest level in more than 50 years of tracking income inequality.”

The first week in October then brought the second blast, an Institute for Policy Studies analysis on the latest trends in corporate executive pay. In 2018, the IPS report details, 50 major U.S. corporations paid their CEOs over 1,000 times the compensation that went to their most typical workers.

The third blast comes from two of the world’s top inequality scholars. In 2018, economists Emmanuel Saez and Gabriel Zucman inform us, America’s 400 richest households paid taxes at a lower rate than any other income cohort in the nation, the first time that’s happened since the modern federal income tax went into effect in 1913.

The combined federal, state, and local tax rate on the nation’s richest 400 households, Saez and Zucman have calculated, last year fell 2.5 percentage points to 23 percent. In other words, the nation’s richest 400 households paid less than a quarter of their income in taxes.

Households in the nation’s poorest 50 percent, by contrast, paid 24.2 percent of their incomes in combined 2018 federal, state, and local taxes.

These disturbing new numbers appear Saez and Zucman’s new book, The Triumph of Injustice. The book traces how tax rates on the richest of America’s rich have nosedived since the middle of the 20th century. In 1950, the two economists point out, our top 400 households had a combined tax bill that averaged 70 percent of their incomes. A generation later, in 1980, that combined rate took 47 percent — about half — of top-400-household incomes. That rate has since fallen to last year’s 23 percent.

The bottom line: America’s richest used to pay over three times more of their income in total taxes than they do now. The predictable result? America’s richest have become phenomenally richer than they used to be.

The business magazine Forbes began publishing its annual list of the nation’s 400 richest in 1982. The shipping magnate Daniel Ludwig topped that first annual Forbes list. His total fortune: just $2 billion.

Forbes earlier this month released the 2019 ranking of the top 400. The fortune now needed to enter the ranks of America’s 400 richest: $2.1 billion.

Admittedly, we’re not taking inflation into account with this comparison. So let’s do that. Adjusting for inflation, Ludwig — the richest single individual in the inaugural Forbes list — had a 1982 fortune worth $5.3 billion. A stash that size today would rank him just 125th.

In that initial 1982 Forbes 400, America’s richest averaged $230.8 million in net worth each. In today’s dollars, that would come to nearly $633 million. The 2019 top 400 average: $7.4 billion, 32 times the top-400 average net worth in 1982.

Wages for the typical American worker, meanwhile, have been “increasing” on average by less than a half percent a year over the last four decades.

“It’s the economy, stupid,” Bill Clinton’s top campaign guru quipped during the 1992 presidential campaign.

No, it’s the inequality, stupid, the vast gap between the rich and everyone else that’s poisoning nearly every aspect of modern American life, from our crumbling infrastructure to our endangered environment. Hitting an occasional trifecta at the racetrack won’t close that gap. Taxing the rich — and confronting their corporate power — will.

This blog was originally published at OurFuture.org on October 22, 2019. Reprinted with permission.

About the Author: A veteran labor journalist, Sam Pizzigati has written widely on economic inequality, in articles, books, and online, for both popular and scholarly readers. Sam Pizzigati co-edits Inequality.org. Follow him at @Too_Much_Online.


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Income inequality went up again in 2018, and the Republican tax law may have made it worse

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U.S. income inequality continued to grow in 2018, according to new Census Bureau figures. That’s a continuation of a decades-long trend—and a problem several of the Democratic presidential candidates have plans to combat.

The biggest rises in inequality came in Alabama, Arkansas, California, Kansas, Nebraska, New Hampshire, New Mexico, Texas, and Virginia, making increasing inequality a nationwide phenomenon hitting red states, blue states, and swing states across regions of the country. But it’s not something that’s just happening in a vacuum. It’s a product of policy and of choices that giant corporations, unfettered by government, are making to transfer wealth upward. Candidates like Sens. Elizabeth Warren and Bernie Sanders have offered plans from a wealth tax to a $15 minimum wage to strengthening unions to combat the continuing trend. Republicans, meanwhile, are looking for ways to make it worse.

“In 2018 the unemployment rate was already low, and the labor market was getting tight, resulting in higher wages. This can explain the increase in the median household income,” University of Florida economist Hector Sandoval told the Associated Press. “However, the increase in the Gini index shows that the distribution became more unequal. That is, top income earners got even larger increases in their income, and one of the reasons for that might well be the tax cut.”

We’d need more data to know for sure, but we can be sure that it’s an outcome Republicans wouldn’t object to—except selectively during campaign season.

This article was originally published at Daily Kos on September 26, 2019. Reprinted with permission.

About the Author: Laura Clawson is a Daily Kos contributor editor since December 2006. Full-time staff since 2011, currently assistant managing editor.. Laura at Daily Kos

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More U.S. Workers Have Highly Volatile, Unstable Incomes

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The U.S stock market may be at record highs and U.S. unemployment at its lowest level since the Great Recession, but income inequality remains stubbornly high.

Contributing to this inequality is the fact that while more Americans are working than at any time since August 2007, more people are working part time, erratic and unpredictable schedules—without full-time, steady employment. Since 2007, the number of Americans involuntarily working part time has increased by nearly 45 percent. More Americans than before are part of what’s considered the contingent workforce, working on-call or on-demand, and as independent contractors or self-employed freelancers, often with earnings that vary dramatically month to month.

These workers span the socioeconomic spectrum, from low-wage workers in service, retail, hospitality and restaurant jobs—and temps in industry, construction and manufacturing—to highly educated Americans working job-to-job because their professions lack fulltime employment opportunities given the structure of many information age businesses. As Andrew Stettner, Michael Cassidy and George Wentworth point out in their new report, A New Safety Net for an Era of Unstable Earnings, what all these workers have in common are highly volatile, unstable incomes and a lack of access to the traditional U.S. unemployment insurance safety net.

“The programs we have to help people are very biased toward traditional incomes,” says Stettner, senior fellow at The Century Foundation. “Volatility in earnings is a really big problem.”

“Those with the least to lose are most likely to lose it”

Published by The Century Foundation, a progressive, nonpartisan think tank, in collaboration with the National Employment Law Project (NELP), which advocates for policies that expand access to work and labor protections for low-wage workers, the report found that those in the contingent or nontraditional workforce “experience nearly twice as much earnings volatility as standard workers.”

It also found that because of this situation, between 2008 and 2013, three out of five prime earners experienced at least as much as a 50 percent drop in their month-to-month income. Half experienced month-to-month income drops of more than 100 percent.

“This broad issue of underemployment,” says NELP senior counsel George Wentworth, “there’s less of a light on it and these people are not showing up in national unemployment figures. But these workers are struggling and many of them are not making ends meet.”

Central to this problem is that most workers now employed part time are making less than what they made previously, working full time. At the same time, their part-time or independent contractor status means they are likely not eligible for a full complement—if any, in the case of self-employed freelancers—of standard employment benefits, including employer paid health insurance or any form of unemployment insurance, explains Wentworth.

As the report notes, “Those with the least to lose are most likely to lose it.”

Policy recommendations

Both Stettner and Wentworth explain that historical policy responses—and those set up to help workers laid off during the Great Recession—focus on traditional employment situations. Typical unemployment insurance is also biased against those who take up part-time or self-employment gigs while they’re looking for new full-time jobs by reducing unemployment payments. Some states have partial unemployment benefits designed for part-time workers, including those who’ve involuntarily had their hours reduced, but these vary widely. The report found that for workers whose hours are cut from full time to part time, “ten states would replace half of their lost earnings while fourteen states would provide no benefits at all.”

To address what’s becoming the new normal for U.S. workers, the report makes several recommendations. It proposes that states offer partial unemployment benefits to workers earning less than 150 percent of what they’d qualify for weekly if they were laid off (rather than working part time). This would substantially improve coverage for workers whose hours have been cut or who take part-time jobs after losing fulltime jobs.

“It also should be easier to file for these benefits,” says Stettner, explaining that current work documentation requirements don’t necessarily reflect the reality of how part timers work and get paid.

The report also recommends broadening unemployment insurance support for work-sharing programs. Work-share programs, explains Wentworth, are designed to help employers avoid layoffs by retaining their existing workforce but with reduced hours.

The report proposes beefing up existing financial support for work-share programs to reduce the impact to employees of reduced hours. “This is basically for high road employers,” says Wentworth.

The report also recommends a pilot program to provide unemployment insurance to freelancers who don’t have a traditional employer relationship. This is perhaps the most challenging of the report’s proposals since it seeks to address circumstances that extend well beyond the issue of reduced hours. Ideas include giving freelancers better access to certain tax credits in ways that help even out swings in earnings. It could also involve building on international examples such as professional guilds in Europe, where people contribute in order to draw benefits when needed, Stettner explains.

These proposals go beyond and build on those already being discussed at the state, local and federal level to require employers to provide more stable scheduling, pay a minimum number of hours if workers are called for a shift and that protect workers who request schedule changes. They would also begin to address the situations of the estimated 19.1 million Americans who depend solely on freelance income and are currently without any employment safety net.

“We’re just scratching the surface to understand how to come up with a better set of market-based and government solutions,” says Stettner. “We’ve created a whole view of the world that now applies to only about half the working people in America,” he says. “We have this huge divide we need to hammer on. It should concern everyone.”

This article originally appeared at Inthesetimes.com on December 28, 2016. Reprinted with permission.

Elizabeth Grossman is the author of Chasing Molecules: Poisonous Products, Human Health, and the Promise of Green Chemistry, High Tech Trash: Digital Devices, Hidden Toxics, and Human Health, and other books. Her work has appeared in a variety of publications including Scientific American, Yale e360, Environmental Health Perspectives, Mother Jones, Ensia, Time, Civil Eats, The Guardian, The Washington Post, Salon and The Nation.


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Income Inequality Is off the Charts. Can Local Policies Make a Difference?

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The income gap between the classes is growing at a startling pace in the United States. In 1980, the top 1 percent earned on average 27 times more than workers in the bottom 50 percent. Today, they earn 81 times more.

The widening gap is “due to a boom in capital income,” according to research by French economist Thomas Piketty. That means the rich are living off of their wealth rather than investing it in businesses that create jobs, as Republican, supply-side economics predicts they would do.

Piketty played a pivotal role in pushing income inequality to the center of public discussions in 2013 with his book, Capital in the Twenty-First Century. In a new working paper, he and his co-authors report that the average national income per adult grew by 61 percent in the United States between 1980 and 2014. But only the highest earners benefited from that growth.

For those in the top 1 percent, income rose 205 percent. Meanwhile, the average pre-tax income of the bottom 50 percent of workers was basically unchanged, stagnating “at about $16,000 per adult after adjusting for inflation,” the paper reads.

It notes that this trend has important political consequences: “An economy that fails to deliver growth for half of its people for an entire generation is bound to generate discontent with the status quo and a rejection of establishment politics.”

But the authors also note that the trend is not inevitable or irreversible. In France, for example, the bottom 50 percent of pre-tax income grew by about the same rate—32 percent—as the overall national income per adult from 1980 to 2014.

The difference? In the United States, “the stagnation of bottom 50 percent of incomes and the upsurge in the top 1 percent coincided with drastically reduced progressive taxation, widespread deregulation of industries and services, particularly the financial services industry, weakened unions, and an eroding minimum wage,” the paper reads.

Piketty and Portland

President-elect Donald Trump’s administration promises at least four years of policies that will expand the gap in earnings. But a few glimmers of hope are emerging at the local level.

The city council of Portland, Oregon, for example, recently approved a tax on public companies that pay executives more than 100 times the median pay of workers. The surtax will increase corporate income tax by 10 percent if executive pay is less than 250 times the median pay for workers, and by 25 percent if it’s 250 and over. The tax could potentially affect more than 500 companies and raise between $2.5 million and $3.5 million per year.

The council cited Piketty’s Capital in the Twenty-First Century in the ordinance creating the tax. Steve Novick, the city commissioner behind it, recently wrote that “the dramatic growth of inequality has been fueled by very high compensation of a few managers at big corporations, as illustrated by the fact that 60 to 70 percent of people in the top 0.1 percent of income in the United States are highly paid executives at large firms.”

Novick said that he liked the idea when he first heard about it because it’s “the closest thing I’d seen to a tax on inequality itself.” He also said that “extreme economic inequality is—next to global warming—the biggest problem we have in our society.”

Investing in children

There is also hopeful news in the educational realm. James Heckman, a Nobel Laureate in economics at the University of Chicago who has spent much of his career studying inequality and early childhood education, recently published a paper that lays out the results of a long-term study.

In “The Life-cycle Benefits of an Influential Early Childhood Program,” Heckman and others report that high-quality programs for children from birth to age 5 have long-term positive effects across a range of metrics, including health, IQ, participation in crime, quality of life and labor income.

Predictably, perhaps, the effects of the programs weren’t limited to children. High-quality early childhood education also allowed mothers “to enter the workforce and increase earnings while their children gained the foundational skills to make them more productive in the future workforce,” a summary of the paper reads.

“While the costs of comprehensive early childhood education are high, the rate of return of [high-quality programs] imply that these costs are good investments. Every dollar spent on high quality, birth-to-five programs for disadvantaged children delivers a 13% per annum return on investment.”

The research is important because early childhood education has bipartisan support. Over the summer, the Learning Policy Institute released a report that highlighted best practices from four states that have successful early childhood education programs. Two of them—Michigan and North Carolina—are swing states in national politics. The others are Washington and a solidly red state, West Virginia.

Although it isn’t a substitute for other policy tools to address inequality, like progressive taxes, early childhood education has strong bipartisan support because it produces measurable payoffs for both children and the economy. One study found, for example, that the economic benefit of closing the educational achievement gaps between children of different classes would be $70 billion each year.

Early childhood education fosters an “increasingly productive workforce that will boost economic growth, provide budgetary savings at the state and federal levels, and lead to reductions in future generations’ involvement with the criminal justice system,” the Economic Policy Institute recently noted. “These benefits will, of course, materialize only in coming decades when today’s children have grown up. But the research is clear that they will materialize—and when they do, they are permanent.”

This blog originally appeared at inthesetimes.com on December 26, 2016. Reprinted with permission.

Theo Anderson, an In These Times staff writer, is writing a book about the historical and contemporary influence of pragmatism on American politics. He has a Ph.D. in American history from Yale University and teaches history and literature seminars at the Newberry Library in Chicago.


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