Its the economy stupid! (and it doesnt have to be this way!) - PowerPoint PPT Presentation

It’s the economy stupid! (and it doesn’t have to be this way!) October 28, 2011 Alameda, CA Sylvia A. Allegretto, PhD Center on Wage & Employment Dynamics University of California, Berkeley

The critical role of unions Unions Corporate power & the wealthy U.S. Economy: Workers & citizens Allegretto 2011

Wealth Political Policies access Allegretto 2011

Econ 101 (in very colorful but not so pretty pictures)  The mess we are in today is man made:  it was an ‘Inside Job’  Wall Street, K Steet & PA Avenue  Ayn Rand is popping bennies & partying like it’s 1929!  Those at the alter of the ‘free market’ are kidding themselves at best.  Greenspan (Rand fan) didn’t know banks wouldn’t regulate themselves…what?  Plutocracy: of the 1%, by the 1%, for the 1% Allegretto 2011

Top priorities Effective Reasonable EFCA & regulation tax policy unions Fix the Fair trade ongoing policies housing crisis Allegretto 2011

The only deficit that matters… 2% CA 2 0 0 1 CA 1 9 9 0 0% 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 -2% -4% US today ( as of Sept. ’1 1 ) -4 .8 % or -6 .6 m illion -6% CA today! ( as of Sept. ’1 1 ) -7 .2 % or -1 .1 m illion -8% -10% Source: Sylvia Allegretto’s analysis of Current Employment Statistics data.

These numbers represent people, forever lost output & heartache 12% 12% California United States 10% 10% 8% 8% 6% 6% 4% 4% 2% 2% 0% 0% 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 Source: Sylvia Allegretto’s analysis of BLS Current Population Survey data.

Incomes of typical households in California plunge back to 1998 levels $70,000 Real Median Household Income ( 2010 Dollars) $65,000 $59,821 $59,274 $60,000 $56,042 $55,000 $54,459 $53,252 $52,823 $49,076 $50,000 $49,445 $46,202 $45,000 $40,000 $35,000 $30,000 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Sylvia Allegretto’s analysis of U.S. Census data 2011.

“I am trying to enjoy the fruits of my labor...” ~Lucinda Williams 450.0 400.0 Productivity 350.0 I ndex ( 1 9 7 3 = 1 0 0 ) 300.0 250.0 Average hourly compensation 200.0 150.0 Average hourly wage 100.0 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 Source: Economic Policy Institute’s stateofworkingamerica.org

Union decline and middle-class woes 30 54 25 52 20 50 15 48 Union Membership Rate 10 46 Middle-Class Share of Total Income 5 44 0 42 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Allegretto 2011 Source: David Madland, Karla Walter, Nick Bunker, April 4, 2011, Center for American Progress.

We need a plan to restore manufacturing 35% 32.0% 30% 28.4% 25.1% 25% 20.7% 20% 16.2% 15% 13.1% 10.1% 9.8% 9.1% 8.9% 10% 5% 0% 1950 1960 1970 1980 1990 2000 2007 2008 2009 2010 Source: Sylvia Allegretto’s analysis of CES manufacturing data. Allegretto 2011

We need an economy that makes things (the financial industry makes $ from $) 20000 19000 18000 17000 16000 15000 14000 13000 12000 11000 10000 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Source: Allegretto analysis of CES manufacturing data. Allegretto 2011

Widening wedge of wage inequality 140.0 95th Guys 130.0 90th 80th 120.0 I ndex ( 1 9 7 3 = 1 0 0 ) 110.0 50th 100.0 10th 90.0 20th 80.0 70.0 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 Source: Economic Policy Institute’s analysis of CPS data downloaded from stateofworkingamerica.org Allegretto 2011

Widening wedge of wage inequality 170.0 95th 90th 160.0 Galz 150.0 80th I ndex ( 1 9 7 3 = 1 0 0 ) 140.0 130.0 50th 10th 120.0 20th 110.0 100.0 90.0 80.0 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 Source: Economic Policy Institute’s analysis of CPS data downloaded from stateofworkingamerica.org Allegretto 2011

Retirement risk shift 70% Defined contribution 60% 50% 40% 30% 20% Defined benefit 10% 0% 1983 1986* 1989 1992 1995 1998 2001 2004 2007 Source: Munnell, Alicia H., Golub-Sass, Francesca & Muldoon, Dan. 2009. *Note: Data for 1986 is not available. The data were estimated using the midpoint between 1983 and 1989 downloaded from EPI.

Work Vs. a call to your broker The rise of the plutocracy 40% 35% op Capital Gains Tax Rates 30% 1945 25.0% 25% 20% T 15% 2011 15.0% 10% Source: Citizens for Tax Justice Allegretto 2011

Pre- & post- tax income shares, 2007 45% 40% 38.6% 35.6% 35% 30% 25% 21.3% 19.9% 20% 19.0% 17.1% 14.0% 15% 12.2% 9.2% 10% 7.3% 5.1% 5% 2.5% 0% Lowest 2nd quintile: 3rd quintile: 4th quintile: 81st-99th T op 1% quintile: <20% 21%-40% 41%-60% 61%-80% percentiles Source: Congressional Budget Office 2011. Allegretto 2011

Astonishing picture of income growth (Growth in inflation adjusted after-tax income from 1979 to 2007) 300% 277.5% 250% 200% 150% 100% 65.0% 43.3% 50% 35.2% 27.5% 18.3% 0% Lowest 2nd quintile: 3rd quintile: 4th quintile: 81st-99th T op 1% quintile: <20% 21%-40% 41%-60% 61%-80% percentiles Source: Congressional Budget Office 2011. Allegretto 2011

The very rich are pulling away 1,600,000 Top 1% 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 Bottom 90% 0 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 Source: CBO $2008 Allegretto 2011

CEO's distance themselves from the average worker (Ratio of average CEO compensation to average worker compensation, 1965-2010) 350 300 298 277 243 250 200 185 150 143 126 100 100 70 50 35 24 0 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 Allegretto 2011 Source: EPI analysis of Wall Street Journal /Mercer, Hay Group (2011). Note: Point markers denote where ratio is known.

The not so invisible hand (share of income growth 1979-07) 40.1% increase T op 0.1% 36.0% B ottom 99% 59.9% R est of T op 1% 23.9% Source: EPI analysis of Piketty & Saez IRS data 2009. Allegretto 2011

The rich are getting richer! Trickle up economics. Wealth1983-2009 0.5 41.5% 40.2% 0.4 0.3 0.2 10.2% 9.8% 0.1 5.7% 0 -1.4% -2.0% -4.1% -0.1 Lowest 2nd quintile: 3rd quintile: 4th quintile: 81%-90% 91%-95% 96%-99% T op 1% quintile: 21%-40% 41%-60% 61%-80% <20% Source: Allegretto 2011 EPI briefing paper “The State of America’s Wealth 2011”

The Dow ain’t gonna save you 100% 90% Top 1% 80% 70% 60% 50% Next 9% 40% 30% 20% Next 10% 10% Middle 20% Next 20% Bottom 40% 0% 1989 1992 1995 1998 2001 2004 2007 Source: Allegretto 2011 “The State of America’s Wealth 2011”

What/Who is to Blame for State Budget Gaps? The Housing Bust & the Great Recession!!!

CEOs of Bell. Robert Rizzo, former city manager of Bell, California, was making $787,638 per year in that position.

Educational attainment of California’s workers 4 0 % Private sector w orkers 3 4 % 3 5 % State & local governm ent 3 0 % w orkers 2 4 % 2 5 % 2 2 % 2 1 % 2 0 % 2 0 % 1 7 % 1 5 % 1 3 % 1 2 % 1 2 % 1 1 % 9 % 1 0 % 5 % 3 % 0 % Less than high High School Som e College Associates Bachelors Advanced school degree degree degree* Source: Allegretto & Keefe CWED Brief October 2010. Allegretto 2011

Comparison of CAs public vs. private sector earnings and total compensation 2.00% Annual Earnings 1 .0 7 % Annual Total Com pensation 0 .8 9 % 1.00% 0 .0 1 % 0.00% -1.00% -2.00% -3.00% -4.00% -5.00% -6.00% -7.00% -7 .5 5 % * -8.00% -7 .7 7 % * * -7 .8 6 % * * -9.00% State & Local Governm ent State Governm ent Local Governm ent Note: **1% and *5% significance levels. Allegretto 2011 Source: Allegretto & Keefe CWED Brief October 2010.

Teacher pay 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0.0% -5.0% Females -6.6% -10.0% -12.1% All -15.0% Males -20.0% -23.3% -25.0% -30.0% Source: update of Allegretto, Corcoran, & Mishel 2011

80 Number of State and Local Government 70 Employees Per 1,000 Residents 60 50 The States With The Lowest Public 40 Union Density 30 The States With The Highest Public Union Density 20 10 0 Source: U.S. Census Bureau and the U.S. Bureau of Labor Statistics. Allegretto 2011 From Allegretto, Jacobs & Lucia, 2011