Rich still getting Richer as Poor getting Poorer

Sentier Research reports that the median household income in October 2015 was 1.2% lower than January 2000:

• Median annual household income in October 2015 was $56,671
• Median annual household income in January 2000 (adjusted for inflation) was $57,372

The median annual household income in October 2015 ($56,671) divided by 2 = $28,335 for a dual-income household — which is about what Social Security wage data shows for a median wage of $28,031 — meaning, about 70 million wage earners make less than that.

Thanks to Hillary Clinton's husband, welfare reform has driven many low-income parents to depend more heavily on family and friends for food, childcare and cash. And Republicans all across the nation have been slashing food stamps. So the combination of stagnant wages, declining union membership, a lack of jobs and a weaker social net (etc.) — all contributes to literally starving the beasts.

A new report shows that (in the U.S.) 20 people — a group that could fit into a Gulfstream G650 luxury jet — now own as much wealth as the bottom half of the American population. These 20 people have more wealth than 152 million people living in 57 million households.

And that wealth data is a tip of the iceberg, because much wealth among the uber-rich is hidden — either in offshore tax havens, or in loophole trusts where money is shuffled around into private corporate accounts (or between different family members). Then it disappears from taxation or any sort of oversight or accountability. So there’s a huge amount of escaped wealth that isn’t even factored into these statistics.

Globally, the world's super-rich have taken advantage of lax tax rules to siphon off at least $21 trillion, and possibly as much as $32 trillion, from their home countries and hide it abroad — a sum larger than the entire American economy. And almost half of the minimum estimate of $21 trillion ($9.8 trillion) is owned by just 92,000 people.

The top one-10th of 1 percent of American households controlled about 7 percent of the nation’s wealth in the mid-1970s. By 2000, their share had grown to about 15 percent, and today it’s well over 20 percent.

David Cay Johnston at Aljazeera comments on the report:

The intense concentration of wealth matters because it makes the economy less efficient, discouraging investments that create jobs while giving a relative handful of superrich Americans vast sway over the agendas that politicians pursue. Just 158 families, along with companies they own or control, provided nearly half the contributions to the presidential candidates in both parties, though giving was heavily skewed to Republicans. The result is policies that take from the many and redistribute to the already rich few through stealth techniques that rarely make the news but can be found in the public record. Among these policies are a failure to enforce the laws of business competition, severe restrictions on unions and subsidies galore for big companies ... And because of their political influence, those at the very top get tax favors, especially the deferral of taxes into the distant future, which transforms the burden of taxes into a bonanza of increased profits. If you wonder why Washington doesn’t seem to fix problems that affect most Americans, this is the answer: Politicians take care of the hands that feed them, the donor class. [Editor's note: This is why Presidential candidate Senator Bernie Sanders is calling for a "political revolution".]

* Sub-note: The world's richest 10 percent of people are responsible for producing about half of all carbon dioxide emissions, and the per capita carbon footprint of the richest 1 percent is about 175 times that of the poorest 10 percent, according to another new report.

The rich really have been getting richer while the poor gotten much poorer — but at least (according to the uber-rich Bill O'Reilly) most of the poor people in the U.S. have TVs and refrigerators.

A few notes on the Fed, the Banks, the Labor Force and (low-paying) Jobs — which is all related to Wealth Inequality

This morning Politico reported:

"Friday's jobs report removed virtually all doubt: Santa is bringing an interest rate hike for Christmas. The 211,000 jobs that the economy added in November are more than enough for the Federal Reserve to raise interest rates later this month - a move that could imperil Hillary Clinton's hopes of winning the White House if the Fed inadvertently triggers an economic slowdown ... revisions for September and October now mean job growth averaged a brisk 218,000 over the past three months. Fed Chair Janet Yellen told Congress Thursday that even less-than-torrid job growth would slow an economy with ample room to accommodate new workers."

We have 3.3 million young people graduating from high school for the 2005/16 year. But Yellen claimed that only 1.2 million jobs a year will be needed for first-time job seekers (100,000 a month). But even if all 3.3 million people graduating from high school went straight into college (and didn't work at all), we'd still have that many graduating from college to look for a job.

Yellen also made the "old" claim that an aging population is reducing the labor force — even though high school/college grads out-number Social Security retirees by 3 to 1 (There were 1.1 million retirees last year).

Yellen also blamed an older work force for a decline in the labor force participation rate — but older people are working longer (55 years and older), and their labor-force-participation-rate has been increasing since the 1990s (as cited by the St. Louis Fed) and decreasing for prime-age workers ages 25-54 years old (also cited by the St. Louis Fed).

Meanwhile, we have over 12 million who dropped out of the labor force just since the recession "officially" ended — and maybe as many as half was because they couldn't find jobs. Over 5 million Americans "not in the labor force" currently report they want a job. (That doesn't include those who are still in the labor force and reported as "unemployed").

Yellen also said: “I don’t think we should expect to see labor-force participation move up a great deal over time.” — But that's because right around the time Bill Clinton gave PNTR to China in 2000, the labor-force-participation-rate has been in decline. The BLS and the Fed have already predicted a further decline going into 2022 — so that's not news.

Retirees (or an aging population — or demographics in the labor force) shouldn't be blamed for the decline in the labor force; and neither should "baby boomers". The first didn't retire until 2008 — and when they did, they retired early at age 62. This was 8 years after the long decline in labor-force-participation-rate first began.

The decline in the labor force and the very high unemployment rate for young people is because of offshoring. The U.S. has lost 67,161 factories since 1997 — for a loss of over 5 million job (directly), plus the loss of their "multiplier effect".

From the Economic Policy Institute (EPI):

The decline of manufacturing in the United States over the past 15 years has been well documented: 5.4 million manufacturing jobs [the same exact number who say they want a job today] and over 82,100 manufacturing establishments were lost between 1997 and 2013. There is a common (but incorrect) idea that high wages in U.S. manufacturing are causing growing job losses and declining U.S. export competitiveness ... The decline of American manufacturing over the past 15 years is due to currency manipulation and unfair trade, and not high wages. [I'm not sure where they got their number 82,100, but I got mine (67,161) from the Bureau of Labor Statistics. But either way, it's still a lot.]

Why has Federal Reserve Chair Janet Yellen been making these remarks? Does it have anything to do with her raising (or not raising) interest rates? The Federal Reserve has been considering whether to slow the economy by raising interest rates — despite weak wage growth and no signs of inflation. EPI, the Center for Economic and Policy Research, and the Center for Popular Democracy released a new fact sheet explaining how monetary policy affects the economy.

Also, a visiting Fellow at the Roosevelt Institute (Carola Binder) recently testified before the House Full Employment Caucus, making the case that the rules guiding the central bank have a profound impact on economic inequality and can be changed to promote accountability and transparency (Read her testimony here).

At Vox, Roosevelt Fellow Mike Konczal explains how lobbyists and congressional Republicans plan to use the threat of another government shutdown to push provisions that would seriously undermine financial reform and greatly help banks (And here's another Vox article about ending bank bailouts).