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In 2010, as the economy began its slow recovery from the Great Recession, a new study shows the richest 1% of Americans captured a staggering 93% of all income growth, while the incomes of most Americans stagnated. 93%. Occupy that. The 1% are back

The stock market — leading source of wealth for the few — rebounded. Housing — the leading source of wealth for middle income Americans — continued to decline. Median CEO pay soared a stunning 27%. When the 2011 figures come out, the disparities will be even greater. America is recovering the old economy’s extreme inequalities.

This divorce of the 1% from the rest of us is bad for the economy and for the democracy. It’s even bad for your health. The question is what can be done about it.

In the New York Times last week, financier Steven Rattner summarized the conventional remedies: “better education and training, a fairer tax system, more aid programs for the disadvantaged” to help them “escape the bottom rung.”

OK, but as Harold Meyerson suggests in the Washington Post, this agenda ignores the major source of the new inequality: the changes in how corporations reward their employees.

Who is in the 1%? As Emmanual Saez, the author of the inequality study report, writes, today’s top earners tend to be “working rich.” About a third (31%) of the top 1% are executives and managers outside of finance. Another 14% are “financial professionals.” Doctors are about 16%, lawyers 8%.

Inside our companies, CEO pay has soared, while worker pay has stagnated at best. According to the Institute for Policy Studies, CEOs are now making 325 times what the average worker makes. CEO pay has soared as companies have dramatically increased stock options as part of compensation packages. Worker pay has stagnated as companies have waged relentless and successful war on unions. Even mid-level executives have not shared in the fabulous rewards offered the top.

The Costs of CEO Excess

Ironically, the new concentration of rewards at the top is dysfunctional to companies, as well. As Roger Martin details in his brilliant, Fixing the Game: Bubbles, Crashes, and What Capitalism can Learn From the NFL, CEO pay exploded when companies adopted reward systems based upon maximizing shareholder value. Stock options were dramatically increased as a source of CEO pay, on the theory that the CEO would share the interests of shareholders. Before the change — from 1960 to 1980, CEO compensation per dollar of net income earned for the 365 largest publicly traded U.S. companies FELL by 33%. CEO pay rose, but they earned more for the shareholders for steadily less relative compensation. After 1980, as new compensation schemes came into play, CEO compensation per dollar earned doubled from 1980 to 1990 and quadrupled between 1990 and 2000. And, stockholders fared better in the earlier period than the latter. (more…)

Occupy Wall Street is not known for the precision of its economic analysis, but new research on income distribution in the United States shows that the group’s sloganeering provides a stunningly accurate picture of the economy. In 2010, according to a study published this month by University of California economist Emmanuel Saez, 93 percent of income growth went to the wealthiest 1 percent of American households, while everyone else divvied up the 7 percent that was left over. Put another way: The most fundamental characteristic of the U.S. economy today is the divide between the 1 percent and the 99 percent.

It was not ever thus. In the recovery that followed the downturn of the early 1990s, the wealthiest 1 percent captured 45 percent of the nation’s income growth. In the recovery that followed the dot-com bust 10 years ago, Saez noted, 65 percent of the income growth went to the top 1 percent. This time around, it’s reached 93 percent — a level so high it shakes the foundations of the entire American project.

How has the top 1 percent been able to decouple itself from the nation beneath it? To begin, much of its income comes from investments in funds and firms that are raking in profits from overseas ventures in economies like China’s, which weathered the downturn better than ours. Much of those firms’ profits also derive from their reduced labor costs — the result of layoffs and paycuts. Finally, as Saez points out, there has been “an explosion of top wages and salaries” since 1970. In that year, 5.1 percent of all wages and salaries paid in the United States went to the wealthiest 1 percent. In 2007, the share going to the wealthiest 1 percent had more than doubled, to 12.4 percent.

The consequences of this concentration of wealth and income extend beyond the purely economic. A middle class enduring prolonged stagnation isn’t likely to fund projects the nation needs to undertake — such as rebuilding our infrastructure or increasing teacher pay — or, ultimately, to retain its faith in the efficacy of democracy. The rise of super PACs, the low rates of taxation on capital gains and hedge fund operators, the ability of the major banks to fend off reform — all testify to the power of a neo-plutocracy beyond democratic control. (more…)

Growing up Protestant in a small town in upstate New York, the commemoration of Lent was not as major an event as it would be in, say, a Catholic household. We didn’t give up chocolate or gum or anything else for those forty days between Ash Wednesday and Easter, nor did most of the grown-ups we knew forsake any of their particular pleasures or bad habits.

When I was twelve, one night a week during Lent was spent in religious training before becoming a member of our church at a service on Maundy Thursday (what Catholics and many others call Holy Thursday, the day of The Last Supper). But baptism was a prerequisite for membership and I had not yet been christened in the Congregational Church we attended; neither had my parents or my younger brother and sister. So all five heathens were lined up in the living room one Monday evening, and our minister quickly did the deed with a bowl of tap water. Then we had cake.

My other powerful memory of the Lenten season is weekly religious breakfasts on cold Wednesday mornings. I was in high school and it meant waking up even earlier than usual on frigid winter days and getting a ride to the parsonage.

Yawning protests to the contrary, those meals were worth it. In that big, white-framed house, we were greeted with the sweet maternal warmth of the minister’s wife, enormous platters of food, and a brief talk by the minister on the Eastertime meaning of it all, preaching repentance and redemption but suffused more with brightness than brimstone. Afterward, each of us walked the few remaining blocks to school, our breath in frosty flumes, full of bacon, scrambled eggs and a certain pious self-satisfaction. No fasting for us.

All of which came to mind while learning that today, some churches are taking matters into their own hands and delivering one of the most powerful Lenten messages ever. According to the progressive website ThinkProgress, “As congregations across the country observe the period between Ash Wednesday and Easter by sacrificing and repenting, religious leaders are asking big banks that have wrongfully foreclosed on homeowners and exacerbated the pain of the housing crisis to do the same.”

On Ash Wednesday, churches in San Francisco announced they were removing $10 million from Wells Fargo and called on the bank, as per the advocacy group Faith in Public Life, “to put an immediate freeze on its foreclosures and repent for their misconduct.” The March 9 New York Times reported that:

The Rev. Richard Smith of St. John the Evangelist, an Episcopal church in San Francisco, likened the divestment campaign and public protests to early Christianity’s ritual of ‘reconciliation of the penitents.’ Far from taking place in the private sanctity of the confessional, that rite occurred in public, with the penitent overseen by a priest and required to present himself before a bishop.
‘It seemed like a parallel to us,’ said Mr. Smith, 62. ‘Our banks have done a great deal of damage in a very public way. So it seems appropriate as we enter into a season of penitence that we invite those who separated themselves from the community to repent with us. It’s basically ‘Ethics 101.’ (more…)

JPMorgan Chase CEO Jamie Dimon recently said that he felt safer in Lebanon than he did when Occupy marched past his house. If nothing else, it proves that Wall Street bankers haven’t gotten any better at risk management – the art of knowing where danger lies and avoiding it – than they were when their bad bets crashed the economy and caused the Great Recession.

But then we knew that already, didn’t we? After all, Chase is one of five too-big-to-fail banks that could lose $80 billion or more from their poorly-thought-out risk-taking in Europe’s most troubled countries. The risky behavior shouldn’t surprise anyone, though. These banks know — or at least believe — that their too-big-to-fail status means we’ll rescue them again when they make the next devastating set of blunders.

What’s really striking about comments like these is the fact that executives at America’s big banks never seem to worry when police cars approach their houses. Their biggest fear is that that they might glimpse a sign or hear the sound of a mic check reverberating faintly through well-aged brick walls.

Consider JPMorgan Chase, the institution run by Mr. Dimon. To call his bank “scandal-plagued” would be putting it mildly. Chase has settled six fraud cases with the SEC over the last thirteen years and is implicated in several ongoing investigations, including the two most notorious fraud cases of our time. At any other moment in history the headlines would be screaming with various combinations of the words “JPMorgan Chase,” “fraud,” “probe,” “drop,” mistakes,” “disaster,” “incompetence,” and “scandal.”

But these aren’t normal times. The public has come to expect that bankers will commit fraud, and that the government will ignore it. They’ve come to expect that banks will make bad loans, and that the governments of the world will rescue them by making life more difficult for ordinary people. (more…)

I’m sure that you, like me, pity the poor rich these days. Not the merely rich, but the mega-ones, those precious few who’re among the richest one-tenth of one percent of Americans.

Yes, they have it all. But they also have something they don’t want: widespread public disapproval. Oh, they’re plenty pleased to live on the penthouse floor of the one-percent class, but they’re also aghast, annoyed, angered – and afraid – because the Occupy Wall Street movement has turned a spotlight on their elite lives in a time of mass joblessness, middle-class decline, and swelling poverty.

According to finance advisors who work with them, many multimillionaires are puzzled: “Why target me?” they ask. Poor babies, like their patron political saint, Mitt Romney, they’re pained that the rich are disdained for their extravagance: “We worked hard, we went to college, we tried to better our lives,” they wail. “Isn’t that what I’m supposed to do?”

Gosh, it makes me want to rush out and buy them a clue. (more…)

Pulitzer Prize-winning journalist David Cay Johnston explains the problems with the increasing rate of low-wage jobs that are being created in America.

Most agree that Newt Gingrich’s win over Mitt Romney in South Carolina had to do with what the pundits are calling “unforced errors” on Romney’s part—a series of gaffs, blunders, and obfuscations relating to Romney’s wealth, his unreleased tax returns, the fortune he amassed at Bain Capital (as well as how he amassed it), and his offshore accounts in the Cayman Islands. While in 2008 comedians compared Romney to the Muppet Guy Smiley, in 2012 Romney is looking more like a cartoon cut out of the corporate stereotype—the top-hatted villain in countless American political cartoons of the last 100 years.

While Gingrich is more of a hard scrabble upstart when it comes to his family story, he certainly belongs to the inner circle of the super rich today. And if you have been following Rachel Maddow’s coverage of Gingrich, you know that she has successfully argued that he is little better than a scam artist, using his run for president to sell books written by himself and his wife Calista and using his consulting firms as tax write-offs, for example. But whatever Gingrich’s millions or his ethical problems,  he has been able to paint Romney—with Romney’s considerable assistance—as the only nervous, goofy, out-of-touch super rich guy in the race.

As the Republican primary continues on its strange course, I am convinced that Occupy Wall Street deserves a great deal of credit for our ability to see Romney as a purveyor of “vulture capitalism.” While the idea of the 1% wasn’t even on the radar during the Iowa Straw Poll in August, since then the Occupy movement has shifted the conversation, and the blame for our current economic crisis, to the wealthy.  Even now that the Occupy movement has been forced into hibernation for the winter, it has resurrected the grammar of the iconic rich dude in all of his manifestations—a visual grammar with a rich and complicated history.  That image of the 1% has been applied most effectively in this campaign season to Romney. We’ve seen this hundreds of times, in articles and blog posts, and perhaps most iconically in this disturbing photo taken when Romney was the head of Bain Capital.

Given the pervasive use of the super rich caricature, I thought it might be useful to take a look at its cultural history. One of the oldest negative 20^th century stereotypes of the rich is the fat cat. The term in its current usage, as an insult for wealthy businessmen, was first coined by Frank Kent writing for H.L. Menken in The American Mercury. By the 1930s the term was used to insult specifically those wealthy businessmen who bankrolled politicians. The fat cat in political cartoons is usually represented as an obscenely fat orange tabby cat standing on two legs. He is always masculine, humanoid, and he towers over everyone else in the image—all the while wearing a dark suit, a cigar, and a sneer. In recent years the fat cat has been used by political cartoonists and activists in the US and around the world. Wisconsin-based cartoonist Mike Konopacki has a nice fat cat, and here’s a larger-than-life inflatable fat cat strangling a worker at a protest in front the World Bank. The fat cat is not to be confused with the black cat, an image used by Progressive Era IWW cartoonists to symbolize worker sabotage and resistance which has been making a comeback by way of Occupy Wall Street. (more…)

In public squares across the country, Occupy protesters honor Rev. Martin Luther King’s memory on this holiday devoted to him. Their tribute is more meaningful and enduring than the granite monument that President Obama dedicated to Rev. King in Washington, D.C. last year.

That’s because the Occupiers are pressing for a cause – economic justice – that Rev. King had embraced in the months before his assassination in 1968. And they’re pursuing it with the technique he advocated – nonviolent protest.

Rev. King’s final crusade, his Poor People’s Campaign, and the Occupiers’ championing the nation’s 99 percent are remarkable in their similarities. It’s tragic that in the 44 years since Rev. King launched his campaign for an economic Bill of Rights that the nation’s poor and middle class have lurched backward instead of forward. It’s hopeful, however, that a whole new generation of idealists has taken up the dream of economic justice.

In the year before Rev. King was gunned down, he persuaded the Southern Christian Leadership Conference to join him in a movement devoted to securing for all citizens the basic needs that would enable them to pursue the American Dream, to pursue happiness. He believed every able-bodied person should have access to a job with a living wage. And he believed every American should have decent housing and affordable health care. Without economic security, he said, no man is free.

Rev. King’s dream has its roots in the progressive movement, containing key elements of Democrat Franklin D. Roosevelt’s proposed Economic Bill of Rights. Roosevelt, the beloved president who gave the country Social Security, pushed the Economic Bill of Rights in the waning days of the war. (more…)

What a year it’s been for workers! From Wisconsin to Washington, D.C., on the football field and the factory floor, we’ve seen unprecedented attacks on working families from big corporations and their friends in elected office. But what the folks behind these attacks didn’t anticipate was that their actions would ignite a movement — that the worst moments for workers in 2011 might just be the beginning of a great political awakening for the 99 percent.

The Worst

1. Wisconsin Gov. Scott Walker strips public employees of their collective bargaining rights — Last spring, anti-worker legislators in Wisconsin rammed through a bill that strips the state’s public employees of their right to collectively bargain. After initially using the state’s fiscal challenges as the rationale for his bill, Gov. Walker publicly admitted that the collective bargaining repeal saved the state absolutely no money. This revelation affirmed that the nationwide attacks on public employees were solely designed to hurt workers and their unions — not balance the budget.
2. SB 5 passes in Ohio — In early March, Ohio Gov. John Kasich signed Senate Bill 5 into law. The bill scaled back public employees’ ability to bargain together for better workplace conditions and improved safety, marking a major victory for the corporate-backed lawmakers playing politics at the expense of the 99 percent.
3. Income inequality soars to new heights — In September, the Census Bureau reported that one in six Americans are living in poverty. Meanwhile, CEO pay has continued to skyrocket. The result? Income inequality that puts the United States on par with countries like Cameroon and Uganda. And recent studies show that the rise in inequality here in the U.S. is directly tied to declining union membership.
4. Right-wing attacks on the NLRB endanger workers’ rights — Instead of creating jobs, GOP politicians in Congress spent the year launching more than 50 attacks on the National Labor Relations Board (NLRB) and the National Labor Relations Act — the only recourse workers have when their rights to form unions and bargain collectively are violated. These cynical political games have not only threatened employee safeguards, but the unprecedented overreach by lawmakers has jeopardized the fundamental American principle of due process.
5. Amazon workers face sweatshop conditions — This fall, an investigative report revealed that employees at Amazon.com’s Breinigsville, Pa., warehouse had been working on their hands and knees at a frantic pace in temperatures so high that the company kept ambulances parked outside. Amazon has yet to address the core problems at the warehouse, including brutal working speeds and overuse of temporary employees, for whom organizing for better working conditions is extremely difficult.

The Best

1. The 99 percent fights back — With the attacks on workers escalating from Wisconsin to Washington, D.C., everyday Americans decided it was time to fight back. Beginning this fall, the Occupy Wall Street movement has succeeded in shifting the debate — highlighting the income inequality that puts our whole economy at risk and bringing our nation’s focus back to where it belongs: on the 99 percent. (more…)

Been quite a year, huh? We’ll remember this one for a long time.

This new generation of Republicans, the self-styled Tea Partiers, want to repeal just about all of the 20th century. They don’t like Teddy Roosevelt, Woodrow Wilson, FDR, LBJ, or any of those Kennedy brothers. They say they want to repeal child labor laws, the 40 hour work week, food safety laws, environmental laws, the income tax, direct election of Senators, Social Security, Medicare, the minimum wage, banking regulation, Pell Grants, Head Start, civil rights, voting rights, and just about every other form of progress the 1900s brought us. You know, William Buckley used to say that “a conservative is someone who stands athwart history, yelling stop.” These guys are standing athwart history yelling “go back!” They will happily shut down government at the drop of a hat, for any reason at any time- even when they get what they asked for in terms of policy concessions. Backed by the 1%, the Wall Street elite and the captains of industry who destroyed the economy but are deeply hurt and offended when anyone tries to hold them accountable for it, these Republicans are hell-bent are creating an economy based on the ideas of Ayn Rand and Gordon Gekko, where greed is good, generosity and kindness are weaknesses, and we are taught that it is everyone for themselves and devil take the hindmost.

And speaking of the Wall Street big boys (not being sexist, virtually all of them are) who are not just the top 1% but part of the top 0.1 %, they set new records in 2011 for arrogance that even I didn’t think they could. I had assumed that after some of their more ridiculous moments of the last few years (like one financier comparing Obama to a Nazi because he wanted to take away one of their loopholes), that their very well paid PR guys would tell them “hey, the anger level at us is really rising, we should try to avoid public displays of unbearable hubris”. But the PR team’s nightmares continue multiplying because of quotes like these referring to protesters, one 0.1 percenter said “who gives a crap about some imbecile?” And here’s another 0.1 percenter: “instead of an attack on the 1 percent, let’s call it an attack on the very productive.”

But this was also the year when the movement of, by, and for the bottom 99% started to rise up. This 99er movement is forcing economic issues — and yes, issues of class and economic inequity — onto the American table to be debated and talked about in new ways. The push and shove of these two fundamental ideas- that society should be organized on behalf of the 99% not the 1% vs. the Social Darwinism of greed being good- will dominate our political debate not only in 2012 but for years to come. (more…)