“Billionaires’ Row And Welfare Lines”: It’s A Great Time To Be Rich In America
The stock market is hitting record highs.
Bank profits have reached their highest levels in years.
The market for luxury goods is rebounding.
Bloomberg News reported in August, “Sales of homes priced at more than $1 million jumped an average 37 percent in 2013’s first half from a year earlier to the highest level since 2007, according to DataQuick.”
A report last week in The New York Times says that developers are turning 57th Street in Manhattan into “Billionaires’ Row,” with apartments selling for north of $90 million each.
And there’s no shortage of billionaires. Forbes’s list of the world’s billionaires has added more than 200 names since 2012 and is now at 1,426. The United States once again leads the list, with 442 billionaires.
It’s a great time to be a rich person in America. The rich are raking it in during this recovery.
But in the shadow of their towering wealth exists a much less rosy recovery, where people are hurting and the pain grows.
This is the slowest post-recession jobs recovery since World War II. The unemployment rate is falling, but for the wrong reason: an increasing number of people may simply be giving up on finding a job. The labor force participation rate — the percentage of people over 16 who either have a job or are actively searching for one — fell in August to its lowest rate in 35 years.
This disconnecting is particularly acute among young people. Measure of America, a project of the Social Science Research Council, recently released a study finding that a staggering 5.8 million young people nationwide — one in seven of those ages 16 to 24 — are disconnected, meaning not employed or in school, “adrift at society’s margins,” as the group put it.
Median household income continues to fall, according to recent data from the Census Bureau. The data showed, “In 2012, real median household income was 8.3 percent lower than in 2007, the year before the most recent recession.”
And according to an April Pew Research Center report, “During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7 percent of the wealth distribution rose by an estimated 28 percent, while the mean net worth of households in the lower 93 percent dropped by 4 percent.”
The dire statistics take on even more urgency when we consider what they mean for America’s most vulnerable: our children.
According to First Focus, a bipartisan advocacy organization focusing on child and family issues: “The 1,168,354 homeless students enrolled by U.S. preschools and K-12 schools in the 2011-2012 school year is the highest number on record, and a 10 percent increase over the previous school year. The number of homeless children in public schools has increased 72 percent since the beginning of the recession.”
A report last month by the Carsey Institute at the University of New Hampshire bemoaned the stagnation of the child poverty rate in this country, saying, “These new poverty estimates released on Sept. 19, 2013, suggest that child poverty plateaued in the aftermath of the Great Recession, but there is no evidence of any reduction in child poverty even as we enter the fourth year of ‘recovery.’ ”
Nearly one in four American children live in poverty.
A report last year from the National Poverty Center estimated “that the number of households living on $2 or less in income per person per day in a given month increased from about 636,000 in 1996 to about 1.46 million households in early 2011, a percentage growth of 130 percent.”
And yet, the value of aid for those families is shrinking and under threat.
A report this week by the Center on Budget and Policy Priorities found, “Cash assistance benefits for the nation’s poorest families with children fell again in purchasing power in 2013 and are now at least 20 percent below their 1996 levels in 37 states, after adjusting for inflation.”
The number of Americans now enrolled in the Supplemental Nutrition Assistance Program (SNAP) is near record highs, and yet both houses of Congress have passed bills to cut funding to the program. The Senate measure would cut about $4 billion, while the House measure would cut roughly ten times as much, dropping millions of Americans from the program.
Next week, lawmakers will start trying to find a middle ground between the two versions of the farm bills that include these cuts.
There is an inherent tension — and obscenity — in the wildly divergent fortunes of the rich and the poor in this country, especially among our children. The growing imbalance of both wealth and opportunity cannot be sustained. Something has to give.
By: Charles M. Blow, Op-Ed Contributor, The New York Times, October 25, 2013
“The Great Divide”: No Rich Child Left Behind
Here’s a fact that may not surprise you: the children of the rich perform better in school, on average, than children from middle-class or poor families. Students growing up in richer families have better grades and higher standardized test scores, on average, than poorer students; they also have higher rates of participation in extracurricular activities and school leadership positions, higher graduation rates and higher rates of college enrollment and completion.
Whether you think it deeply unjust, lamentable but inevitable, or obvious and unproblematic, this is hardly news. It is true in most societies and has been true in the United States for at least as long as we have thought to ask the question and had sufficient data to verify the answer.
What is news is that in the United States over the last few decades these differences in educational success between high- and lower-income students have grown substantially.
One way to see this is to look at the scores of rich and poor students on standardized math and reading tests over the last 50 years. When I did this using information from a dozen large national studies conducted between 1960 and 2010, I found that the rich-poor gap in test scores is about 40 percent larger now than it was 30 years ago.
To make this trend concrete, consider two children, one from a family with income of $165,000 and one from a family with income of $15,000. These incomes are at the 90th and 10th percentiles of the income distribution nationally, meaning that 10 percent of children today grow up in families with incomes below $15,000 and 10 percent grow up in families with incomes above $165,000.
In the 1980s, on an 800-point SAT-type test scale, the average difference in test scores between two such children would have been about 90 points; today it is 125 points. This is almost twice as large as the 70-point test score gap between white and black children. Family income is now a better predictor of children’s success in school than race.
The same pattern is evident in other, more tangible, measures of educational success, like college completion. In a study similar to mine, Martha J. Bailey and Susan M. Dynarski, economists at the University of Michigan, found that the proportion of students from upper-income families who earn a bachelor’s degree has increased by 18 percentage points over a 20-year period, while the completion rate of poor students has grown by only 4 points.
In a more recent study, my graduate students and I found that 15 percent of high-income students from the high school class of 2004 enrolled in a highly selective college or university, while fewer than 5 percent of middle-income and 2 percent of low-income students did.
These widening disparities are not confined to academic outcomes: new research by the Harvard political scientist Robert D. Putnam and his colleagues shows that the rich-poor gaps in student participation in sports, extracurricular activities, volunteer work and church attendance have grown sharply as well.
In San Francisco this week, more than 14,000 educators and education scholars have gathered for the annual meeting of the American Educational Research Association. The theme this year is familiar: Can schools provide children a way out of poverty?
We are still talking about this despite decades of clucking about the crisis in American education and wave after wave of school reform.Whatever we’ve been doing in our schools, it hasn’t reduced educational inequality between children from upper- and lower-income families.
Part of knowing what we should do about this is understanding how and why these educational disparities are growing. For the past few years, alongside other scholars, I have been digging into historical data to understand just that. The results of this research don’t always match received wisdom or playground folklore.
The most potent development over the past three decades is that the test scores of children from high-income families have increased very rapidly. Before 1980, affluent students had little advantage over middle-class students in academic performance; most of the socioeconomic disparity in academics was between the middle class and the poor. But the rich now outperform the middle class by as much as the middle class outperform the poor. Just as the incomes of the affluent have grown much more rapidly than those of the middle class over the last few decades, so, too, have most of the gains in educational success accrued to the children of the rich.
Before we can figure out what’s happening here, let’s dispel a few myths.
The income gap in academic achievement is not growing because the test scores of poor students are dropping or because our schools are in decline. In fact, average test scores on the National Assessment of Educational Progress, the so-called Nation’s Report Card, have been rising — substantially in math and very slowly in reading — since the 1970s. The average 9-year-old today has math skills equal to those her parents had at age 11, a two-year improvement in a single generation. The gains are not as large in reading and they are not as large for older students, but there is no evidence that average test scores have declined over the last three decades for any age or economic group.
The widening income disparity in academic achievement is not a result of widening racial gaps in achievement, either. The achievement gaps between blacks and whites, and Hispanic and non-Hispanic whites have been narrowing slowly over the last two decades, trends that actually keep the yawning gap between higher- and lower-income students from getting even wider. If we look at the test scores of white students only, we find the same growing gap between high- and low-income children as we see in the population as a whole.
It may seem counterintuitive, but schools don’t seem to produce much of the disparity in test scores between high- and low-income students. We know this because children from rich and poor families score very differently on school readiness tests when they enter kindergarten, and this gap grows by less than 10 percent between kindergarten and high school. There is some evidence that achievement gaps between high- and low-income students actually narrow during the nine-month school year, but they widen again in the summer months.
That isn’t to say that there aren’t important differences in quality between schools serving low- and high-income students — there certainly are — but they appear to do less to reinforce the trends than conventional wisdom would have us believe.
If not the usual suspects, what’s going on? It boils down to this: The academic gap is widening because rich students are increasingly entering kindergarten much better prepared to succeed in school than middle-class students. This difference in preparation persists through elementary and high school.
My research suggests that one part of the explanation for this is rising income inequality. As you may have heard, the incomes of the rich have grown faster over the last 30 years than the incomes of the middle class and the poor. Money helps families provide cognitively stimulating experiences for their young children because it provides more stable home environments, more time for parents to read to their children, access to higher-quality child care and preschool and — in places like New York City, where 4-year-old children take tests to determine entry into gifted and talented programs — access to preschool test preparation tutors or the time to serve as tutors themselves.
But rising income inequality explains, at best, half of the increase in the rich-poor academic achievement gap. It’s not just that the rich have more money than they used to, it’s that they are using it differently. This is where things get really interesting.
High-income families are increasingly focusing their resources — their money, time and knowledge of what it takes to be successful in school — on their children’s cognitive development and educational success. They are doing this because educational success is much more important than it used to be, even for the rich.
With a college degree insufficient to ensure a high-income job, or even a job as a barista, parents are now investing more time and money in their children’s cognitive development from the earliest ages. It may seem self-evident that parents with more resources are able to invest more — more of both money and of what Mr. Putnam calls “‘Goodnight Moon’ time” — in their children’s development. But even though middle-class and poor families are also increasing the time and money they invest in their children, they are not doing so as quickly or as deeply as the rich.
The economists Richard J. Murnane and Greg J. Duncan report that from 1972 to 2006 high-income families increased the amount they spent on enrichment activities for their children by 150 percent, while the spending of low-income families grew by 57 percent over the same time period. Likewise, the amount of time parents spend with their children has grown twice as fast since 1975 among college-educated parents as it has among less-educated parents. The economists Garey Ramey and Valerie A. Ramey of the University of California, San Diego, call this escalation of early childhood investment “the rug rat race,” a phrase that nicely captures the growing perception that early childhood experiences are central to winning a lifelong educational and economic competition.
It’s not clear what we should do about all this. Partly that’s because much of our public conversation about education is focused on the wrong culprits: we blame failing schools and the behavior of the poor for trends that are really the result of deepening income inequality and the behavior of the rich.
We’re also slow to understand what’s happening, I think, because the nature of the problem — a growing educational gap between the rich and the middle class — is unfamiliar. After all, for much of the last 50 years our national conversation about educational inequality has focused almost exclusively on strategies for reducing inequalities between the educational successes of the poor and the middle class, and it has relied on programs aimed at the poor, like Head Start and Title I.
We’ve barely given a thought to what the rich were doing. With the exception of our continuing discussion about whether the rising costs of higher education are pricing the middle class out of college, we don’t have much practice talking about what economists call “upper-tail inequality” in education, much less success at reducing it.
Meanwhile, not only are the children of the rich doing better in school than even the children of the middle class, but the changing economy means that school success is increasingly necessary to future economic success, a worrisome mutual reinforcement of trends that is making our society more socially and economically immobile.
We need to start talking about this. Strangely, the rapid growth in the rich-poor educational gap provides a ray of hope: if the relationship between family income and educational success can change this rapidly, then it is not an immutable, inevitable pattern. What changed once can change again. Policy choices matter more than we have recently been taught to think.
So how can we move toward a society in which educational success is not so strongly linked to family background? Maybe we should take a lesson from the rich and invest much more heavily as a society in our children’s educational opportunities from the day they are born. Investments in early-childhood education pay very high societal dividends. That means investing in developing high-quality child care and preschool that is available to poor and middle-class children. It also means recruiting and training a cadre of skilled preschool teachers and child care providers. These are not new ideas, but we have to stop talking about how expensive and difficult they are to implement and just get on with it.
But we need to do much more than expand and improve preschool and child care. There is a lot of discussion these days about investing in teachers and “improving teacher quality,” but improving the quality of our parenting and of our children’s earliest environments may be even more important. Let’s invest in parents so they can better invest in their children.
This means finding ways of helping parents become better teachers themselves. This might include strategies to support working families so that they can read to their children more often.. It also means expanding programs like the Nurse-Family Partnership that have proved to be effective at helping single parents educate their children; but we also need to pay for research to develop new resources for single parents.
It might also mean greater business and government support for maternity and paternity leave and day care so that the middle class and the poor can get some of the educational benefits that the early academic intervention of the rich provides their children. Fundamentally, it means rethinking our still-persistent notion that educational problems should be solved by schools alone.
The more we do to ensure that all children have similar cognitively stimulating early childhood experiences, the less we will have to worry about failing schools. This in turn will enable us to let our schools focus on teaching the skills — how to solve complex problems, how to think critically and how to collaborate — essential to a growing economy and a lively democracy.
By: Sean F. Reardon, Professor of Education and Sociology, Stanford University; Published in The New York Times, Opinion Pages, April 27, 2013
“The First Progressive Revolution”: It Did Happen And It Will Happen Again
Exactly a century ago, on February 3, 1913, the Sixteenth Amendment to the Constitution was ratified, authorizing a federal income tax. Congress turned it into a graduated tax, based on “capacity to pay.”
It was among the signal victories of the progressive movement—the first constitutional amendment in 40 years (the first 10 had been included in the Bill of Rights, the 11th and 12th in 1789 and 1804, and three others in consequence of the Civil War), reflecting a great political transformation in America.
The 1880s and 1890s had been the Gilded Age, the time of robber barons, when a small number controlled almost all the nation’s wealth as well as our democracy, when poverty had risen to record levels, and when it looked as though the country was destined to become a moneyed aristocracy.
But almost without warning, progressives reversed the tide. Teddy Roosevelt became president in 1901, pledging to break up the giant trusts and end the reign of the “malefactors of great wealth.” Laws were enacted protecting the public from impure foods and drugs, and from corrupt legislators.
By 1909 Democrats and progressive Republicans had swept many state elections, subsequently establishing the 40-hour work week and other reforms that would later be the foundation stones for the New Deal. Woodrow Wilson won the 1912 presidential election.
A progressive backlash against concentrated wealth and power occurred a century ago in America. In the 1880s and 1890s such a movement seemed improbable, if not impossible. Only idealists and dreamers thought the nation had the political will to reform itself, let alone enact a constitutional amendment of such importance—analogous, today, to an amendment reversing Citizens United v. FEC and limiting the flow of big money into politics.
But it did happen. And it will happen again.
By: Robert Reich, The American Prospect, February 3, 2013
“Stuck On A Plateau”: Progress For Women Continues Flatlining At Top Ranks Of The Private Sector
After the election, word was that we had just lived through another Year of the Woman. After all, a record twenty women will now be serving in the US Senate next term, representing a fifth of all seats. We had previously failed to breach the 18 percent mark in that legislative body.
But women’s progress has stalled out somewhere else: the top of the private sector. The research organization Catalyst released its 2012 Census today, which tracks the number of women in executive officer and board director positions. Women held just over 14 percent of executive officer positions at Fortune 500 companies this year and 16.6 percent of board seats at the same. Adding insult to injury, an even smaller percent of those female executive officers are counted among the highest earners—less than 8 percent of the top earner positions were held by women. Meanwhile, a full quarter of these companies simply had no women executive officers at all and one-tenth had no women directors on their boards.
But as in the Senate, progress may be slow and even small percentages can be victories. Did this year represent a step forward? Not even close. Women’s share of these positions went up by a mere half of a percentage point or less last year. Even worse, 2012 was the seventh consecutive year in which we haven’t seen any growth in board seats and the third year of stagnation in the C-suite. Meanwhile, women may hold the majority of the jobs in growing sectors such as retail, healthcare and food service, but of the executive officers in those industries they represent less than 18 percent, under 16 percent and just 15.5 percent, respectively.
If this is the sign of the end of men or the richer sex, I fail to see how. Reversing these numbers may take time. But we’re not even on a steady uptick—we’re stuck on a plateau. Fortune tellers who tell us women are on track to dominate the economy need to explain how that can be if we aren’t seeing any movement in these top indicators. Representing half the workforce can still mean inequality if we aren’t breaking through to the top jobs.
By: Bryce Covert, The Nation, December 11, 2012
“Life Is Too Short”: Typical American Worker Would Need 244 Years To Match CEO’s Annual Salary
The average CEO made $9.6 million in 2011, even as workers’ wages remained stagnant and unemployment hovered nationally around 8 percent. Chief Executive Officers are being paid at the highest-ever rate since the AP started tracking the figure in 2006, according to a new report from the news organization.
But while CEOs may be reaping the rewards of higher profits and a growing stock market, very little of that achievement spreads as far as the average worker — or even the company’s stockholders:
Profit at companies in the Standard & Poor’s 500 stock index rose 16 percent last year, remarkable in an economy that grew more slowly than expected.
CEOs managed to sell more, and squeeze more profit from each sale, despite problems ranging from a downgrade of the U.S. credit rating to an economic slowdown in China and Europe’s neverending debt crisis.
Still, there wasn’t much immediate benefit for the shareholders. The S&P 500 ended the year unchanged from where it started. Including dividends, the index returned a slender 2 percent.
As the AP noted, “the typical American worker would have to labor for 244 years to make what the typical boss of a big public company makes in one.”
Growing CEO pay is contributing to the larger trend of increasing income inequality — CEO pay increased 127 times faster than the average worker pay over the last 30 years, and the average Fortune 500 CEO made 380 times what the average worker did last year. Fortune 500 companies made a record $824 billion in 2011.
By: Annie-Rose Strasser, Think Progress, May 25, 2012
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