Notes on a Theory…

Thoughts on politics, law, & social science

Inequality is a Problem: There is Too Little

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thebestinequalitygraphupdated-figure1-version3Talk about inequality is in the air. Everyone seems to agree it’s a problem, although a lot of people seem to offering the same old policy proposals to address it. It’s almost as if they are simply attaching what they already want to do to the rhetoric of today’s demands. But maybe the problem is that we misunderstand what exactly the problem of inequality is as far as elites are concerned.

Speaking of which, Jonathan Cohn points us to this story by Scott Amey from the Project On Government Oversight

On the same day that the President spoke eloquently and fervently about the rising income inequality in the United States, the ever-contractor-friendly Office of Federal Procurement Policy (OFPP) in the Office of Management and Budget (OMB) increased the maximum amount of contractor compensation that can be charged to government contracts from a mere$763,029 per employee per year to what OFPP apparently considers a much more reasonable $952,308 per employee per year. This increase primarily affects the employees of the largest government contractors—most notably defense and information technology firms. So taxpayers are now on the hook for paying up to nearly $1 million for every one of these contractor executives or employees every year.

Well it’s certainly true that there are people whose income dwarfs a million dollars–as they say, the .01% are doing way better than the 1%–this isn’t at the top of my agenda.  This brought to mind this piece by Amy Traub from Demo discussing the president’s speech. Here’s the key graph:

The president also vowed that “whatever executive authority I have to help the middle class, I’ll use it.” That’s a tremendously exciting proposition. To begin with, the president could make a big difference for at least one group of low-income Americans trying to climb into the middle class – workers employed by federal contractors. Our research finds that nearly two million private sector employees paid through federal funds earn wages too low to support a family, making $12 or less per hour. Through an executive order like the one that President Lyndon Johnson signed in 1965 to mandate equal employment opportunity for federal contract employees, President Obama has significant authority to improve many of the poorly-paid workers whose work is paid for with our tax dollars.

One problem here is that while the administration is acting now to ensure that those at the top can get even more income from the federal government, they still haven’t acted for those at the bottom. And it’s not like the issue of unilateral executive action to address this hasn’t been raised before, as Josh Eidelson notes.

The White House has offered “no response” to a months-old call from congressional Democrats to bypass Congress and use executive action to raise workers’ wages, the co-chair of the Congressional Progressive Caucus told Salon Tuesday afternoon.


Grijalva and 49 House Democrats wrote to Obama in September to urge he use executive authority to require better labor standards for workers employed through federal government contracts with private companies. That letter followed a prior July letter by Grijalva and others, and a handful of one-day strikes since May by cleaning and concessions workers in D.C. federal buildings. A report by the progressive think tank Demos estimated that about 2 million workers with taxpayer-funded jobs make $12 an hour or less.

And while Demos and Daily Kos among others (and me!) have been trying to call attention to this for some time, not only has the White House ignored it until now, but so have most outside it as well. It’s gotten little attention from the media, and there’s been little organized effort from organized interests to push for it. Even this rather vague suggestion from the speech seems more designed to convince people they plan on acting rather than trumpeting coming action.

The president is right that inequality is a serious problem. It’s good to see how these arguments, which have been pushed by unions, the Occupy movement, and most importantly the service worker strikers and protestors, are getting traction. There are major changes that need to be made to reduce it. But there are small things that could help. The president could act right now to reduce inequality if he chose. Instead, he’s acting to make sure CEOs get a bigger slice of the pie. This would make sense, if the problem with inequality is that there was too little of it.

*Graph is from Lane Kenworthy

Written by David Kaib

December 9, 2013 at 10:56 am

2 Responses

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  1. Nicely done, per usual. Your humble curmudgeon read the speech and saw Standard Bait & Switch Speech #3, structured as such: 1) State obvious, debilitating problem; 2) Toss a few table scraps at the afflicted to assuage them for a few minutes and provide “liberal” pundits with a tag line to flog incessantly; 3) Propose serious policies which will make the problem worse, while pleasing the donor base… and all while attempting to avoid any responsibility for the outcome via rhetorical prophylactic.

    Shorter Obama: “For the first five years of my administration, especially the first two years, I’ve proposed and enacted policies which made inequality rise faster than even during my predecessor’s term. Now that you’ve finally noticed what I’ve done and why, I’m now pledging to spend the next three years talking about inequality to help frame the next election cycle, while still proposing policies that will make it much worse.”

    A $10 minimum wage is still very much a poverty wage, but that’s as far as they’ll go on that… even knowing full well both houses of congress will vote against it–the GOP still has their filibuster on legislation. Universal Pre-K sounds nice for today’s kids that may benefit in 18 years, assuming they don’t end up in poverty and at the bottom of the educational apartheid system another part of the administration is currently setting up. And if TPP somehow manages to come into being, it seems almost all the progress we’ve made over the last century will be up for disposal under their private, corporate “courts,” which can simply wipe out laws seen to impede profits. For Neo-Libs, “equalization” of policies always puts us in a race to the bottom of the slag heap in the name of “competitiveness.” So when they say we need to be more competitive, they’re really saying we need to be poorer.

    The table scraps on offer from party leadership won’t get much traction, except perhaps from elites who want to be seen as somehow “caring” or some such. Main Street will be non-plussed, methinks. But this is probably the best we can expect from a one-trick, Neo-Liberal pony. All it really does is underscore just how tone-deaf and out of touch leadership really is. Not good strategery when launching into an election cycle with the anvil of PPACA around their necks, eh?

    Ford Prefect

    December 9, 2013 at 12:59 pm

  2. […] 3. Inequality is a Problem: There is Too Little? […]

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