Inequality is a Problem: There is Too Little
Talk 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.
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