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Taxpayer Subsidized Downsizing in America
The business of quick and dirty layoffs has become a familiar feature in our culture. One recent example involved a journalist who worked at a large news organization. He was new to the company so he gratefully accepted the friendship of a well respected senior reporter. One Friday morning his mentor emailed him about a story idea and ended it by writing, “I’ll see you at the 10 AM meeting.” This prompted the following email exchange:
“What meeting? I didn’t get the email.”
“I’ll forward it do you.”
Then a short time later: “Forget the email. This meeting isn’t for you. Don’t come to this meeting!”
This is how the newsroom learned that day of the layoffs. Many senior journalists were let go along with a few younger reporters to avoid the appearance of age discrimination. As these “redundant” employees filed from the meeting they were handed garbage bags for their personal effects and accompanied to their desks by hired chaperones. It was all over in an hour.
Coolly calculated business decisions and pitiless firings toss employees off company books and onto government unemployment rolls somewhere in this country nearly every week. No notices, no outplacement services, no severance pay and no extended benefits are required. In many cases there is no effort to treat employees with the dignity or respect they deserve.
Apart from union contracts or employment agreements, American companies have no legal obligations to citizens being fired. They need not assume any responsibility for the impact it has on an employee, their family or their community. The only business costs of any significance are the premiums companies pay for government unemployment insurance. This easy, low cost ability to fire workers is called “workforce efficiency” and the U.S. is among the most efficient in the world. We ranks 12th out of 144 nations according to the study on global business competitiveness .
In most other advanced nations there are laws requiring companies to provide loyal employees with advanced layoff notices, severance pay and other benefits. These structural costs for downsizing may make businesses a little less competitive, but it brings significant benefits. It helps maintain a stable workforce and postpones government funded assistance to severed employees while they look for jobs. Requiring larger companies to provide mandatory severance benefits helps the nations absorb minor bumps in the economy without adding to problems by throwing people out of work at the first sigh of trouble. It also happens to be a humane way for citizens to treat one another.
Here in this country we treat our labor force as if it were a commodity to be bought and discarded at will. In the end, big business lets taxpayers foot most of the costs for unemployment benefits and supplemental welfare services for people out of work. At the same time the pro-business lobby pushes Congress for business tax breaks and budget cuts in the programs that help the workers they leave behind. Isn’t it time we stopped bowing to the pro-business lobby and stand up for the American worker?
Do Pro-business Policies Reduce Poverty?
President Calvin Coolidge once said, “… the business of the American people is business”. He was quoted out of context at the time. His remarks were aimed at newspaper reporters who were inept at covering business news, but this intentional misquotation seemed to sum up his economic policies.
Today this misquote seems prophetic. Political leaders from both parties speak as if whatever benefits business benefits the people. State governments offer tax breaks and business friendly regulations to attract companies that might bring in more jobs. This is especially true in less wealthy states where poverty rates are high. President Lyndon Johnson’s “War on Poverty” has been transformed into pro-business politics and the promise of work for the worthy.
It is true that the poor need jobs, but the causes of poverty are more complex. There is little regard for other factors such as the need for quality daycare, health care access, job training or transportation. Journalists rarely asks politicians how they plan to help the poor. When they do, candidates talk about their plans to grow the economy. This has some become an acceptable answer.
The insurgent idea that serving business interests is the best way to fight poverty arguably arose in the mid 1970s when corporate interest groups were forming and the business lobby became a powerful influence on Congress. This was the high water mark of American unions as organized business groups launched campaigns to turn Congress and public opinion against them.
At the same time, these industry lobbying groups began fermenting hysteria over the growing “welfare state.” The poor were poor, they argued, because anti-poverty programs make people dependent on government handouts while government regulations restrict the ability of companies to create jobs for those willing to work. According to their narrative, government needed to spend more resources supporting commercial interests and deregulating markets. President Reagan road these pro-business, anti-union, anti-government sentiments to the White House in 1980.
The success of the pro-business movement is evident. In this past election Mitt Romney’s entire presidential campaign centered around the idea that business prosperity was key to growing jobs and the economy. The California Republican Party explicitly incorporates this thinking in their core beliefs:
“” each person is responsible for his or her own place in society. The Republican philosophy is based on limiting the intervention of government as a catalyst of individual prosperity” Republicans believe free enterprise has brought economic growth and innovations that have made this country great. Government should help stimulate a business environment where people are free to use their talents. “[California Rep Committee Philosophy http://cagop.org/inner.asp?z=585A]
In other words, it is the role of government to facilitate the business economy but each individual’s responsibility to avail themselves of the opportunities businesses provide.
The sufficiency of robust commerce to lift all boats isn’t just a conservative or partisan idea. It is expressed and pursued often by Democrats as well. In this last election even President Obama avoided talking about the poor by referring to them as “those aspiring to be middle class.” There was almost no mention by either party of how they would accomplish this beyond trying to grow the economy.
So how well is our pro-business politics working out for the poor? This should be an empirical question that can be tested by examining the data. Are business interests and the interests of the poor perfectly aligned? Are there points of departure where the needs of some folks cannot be met without compromising some business interests? Most importantly, does the data show that when businesses are doing well there are more jobs and better wages?
Profits, Employment and Wages
Corporate profits are a measure of how well businesses are doing, so conventional wisdom would say wages and employment should rise and fall commensurate with corporate profits. The hypothesis is that when companies do well there are more good paying jobs and therefore less poverty. Is there evidence to the contrary?
In June of 2012, the St. Louis Federal Reserve released data showing a number of economic indicators over the last 71 years. Using their report, the graph below plots corporate profits (CP) as a percentage of gross domestic product (GDP) from 1940 to 2011. GDP is total value of all the goods and services sold and a good measure our economy. The shaded areas represent periods of recession. This graph shows that corporate profits rebounded since the 2007 recession and are at the highest level since 1940. The recession is clearly over for corporate America.
Corporate Profits to GDP by St. Louis Federal Reserve
Does it therefore hold true that robust corporate profits mean more jobs? The next graph plots the number of employed Americans as a percentage of our population. This graph uses an employment per population percentage because the population doesn’t stop growing during recessions. A fair comparison over time has to incorporate population growth for the same reason dollar comparisons over time have to factor in inflation.
Civilian Employment to Population Ratios by St. Louis Federal Reserve
This above graph shows that there are actually fewer people working today as a percentage of the population than at any time in the past thirty years. Last June, in an article related to this graphs, Business Insider magazine speculated that one reason corporations are so profitable is that they aren’t employing as many Americans.
Does it also hold true that robust corporate profits means better wages? The next graph depicts the total amount of U.S. wages paid as a percentage of the value of all goods and services sold (GDP). It shows that wages are at an all-time low relative to the wealth being generated. If jobless recoveries are one reason for record corporate profits, the decline in wages pictured in this next graph may be the other.
US Wages as a percentage of GDP by St. Louis Federal Reserve
It turns out that the null hypothesis is true. Corporate profits are at a record high, employment and wages are at a record lows and the notion that what is good for business is good for people is false. The stock markets have recovered. Corporate profits have recovered, but the financial well-being of families have declined. Median incomes are shrinking and prospects for the poor are increasingly dismal.
Are Measures of Business Competitiveness Compatible with the Interests of Individuals?
When considering what factors make businesses more competitive it’s best to take a broad global view. A global survey of business competitiveness was recently conducted and released by the World Economic Forum. The study on global business competitiveness ranks 144 nations according to indicators grouped in 12 general categories.
Overall, the United States is very competitive, ranking 7th out of 144 countries. When you drill down in some of the 12 categories, however, you find indicators favorable for business that are clearly at odds with worker interests. For example, In the area of “Labor Efficiency” the U.S. labor “redundancy” costs are low, which means it doesn’t cost as much here to fire employees. This makes us more competitive (12th place) on this measure. This variable includes the estimated costs of providing advance layoff notices, severance payments any penalties that other countries might impose on employers for terminating “redundant” workers. The U.S. may be more competitive in this measure, but is this factor good for individual workers? Does it reduce poverty?
The U.S. also did well (8th) when it comes to the ease of hiring and firing people. All of this makes for a “flexible” work force, which is good for business, but does it stabilize the workforce or encourage employers to try and weather out minor economic storms?
Are the states with the most competitive business environments doing better at lifting people out of poverty?
Every year for the past five years CNBC has scored all 50 states on 43 measures of business competitiveness. This survey was developed with input from business groups including the National Association of Manufacturers and the Council on Competitiveness. States receive points based on their rankings in each factor and the factors are organized into broader categories. I was unable to locate a detailed list of factors within each category, but CNBC has published general descriptions of each category. In the category of “Workforce” for instance, they indicate that the prevalence of unions in a state is a negative factor for business competitiveness, while lower costs of doing business is a positive factor. Among the factors creating low costs for doing business are lower tax rates and tax incentives or tax abatement for business. The general category findings for each state are published.
The hypothesis, again, is that when companies are doing well there are more good paying jobs and less poverty. So it follows that the states with the most competitive business environments should also be the states with the lowest rates of poverty.
To test this I used the CNBC business competitive findings to compare ten states with the highest poverty rates and ten states with the lowest poverty rates. The high poverty states, starting with the highest poverty rate, are Mississippi, Arkansas, Kentucky, Louisiana, New Mexico, West Firginia, Oklahoma, Texas, Alabama, and South Carolina. The ten states with the lowest rates of poverty, starting from the top, are New Hampshire, Mariland, Alaska, New Jersey, Hawaii, Connecticut, Wyoming, Utah, Minnesota and Massachusetts. The results of this analysis are found in the table below.
State poverty levels and business competitiveness by Brian Lynch. Business Competitiveness Rankings are from CNBC’s Top States for Business Special Report: ttp://www.cnbc.com/id/100000994
It is striking that states with the highest poverty levels are also states that are more business competitive. The average rank in “Overall Business Competitiveness” for high poverty states is 7 points higher (more business friendly) than the rank for low poverty states. In the “cost of business” category, high poverty states have an average rank of 18 versus 37 for low poverty states. In the “workforce” category, which includes the prevalence of unions in a state, the high poverty states have an average rank of 20 versus 32 in low poverty states.
Despite being “business friendly”, the ten high poverty states have over eight million poor citizens while the ten low poverty states have just over three million poor. There may be some political asymmetry as well since 7 out of 10 states with the high poverty rates have conservative Republican governors, while 6 out of 10 low poverty states have Democratic governors.
Conclusions
It is clear that pro-business politics, which puts commercial interests above the individual’s interests, isn’t working for the poor or for most Americans. While a healthy economy is necessary for individual prosperity, it is clearly not sufficient. What is best for business may be good for some, but not for all of our citizens. There are certain business interests at odds with individual interests. Our political leaders need to acknowledge this when making policy.
The total dominance of pro-business politics has successfully crowded out meaningful debate on how to help the poor, the ranks of whom are swelling every year. The poor are more marginalized and invisible than ever. Almost no one speaks for them. There is no hope for them in the more competitive business policies being proposed. In fact, business prosperity is no longer well correlated with job growth or adequate pay, so plans to grow the economy ring hollow. The social contact that once pegged wage increases with increased productivity is broken. As a result, big business can flourish while the welfare of workers and the poor decline. This is unacceptable.
The ascendance of pro-business politics has given rise to commerce without conscience and too many ordinary citizens are being left behind. We need to change the dialogue and strike a better balance. We need to reclaim the role that government must play in meeting the needs of all our people.
Our Long-term Debt Will Be Fixed If Congress Does Nothing – But Don’t Count On that!
According to the Congressional Budget Office information (see below), it appears that if the “do-nothing” Congress actually does nothing the nation’s long term debt outlook would significantly improve. As it stands, temporary tax cuts are set to expire and automatic budget cuts already passed by Congress with bi-partisan support are set to take effect. As a result of laws already on the books our long-term debt problem is about to be fixed. But Congress will have none of this! Nor should they!
The 2012 Long-Term Budget Outlook: Infographic
A Billionaire to Regulate Billionaires at the SEC
A TALE OF TWO NORMS
NORM AS DIRECTOR:
SEC Names Norm Champ as Director of Division of Investment Management
2012-129
Do Business Friendly Policies Reduce Poverty?
Do Business Friendly Policies Reduce Poverty?. A look at the numbers.
Wealth Redistribution Begins with A Fair Wage
When America’s wealthy elite talk of the redistribution of wealth it is a derisive term applied to federal aid to the working poor paid out of federal tax revenues. The rich are unhappy that some of their compensation goes to support low wage earners. But the growing need for federal aid to support working families is really a consequence of the unfair redistribution of wealth that takes place every working day.
Beginning around 1978 and continuing today, hourly employees have not received a fair wage for a days work. More specifically, hourly wages stopped keeping pace with the rise of hourly productivity (or GDP). Workers continued generating new wealth but they were no longer receiving a share in the additional wealthy they were creating. This simple fact, compounded over the decades, is the single most relevant factor behind our economic difficulties today. Below are some key findings from a report regarding how America’s wage earners are doing. It is from a report put out by the Economic Policy Institute.
THE STATE OF WORKINGAMERICA
Policy-driven inequality blocks growth for low- and middle-income Americans
http://stateofworkingamerica.org/fact-sheets/key-findings/
Daily stock indices, monthly employment reports, and even quarterly data on the gross domestic product are insufficient indicators for answering this vital question:
How well is the American economy providing acceptable growth in living standards for most households?
EPI’s The State of Working America, 12th Edition looks broadly at available data and concludes that the answer is simply “not well at all.”
This is not because the economy has failed to grow, on average. National income has grown enough to substantially improve the fortunes for all. As the data reveal, however, it is the top 5%, the top 1%, and fractions of the top 1 percent that have received almost all the benefits of the economy’s growth.
America’s low- and middle-income families have suffered a lost decade
22% – Despite an increase in productivity of more than 22 percent [between 2000 and] 2010, typical wage earners made roughly the same amount per hour as in 2000.
↓ 6% – Median family income was 6 percent lower in 2010 than in 2000.
This lost decade of no wage and income growth began well before the Great Recession—which started in Dec. 2007—battered wages and incomes. In the historically weak economic expansion following the 2001 recession, hourly wages and compensation failed to grow for either high school– or college-educated workers.
Another lost decade ahead?
Consensus forecasts predict that unemployment will remain high for many more years, suggesting that typical Americans are in for another lost decade of living standards growth. For example, as a result of persistent high unemployment, the incomes of families in the middle fifth of the income distribution in 2018 will likely still be below 2000 levels.
A generation of rising inequality.
156% – From 1979–2007, wages for the top 1 percent of wage earners grew 156 percent, compared to 17 percent for the bottom 90 percent.
60% – From 1979–2007, the top 1 percent of tax units claimed 60 percent of the cash, market-based income growth, compared to 9 percent for the bottom 90 percent.
38.3% – From 1983–2010, 38.3 percent of the wealth growth went to the top 1 percent and 74.2 percent to the top 5 percent. The bottom 60 percent, meanwhile, suffered a decline in wealth.
Rising inequality prevented wage growth for low- and middle-income workers
0.6% – From 1979–2007, incomes for the middle fifth of households grew, but the annualized rate of growth (0.6 percent) reflects a deep economic failure. This middle-fifth growth lagged far behind average growth over the same period, and pales in comparison to growth during earlier periods of history; between 1947 and 1979, for example, cash incomes (not even including expanded employer-provided and government in-kind benefits like health care) for the middle fifth of American families grew at an average annual rate of 2.4 percent—or four times as fast as what was achieved by the middle fifth of households between 1979 and 2007. If the middle fifth of the income distribution had grown at the average rate of income growth overall, these households would have had income $18,897 higher in 2007.
7% – The typical worker has not gained from improvements in the ability to produce more goods and services per hour worked (productivity growth). Between 1979 and 2011, productivity grew 69 percent, but median hourly compensation (wages and benefits) grew just 7 percent.
Policy choices generated inequality
Policy decisions made over the last several decades have caused this explosive rise in inequality. These decisions include: lowering individual and corporate tax rates; deregulating industries; failing to maintain the value of the minimum wage; failing to protect the right of workers to obtain collective bargaining; and failing to prevent asset bubbles.
Additional findings.
These sobering data could be mitigated by the ability of Americans to move freely up and down the income or wealth ladders (mobility). There is no evidence, however, that mobility has increased to offset rising inequality.
Further examination of the data through the lenses of race and ethnicity finds the overall data obscure the dramatically worse outcomes minorities face.
Gender gaps have been reduced in many of our labor market analyses. While due in large part to substantial gains for women, part of the closing of the gap has occurred because men have lost significant ground.
U.S. Drops to 12th Place on Global Prosperity and Well Being Index
How prosperous is the United States compared with other nations? The latest Prosperity Index is out, and the news for America is disappointing. The U.S. fell to 12th place in the world, just behind Luxembourg and Ireland. Partisan and ideologically driven arguments should to be set aside for the moment as we analyze and assess this data. We should take this finding as a challenge to be solved by appealing to our strengths as a nation. In the coming months I will be exploring various aspects effecting our national prosperity. I invite the readers of this blog to check back periodically to see what I uncover.
The 2012 Legatum Global Prosperity Index of Wealth and Well Being
The just released Global Prosperity Index finds the United States has fallen to 12th place in the world. This is the first time the US has not been in the top 10 group. The Index is based on the Dubai-based Legatum Institute’s assessment of prosperity based on both material wealth and personal wellbeing in 142 different countries, in eight categories ranging from the economy and entrepreneurship to health and personal freedom. The top 25 nations ranking is as follows:
Prosperity Index
1 – Norway
2 – Denmark
3 – Sweden
4 – Australia
5 – New Zealand
6 – Canada
7 – Finland
8 – Netherlands
9 – Switzerland
10 – Ireland
11 – Luxembourg
12 – U.S.
13 – UK
14 – Germany
15 – Iceland
16 – Austria
17 – Belgium
18 – Hong Kong
19 – Singapore
20 – Taiwan
21 – France
22 – Japan
23 – Spain
24 – Slovenia
25 – Malta
There are eight categores by which national prosperity is judged. The United States scored as follows on these eight categories:
Ranking Catigory
20 Economy
12 Entrepreneurship /Opportunity
10 Governance
5 Education
2 Health
27 Safety/Security
14 Personal Freedom
10 Social Capital
Half of All Full-time Employees Earn Less Than $19/hr.
Bureau of Labor Statistics
For release 10:00 a.m. (EDT) Thursday, October 18, 2012 USDL-12-2072
Technical information: (202) 691-6378 • cpsinfo@bls.gov • www.bls.gov/cps
Media contact: (202) 691-5902 • PressOffice@bls.gov
USUAL WEEKLY EARNINGS OF WAGE AND SALARY WORKERS THIRD QUARTER 2012
Median weekly earnings of the nation’s 103.6 million full-time wage and salary workers were $758 in the third quarter of 2012 (not seasonally adjusted), the U.S. Bureau of Labor Statistics reported today.
This was 0.7 percent higher than a year earlier, compared with a gain of 1.7 percent in the Consumer Price Index for All Urban Consumers (CPI-U) over the same period.
Data on usual weekly earnings are collected as part of the Current Population Survey, a nationwide sample survey of households in which respondents are asked, among other things, how much each wage and salary worker usually earns. (See the Technical Note.) Data shown in this release are not seasonally adjusted unless otherwise specified. Highlights from the third-quarter data are:
- Seasonally adjusted median weekly earnings were $765 in the third quarter of 2012, little changed from the previous quarter ($773). (See table 1.)
- On a not seasonally adjusted basis, median weekly earnings were $758 in the third quarter of 2012. Women who usually worked full time had median weekly earnings of $685, or 82.7 percent of the $828 median for men. (See table 2.)
- The female-to-male earnings ratio varied by race and ethnicity. White women earned 83.4 percent as much as their male counterparts, compared with black (93.2 percent), Hispanic (87.5 percent), and Asian women (73.1 percent). (See table 2.)
- Among the major race and ethnicity groups, median weekly earnings for black men working at full-time jobs were $633 per week, or 74.1 percent of the median for white men ($854). The difference was less among women, as black women’s median earnings ($590) were 82.9 percent of those for white women ($712). Overall, median earnings of Hispanics who worked full time ($556) were lower than those of blacks ($606), whites ($780), and Asians ($915). (See table 2.)
- Usual weekly earnings of full-time workers varied by age. Among men, those age 45 to 54 and 55 to 64 had the highest median weekly earnings, $976 and $980, respectively. Usual weekly earnings were highest for women age 35 to 64; weekly earnings were $740 for women age 35 to 44, $754 for women age 45 to 54, and $766 for women age 55 to 64. Workers age 16 to 24 had the lowest median weekly earnings, at $437. (See table 3.)
- Among the major occupational groups, persons employed full time in management, professional, and related occupations had the highest median weekly earnings—$1,300 for men and $948 for women. Men and women employed in service jobs earned the least, $530 and $440, respectively. (See table 4.)
- By educational attainment, full-time workers age 25 and over without a high school diploma had median weekly earnings of $464, compared with $648 for high school graduates (no college) and $1,170 for those holding at least a bachelor’s degree. Among college graduates with advanced degrees (professional or master’s degree and above), the highest earning 10 percent of male workers made $3,448 or more per week, compared with $2,311 or more for their female counterparts. (See table 5.)
Revision of Seasonally Adjusted Usual Weekly Earnings Data The Usual Weekly Earnings news release for the fourth quarter of 2012 will incorporate annual revisions to seasonally adjusted data for the number of full-time wage and salary workers and median weekly earnings in current dollars. (See table 1.) Estimates for constant (1982-84) dollar median weekly earnings also will be affected by revisions to the current dollar series. Seasonally adjusted estimates back to the first quarter of 2008 will be subject to revision.
Go to Tables: http://www.bls.gov/news.release/pdf/wkyeng.pdf
U.S. Global Business Competitiveness Slipping
The World Economic Forum published a study on global business competitiveness that ranks 144 nations according to indicators in 12 categories. We American’s sometimes inflate our greatness among nations. With respect to our Militarily this is justified. The United States represent nearly half of the worlds total military capability. But on measures of national well being, ecology, human rights, health care, press freedom and many other critical areas we often fall short in comparison to other advanced nations.
Given how highly our politics regards U.S. business interests, you might assume our global business competitiveness makes us number one in the world. Keep in mind as you read on that many of the specific measures that make businesses competitive are not in the best interest of ordinary citizens. Business interests and social interests are sometime opposed.
The business competitiveness study categories and where the United States ranks:
CATIGORY RANK (Out of 144)
| 1. Institutions | 42 |
| 2. Infrastructure | 14 |
| 3. Macroeconomic Environment | 111 |
| 4. Health and Primary Education | 34 |
| 5. Higher Education and Training | 8 |
| 6. Goods Market Efficiency | 23 |
| 7. Labor Market Efficiency | 6 |
| 8. Financial Market Development | 16 |
| 9. Technological Readiness | 11 |
| 10. Market Size | 1 |
| 11. Business Sophistication | 10 |
| 12. Innovation | 6 |
Overall, the United States is very competitive, ranking 7th out of 144 nations. This is a decline from last year, however, when we were 5th out of 142 countries. Major reasons for the overall low marks can be found in our Macroeconomic situation, primarily our government budge imbalance and huge national debt on which we were ranked 140th and 136th respectively . Our gross national savings is also very low, with a rank of 114th in the world. Still, confidence in America’s credit rating remains high, 89.4%, or 11th among the nations.
Looking at our strengths and weaknesses, in the Institutions category our top ranking was 5th in investor protections. Our next highest rankings were in efficiency of corporate boards (23rd), intellectual property protection and ethical behavior of firms (both ranked 29th). Our lowest ranking was on the business cost of terrorism (124th). Next lowest rankings were in the business cost of crime and violence, and the business cost of organized crime (86th and 87th).
We did better in Infrastructure. We ranked 1st in available airline seats and 15th in telephone land lines. Interestingly, mobile phone subscriptions were our lowest indicator (72nd) followed by the quality of our electric supply (33rd in the world). Our transportation infrastructure didn’t fair much better (30th).
In the category of Health and Primary Education we had no malaria impact on businesses (1st) but the prevalence and business impact of HIV was high ranking the US 92nd and 90th in the world. Also surprising was our low ranking on primary school enrollments (58th), infant mortality (41st) and the quality of our primary education (38th).
In Higher Education and Training we are doing well in post-secondary education (2nd) and the availability of research and training opportunities (9th). We ranked 47th in secondary school enrollment and the quality of our math and science education.
In Goods and Market Efficiency we rank 9 and 10 in market dominance and buyer sophistication. Our worst ranking is on the business tax rate to profit ration (103rd).
In the area of Labor Efficiency we apparently have the lowest labor redundancy costs in the world (1st) and our hiring and firing practices are also great for business (8th). The labor redundancy variable estimates the cost of advance notice requirements, severance payments, and penalties due when terminating a redundant worker. We also ranked 5th in the brain drain measure and 8th in the efficiency of our hiring and firing practices. Our low rankings here were in the women to men ratio in the work force (we ranked 44th) and our cooperation in labor-employer relations (42nd) , perhaps no surprise give our ease and thrift in firing people).
In the Financial Market Development category we are very competitive in the availability of venture capital (10th) but weak on the strength of our banking institutions (80th). Regarding the regulation of security and exchange, we also ranked low (39th) although it is unclear if this means we are over or under regulated.
In the area of Technological Readiness we ranked 8th in the number of internet subscribers yet 20th in the percentage of individuals using the internet. We rank lowest, (43rd) on foreign direct investment and technology transfer.
Market Size, we remain number one in domestic market size (we buy more things) and number two in foreign market size.
In the category of Business Sophistication we are third in the extent of marketing and ranked in the low teens on other measures, such as production process (13th) and local supplier quality/quantity (14th).
When it comes to Innovation, The United States is still doing very well. We are ranked in the single digits on most measures, including University-industry collaboration in R&D (3rd), Availability of scientists and engineers (5th), Quality of scientific research institutions (6th), Capacity for innovation and Availability of scientists and engineers (both ranked 7th). Our lowest ranking in this area was in government procurement of advanced tech products (15th).
Read more at: http://reports.weforum.org/global-competitiveness-report-2012-2013/
Graphic View of Wealth Distribution in America
Who Owns What In America?
Imagine lining up everyone in America according to what they own, starting with those who own nothing and continuing down the line to those who own a lot. Now divide that line of people into five equally long segments. Each segment would include 20% of the total population, or about 61.7 million people. Next, add up the total amount of what everyone owns in each segment. The result is represented by the pie chart below. The whole pie represents the total wealth in America. The size of each slice represent the ratio of how much each segment owns of America’s wealth. The slice of ownership for the poor and working poor are barely visible. 80% of all Americans own just 15.6% of America’s wealth.
The number of people who slipped into poverty in 2010 is an all time high of 46.2 million, so the poorest 20% in terms of wealth ownership includes 15.5 million folks who technically don’t meet the poverty criteria, based on income levels. The poor essentially own almost nothing. The working poor own twice of almost nothing.
When I first plotted the distribution of wealth in America in this pie chart it reminded me a little of that Pac-Man character. The richest Americans own 84.6% of everything while the remaining 80% of us have 15.4% left. The statistical middle of what I labeled the “Middle America” owns just 4% of America’s wealth assets.
This raises an interest question. How do we define middle class? Is Middle America, as I’ve labeled it here the same as middle-class?
No, We usually define middle class by income levels, not wealth ownership. As of 2011 the median family income has declined to just over $51,000 per year. If we were to define middle class based on 10% of families above and below the median income (as I have done here for wealth ownership, the narrow and very low income range would not fit most peoples conception of “middle class”.
But this pie chart displays the distribution of wealth, not income. It includes all equity ownership in everything from homes to 401K’s, stocks, bonds, businesses, etc. This chart cannot be directly converted to income levels. There are people with equity but not much income and people with large incomes but not much equity.
However, from a visual perspective the median income (middle most income) will still fall somewhere near the center of the red colored slice, about where the label line is drawn. Individuals in that group made about $26,364 per year, or about $52,000 per household in 2010. Beyond that it is difficult to superimpose income brackets on this pie chart
This graphic really make clear just how compressed wealth distribution is in America. Missing from the public dialogue over the past few decades is mention of the working poor. Politicians and the media seem to focus on the middle class or the poor as if there were no working poor.
The other conclusion I come away with is that there is plenty of wealth here in the still wealthiest nation on Earth. Telling ourselves that we can’t afford social services for the poor or good public schools or what ever else we desire as a nation is simply not true. As a nation we can afford a much better society than we have now.
Data Driven Viewpoints 