38 Only reason average family incomes Haskins and Sawhill, Creating an Opportunity Society, 10.
39 “They are also working more hours” Larry Mishel, interview, June 30, 2010.
40 The toll on young mothers Phillips, Wealth and Democracy, 113; U.S. Bureau of Labor Statistics, “Employment Characteristics of Families Summary,” March 24, 2011, http://www.bls.gov.
41 “World’s highest ratio of two-income households” Phillips, Wealth and Democracy, 113, 164.
42 An even tighter financial bind Elizabeth Warren and Amelia Warren Tyagi, The Two-Income Trap: Why Middle-Class Parents Are Going Broke (New York: Basic Books 2003), 20–24.
43 “A crisis in middle-class family economics” Ibid., 34.
44 The typical college graduate Hacker and Pierson, Winner-Take-All Politics, 35–38.
45 Entry-level college graduate salaries Heidi Shierholz, “New College Grads Losing Ground on Wages,” Economic Snapshot, Economic Policy Institute, August 31, 2011, http://www.epi.org. Men’s salaries fell from $22.75 per hour in 2000 to $21.77; women’s fell from $19.38 to $18.43.
46 Falling further and further behind the executive elite Larry Mishel, interview, June 30, 2010; Catherine Rampell, “Many with New College Degree Find the Job Market Humbling,” The New York Times, May 18, 2011; Joann S. Lublin, “A Closer Look at Three Big Paydays,” The Wall Street Journal, November 15, 2010.
47 “A critical problem of legitimacy” Lawrence H. Summers, “The Future of Market Capitalism,” Harvard Business School Forum, October 14, 2008, http://www.hbs.edu.
48 Average Americans would be far better off today Hacker and Pierson, Winner-Take-All Politics, 25.
49 Would have earned $743 billion more Jacob S. Hacker and Paul Pierson, cited in Kevin Drum, “Why Screwing Unions Screws the Entire Middle Class,” with statistical table, “Your Loss, Their Gain,” Mother Jones, March–April 2011.
50 Rising numbers of business managements Jacob S. Hacker, The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream (New York, Oxford University Press, 2008), 69.
51 One-third had failed to find U.S. Bureau of Labor Statistics, “Worker Displacement, 2001–03,” July 30, 2004, http://www.bls.gov/news.release/archives/disp_07302004.pdf. See also U.S. Bureau of Labor Statistics, “Worker Displacement, 2007–09,” August 26, 2010.
52 Fifty-nine thousand factories and production facilities U.S. Bureau of Labor Statistics, “Quarterly Census of Employment & Wages Database,” accessed January 20, 2012, http://www.bls.gov.
53 17.1 million to 11.8 million U.S. Bureau of Labor Statistics, “Employment, Hours, and Earnings from the Current Employment Statistics survey (National),” data extracted on January 23, 2012, http://www.bls.gov.
54 After the 1990 downturn Peter S. Goodman, “Despite Signs of Recovery, Chronic Joblessness Rises,” The New York Times, February 21, 2010.
55 “The weakest hiring cycle” Stephen Roach, “More Jobs, Worse Work,” The New York Times, July 22, 2004.
56 Sitting on idle capital “No Rush to Hire Even as Profits Soar,” The Wall Street Journal, February 6, 2011.
57 Roughly twenty-nine million Americans U.S. Bureau of Labor Statistics, “The Employment Situation, December 2010,” January 7, 2011, http://www.bls.gov. Unemployed, 14.5 million; part-time wanting full-time work, 8.9 million; 2.6 million marginally attached (day laborers); discouraged dropouts from labor market, 3.6 million.
58 Hoarding $1.9 trillion in cash Alan Greenspan, citing Federal Reserve data, in “Activism,” International Finance 14, no. 1 (Spring 2011), www.cfr.org/content/publications/attachments/infi_1277_Rev6.pdf.
CHAPTER 7: THE GREAT BURDEN SHIFT
1 “The burden shift” Metropolitan Life, “The MetLife Study of the American Dream,” January 25, 2007.
2 “More and more economic risk” Hacker, Great Risk Shift, xv–xvi.
3 “One Recession, Two Americas” Paul Taylor and Rich Morin, Pew Research Center, “One Recession, Two Americas,” September 24, 2010, http://www.pewsocialtrends.org.
4 Survey documented a class split Ibid. Among other findings: 43 percent had been unemployed at some point; 35 percent had serious difficulty paying their rent or their mortgage.
5 The fault lines Ibid.
6 “The single most common word” Pew Research Center, “Public Looks Back at Worst Decade in 50 Years,” December 21, 2009, http://www.pewresearch.org.
7 The numbers describe the damage “Household Wealth Falls by Trillions,” The New York Times, March 13, 2009.
8 The Misery Index tracked Edward Hyman’s Misery Index, cited in Phillips, Wealth and Democracy, 133.
9 So pervasive U.S. Bureau of Labor Statistics, “National Compensation Survey: Employee Benefits in Private Industry,” March 2006, http://www.bls.gov/ncs/ebs/sp/ebsm0004.pd.
10 Four of whose owners “The Forbes 400: The Richest People in America,” net worth calculated September 2011, accessed January 26, 2012, http://www.forbes.com.
11 To roll back health care Steven Greenhouse and Reed Abelson, “Wal-Mart Cuts Some Health Care Benefits,” The New York Times, October 20, 2011.
12 “The truth is” Excerpt of interview of Jon Lehman for the Frontline program “Is Wal-Mart Good for America?,” July 16, 2004. http://www.pbs.org/frontline./frontline.
13 Wal-Mart reported Michael Barbaro, “Wal-Mart Says More than Half Its Workers Have Its Health Insurance,” The New York Times, January 23, 2008.
14 “Another example of corporations” Greenhouse and Abelson, “Wal-Mart Cuts.”
15 Costco, a big-box retail rival John Matthews, Costco senior vice president for human resources and risk management, interview with Owen Smith, January 26, 2012; James Flanigan, “Costco Sees Value in Higher Pay,” Los Angeles Times, February 15, 2004; Ann Zimmerman, “Costco’s Dilemma: Be Kind to Its Workers, or Wall Street?” The Wall Street Journal, March 26, 2004.
16 “We try to provide” “CEO Interview: Costco’s Jim Sinegal,” FastCompany, November 1, 2008, www.fastcompany.com/magazine/130/thinking-outside-the-big-box.html.
17 Sinegal consistently took R. J. Hottovy, “Morningstar’s 2011 CEO of the Year Redefined Retail,” Morningstar, January 4, 2012.
18 Costco has outperformed Wal-Mart Ibid.
19 The switch offered big savings Brooks Hamilton, interview, December 8, 2010. Hamilton, a corporate pension consultant, based his calculations on Labor Department figures.
20 “[The] pension has been a drag” Jeffrey Immelt, GE Annual Outlook Investors Meeting, transcript, December 14, 2010, http://www.ge.com.
21 Pension plans were moneymakers Ellen E. Schultz, Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers (New York: Portfolio/Penguin, 2011), 9.
22 “Many, like Verizon” Ibid., 3–25.
23 “This fundamental transformation” Hacker, Great Risk Shift, ix–x.
24 “The burden shift has turned” Metropolitan Life, “The MetLife Study of the American Dream,” January 25, 2007.
25 “Having an impact” Ibid.
26 Two-thirds said they had not Ibid.
27 Two years later Ibid. MetLife’s nationwide survey found 68 percent said they had not achieved the American Dream; 48 percent of baby boomers and older (over forty-two) said they did not expect to achieve the American Dream. See also “The 2009 MetLife Study of the American Dream.”
28 Personal bankruptcies soared American Bankruptcy Institute, Annual Business and Non-Business Filings by Year (1980–2009), http://www.abiworld.org.
29 “Bankruptcy has become deeply entrenched” Warren and Tyagi, Two-Income Trap, 6.
30 Families go over the financial cliff Board of Governors of the Federal Reserve System, Federal Reserve Statistical Release Z. 1, Flow of Funds Accou
nts of the United States, table L,100, September 16, 2011, http://www.federalreserve.gov; Federal Reserve Statistical Release G. 19, Consumer Credit, October 7, 2011, http://www.federalreserve.gov.
31 “I was pretty much borrowing” Pam Scholl, interview, December 29, 2011.
32 “We have gone from” Robert Lawless, testimony before U.S. Senate Committee on Judiciary, December 4, 2008, http://www.judiciary.senate.gov/pdf/08-12-04LawlessTestimony.pdf. Also see Federal Reserve Statistical Release G. 19, Consumer Credit; and Federal Reserve Statistical Release Z.1.
33 “Just a generation ago” Warren and Tyagi, Two-Income Trap, 127.
34 “The single biggest determinant” Lawless, interview, November 3, 2010.
35 “That really opened the floodgates” Ibid.
36 “If they make the minimum” Excerpt of interview of Shailesh Mehta for the Frontline program “The Card Game,” November 24, 2009. http://www.pbs.org/frontline./frontline.
37 “More than 75 percent” Warren and Tyagi, Two-Income Trap, 131, 139–140.
38 Credit card companies blanketed the nation Ibid., 130.
39 “High-income deadbeats” Lawless, interview, November 3, 2010.
40 Bankruptcies were back over 2 million Bankruptcy Data Project, Harvard University, accessed February 24, 2011, http://bdp.law.harvard.edu. For 2009, the figure was 1,950,492; and for 2010, it was 2,094,623.
41 “Functioned like a barricade” Robert M. Lawless, Angela K. Littwin, Katherine M. Porter, et al., “Did Bankruptcy Reform Fail? An Empirical Study of Consumer Debtors,” American Bankruptcy Law Journal 82 (October 15, 2008).
42 “The families in bankruptcy” Ibid.
CHAPTER 8: THE WEALTH GAP
1 The economics “of the 1%” Joseph E. Stiglitz, “Inequality: Of the 1%, by the 1%, for the 1%,” Vanity Fair, May 2011.
2 “The fact is” Michael Abramowitz and Lori Montgomery, “Bush Addresses Income Inequality,” The Washington Post, February 1, 2007.
3 “By 2004, the richest 1 percent” Robert Frank, Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich (New York: Crown Publishing Group, 2007), 3.
4 “It is absolutely excessive” Matthew Symonds, “Absolutely Excessive,” Vanity Fair, October 2005.
5 WELCOME TO THE PLUTONOMY MACHINE Citigroup, “Plutonomy: Buying Luxury, Explaining Global Imbalances,” October 16, 2005.
6 “The rich now dominate” Citigroup, “Revisiting Plutonomy: The Rich Getting Richer,” March 6, 2006, http://www.ifg.org.
7 A wealthy American plutocracy Paul Krugman, “Graduates Versus Oligarchs,” The New York Times, February 27, 2006; Stiglitz, “Inequality.”
8 “The top 1% alone control” David Hirschman, “The New Wave of Affluence,” Advertising Age, May 23, 2011; David Hirschman, “On the Road to Riches,” May 22, 2011, Ad Age blogs, http://adage.com.
9 Luxury goods were selling Stephanie Clifford, “Even Marked Up, Luxury Goods Fly off Shelves,” The New York Times, August 4, 2011.
10 Most people estimated Benjamin I. Page and Lawrence R. Jacobs, Class War? What Americans Really Think About Economic Inequality (Chicago: University of Chicago Press, 2009); Inequality Survey, 37–38, pay data cited from simplyhired.com, November 8, 2007, and Corporate Library Survey reported at aflcio.org/corporatewatch/paywatch.
11 Eleven different polls Page and Jacobs, Class War?, 41.
12 Jack-and-the-Beanstalk growth Benjamin M. Friedman, The Moral Consequences of Economic Growth (New York: Alfred A. Knopf, 2005), 116–120; Paul Krugman, “The Third Depression,” The New York Times, June 27, 2010.
13 This small elite Emmanuel Saez, “Striking It Richer: The Evolution of Top Incomes in the United States,” July 17, 2010.
14 Incomes over $352,000 Emmanuel Saez, “Striking It Richer: The Evolution of Top Incomes in the United States” (updated with 2009 and 2010 estimates), March 2, 2012. The calculations of Emmanuel Saez and Thomas Piketty cited throughout this book are based on salary, bonuses, and capital gains income—all inclusive. See also Shaila Dewan and Robert Gebeloff, “One Percent, Many Variations,” The New York Times, January 15, 2012. The Times noted there were various ways of calculating income and reported that the Federal Reserve’s Survey of Consumer Finances set the cutoff for the top 1 percent at $690,000 in 2007, the latest year for which Federal Reserve data is available. Economists at the Tax Policy Center and other institutions have developed figures close to $600,000.
15 Made $1.35 trillion in 2007 Frank, Richistan, 3.
16 The top 1 percent garnered two-thirds Saez, “Striking It Richer,” Pathways Magazine.
17 And this tiny group reaped 93 percent Saez, “Striking It Richer,” update, March 2, 2012.
18 The top 0.01 percent Ibid., figure 3.
19 $10 million a week David Cay Johnston, “Scary New Wage Data,” October 24, 2010, http://www.tax.com.
20 Half a dozen hedge fund managers “Pay of Hedge Fund Managers Roared Back Last Year,” The New York Times, April 1, 2010.
21 Paulson had already made nearly $4 billion Gregory Zuckerman, “Trader Racks Up a Second Epic Gain,” The Wall Street Journal, January 28, 2011.
22 Translating these astounding numbers Frank, Richistan, 3–12; see chart, 6.
23 Billionaireville Frank, Richistan, 11–12.
24 The Walton family Tony Judt, Ill Fares the Land (New York: Penguin Group, 2010), 14.
25 The super-rich and ultra-rich often compete Frank, Richistan, 8–12.
26 Ever more expensive toys Symonds, “Absolutely Excessive.”
27 When the rich build Robert H. Frank, “Why 2 Paychecks Are Barely Enough,” The New York Times, Sunday Business, January 1, 2012.
28 “Income inequality is real” Abramowitz and Montgomery, “Bush Addresses Income Inequality.”
29 America is now the most unequal Will Hutton, “Log Cabin to White House? Not Any More,” The Observer, April 28, 2002, http://www.observer.co.uk/comment/story/0,6903,706484,00.html; Organisation for Economic Co-operation and Development, “Divided We Stand: Why Inequality Keeps Rising,” An Overview of Growing Income Inequalities in OECD Countries: Main Findings, accessed December 6, 2011, http://www.oecd.org/dataoecd/40/12/49170449.pdf.
30 “Those at the top” Hacker and Pierson, Winner-Take-All Politics, 34–40.
31 The degree is not what explains that Ibid., 35–38.
32 “The most telling fact” Larry Mishel, interview, July 10, 2010.
33 “The U.S. tax code” David Cay Johnston, Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else (New York: Penguin Group, 2003), 11.
34 As the tax code has been written Thomas L. Hungerford, “An Analysis of the ‘Buffett Rule,’ ” Congressional Research Service, October 7, 2011, fpc.state.gov.
35 The key driver U.S. Treasury Department, “Capital Gains and Taxes Paid on Capital Gains for Returns with Positive Net Capital Gains, 1954–2008,” http://www.ustreas.gov/offices/tax-policy/library/capgain1–2010.pdf.
36 Garner roughly half of all capital gains Robert Lenzner, “The Top 0.1% of the Nation Earn Half of All Capital Gains,” Forbes, November 20, 2011.
37 “If you make money with money” “Warren Buffett Tells Charlie Rose Why Congress Should Stop ‘Coddling’ the Super-Rich,” transcript, PBS, Charlie Rose, August 17, 2011, http://www.cnbc.com.
38 Personally, Buffett admitted Ibid.; and Warren Buffett, “Stop Coddling the Rich,” The New York Times, August 14, 2011.
39 The Forbes 400 Richest Americans Howard Zinn, A People’s History of the United States, 1492–Present (New York: HarperCollins, 1999), 580; see also Conor Dougherty, “Income Slides to 1996 Levels,” The Wall Street Journal, September 13, 2011; Census Bureau, “Income, Poverty, and Health Insurance Coverage in t
he United States: 2010.”
40 The Bush tax cuts Internal Revenue Service, U.S. Individual Income Tax: Personal Exemptions and Lowest and Highest Bracket Tax Rates, and Tax Base for Regular Tax: Tax Years 1913–2008, http://www.irs.gov/taxstats/article/0,,id=175910,00.html.
41 The top 1 percent bracket reaped Edmund L. Andrews, “Tax Cuts Offer Most for Very Rich, Study Says,” The New York Times, January 8, 2007; Field-house and Pollack, “Bush-Era Tax Cuts,” Economic Policy Institute, June 1, 2011; Thomas L. Hungerford, “Changes in the Distribution of Income Among Tax Filers Between 1996 and 2006: The Role of Labor Income, Capital Income, and Tax Policy,” Congressional Research Service, December 29, 2011, fpc.state.gov.
42 Average income jump fivefold Fieldhouse and Pollack, “Bush-Era Tax Cuts.”
43 At the other end Dougherty, “Income Slides to 1996 Levels”; Census Bureau, “Income, Poverty, and Health Insurance Coverage in the United States: 2010.”
44 The middle-income tax cut Andrews, “Tax Cuts Offer Most for Very Rich”; Fieldhouse and Pollack, “Bush-Era Tax Cuts.”
45 President Obama persuaded Congress “Tax Deal Suggests New Path for Obama,” The New York Times, December 7, 2010; “Congress Sends $801 Billion Tax Cut Bill to Obama,” The New York Times, December 17, 2010.
46 In Arnold Toynbee’s terms Toynbee, Study of History, vols. 7–10, 365–68.
47 When this happens Toynbee, Study of History, vols. 1–6, 245–46.
48 His annual salary Nace, Gangs of America, 180–81.
49 “Management does not go out ruthlessly” John Kenneth Galbraith, The New Industrial State (New York: New American Library, 1968), 120–21.
50 “Greed, for lack of a better word” Nace, Gangs of America, 180; Krugman, Conscience of a Liberal, 142; Reich, Supercapitalism, 108.
51 James Burke, CEO of Johnson & Johnson Jim Collins, “The 10 Greatest CEOs of All Time,” Fortune, July 21, 2003; James E. Burke, Harvard Business School Alumni Achievement Awards, accessed October 20, 2011, http://www.alumni.hbs.edu.
52 Burke lived Johnson & Johnson, “Our Credo,” accessed October 20, 2011, http://www.jnj.com.
Who Stole the American Dream? Page 48
