October 2011, Week 3


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Portside Moderator <[log in to unmask]>
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Fri, 21 Oct 2011 16:28:04 -0400
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Who Are the 1% and What Do They Do for a Living?

by Mike Konczal
Friday, 10/14/2011 - 1:38 pm 

     There's good reason to focus on the top 1%: 
     they're distorting our economy.

Look, a crazy anti-capitalist anarchist carrying a
bizarre sign incompatible with the basic tenents of
liberals: [photo of demonstrator carrying a placard with
a graph labeled 'Average Household Income Before Taxes'
-- moderator]

Or not.

A lot of emphasis is on the "99%" versus the "1%" in
these protests. But who are the 1% and what do they do
for a living? Are they all Wilt Chamberlains and Oprahs
and other people taking part in the dynamism of the new
economy? Nope. It's same as it ever was -- high-level
management and the financial sector.

Suzy Khimm goes through the numbers here. I'm curious
about occupations. I'll hand the mic off to "Jobs and
Income Growth of Top Earners and the Causes of Changing
Income Inequality: Evidence from U.S. Tax Return Data"
by Bakija, Cole, and Heim. This is the latest and
greatest report on occupations and inequality. Here's a
chart of the occupations of the top 1%:

Inequality has fractals. Let's go into the top 0.1% -
what do they look like?  Here's the chart of the
occupations of the top 0.1%, including capital gains:

It boils down to managers, executives, and people who
work in finance. From the paper: "[o]ur findings suggest
that the incomes of executives, managers, supervisors,
and financial professionals can account for 60 percent
of the increase in the share of national income going to
the top percentile of the income distribution between
1979 and 2005."

For fun, there are more than twice as many people listed
as "Not working or deceased" than are in "arts, media,
sports." For every elite sports player who earned a
place at the top of the income pyramid due to technology
changes and superstar, tournament-style labor markets
that broadcast him across the globe, there are two trust
fund babies.

The top 1% of managers and executives often means C-
level employees, especially CEOs. And their earnings
versus the average worker have skyrocketed in the past
30 years, so this shouldn't be surprising:

How has this evolved over time?  Can we get a cross-
section of that protest sign above?

Same candidates. There's a reason the protests ended up
on Wall Street: The top 1% and top 0.1% comprises all
the senior bosses and the financial sector.

One of the best things about Occupy Wall Street is that
there is no chatter about Obama or Perry or whatever is
the electoral political issue of the day. There are a
lot of people rethinking things, discussing, learning,
and conceptualizing the kinds of world they want to
create. Since so much about inequality is a function of
the legal structure known as a "corporation," I'd
encourage you to check out Alex Gourevitch on how the
corporate is structured in our laws.

The paper notes that stock market returns drive much of
the manager's income. This is related to a process of
financialization, something JW Mason has done a
fantastic job outlining here. The "dominant ethos among
managers today is that a business exists only to enrich
its shareholders, including, of course, senior managers
themselves," and this is done by paying out more in
dividends that is earned in profits. Think of it as our-
real-economy-as-ATM-machine, cashing out wealth during
the good times and then leaving workers and the rest of
the real economy to deal with the aftermath.

Both articles mention chapter 6 of Doug Henwood's Wall
Street; anyone interested in how things have changed and
where they need to go would be wise to check it out.
It's even available for free pdf book download here.

There's good reason to focus on the top 1% instead of
the top 10 or 50%. There is evidence that financial pay
at this elite level is correlated with deregulation and
the other legal changes that brought on the crisis.
High-ranking senior corporate executives' pay has
dwarfed workers' salaries, but is only a reward for
engaging in shady financial engineering practices. These
problems require a legal solution and thus they require
a democratic challenge and a rethinking of how we want
to structure our economy. Here's to the 99% and Occupy
Wall Street helping get us there.

Mike Konczal is a Fellow at the Roosevelt Institute.


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