'Say on Pay' Votes Battle Back Against Income Inequalities
Robyn Blumner

It is a good day for working-stiff schadenfreude when top executives at Citigroup are told by company shareholders that they don't deserve millions of dollars in compensation. Hurray for the 99 percent.

The "say on pay" vote, albeit advisory, was a surprising yet satisfying show of shareholders' disgust with the greed of top executives in the financial sector. Thanks go out to the Dodd-Frank financial reform law, which requires this vote for every publicly traded company -- a law Mitt Romney says he would repeal as president.

So, could this be the first hint that we have reached inequality's nadir, and that the pendulum of social equilibrium is now swinging back toward the middle? Is it a harbinger of another great compression similar to the one that occurred after World War II and into the 1970s when income inequality contracted sharply because of a resurgent middle class?

Don't count on it. That won't happen until Americans discard the myth that huge rewards flow to those who earn it through hard work. This is a carefully built illusion based on the assumption that the American economy is fair. And it fuels the corollary that those people who are struggling financially are just not giving it enough elbow grease or haven't strived hard enough for marketable skills. It's not true, and we're gullible to believe it.

Do glorified packaged-debt salesmen really work 10 to 100 times harder than the laborer who replaces a roof or the home health aide? Are their skills that much more valuable? See 2008 for reference.

America's explosion of Gilded Age inequality is the result of skewed government and corporate policies, not any superhuman industriousness by those at the top. And this misalignment has a cure: Fairer taxes and living wages for work, starting with the minimum wage.

Mitt Romney is worth somewhere near a quarter billion dollars, due largely to his time with the leveraged buyout firm Bain Capital. In describing his success, Romney says, "What I have, I earned; I worked hard, the American way." But Romney's finances would have looked quite different had he made his fortune during the mid-20th century.

Back then, marginal tax rates were as high as 90 percent, capital gains taxes were higher than the 15 percent Romney pays now and the government protected workers' rights. Bain Capital may not have found it so easy to layoff workers or slash benefits at its buyout-target companies. Government and union power led to shared rewards for everyone's hard work, with taxes getting spent on public investments and amenities. Romney would have still been plenty rich, just maybe not putting-a-car-elevator-in-the-beach-house rich.

Only the government can get the nation back to an optimal equilibrium, where millionaires pay at least a higher tax rate than Warren Buffett's secretary. And the minimum wage needs to be raised. The federal rate is $7.25 an hour, or $15,080 a year, which doesn't even reach the federal poverty line for a family of two.

Minimum wage earners aren't just teens looking for pocket money. Eighty-eight percent of people making the minimum are 20 or older, and nearly 44 percent have at least some college education. And no, a raise won't reduce employment: see the extensive 16-year study by lead economist Arindrajit Dube, which found "no employment effects" from an increase.

Sen. Tom Harkin, a Democrat from Iowa, is pushing a wage raise bill in the Senate, but the issue is a non-starter in the Republican-controlled House, where many lawmakers would like to see the minimum wage abolished completely. What's a little indenture between friends?

When Romney ventured in January that the federal minimum wage should rise with the Consumer Price Index, conservatives let loose on him. Since then, Romney has backed off, pointing with pride to his vetoing of a minimum wage boost while governor of Massachusetts. Wonder what he'll say after the Etch-a-Sketch shake?

After decades of wage stagnation, there is a growing awareness that hard work no longer correlates to success. The 99 percent "say on pay" is that enough is enough for Wall Street; now it's everybody's turn. But the government has to help.

 

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'Say on Pay' Votes Battle Back Against Income Inequalities | Politics

 

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