Inequality and social policy

Compensation for bottom 80% of Americans vs productivity growth

Growing Inequality since ‘74

1980: CEO pay 40X worker, now: 400X

International comparison

why?

• less progressive taxation since 80s?• “progressive” vs “regressive” taxes--income tax, sales tax, estate

(death) tax

• globalization?

• decline in unionization?

• changing technology?

Social Programs

• Most benefits go from middle class to middle class

• Social Security and Medicare are the big items, and growing

Federal Budget

Source: New York Times, Feb. 8, 2005, based on Budget of the United States FY2006, Feb. 8, 2005.

Social Security

• Before 1935, poverty among the elderly was much higher than the rest of the population, today lower.

• How it works:• Not means tested

• You pay 7% of paycheck, employer matches. (Up to income of $87,000).

Financing social security in the future

• “Pay as you go” program. • Problem:• Baby boom approaching retirement age • people living longer• ratio of workers to beneficiaries dropping• benefits higher.

• What to do?• Delay payment age?• Reduce payments? • Raise tax rate? • Privatize?

Bigger problem--medical care costs

• Medicaid and Medicare costs growing faster than Social Security

Medical care delivery

• Over 40 million Americans without insurance

• lower life expectancy and higher infant mortality than developed countries on average

• And we pay more

A Hard Nut to Crack

Sick around America

Protecting workers• Worker safety

Poverty

• Today 14%, up from 11% in 2000

• “Feminization and infantalization of poverty”

• -1/5 kids poor, twice rate of other developed countries

Women and family structure

• Moynihan report 1965: black kids raised in female-headed families up to 26%

• Today 68%

• Lower rates but similar trend among whites

• Bush admin reaction: Healthy Marriage Initiative

“Welfare”

• From AFDC to TANF in 1996• states greater leaway, 2 years at a stretch, 5 total

• reducing welfare roles--by over half nationally since mid 90s

• Shift in states’ approach: from cash to transportation assistance, childcare, job training, etc.

• politically popular, but is it helping the poor?

Public Housing

• Senior/Family

• Section 8

• Hope VI

Other programs

• Food stamps, WIC

• SSI, SSDI (Disability)

• Unemployment insurance

• Earned Income Tax Credit

• etc.

EITC