In today’s On the News segment: A report from the US Government Accountability Office shows the shift away from traditional pensions to 401(k)-like plans contributes to inequality; Bernie Sanders endorsed a citizen-led initiative to fight soaring drugs prices in California; the US-Korea Free Trade Agreement has resulted in more than 95,000 lost US jobs; and more.
Thom Hartman here — on the best of the rest of Economic and Labor News…
You need to know this: Robert E. Scott is reporting at Economic Policy Institute that the US-Korea trade deal has resulted in growing trade deficits and more than 95,000 lost US jobs. The US-Korea Free Trade Agreement (KORUS) was passed just a bit over four years ago. President Obama said that the agreement would support 70,000 US jobs. This was supported by a White House fact sheet that claimed that the KORUS agreement would “increase exports of American goods by $10 billion to $11 billion…” and “support 70,000 American jobs from increased goods exports alone.” Well, things are not turning out that way. Far from supporting jobs, growing goods trade deficits with Korea have eliminated more than 95,000 jobs between 2011 and 2015. It’s time to say “no more” to these so called free trade agreements and bring our jobs home.
CommonDreams.org is reporting on the outrageous compensation hedge fund managers are getting. New rankings show the top 25 managers had combined earnings of $12.94 billion in 2015. At the top of the list are Kenneth Griffin of Citadel and James Simons of Renaissance Technologies, who each took in $1.7 billion. Simons has the distinction of being the only manager to appear on the list for its entire 15-year history. Griffin, The New York Times reports, “was the biggest donor to the successful re-election campaign of Mayor Rahm Emanuel of Chicago. More recently he has poured more than $3.1 million into the failed presidential campaigns of Marco Rubio, Jeb Bush and Scott Walker, as well as the Republican National Committee.” Reuters adds, “The higher payday came despite the fact that roughly half of all hedge funds lost money last year,” said institutional investor editor Michael Peltz. He added that “about half of the 25 highest-earning hedge fund managers used computer-generated investment strategies to produce their investment gains.” According to Sam Pizzigati, who edits Too Much, the Institute for Policy Study’s online weekly newsletter on excess and inequality, “The real enormity of America’s annual hedge fund jackpots only comes into focus when we contrast these windfalls to the rewards that go to ordinary Americans. Kindergarten teachers, for instance. The 157,800 teachers of America’s little people, the Bureau of Labor Statistics tells us, together make about $8.34 billion a year.” According to Stephen Lerner, a fellow at Georgetown University’s Kalmanovitz Initiative for Labor and Working Poor, these managers are merely a reflection of our “winner-take-all politics. Billionaire hedge fund managers have been leveraging huge amounts of investor capital to extract enormous cash payouts for themselves, the ultimate in ‘winner-take-all’ economics. To squeeze out these payouts, they’ve been pressuring the enterprises they dominate to slash wages, eliminate pension and health benefits and offshore middle-class jobs.”
Backing a citizen-led initiative to fight back soaring drugs prices in California, Democratic presidential candidate Bernie Sanders on Tuesday endorsed a ballot proposal designed to halt what he described as a corporate “rip-off” of the state’s sick and vulnerable. He said, “While Congress has failed to stand up to the greed of the pharmaceutical industry, the people of California can by supporting this ballot initiative.” Called the California Drug Price Relief Act, this measure, described by the San Francisco Chronicle, “would restrict California health programs from paying more for prescription drugs than what’s paid by the US Department of Veterans Affairs.” Given the enormous leverage of the VA, those drug prices are often the lowest available anywhere in the nation. It’s also backed by the AIDS Healthcare Foundation, the National Nurses United (NNU) and Californians for Lower Drug Prices campaign, and voters will be able to vote on this initiative in November after supporters collected more than half a million signatures to get it on the ballot. Mike Roth, a spokesman for Californians for Lower Drug Prices, stated this proposal is “the most comprehensive drug price reduction initiative California has put before voters in more than a decade and a very real opportunity to combat the greed of Big Pharma.” Sanders added, “We know that the VA pays considerably less than retail prices for prescription drugs. The people of California and all Americans should get the same price. Americans living with HIV/AIDS and cancer should not live in fear that they will go bankrupt because of the outrageously high cost of their prescription drugs.” Go Bernie! and Go California!
And finally … A report released Thursday from the US Government Accountability Office (GAO) shows the shift away from traditional pensions to 401(k)-like plans contributes to inequality. Bloomberg reported Friday, “The US retirement landscape is starting to look like a Charles Dickens novel.” These “defined contribution (DC)” plans, the report notes, “have become the dominant form of retirement plan for US workers,” but 60 percent of all US households in 2013 had no retirement savings in one. Further showing this inequality, the GAO reports that while 81 percent of working, high-income households had savings in a DC plan, only about 25 percent of working, low-income households had any savings in one. Also, from 2007 to 2013, the average balance in such accounts held by white working households didn’t significantly change, but for Black working households, the average balance in plans dropped significantly — from $31,100 in 2007, to $16,400 in 2013. Further, according to GAO’s projections, households in the lowest earning group accumulated DC savings that generated lifetime income in retirement, as measured by an annuity equivalent, of about $560 per month on average (in 2015 dollars). Yet, 35 percent of this group had no DC savings at retirement. In contrast, households in the highest earning group saved enough to receive about 11 times more per month in retirement and only 8 percent had no DC savings. A 2013 paper from the Economic Policy Institute showed how this shift away from traditional pensions to 401(k) retirement plans has been a “disaster,” fueling inequality and creating more insecure retirements. Economist Dean Baker also noted in December that “Your retirement prospects are bleaker than ever,” attributing it to “the disappearance of traditional defined benefit pensions and the failure of 401(k)-type plans to fill the gap.” He added, “The vast majority of Americans who expect to retire in the next decade can count on little income other than their Social Security. This is true not only for low-income workers, who have struggled most of their lives, but also for millions of middle-income workers,” Baker wrote. “Although Social Security is a tremendously important program, and provides a solid base that retirees can depend upon, its $16,000 average annual benefit doesn’t go very far. Many if not most can expect to see sharp reductions in living standards.” Hello, Tiny Tim.
And that’s the way it is for the week of May 16, 2016, on Labor and Economic News.