Jay

Resource Proposal #1 (more on proposals)

Type (Biz, Gov, or Soc): Government

Name of Resource and Citation: Securities Exchange Commission: SEC proposes rules for Pay Ratio Disclosure

Securities Exchange Commission. Retrieved from http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539817895#.Uyn6k_ldWuI.

Topic for Paper: Income Inequality in the US

My paper will focus on the rising issue of income inequality in the United States. The public has taken meaningful steps to address this issue and close the wealth gaps. One possible solution is increasing minimum wage. My paper takes a closer look at this issue through identifying corporations such as McDonald’s who have historically struggled with the topic and even been the victim of aggressive lawsuits.

Victim?  Aggressive?  What is the basis of such characterizations?   Your paper should focus on solutions, not McDonald’s perse.  Corporations raising wages voluntarily due to tight labor markets is a solution.  Not sure what lawsuits have to do with it…

Your proposal.

One large issue surrounding income inequality is the disparity between the pay of large corporation CEO’s and top executives and the minimal compensation of bottom level employees. For example, while the CEO of McDonald’s is making over 8 and a half million dollars a year, the company continues to pay employees minimum wages, money that is barely (and in some cases not even) enough to live on.

To combat this issue, the SEC has proposed a rule that forces publicly traded companies to disclose a pay ratio that compares the compensation of its CEO to the company’s median employee compensation. Based off a component of the Dodd-Frank law that has yet to be enforced, the proposal would quantify the value of median workers in meaningful, comparative terms to that of the CEO.

Although some believe the proposal is a gimmick meant to shame companies into reducing excessive packages, if enforced the law would be a big first step towards forcing companies to address their pay distribution. However, because of the rule’s controversy, the SEC is hesitant and unsure of how enforce it. Even though it was passed with Dodd-Frank, there is no deadline for when the law must be put into effect. This means it will likely be watered down and useless before it can ever be an actual threat to companies.

Interesting.  I mean, even if it is gimmicky, it may work.  COmpanies clearly loathe it, and CEOs, right?  If they think it won’t matter, why fight it?

This mishandling and controversy surrounding this bill is typical of the income distribution debate. It is only a matter of time before a more powerful and meaningful public discussion arises and is forced into the political field. My paper will address these issues as well as look at possible solutions that can be incorporated into law effectively.

Ok…. good conclusion.  FOr sure, pay ratio disclosure is one policy option so it is nice to have it in hand.  You may want to look for advocates or critics of the idea since the SEC seems to be trying not to anger anyone and hence maybe is unclear.

Resource Proposal #2 (more on proposals)

Type (Biz, Gov, or Soc): Soc

Name of Resource and Citation: How Raising the Federal Minimum Wage would help working families and give the economy a boost, by Doug Hall and David Cooper (Economic Policy Institute)

Retrieved from:  http://www.jobsnowcoalition.org/reports/2012/federal-minimum-wage-9-80-boost_epi2012-08.pdf

Topic for Paper: Income Inequality in the US

Your proposal.

I’d like to focus one part of my paper on what the Government can do to fight income inequality growth in the US. This article, published by the Economic Policy Institute, examines the effectiveness of raising the federal minimum wage to combat income inequality growth. the article notes that while top earners have experienced substantial growth in income, there is no system in place to ensure that low income workers maintain a fair wage.

A bill was actually introduced in 2012 that raised the federal minimum wage from 7.25 to 9.80 with three increases of .85, indexed to inflation. The article shows that this increase could, among other things, raise wages for 28 million US workers and increase GDP by $25 billion, creating 100,000 new jobs. Furthermore, the article discusses the demographic characteristics of affected workers given an increase in the minimum wage.

The article also points to “corporations taking huge advantage of the slack in the labor market” by taking advantage of the fact that there are 3.4 unemployed workers for each job opening. Corporations use this bargaining power to cut wages and benefits, shorten hours, and “jeopardize the chance of experiencing a real economic recovery.”

Can they point to measurements of these impacts?

Finally, the article shows that increase the minimum wage is good from a macroeconomic view because shifting profits from corporations, who are unlikely to spend the money immediately to the worker that is more likely to spend immediately. This stimulates a large demand for goods and services, requiring the economy to broaden their workforce to keep up with demand.

What kind of methodology did they use for their estimates?  Their own?  Or other researchers?  How does being activists affect their approach, do you think?  

Resource Proposal #3 (more on proposals)

Type (Biz, Gov, or Soc): Biz

Name of Resource and Citation:

“Bill Gate’s Solution to Income Inequality” -Chris Matthews, published in Fortunate Magazine October 2014

retrieved from:  http://www.entrepreneur.com/article/238619

Topic for Paper: Income Inequality in the United States

Your proposal.

This article explores a different solution to the problem of rising inequality. Currently, the tax code taxes labor. Under Gates’ solution, the tax would be on consumption. This idea is not new. In fact, it’s been around for a while. It’s heavily criticized as a far right solution, since consumption taxes are typically regressive. Since people at all levels of income have to consume goods, and poor spend a higher amount of their income on consumption, it typically burdens the poor more than the rich.

Although if you exclude food and clothes, you can mitigate this.

However, Gates’ plan accounts for this as well. One of the strengths behind the plan is to reduce incentive to consume while encouraging saving and investing, particularly at lower income levels. By instituting a sizable estate tax, the wealthy are unable to simply let their wealth grow over the years, which could create the first truly progressive consumption tax and completely alter America’s economic status quo, particularly in regards to income inequality.

Meanwhile, Congress is gung ho to repeal the estate tax…

How would he encourage savings in his tax plan?

Ironically, moving away from an income tax might also get professional tax preparers, your H&R Blocks and so on, up in arms.  Not that it would be a huge loss for society.

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