Beyond Fairness: Skyrocketing CEO Pay Is Bad for Our Economy

Jul 16, 2015Susan Holmberg

Next week marks the 5th anniversary of the Dodd-Frank Wall Street Reform and Protection Act. While the law has made some solid strides toward regulating Wall Street (with the creation of the Consumer Financial Protection Bureau arguably the most potent and popular), there is still much work to be done, particularly in the realm of CEO pay reform.

Next week marks the 5th anniversary of the Dodd-Frank Wall Street Reform and Protection Act. While the law has made some solid strides toward regulating Wall Street (with the creation of the Consumer Financial Protection Bureau arguably the most potent and popular), there is still much work to be done, particularly in the realm of CEO pay reform.

From 1978 to 2014, executive compensation at American firms rose 997 percent, compared with a sluggish 10.9 percent growth in worker compensation over the same period.

While CEO pay continues its determined ascent up a seemingly limitless mountain of stock options and other performance pay, the SEC has yet to implement all of the Dodd-Frank rules designed to reform CEO pay practices. The Say-on-Pay provision, which allows shareholders an advisory vote on proposed executive compensation packages, has been in effect since 2011, and Section 954—the clawbacks provision—should soon be finalized. But the SEC continues to delay the disclosure rule on CEO–worker pay gaps, as well as a few other key provisions.

This raises a few obvious questions: Why is it so important to urge the SEC to implement these CEO pay reform rules? Does it really matter how much CEOs are paid? Isn’t this debate really just about people being jealous of, for example, former Oracle chief Larry Ellison and his Hawaiian island?

Hardly. We have to stop talking about the CEO pay issue in terms of fairness, which usually leads to accusations of envy. This conversation just doesn’t get us very far. The truth is that skyrocketing CEO pay is terrible for our economy for two reasons, as we explain in the infographic below.

To elaborate, the problems are as follows:

1. How CEOs Are Paid

The current trend in how CEOs are paid, particularly with stock options, creates a range of economic problems. Several studies show that equity-heavy pay, because it makes executives very wealthy very quickly, distorts CEOs’ incentives, inducing them to take on too much risk. Instead of bearing this risk themselves, they shift it onto the rest of society, as we saw during the financial crisis. This model also encourages executives to behave fraudulently, as in the backdating scandals of a decade ago, and lessens their motivation to invest in their businesses. In addition, according to economist William Lazonick, in order to issue stock options to top executives while avoiding the dilution of their stock, corporations often divert funds to stock buybacks rather than spending on research and development, capital investment, increased wages, or new hiring. To top it all off, these pay packages cost taxpayers billions of dollars due to the performance pay tax loophole instituted by President Clinton.

2. How Much CEOs Are Paid

In addition to its problematic structure, the sheer volume of CEO pay creates an array of economic problems. A handful of high-profile economists—Thomas Piketty, Joseph Stiglitz, and Robert Reich, to name a few—have begun to make the case that a high degree of economic inequality precipitates financial instability because it leads to, for example, a decline in consumer demand, which has tremendous spillover effects in terms of investment, job creation, and tax revenue, not to mention social instability.

The growth of executive pay is a core driver of America’s rising economic inequality. According to the Economic Policy Institute, “[e]xecutives, and workers in finance, accounted for 58 percent of the expansion of income for the top 1 percent and 67 percent of the increase in income for the top 0.1 percent from 1979 to 2005.” Another calculation by economists Ian Dew-Becker and Robert Gordon finds that the large increase in the share of the top .01 percent is mostly explained by the incomes of superstars and CEOs.

Dodd-Frank’s anniversary should remind us that we still have a long way to go to rein in ever-increasing CEO pay, including instituting key provisions like the CEO–worker pay gap. If we move the CEO pay debate beyond the rhetoric of fairness and envy to a conversation about its costs, we could galvanize the public around this issue. The evidence is clear: skyrocketing CEO pay is not just an ethical problem; it’s also simply bad economics.

Susan Holmberg is Director of Research and a Fellow at the Roosevelt Institute.

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The Future of Small Business Financing: Where We're Going, We Don't Need Banks

Jul 9, 2015Richard Swart

This week, the Roosevelt Institute's Next American Economy project is releasing a series of thought briefs in which experts examine how the economy will change over the next 25 years. Read the introduction here.

“We need banking, but we don’t need banks.” 

—Bill Gates, 1996

This week, the Roosevelt Institute's Next American Economy project is releasing a series of thought briefs in which experts examine how the economy will change over the next 25 years. Read the introduction here.

“We need banking, but we don’t need banks.” 

—Bill Gates, 1996

When asked to think about challenges facing small businesses as they attempt to access capital, I could not help but think of the famous quip above, which essentially predicts the end of banking as we know it. None could predict the calamitous rise and fall of the stock market, but with the near death—and eventual resurrection—of the “too big to fail” institutions, it is not hard to see the roots of this crisis running through the last 30 years.

The nature of our relationship to institutions has fundamentally changed. Whereas financial and corporate institutions held the public’s trust in the past, that trust has now shifted to networks—to shared risk, collaborative capitalism, and peer-based lending models. To future generations, the idea of one financial company providing all of our financial needs will seem foreign.

Often, crowds can better predict elections and stock prices than markets; similarly, social intelligence and signals often are more predictive of consumer behavior than past financial history. Today, credit risk can be inferred from one’s peer network, the health of a business better predicted by Yelp than by a balance sheet.

Contemporary fund-based approaches to providing access to capital often fail. Most of the funds are unprofitable, and the expectations and pressure put on early firms is antithetical to the goal of funding and supporting innovative new businesses.

In my thought brief, I speculate that the various forms of collaborative and social finance evolving since the Great Recession will build a new financial system—one that can provide a range of affordable, fast, and transparent financial services to the businesses that need them. These new models will supplant the finance industry that has systematically failed to ensure businesses have access to needed capital.

By 2040, people may read Bill Gates’s quote and wonder, what did he mean by “banks”? The future is bright. The convergence of technology, big data, and social networks has empowered a dynamic generation of fintech entrepreneurs who will create an unimaginable array of new financial products and services. In response, all but the incumbent institutions will celebrate.

Richard Swart is Crowdfunding and Alternative Finance Researcher and Scholar-in-Residence in the Institute for Business and Social Impact at the University of California, Berkeley.

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What Will Unions Look Like in 25 Years?

Jul 9, 2015Michelle Miller

This week, the Roosevelt Institute's Next American Economy project is releasing a series of thought briefs in which experts examine how the economy will change over the next 25 years. Read the introduction here.

This week, the Roosevelt Institute's Next American Economy project is releasing a series of thought briefs in which experts examine how the economy will change over the next 25 years. Read the introduction here.

We can only envision the union of the future by imagining the experiences of the worker of the future. Who is she? How does she work? Who is her boss? And, most importantly, what does she need to have power over her own economic future?

The rapid growth of cloud technology platforms that enable new models for the distribution of work signals that the worker of the future will be performing a series of tasks instead of a single job. It’s possible that her “workplace” will not be a fixed geography but multiple points on a map, including a space in her own home. As even senior managers may be replaced by intelligent technology, she may never see her boss or receive performance feedback in person. And while she’ll certainly have coworkers, it will be difficult to gather around a water cooler and discuss the day’s events when they are scattered around the world, accessing their work one gig at a time.

As I worked on cobbling together a vision for the union of the future, I kept this worker in mind. And, as the co-founder of a digital platform dedicated to supporting people who are experimenting with new forms of workplace power, I get to see glimpses of this future every day: Self-sustaining Facebook groups run by workers through their OURWalmart affiliation; Starbucks baristas connecting globally through worker-led campaigns; Mechanical Turkers building plug-ins to rate task requesters and collaborating on campaigns through Dynamo; Etsy sellers supporting one another through teams; Uber drivers sharing information on Reddit. Workers are already making this future real by leveraging popular technology tools to connect with each other; it’s up to our existing institutions to create the infrastructure to make their efforts more effective, powerful, and lasting.

What I lay out in my thought brief are some ideas for how we might do just that. As the employee–employer relationship crumbles, we must accept that our policies and structures for building worker power require radical reform. Embracing platform technology by investing in its connective and collaborative potential for workers opens unprecedented opportunities for building global collective power. Thoughtfully reimagining how we enable resource-sharing to create new, worker-owned safety nets that offset precarity while recognizing the inherent power of our existing institutions can instill stability and support. And recognizing these new kinds of workers by advancing expansive, inclusive policy solutions rounds out the basic infrastructure for building worker power over the next 25 years.

A decade ago, I was part of a conversation with a homecare worker who had helped organize her union. In describing what this meant to her, she said, “the union is a thousand, a million dreams, waiting to become real.” It is not an NLRA-defined bargaining agreement or adherence to a rigid set of classifications. For workers, it is some amount of agency over their lives. It’s a way to connect, a way to shelter each other, and, ultimately, a way to ensure that our millions of dreams have the chance to become real.

Michelle Miller is the co-founder of Coworker.org, a digital platform that matches campaigning tools with organizing, media, and legal support to help people change their working conditions.

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Envisioning the Economy of 2040

Jul 8, 2015Next American Economy

Early in the morning factory whistle blows / Man rises from bed and puts on his clothes / Man takes his lunch, walks out in the morning light / It's the working, the working, just the working life

—Bruce Springsteen, “Factory” (1978)

The predestined, blue-collar lifestyle that Bruce Springsteen sang about in Darkness on the Edge of Town is already a thing of the past, and it will only grow smaller in our rear-view mirrors as we approach 2040. Soon, the world of the large central firm and steady, predictable work will exist only in museums.

Early in the morning factory whistle blows / Man rises from bed and puts on his clothes / Man takes his lunch, walks out in the morning light / It's the working, the working, just the working life

—Bruce Springsteen, “Factory” (1978)

The predestined, blue-collar lifestyle that Bruce Springsteen sang about in Darkness on the Edge of Town is already a thing of the past, and it will only grow smaller in our rear-view mirrors as we approach 2040. Soon, the world of the large central firm and steady, predictable work will exist only in museums.

What will replace it?

In a new series of thought briefs, we attempt to address this question and describe some ways that economic, social, and political institutions in the U.S. must adapt to provide opportunity and prosperity in the mid-21st century. Guided by the belief that we are in the midst of an economic transformation on par with the Industrial Revolution, the Roosevelt Institute’s Next American Economy project identifies the trends and challenges that will shape our economy in the next 25 years in order to better inform the policy decisions we must make today. We are particularly focused on the potential impact of new technologies on productivity, employment, and economic security.

To help glean insights on these topics, we convened a diverse group of economists, technologists, union leaders, and entrepreneurs, and framed a series of conversations aimed at identifying the key concerns of today and projecting how they might evolve, dissipate, or intensify over the next 25 years.

These briefs—our first public release—take on some of the most promising and challenging issues that our expert working group came up with, including the promise and perils of the gig economy, smarter cities, and better modes of finance, as well as the need for new worker bargaining platforms and improved, lifelong education. We consider these topics in what we hope is a thorough (though of course not exhaustive) and accessible narrative.

Although each brief in this series focuses on a different aspect of economic evolution, the collection as a whole is primarily concerned with a foundational question of adaptation: How should American society—its workers, businesses, and government—adapt to a rapidly shifting economic environment? Generally, we identify four recurring formative trends that will shape the 2040 economy.

First, technologies like cloud computing, 3D printing, and robotics will revolutionize the way Americans work, communicate, and generally relate to the world. Technology will replace workers as a variety of professions become automated, but, as it leads to the creation of new jobs and overall economic growth, the extent to which technology can offset its own economic drawbacks remains to be seen. In “Where Will Work Come From in the Era of Cloud Computing and Big Data?” John Zysman and Martin Kenney discuss how American manufacturers can make up for lost business by ushering in a new era of high-tech, value-added products.

Second, changes in the workplace will move traditional employment increasingly toward entrepreneurship, freelancing, independent contracting, and gig economy or “peer-to-peer” work on platforms like TaskRabbit. This will result in myriad changes to the ways in which Americans look after basic needs, from health care to retirement planning, that were previously met by a single employer. In “Barriers to Growth in the ‘Sharing Economy’,” Denise Cheng addresses numerous facets of the gig economy, while in “Challenges in SME Access to Capital” Richard Swart discusses the importance of start-up capital in a more entrepreneurial future economy.

The third trend, following directly from the second, concerns the likely increase in overall economic insecurity that will result from a society-wide decrease in the number of traditional jobs. Without the stability of long-term, full-time employment from a single firm that provides not only salary but also comprehensive benefits, Americans will need new tools to provide economic security for themselves and their families. Key to this point is not only the cost of benefits but the increased time and effort workers will have to expend just to manage their careers. How will workers bargain, for example, when they are employed—effectively—by a multitude of customers across a number of platforms like Uber and Etsy? If they are contractors, what institutions will help them complete their annual tax returns and handle billing and payments? And lastly, how will workers keep their skills up to date as employer needs evolve around them? Michelle Miller addresses some possibilities for the future of bargaining power in “The Union of the Future,” while briefs by Chelsea Barabas and our colleagues at the Royal Society for the Encouragement of Arts, Manufacture, and Commerce discuss two revolutions in education that will help workers adapt in a rapidly changing economy.

Finally, the government’s increasing inability to make policy that benefits society and meets the economy’s most pressing needs will be exacerbated by rapid technological and economic evolutions that make such policy ever more pressing. Simultaneously, swelling retirement entitlements will raise budgetary challenges that further restrict the federal government’s ability and willingness to invest and reform. As such, is out of necessity that we at the Next American Economy project feel cities—already successful laboratories for creative policy solutions—will increasingly become the incubators and epicenters for innovation and business growth. Julia Root goes into great depth on this topic in “Urban Platforms in 2040.”

The challenge of adapting to these evolutions is grave. Indeed, it would be easy—and some of us were tempted—to throw up our hands and prepare for the worst. To avoid unproductive handwringing, the Next American Economy project took a collective oath of optimism. This is perhaps most apparent in our final brief, written by Next American Economy leader and Roosevelt Institute Senior Fellow Bo Cutter, in which we project many of the ideas discussed in these papers into 2040 and paint a holistic picture of this (not overly) optimistic scenario.

We hope that you will enjoy this foray into our future.

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Clinton's Executive Pay Comments Show We're Still Too Focused on Fairness

Apr 17, 2015Susan Holmberg

Hillary Clinton surprised many progressives earlier this week with her remarks on a model populist issue. "There’s something wrong when CEOs make 300 times more than the typical worker. There’s something wrong when American workers keep getting more productive…but that productivity is not matched in their paychecks.”

Hillary Clinton surprised many progressives earlier this week with her remarks on a model populist issue. "There’s something wrong when CEOs make 300 times more than the typical worker. There’s something wrong when American workers keep getting more productive…but that productivity is not matched in their paychecks.”

Indeed. From 1978 to 2013, executive compensation at American firms rose 937 percent, compared with a sluggish 10.2 percent growth in worker compensation over the same period. In 2013, the average CEO pay package at S&P 500 Index companies was worth $11.7 million. Numbers for 2014 are just starting to be released, but Microsoft’s Satya Nadella is thus far topping the list at $84 million in mostly stock awards.

Too often the CEO pay debate, which tends to come into focus during our annual rite of corporate proxy season, hinges on a question of ethics. Is paying CEOs excessive amounts fair to workers? No, of course not, as so many fast food workers, whose CEOs make approximately 1,200 times more than they do, rightfully voiced yesterday.

One of the problems, however, with expressing CEO pay as a fairness issue is that it is too often countered with accusations of envy. And this doesn’t get us very far. (Note that Clinton’s language—“there’s something wrong”—plays into the fairness framing.) Our efforts to reform CEO pay would be much stronger if we also talked about how bad the status quo is for our economy and thus our society.

There are two main reasons CEO pay should be a concern to anyone who cares about economic prosperity in the United States, including Hillary Clinton. One reason stems from the total amount CEOs are paid. The other relates to the structure of CEO pay, in particular that the bulk of their compensation comes in the form of stock options and stock grants.

Total Amount of CEO Pay

A handful of high-profile economists—Thomas Piketty, Joseph Stiglitz, and Robert Reich, to name a few—have begun to make the case that a high degree of economic inequality precipitates financial instability because it leads to a decline in consumer demand, which has tremendous spillover effects in terms of investment, job creation, and tax revenue, not to mention social instability.

Research clearly demonstrates that the growth of executive pay is a core driver of America’s rising economic inequality. According to the Economic Policy Institute, “[e]xecutives, and workers in finance, accounted for 58 percent of the expansion of income for the top 1 percent and 67 percent of the increase in income for the top 0.1 percent from 1979 to 2005.” Another calculation by economists Ian Dew-Becker and Robert Gordon finds that the large increase in share of the 99.99th percentile is mostly explained by the incomes of superstars and CEOs.

The Structure of CEO Pay

Several studies show that equity-heavy pay, because it makes executives very wealthy very quickly, distorts CEOs’ incentives, inducing them to take on too much risk. Instead of bearing this risk themselves, they shift it onto the rest of society, as we saw during the financial crisis. This model also encourages executives to behave fraudulently, as in the backdating scandals of a decade ago, and lessens their motivation to invest in their businesses. According to economist William Lazonick, in order to issue stock options to top executives while avoiding the dilution of their stock, corporations often divert funds to stock buybacks rather than spending on research and development, capital investment, increased wages, or new hiring. To top it all off, these pay packages cost taxpayers billions of dollars due to the performance pay tax loophole.

Hillary Clinton’s comments on CEO pay could be a signal that she is willing to adopt at least some of the progressive messaging championed by Senator Elizabeth Warren. We can enhance that message by making better economic arguments for why we need to reform skyrocketing CEO pay.

For more, see my primer on the executive pay debate.

Susan Holmberg is a Fellow and Director of Research at the Roosevelt Institute.

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What Would You Do Today to Ensure a Good Economy 25 Years From Now?

Mar 24, 2015Laurie Ignacio

In January, the Roosevelt Institute gathered 30 experts and practitioners in technology, education, finance, and economics to discuss the next American economy. We asked them what they would do today to ensure a good economy 25 years from now.

Over the next few weeks, Roosevelt will be highlighting some key suggestions. Check out the experts in attendance and then explore their revolutionary ideas:

In January, the Roosevelt Institute gathered 30 experts and practitioners in technology, education, finance, and economics to discuss the next American economy. We asked them what they would do today to ensure a good economy 25 years from now.

Over the next few weeks, Roosevelt will be highlighting some key suggestions. Check out the experts in attendance and then explore their revolutionary ideas:

First up we have Michelle Miller, co-founder of Coworker.org, a digital platform that provides workers with campaigning tools and other digital organizing support.

Michelle recommends reimagining how we classify employees. As more and more people freelance and rely on alternatives to full-time employment, like selling crafts on Etsy or driving for Uber, Michelle says that we should rethink the current employment classification system in order to expand protections, like health care deductibility, that are currently available only to more traditional employees.

To read more about American workers’ changing roles and new challenges, check out the links below.

"The future of work: There's an app for that," The Economist

"Lawsuits facing Uber, Lyft could alter sharing economy," CNBC

"What Happens To Uber Drivers And Other Sharing Economy Workers Injured On The Job?," Forbes

Michelle Miller is the co-founder of Coworker.org, a digital platform that matches campaigning tools with organizing, media and legal support to help people change their working conditions. Since its founding in 2013, Coworker.org has catalyzed the growth of global, independent employee networks at major companies like Starbucks, Wells Fargo, Olive Garden and US Airways. Miller’s early work developing Coworker.org was supported by a 2012 Practitioner Fellowship at Georgetown University’s Kalmanovitz Initiative for Labor and the Working Poor. She is a 2014 Echoing Green Global Fellow.

Before co-founding Coworker.org, Miller spent a decade at the Service Employees International Union where she pioneered creative projects that advanced union campaigns. She is also a nationally recognized media artist and cultural organizer. Most recently, she directed the participatory media creation process for Hollow, a 2014 Peabody award-winning interactive documentary about her home state of West Virginia.

Learn more about Michelle Miller’s work by visiting coworker.org and her profile at EchoingGreen.org.

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America's Tax Code Is Broken, But the Rubio-Lee Plan Won't Fix It

Mar 4, 2015Eric Harris Bernstein

"We believe that America’s best days are still ahead. But we also recognize that restoring the shared prosperity that comes from a strong economy requires reforming the most antiquated and dysfunctional government policies, beginning with the federal tax system."

-Senators Marco Rubio and Mike Lee 

Finally, something we can all agree on. 

"We believe that America’s best days are still ahead. But we also recognize that restoring the shared prosperity that comes from a strong economy requires reforming the most antiquated and dysfunctional government policies, beginning with the federal tax system."

-Senators Marco Rubio and Mike Lee 

Finally, something we can all agree on. 

In their joint op-ed in this morning's Wall Street Journal, the two Republican senators proposed a new tax plan and argued that our current federal tax structure is broken, its problems "rooted in the same fundamental unfairness and inequity of a government that picks winners and losers."

Again, we here at the Roosevelt Institute welcome this realization. For too long, our tax code has helped the few at the expense of the many. Unfortunately, an analysis of their proposed solutions shows that the senators have come out on the wrong side of this argument. 

First, they propose lowering the top corporate tax rate to 25 percent. This would be a step worth discussing if not for the fact that, with offshore tax havens and a wealth of other tax benefits, America's largest corporations currently pay an effective rate of just 12.6 percent. In the words of Roosevelt Institute Chief Economist Joseph Stiglitz, it would seem that the problem is not double taxation, but no taxation.

The senators then argue that, in order to incentivize investment, they would make all capital expenditures 100 percent tax-deductible, suggesting that taxes have squeezed corporations out of the investment business. But if this is the case, then how do we explain the $2 trillion currently being held abroad by America's largest corporations? And what about the enormous sums that companies like Apple and Home Depot are spending on buybacks to enrich investors? 

In fact, new research from Roosevelt Institute Fellow J.W. Mason shows us that the link between corporate cash flow and productive investment has been all but severed since the shareholder revolution of the 1980s. Shareholders now pocket an increasingly large portion of corporate earnings and borrowing that would have once gone to capital investments, job creation, or raising workers’ pay. Given these facts, as well as the current level of historically high profts, it is clear that corporate investment is not suffering from lack of funding, and that more spending on corporate welfare is the wrong way to go.

Lee and Rubio suggest that corporate taxes drive American industries abroad. This is absolutely true: Corporations want to benefit from American security, infrastructure, and human capital, but they don't want to pay their share to maintain those invaluable assets, so they shelter themselves in tax havens like Ireland. The problem, from our point of view, is not, as Rubio and Lee suggest, that the tax code taxes corporations (indeed, that is what a tax code exists to do); the problem is that it allows wealthy corporations to avoid those taxes. 

We need policies that will ensure corporations contribute like the rest of us, not ones that will commit more public money to private enterprise. 

The senators state that their plan is guided by the principles of fairness, freedom, and growth. This raises the question: In whose mind is it fair to spend hundreds of billions of dollars on wealthy corporations, while Americans drive on pothole-pocked roads and send their children to overcrowded schools to learn from underpaid teachers?

For the individual income tax, Rubio and Lee propose reducing the number of brackets to two -- one at 15 percent and one at 35 percent. Even though they have been greatly reduced since the 1980s, lowering rates for middle-income earners is worth discussing. The far more significant part of this proposal, however, is the 11 percent tax break for top income earners, which would further reduce the amount of public funds available for things like roads and schools, and which would further tip our economic balance toward the wealthy.

The senators would likely argue that this tax break will stimulate productive spending, but trickle-down economics did not work under Reagan and will not work now.

Toward the end of their op-ed, the authors posit a series of pro-family tax reforms, like tax credits for children and tax breaks for couples filing jointly. These policies are rooted in a belief that families with married parents are more economically stable and productive than single-parent families. Again, this may be a point worth debating, but these miniscule incentives are scarcely more than lip service to the American middle class, which this plan largely forsakes in favor of more tax cuts for large corporations and the wealthy. 

More generally, Rubio and Lee frame their entire plan as a benefit to average Americans, but do this while glossing over policies that will only continue our current trend of supporting the wealthy at the expense of the country as a whole. The Stiglitz tax reform plan, on the other hand, offers a blueprint for a tax code that would bolster the middle class while driving growth and opportunity. 

Now that we’ve all agreed on the problem, we should look to solutions that economists tell us actually work.

Eric Harris Bernstein is a Program Associate at the Roosevelt Institute.

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Daily Digest - February 27: We're Missing the Mark on Monetary Policy, and a Goodbye

Feb 27, 2015Rachel Goldfarb

Click here to subscribe to updates from the Roosevelt Institute.

Click here to subscribe to updates from the Roosevelt Institute.

The Roosevelt Institute has produced the Daily Digest five days a week since 2009, but its time has now come to an end. Today will be the final Daily Digest; however, we hope you'll subscribe to our weekly e-mail updates to stay in the loop with all the exciting work we're doing here at the Roosevelt Institute. You can also stay in touch with us on Facebook and Twitter. Thank you for reading!

Corporate Borrowing Now Flows To Shareholders, Not Productive Investment: Study (IB Times)

Owen Davis reports on J.W. Mason's new white paper, "Disgorge the Cash," explaining how the paper fits into a growing body of research that suggests flaws in our basic understanding of economics.

Students Question Own Role in Participatory Budgeting (Columbia Spectator)

Sasha Zeints reports on a Campus Network event discussing students' role in participatory budgeting. Chapter president Brit Byrd says students are well-suited to participate as volunteers.

The Federal Reserve Speaks in Mumbo Jumbo. Here's How to Fix That. (The Week)

Referencing Roosevelt Institute Fellow Mike Konczal, Jeff Sprots argues that the opacity of Federal Reserve statements could be solved by mandating a numerical target for the Fed.

The Real Meaning of $9 an Hour (Time)

Rana Foroohar says that Walmart's wage hike might not make a dramatic impact on the real economy, but it shows that workers can still get the largest companies in the world to change.

What Is ‘Middle-Class Economics’? (NYT)

Josh Barro points out that government policies that help the middle class are only able to produce small shifts. He says the best option might be to step back and hope positive trends continue.

The FCC Approves Strong Net Neutrality Rules (WaPo)

Cecilia Kang and Brian Fung report on the Federal Communications Commission's vote yesterday, which classified the Internet as a public utility to protect access for all.

New on Next New Deal

Make the Stop Overdose Stat Act a Priority for 2015

Roosevelt Institute | Campus Network Senior Fellow for Health Care Emily Cerciello explains why this bill targeting opioid overdose prevention should be on both parties' agendas this year.

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Daily Digest - February 26: Where Is All the Corporate Cash Going?

Feb 26, 2015Rachel Goldfarb

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Why Companies are Rewarding Shareholders Instead of Investing in the Real Economy (WaPo)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Why Companies are Rewarding Shareholders Instead of Investing in the Real Economy (WaPo)

Lydia DePillis looks at Roosevelt Institute Fellow J.W. Mason's new white paper on how the shift towards increased shareholder payouts since the 1980s has decreased corporate investment.

  • Roosevelt Take: Read J.W. Mason's paper, "Disgorge the Cash: The Disconnect Between Corporate Borrowing and Investment," here.

Hewlett-Packard Shows How to Fatten Shareholders While Firing Workers (LA Times)

Referencing J.W. Mason's paper for context on the impact of shareholder payouts on the larger economy, Michael Hiltzik explains how H-P has managed to fire workers and increase payouts at once.

Don't Wait Until 2016 to Make Political Change (HuffPo)

Roosevelt Institute | Campus Network National Director Joelle Gamble argues for the need for young people to participate in governance, not just elections.

The Push for Net Neutrality Arose From Lack of Choice (NYT)

Steve Lohr speaks to Roosevelt Institute Fellow Susan Crawford, who agrees that the current approach to net neutrality makes sense while cable is most people's only option for high-speed Internet.

The Lawyer Who Went from Fighting for Guantánamo Bay Inmates to Going After Shady Banks (Vice)

David Dayen profiles Josh Denbeaux, a lawyer who is fighting back against foreclosure abuse in the courts and trying to develop class-action suits for homeowners facing illegal foreclosures.

New on Next New Deal

Launching Our Financialization Project with "Disgorge the Cash"

Roosevelt Institute Fellow Mike Konczal introduces our Financialization Project, which aims to define and explain the topic, as well as J.W. Mason's paper. Learn more about the project here.

Millennials Want More Than Obama’s Keystone Veto

Roosevelt Institute | Campus Network Senior Fellow for Energy and Environment Torre Lavelle says the veto isn't good enough, because Millennials are seeking a real commitment to transforming energy usage.

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Daily Digest - February 10: What Happened to Reinvesting Corporate Profits?

Feb 10, 2015Rachel Goldfarb

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Stock Buybacks Are Killing the American Economy (The Atlantic)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Stock Buybacks Are Killing the American Economy (The Atlantic)

Nick Hanauer blames the high percentage of corporate profits going to stock buybacks for our slowed economy; that money could otherwise go to higher wages or new corporate investments.

Obama and Congress Offer Bogus Rhetoric on Tax Reform (AJAM)

David Cay Johnston says that both the Democrats and the Republicans are only discussing tax reform that benefits the political donor class, instead of reform that help average Americans.

  • Roosevelt Take: In a white paper released last year, Roosevelt Institute Chief Economist Joseph Stiglitz proposed a tax plan that would promote equity and growth for all.

Right-to-Work Laws are Every Republican Union-Hater's Weapon of Choice (The Guardian)

There are no philosophical or economic arguments in favor of right-to-work laws, writes Michael Paarlberg, only a political preference for supporting employers over workers.

Illinois Governor Acts to Curb Power of Public Sector Unions (NYT)

Monica Davey and Mitch Smith report on Governor Rauner's executive order, which will strip public sector unions of the fair share dues that non-members pay for the benefits they get anyway.

Red States' New Tax on the Poor: Mandatory Drug Tests for Welfare Recipients (TNR)

Elizabeth Stoker Bruenig points out that only certain public funds require invasive tests to ensure recipients are worthy of assistance. Other forms of welfare, like public schools, are simply accepted.

In at Least 22 States, Your Student Debt Could Cost You Your Job (Jobs With Justice)

Chris Hicks points out the disconnect inherent in laws that revoke professional licenses from people who aren't able to pay their student debt. How will they make enough to pay it off without that license?

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