The Economic Policy Institute (EPI), a non-profit think tank focusing on the needs of middle- and low-income workers, this week released a new report that shows the U.S. Wealth Gap has continued to grow over the past decade. It also calls the first 10 years of the 21st century a “lost decade” for middle class Americans. A summary of the report can be seen in the slideshow below.
By “lost decade,” the report means that real median income for working-age families has dropped to $63,000 in 2010, down from $69,233 in 2000. This is during the same time period in which overall economic productivity has continued to rise steadily. The report warns of another lost decade, if unemployment continues to stay at high levels.
As for wealth disparity, the report shows that real annual household income for the top 1% in income has risen 240% since 1979, and has skyrocketed the past decade. For the bottom 20% in income, their real annual household income has risen only 11% since 1979.
When it comes to real annual household capital income, the top 1% have increased their take by 309% since 1979, while the bottom 60% bring in less real annual household capital income than they did in 1979. An interesting graph in the report shows why 1979 is used as a cut-off. From 1947 to1979, the income rate for all income groups rose fairly evenly. From 1979 to 2007, the average family income growth rate for the top 5% income group rose 2%, while the bottom fifth income group had no family income growth rate change.
The report blames the growing disparity on a number of factors. EPI shows that CEO and executive compensation have grown dramatically since around 1985, while effective tax rates on those with the highest incomes have dropped dramatically since around 1970. As for the middle class, the report shows that wages, including minimum wage, have stagnated over the past four decades. It blames this stagnation partly on a drop in union coverage, and partly on growing trade with less-developed nations.
Apple, the company that’s considered to be many consumers’ favorite gadget maker, is under fire for what’s happening at its Foxconn factories in China. Aside from numerous reports of suicide and suicide attempts, The New York Times, in January, revealed specific details about the working conditions in the factories, which sparked a lot of controversy over the tech company.
In The New York Times report, Charles Duhigg and David Barboza wrote: “the workers assembling iPhones, iPads and other devices often labor in harsh conditions, according to employees inside those plants, worker advocates and documents published by companies themselves. Problems are as varied as onerous work environments and serious — sometimes deadly — safety problems.”
Is Apple responsible for the poor working conditions in Foxconn’s Chinese factories? Why or why not?
Ever since this article was published, both Apple and Foxconn have gained extensive criticism. Many groups, including the Economic Policy Institute (EPI), are speaking out against Apple claiming it should take full responsibility.
“Apple is certainly to blame because Apple is in control of the situation,” Ross Eisenbrey, the Vice President of the Economic Policy Institute, said to WebProNews.
The EPI, along with Students and Scholars against Corporate Misbehavior (SACOM), the Workers Rights Consortium, and others, recently held a forum to raise awareness of these issues. Their research, as Eisenbrey explained to us, found that Foxconn’s Chinese factory employees work 60-70 hours per week, are exposed to dangerous chemicals, experience explosions from uncontrolled aluminum dust, and are under a military-style of management.
In addition, a large part of the workforce consists of 16-18-year old individuals that serve as “interns” from local vocational schools. Eisenbrey, however, told us that these individuals do not even work in the areas in which they are hoping to obtain training in.
He pointed out that many of these conditions break Apple’s Code of Conduct as well as Chinese laws.
“Apple has the capacity, because it makes such a big profit, to offer a better margin to Foxconn,” said Eisenbrey.
“They have the power to do that – they’ve just chosen not to do that,” he added.
According to him, the problems date back to 2005. At that time, Apple made a commitment to enforce improvements. But, Eisenbrey told us that he doesn’t believe Apple’s commitment was strong enough since the issues remain several years later.
The debate around Apple its Foxconn factories came even further into the spotlight after Rob Schmitz, Marketplace’s China correspondent in Shanghai, had the opportunity to visit the Foxconn Longhua facility:
Interestingly, Foxconn’s plants in Brazil also produce Apple products, but the working conditions are very different from China’s. Under Brazilian law, workers are required to have union representation. As a result, workers have better wages, transportation, and benefits.
Since Brazil shows that Foxconn and Apple can abide by such mandates, Eisenbrey thinks the companies are more than capable of facilitating similar practices in China.
Last month, the Fair Labor Association (FLA) conducted an investigation of Foxconn’s plants in China in response to the widespread scrutiny of both Apple and Foxconn. Since the audit found multiple violations, the companies are required by the FLA’s remediation policy to make changes.
The improvements involve reducing worker overtime, giving workers a stronger voice, and reforming the “internship” program. While these provisions would help the current circumstances, Eisenbrey and others see a problem in the fact that the changes won’t begin until June of 2013.
“We get a report that basically puts off changes for more than a year and doesn’t really promise anything more than Apple and Foxconn promised in 2006,” he said.
“They made commitments 6 years ago, and here we are again 6 years later and nothing has changed,” he continued.
Although Eisenbrey is skeptical given the comapanies’ past actions, he told us that he hopes Apple will step up, take responsibility, and do what’s right.
“People have believed Apple’s commitment in the past, and if they go on making commitments and breaking them, sooner or later, that’s gonna penetrate the buying public,” he said.
“Apple is a very efficient, powerful organization that, when it wants to get something done, can get it done,” he said. “They haven’t gotten this done.”
Could all this scrutiny result in Apple becoming a less valuable company? What do you think?
“Apple is certainly to blame because Apple is in control of the situation,” 