Moneybox
A blog about business and economics.

Aug. 10 2017 5:54 PM

Malls and Restaurants Schedule Workers at the Last Minute. Oregon Just Made That Illegal.

As the Democratic Party continues to flail over what besides resistance to Donald Trump it stands for (what’s the health care plan, anyway?), they can look for inspiration to Oregon, where Democratic Gov. Kate Brown signed the country’s first statewide employee scheduling law on Tuesday.

Starting in July 2018, Oregon will require big companies in retail, hospitality, and food service to give employees schedules at least a week ahead of time, and offer stress pay to workers who don’t get a 10-hour break between shifts. By 2020, employers covered by the law will have to hand out schedules two weeks in advance.

Oregon is the first state to pass such a law, which grows out of a vibrant municipal movement to humanize low-wage fast food and mall jobs that can no longer be thought of as stopgap positions, if they ever were. The median age of a retail employee, for example, is 39. According to a New York state study, most retail workers are breadwinners. It's hard to spend time with your family if you never know when you get off work.

San Francisco, Seattle, and New York City all have similar policies in place. (Several red-state cities have also tried, only to be shut down by conservative statehouses.) The Oregon bill may be a sign that the movement is about to jump from cities to states. In December, the Illinois Attorney General announced that a group of large retailers including Aeropostale and Disney would stop using on-call scheduling after an investigation. A handful of other blue-state AGs are also looking into it. In 2015, Elizabeth Warren introduced a fair scheduling bill in the Senate.

Aug. 10 2017 5:40 PM

That Ridiculous San Francisco Craigslist Ad Is Actually a Sign of Progress

A couple of San Francisco–based, fortysomething executives posted a Craigslist ad looking for a personal assistant on Wednesday. The post is a good example of why not everyone is cut out to be an HR director: It’s a long, stream-of-conscious list of required and desired qualities that, interpreted generously, tries to offer a potential employee a full picture of the gig. Read less generously, it strikes several bizarre notes that border on offensive (most specifically in its all-caps insistence on English-language FLUENCY) and scream micromanager.

The posting has gone viral, thanks in no small part to our collective urge to hate out-of-touch elites and the communal release that comes from complaining that they are awful. Sure, the posters’ decision to explicitly update the listing to state that “due to high demand, we’re offering $15-35 an hour (vs. the former $25-35 an hour)” is a telling indication of how deeply they believe in the harsh efficiency of the market, and a good reason to question what life as their underling would be like. And yes, it is bizarrely specific and unprofessional, particularly the section that attempts to assure applicants that the employers’ insistence that “you take pride in how you look” isn’t weird because they embrace “whatever that ‘look’ or style may be for you.”

It is boring to point out that anyone tweeting the screenshots to this ad ought to read the actual thing and realize the applicant qualifications are broken into “requirements” (mostly reasonable if occasionally ill-put) and “bonus points” (largely ridiculous, but also indisputably not required or expected, and certainly not all at once).

But ultimately, there is an easy way to explain how this post, and its annoyingly intimate rhetoric, came into being, and why it strikes such a nerve. The posters are not just looking for a personal assistant. They are looking for a mom.

The section of the post that establishes the “problem” is both hilariously out-of-touch and occasionally relatable:

…personal social media accounts are neglected, I buy fresh flowers but don't have time to trim daily and change the water, indoor plants are dying, vacations and fun trips aren't taken because there's no time to plan them, dirty laundry is neglected until we run out of clean clothes to wear, merchandise that should be returned doesn't get returned, phone calls to customer support don't get made, prescriptions aren't refilled, instead of dry cleaning something it will just never be worn again, pants that are too long never get hemmed, that cute dog doesn't get taught new tricks or get his coat brushed out as often as it needs to be, things that we're meaning to order don't get ordered, items slated for donation sit in a corner for months, groceries aren't put away into the cabinet, the sink is eternally filled with soaking dishes/pots/pans, picture frames hang on the wall with no photos inside, the closet is in need of reorganization, appointments aren't scheduled, information isn't updated, nail polish gets chipped and remains chipped…

Flowers, Instagram, and chipped nail polish aside, this is a laundry list (no pun intended) of the daily mundanity pretty much everyone needs to deal with to simply exist in the world. And of course, until very recently, we didn’t have to think about these tasks because they were done by people who had little choice in the matter—by servants, or slaves, or women.

We could, and probably should, mock these posters’ naïve assumption that they will have a flourishing and close personal relationship with the serf they are hoping to hire for just a squeak above minimum (and in San Francisco, unlivable) wage. Indeed, I’d suggest that the main source of irritation that comes from reading it is due to the problematically mixed messaging of “we want to pay a professional” and “we expect you to be family.” (Though it also seems to me that part of being a good personal assistant is being a personality match, but having neither had nor been a personal assistant myself, I can’t quite say how out-of-line that particular desire of the post is.).

So, sure, it’s annoying. And it’s by no means a solution—hiring a personal assistant to do housework is not viable for most people. But this ad is just one indication that even annoying people in Silicon Valley have begun to realize the value of housework—indeed, it’s a cousin to the numerous apps that now exist to also try to “solve” this problem. Neither of these solutions will work in the long run. But I’d argue that instead of lamenting this clueless ad as indicative of everything wrong with Bay Area culture, we should file it under “evidence” as we work toward a world that actually accounts for the cost of housework, and doesn’t just ignore it or leave it to certain groups.

Aug. 9 2017 6:45 PM

California Cities Are Trying to Shun the Companies That Build Trump’s Wall

Overmatched in Congress by gerrymandering, rural bias, and clustering, blue cities and states have little power in Washington to stop President Trump’s border wall.

Back at home, however, they issue billions of dollars in procurement contracts to some of the same construction companies that are bidding to build the wall along the U.S-Mexico border. Maybe it’s there, politicians reason, that they could make their voice heard.

On Tuesday, the Los Angeles City Council voted to draw up a law to require firms bidding for city contracts to disclose their role in the border wall. Oakland and Berkeley have already said they will not do business with companies involved in design and construction of the wall. Similar efforts have been proposed in San Francisco and New York, and California state legislators have taken aim both at contracting with companies who work on the wall and using state pension funds to invest in them.

The first question that has to be asked about these efforts is: What wall?  Trump’s signature promise hasn’t exactly been coming along as planned. In May, after a rushed bidding process characterized by being open-ended in some ways (the wall should perhaps have solar panels, the president said) and extremely specific in others (the wall must be transparent so Americans can’t be hit by 60-pound packages of drugs, the president said), DHS announced a group of finalists had been selected.

But in July, the Trump administration said that a planned showcase of prototypes from those finalists had been postponed, after a complaint about the bidding process from the Penna Group, a Fort Worth, Texas-based contractor. Michael Evangelista-Ysasaga, Penna’s chief executive officer, told me that his company’s bid had been rejected because the government misunderstood the terms of the paperwork. “Any time there’s a rush, mistakes are made,” Evangelista-Ysasaga says.

The wall model display in San Diego that was supposed to be under construction by June has now been delayed twice, first to the end of the summer, and now until November.

Meanwhile, a leaked transcript of Trump’s January phone call with Mexican President Enrique Peña-Nieto revealed that the commander in chief was not nearly as determined to have Mexico pay for the wall as he had been on the campaign trail.*

With all that in mind, threats from local jurisdictions may not be the preeminent hold-up for the wall. If the project goes forward according to Trump’s promises (which it won’t), it would constitute one of the largest nonmilitary contracts in the United States. Senate Democrats say the wall would cost $70 billion to build. Probably worth the cost of being shut out of California procurement, in other words.

Still, the outrage around the wall has been successful so far in dissuading several high-profile companies from participating in the bid process. When the bids are finally revealed, the opprobrium could stick to some of those companies in ways that extend beyond what’s prescribed by local or state law. When it comes time for blue states to award corporate subsidies, for example, firms might find their enthusiasm for the wall becomes a political liability.

The gestures are reminiscent of the movement to divest from private prison companies. New York City’s pension funds decided in May to sell stock and bonds in a trio of prison companies. Architects have also moved to stop their peers from designing prison projects.

Unfortunately for municipal legislators, the problem with the wall (which, again, won’t happen) is that the profit motive is so large, it’s probably worth forfeiting your company’s right to supply steel to California public works projects. Another reason why this border-spanning, solar panel-encrusted nightmare won’t quite die yet.

*Correction, Aug. 10, 2017: This post originally misspelled Enrique Peña-Nieto’s last name.

Aug. 8 2017 6:39 PM

Columbus, Ohio, Will Offer Free Bus Passes to 40,000 Downtown Workers

Downtown business interests in Columbus, Ohio, say rents are down and the office vacancy rate is rising—simply because there’s no place to park.

It’s the same complaint that downtown power brokers made during the 1950s, one that helped create the streetscape of U.S. downtowns, which features plenty of street parking, large single-use parking garages, and parking on the lower floors of office buildings and hotels. (Columbus is not exactly a parking desert, but it is also the country’s largest city without rail transit, and 83 percent of downtown employees drive to work alone.)

Last week, the Capital Crossroads Special Improvement District opted for a cheaper and more novel solution than creating more parking spaces: Give 43,000 downtown workers free bus passes for 18 months starting next summer. The passes will be funded by a tax on downtown office owners but made possible by COTA, the regional transit agency, which is slashing the annual cost of a bus pass to $40.50 from $744. The hope is that 4,000 to 5,000 workers will sign up.

Aug. 8 2017 6:15 PM

Americans Are Overpaying for Insurance Because Obamacare Is Too Confusing

Millions of Americans who would qualify for financial help to buy health insurance under Obamacare seem to be leaving that money on the table by purchasing coverage that's ineligible for assistance, according to a new paper published in the journal Health Affairs.

Why are so many people turning down government help? In short, we don't know for sure. But the study, authored by researchers from the Urban Institute and Michigan State University, raises a familiar issue with the health law. For many insurance shoppers, Obamacare may just be too confusing.

If you're reading this article, chances are you're familiar with the Affordable Care Act's online insurance exchanges—the state and federal websites, like healthcare.gov, where Americans can compare plans and buy coverage every open enrollment season. Most Americans who buy insurance on the individual market now use these portals, and for good reason: In order to qualify for Obamacare's coverage subsidies, you have to get your insurance through an official exchange.

Nonetheless, there are still millions of Americans who have continued to buy their coverage off the exchange. Often, the plans they choose are identical to what's offered on ACA's marketplaces. The running assumption among health care experts I've talked to over time was that the vast majority of those customers probably made too much money to receive any government help, since only families that earn between 100 and 400 percent of the poverty line are eligible for Obamacare's tax credits. For those not getting a subsidy, it might be easier and less of a time suck to buy directly from an insurer, rather than log on to healthcare.gov and fill out a long form. They may also be able to find insurance options with slightly wider networks or other advantages.

Except, it turns out that a lot of those Americans shopping off the exchanges would qualify for subsidies. Using the data from the National Health Interview Survey, the Michigan State and Urban Institute team estimated that 6.3 million nonelderly adults bought their insurance coverage outside Obamacare's marketplaces in 2015. Almost 41 percent of them reported incomes between 100 and 400 percent of the poverty line—meaning they should have been tax credit eligible. Almost 19 percent earned less than 250 percent of the poverty line, meaning they would have qualified for special subsidized plans that lowered their out-of-pocket costs like deductibles and co-pays.

But for some reason, they said no thanks.

For a number of consumers, that may have been a rational choice. Many younger, healthier Americans, for instance, have chosen to skip the exchanges and buy inexpensive, short-term health plans that don't meet Obamacare's regulatory standards. These policies don't cover pre-existing health conditions and can include lifetime caps on coverage. As a result, the federal government doesn't actually consider them insurance, and those who buy them still have to pay the individual mandate's tax penalty for the uninsured. Even with that added cost, short-term plans may be more affordable for some.

Still, it seems fairly obvious that some people are simply overpaying for coverage because they don't know any better. "I have to think a lot of them just aren't aware they could get better deals buying through the exchange," the study's lead author, Michigan State economist John Goddeeris, told Modern Healthcare. "Probably a good number of people are making a mistake."

This is not the first study to suggest that millions may be unwittingly forgoing Obamacare's financial assistance. A January Health Affairs study found that 31 percent of Californians who bought insurance on the individual market in 2014 missed out on the ACA's premium tax credits or cost-sharing subsidies either because they bought insurance off the exchange, or chose the wrong kind of plan. One clue about what might have gone wrong: People who qualified for aid but bought off-exchange coverage anyway were less likely to have gotten help from an insurance counselor. Meanwhile, in a 2015 survey by the Robert Wood Johnson Foundation, 59 percent of the uninsured said they either did not know about Obamacare's tax credits, or didn't understand them.

The ACA has done an enormous amount of good by helping millions obtain health insurance they otherwise couldn't afford. But it's also a complicated policy contraption that assumes a relatively savvy consumer, and without extensive public education, many people are simply going to miss out on its benefits. Even the Obama White House seems to have failed at adequately spreading the word, which may well have hurt the law politically; it's easy to imagine that some voters who were enraged by rising premiums didn't realize the government was there waiting to give them a tax credit. Now, the ACA is being run by an administration that has spent months gradually sabotaging the law for political gain, and will almost surely cut back on outreach. I'm guessing the number of people paying more than they should for coverage is about to rise even higher.

Aug. 8 2017 2:09 PM

Rich San Franciscans Find Out What Poor People Already Know: Investors Can Buy Their Land for Almost Nothing

In April 2015, a couple from San Jose, California, quietly bought one of America’s most exclusive and expensive streets for a song.

For a measly $90,000, the San Francisco Chronicle reports, Tina Lam and Michael Cheng purchased San Francisco’s tony, private Presidio Terrace. Flanked by mansions that sell in the eight figures, the street has been managed by nearby homeowners—which have included House Minority Leader Nancy Pelosi and California Sen. Dianne Feinstein—since 1905. The purchase, the Chronicle writes, "includes a string of well-coiffed garden islands, palm trees and other greenery,” in addition to the real jackpot: 120 free parking spaces. At a monthly parking rate of $200, the couple could make their money back in a couple years.

What happened here? According to its lawyer, the Presidio Homeowners Association forgot to pay a $14-a-year tax bill because it was being mailed to the wrong address. So the city put the property up for auction. The PHA, in other words, lost a private street in the most expensive city in the country over a paltry $994 in unpaid back taxes, penalties, and interest.

As if the story couldn’t get any richer, Presidio Terrace was whites-only until the 1948 Supreme Court decision Shelley v. Kraemer, which stopped courts from enforcing racial covenants—deeds that stipulated that a property couldn’t be sold to a minority. Now the street itself is owned by a couple of Asian American immigrants.

It’s a hilarious, headline-grabbing example of a much more pernicious practice, in which governments auction tiny tax liens to private investors, who impose onerous interest charges and legal fees in order to foreclose on homes. It’s a tragedy of the financial crisis repeating as farce.

Aug. 7 2017 7:19 PM

Did the Rich Really Pay Much Higher Taxes in the 1950s? The Answer Is a Little Complicated.

American progressives like to remember the mid–20th century as a time when the only thing higher than a Cadillac’s tail fin was the top marginal tax rate (which, during the Eisenhower years peaked above 90 percent for the very rich). Uncle Sam took 90 cents on the dollar off the highest incomes, and—as any good Bernie Sanders devotee will remind you—the economy thrived.

Conservatives, however, often try to push back on this version of history, pointing out that those staggeringly high tax rates existed mostly on paper; relatively few Americans actually paid them. Recently, the Tax Foundation's Scott Greenberg went so far as to argue that “taxes on the rich were not that much higher” in the 1950s than today. Between 1950 and 1959, he notes, the highest earning 1 percent of Americans paid an effective tax rate of 42 percent. By 2014, it was only down to 36.4 percent—a substantial but by no means astronomical decline.

averageeffectivetaxrateonthetop1percentofu.s.households

Greenberg is not pulling his numbers out of thin air. Rather, he’s drawing them directly from a recent paper by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman in which the three economists—all well-loved by progressives—estimate the average tax rates Americans at different income levels have actually paid over time. Their historical measure includes federal, state, and local levies—including corporate, property, income, estate, sales, and payroll taxes. And lest you think Greenberg is misrepresenting anything, here’s Piketty & co.’s own graph (rates on rich folks are shown in green).

There are a few obvious reasons why the taxes the rich actually paid in the 1950s were so much lower than the confiscatory top rates that sat on the books. For one, the max tax rates on investment income were far lower than on wages and salaries, which gave a lot of wealthy individuals some relief. Tax avoidance may have also been a big problem. Moreover, there simply weren’t that many extraordinarily rich households. Those fabled 90 percent tax rates only bit at incomes over $200,000, the equivalent of more than $2 million in today’s dollars. As Greenberg notes, the tax may have only applied to 10,000 families.

To Greenberg, the takeaway from this is simple: Progressives should stop fixating on the tax rates from 60 years ago. “All in all, the idea that high-income Americans in the 1950s paid much more of their income in taxes should be abandoned. The top 1 percent of Americans today do not face an unusually low tax burden, by historical standards.”

I’m not convinced. Effective tax rates on 1 percenters may not have fallen by half, as some on the left might be tempted to imagine. But they are down by about 6 percentage points1 at a time when the wealthy earn a vastly larger share of the national income. That drop represents a lot of money. Moreover, as Greenberg admits, tax rates on top 0.1 percent have fallen by about one-fifth since their 1950s heights. That rather severely undercuts the idea that taxes on the wealthy haven't fallen “much.”

Moreover, there may be reasons to support higher taxes beyond their ability to raise revenue. One popular theory among left-leaning intellectuals right now—advanced by Piketty, Saez, and their protegée Stefanie Stantcheva—is that high tax rates actually ease income inequality by discouraging CEOs and professionals from demanding exorbitantly high pay for their services.* In other words, thanks to high tax rates, people didn’t bother trying to get as rich. After all, there’s no point in bargaining for a giant bonus if the government is going to clip off most of it. I wouldn’t say the theory has been accepted as a consensus fact at this point, but it’s certainly alive and being taken seriously.

So the real tax rates rich Americans paid in the 1950s may not have been so stratospherically high as some progressives assume. But they also may have helped create a more egalitarian society. That seems worth considering.

1 Or more, depending on how you pick your frame of comparison. If you average the rates 1 percenters paid between 2010 and 2014, their effective average rate comes out to about 33.6 percent.

*Correction, Aug. 8, 2017: This post originally misspelled Stefanie Stantcheva’s first name.

Aug. 3 2017 7:28 PM

Outside of Elite Colleges, Affirmative Action Is Already Disappearing

The Trump administration may or may not be preparing a legal assault against college affirmative action policies. But in case lawsuits do start flying, here's a piece of context that's worth keeping in mind: Outside the very top tiers of higher education, race-based admissions have largely disappeared already.

That was the finding from a recent working paper by sociologists Daniel Hirschman of Brown and Ellen Berry of the University of Toronto, which quantified the decline of affirmative action on America's campuses over the last two decades. In 1994, they found, about 60 percent of selective colleges—schools that reject at least 15 percent of their applicants—publicly stated that they considered race in their admissions process. By 2014, that number was down to the 35 percent.

The vast majority of that drop occurred at lower-ranking schools. Among the 63 institutions deemed “most competitive” by Barron's Profiles of American Colleges, 93 percent considered race in 1994. Two decades later, that mark had barely slipped, inching down to 88 percent. By comparison, at the 587 colleges Barron's considered merely “competitive,” the number using affirmative action dropped from 46 percent to 18 percent.

graph

In other words, affirmative action went from a being common policy across all sorts of campuses to more of a niche practice particular to brand-name, wealthy colleges.

Here's another way to put those numbers in perspective. There are around 4,700 two- and four-year colleges in America, but only 1,000 or so schools reject a meaningful number of applicants each year. Of those, just 352 claimed to consider race in admissions by 2014 according to Hirschman and Berry—and 124 of them fell into Barrons' two most prestigious categories. There were only 158 schools in those categories, so most prestigious schools considered race in admissions.

But in total, those two tiers of colleges are responsible for educating just 6 percent of America's undergrads.

This isn't to minimize how important the debate over affirmative action is. Quite the contrary. Top colleges are gate-keepers for elite institutions, stepping stones into politics, finance, Silicon Valley, T14 law schools, the media, and beyond. Harvard and Stanford's admissions policies play a not-insignificant role in determining who gets to run the country one day. By extending black and Hispanic students extra consideration, they're giving them a necessary boost into those worlds. You might assume that smart, driven kids will succeed no matter where they go to college, but economists have shown that attending a prestigious school is especially beneficial for minorities and first-generation students, possibly because it helps them develop professional networks their families lack.

We also know that when schools end affirmative action, black and Hispanic enrollment tends to drop. After California banned schools from considering race, for instance, minority admission rates at its top state universities plummeted 50 to 60 percent; at U.C. Berkeley, black and Hispanic students fell from 22 percent to 12 percent of the freshman class.

In contrast, it's not clear how much white students have at stake in the affirmative action debate other than symbolic satisfaction. To be sure, at least a few lose spots at top colleges to minority applicants with lower test scores or grades (of course, many also lose spots to legacies and other unexceptional students with wealthy parents who donate or pay full freight). But if they lose a spot at one insitution, there's still a strong chance they'll be accepted to another similar school. And at many top colleges, such as Berkeley or the University of Texas at Austin, the main beneficiaries of race-blind policies have been Asian students. If affirmative action were ever finally ended for good, the face of America's elite professional class might not become that much more white. But it would be even less black and brown.

Aug. 1 2017 7:01 PM

A Small Yet Soul-Crushing Illustration of Donald Trump’s Utter Economic Illiteracy

The full transcript of Donald Trump's Wall Street Journal interview, which leaked to Politico, is enough to make anyone spiral into despair—like most performances from our president, it's full of moments that illustrate his tenuous grasp of reality. As Slate's official economics correspondent, though, there was one section that left me especially crestfallen—in just one short paragraph of word salad, he delivers a subtle but telling demonstration of his total ignorance on how economies work.

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Here's the passage. Trump is trying to explain that he thinks the United States is growing too slowly compared with the rest of the world, and therefore we need to cut our corporate tax rate to 15 percent. I've bolded the key part.

So I’ll call, like, major—major countries, and I’ll be dealing with the prime minister or the president. And I’ll say, how are you doing? Oh, don’t know, don’t know, not well, Mr. President, not well. I said, well, what’s the problem? Oh, GDP 9 percent, not well. And I’m saying to myself, here we are at like 1 percent, dying, and they’re at 9 percent and they’re unhappy. So, you know, and these are like countries, you know, fairly large, like 300 million people. You know, a lot of people say—they say, well, but the United States is large. And then you call places like Malaysia, Indonesia, and you say, you know, how many people do you have? And it’s pretty amazing how many people they have. So China’s going to be at 7 or 8 percent, and they have a billion-five, right? So we should do really well.
But in order to do that – you know, it’s tax reform, but it’s a big tax cut. But it’s simplification, it’s reform, and it’s a big tax cut, 15 –

At some point, it appears Donald Trump heard somebody say that the United States cannot grow as fast as China or Malaysia because we have a “large” economy. No doubt, what they meant is that the U.S. is a highly developed, rich nation and therefore can't expand as quickly as developing countries that can still reap large gains from taking basic steps to improve their living standards. But Trump did not understand it that way. He apparently thought that when whoever he was listening to said “large,” they were talking about population. Therefore, in his mind, if China grows at nearly 7 percent per year with its 1.4 billion people, the U.S. should be able to do it too.

This is the man who millions of voters are relying on to bring back jobs. Bottoms up.

Aug. 1 2017 1:50 PM

Trump, Man of the People, Brags About Corporate Profits as Wages Stagnate

President Trump took to the Twitter-waves to broadcast some important economy news Tuesday morning.

Trump usually posts such tweets—another one Tuesday was on the media’s failure to report on the stock market’s gains this year—to take credit for the strength of the economy and reassure his audience (and himself) of his general awesomeness. Trump never tweets negative news, like, say, the crap sales this year from the auto industry, which is the largest manufacturing and retail sector of the economy.

Never mind the absurdity of Trump taking credit for positive economic news and ignoring the negative—Trump arrived in the White House after an eight-year boom in corporate profits and the stock market that can hardly be attributed to him. There’s something else that’s amiss. The fact that American companies are making more than ever is actually a big part of the problem in this country. And its arguably one of the reasons we ended up with Trump.

Of course, corporate profits are better than corporate losses. And more corporate profits are generally better than less corporate profits. But the signal fact of the past decade or so is that, while the fortunes of the corporate sector recovered rapidly after the financial crisis (thanks, Obama and Bernanke!), the fortunes of American workers never quite did.

For a variety of reasons, in fact, the relationship between pay and profits—which was already  increasingly tenuous in the 1990s and the 2000s—broke down entirely during the Obama era. Companies, having survived the collective near-death experience of the 2008 financial crisis, were eager to keep costs down. With massive slack in the labor market—the unemployment rate was 10 percent in October 2009—and unions on their back, workers at all skill levels were not in much of a position to bargain for higher rates. If they did summon up the courage to ask for more, companies could wield the threat of automation, outsourcing, or offshoring. Oh, and thanks to Republican intransigence, the federal minimum wage has remained stuck at a measly $7.25 per hour for the past decade.

So even as median household income stagnated and wages grew a tiny bit, we saw a massive increase in pre-tax corporate profits, from $1.38 trillion in 2008 to $1.84 trillion in 2010, $2.13 trillion in 2012, and $2.16 trillion in 2016. That’s an increase of more than 56 percent in six years. More significantly, corporate profits as a percentage of GDP, which never topped 6.4 percent in the 1990s, rose from 7.3 percent in 2008 to 10.4 percent in 2014. Another way of looking at this, as Pedro da Costa points out in Business Insider, is that labor’s share of the overall economic pie has been plummeting during this expansion. America has been making a lot bigger pizzas in the past several years, but all the extra slices are being delivered to executives and shareholders.

The strange, unpredicted thing is that this trend continued even as the expansion continued to roll on and the labor market tightened. There have been more than 5 million jobs open in the U.S. since August 2014. The unemployment rate stands at 4.4 percent. In many states and cities, the minimum wage is rising. And yet overall pay isn’t really budging much. Median household income adjusted for inflation in 2015 was below its level in 2006.

This state of affairs is maddening. It’s true that inflation has generally been muted since the onset of the financial crisis. And many important things have become cheaper, like clothes and wireless service. But some goods and services that people really need—say, housing, education, and health care—have become significantly more expensive in the past decade. What’s more, there is something soul-sapping about showing up to work every day and either getting the same as you did last year, or getting paid less than you did last year, and never getting a raise or bonus—especially when you can see that your company’s profits are rising dramatically. It’s almost as if the system was, dare I say it, rigged against those who work and toward rewarding those who sit on their rears and collect dividends.

To aggravate matters, in the past few years, the financial press (me included), Wall Street, the Obama administration, and the Federal Reserve were trumpeting the economic gains apparent in this long-running expansion. That disconnect between corporate prosperity and the struggles of workers was one of the factors that helped ignite Trump’s campaign. While he’s gleefully taking credit for the corporate prosperity now, the previous political establishment’s identification with that disconnect was a theme that Trump played off of masterfully throughout the campaign and even in his closing argument campaign ad.

In theory, of course, profits and wages should be rising in closer harmony. The demand for labor relative to the supply is relatively high. But the structural forces that allowed companies to keep wages down as they recovered—the weakness of unions, the threat from offshoring and automation, the insecurity of millions of people traumatized by the financial crisis—are still with us, even as the economy enters its ninth year of expansion. I’d add another less appreciated factor. A kind of pathology has taken root among business owners. They’ve convinced themselves not only that they shouldn’t have to raise wages in order to attract, motivate, and reward workers, but that it would be detrimental to their business if they were to do so.

Given that the president views every relationship as a zero-sum game, it’s not likely companies will come under any short-term pressure to share a higher proportion of their profits with their employees. But that doesn’t mean executives should rest easy. If jobs stop roaring as profits continue to levitate, Trump may flip the script.

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