How inequality has soared in the US

The top 1 per cent now take home 23.5 per cent of all income.

If you want to get some idea of why the 99 per cent movement has attracted so much support in the US, just take a look at this graph. Over the last thirty years, the share of income taken by the top 1 per cent of Americans has risen from 10 per cent to 23.5 per cent. Even more remarkably, the share taken by the top 0.1 per cent (the top 14,988 US families, making at least $11.5m in 2007) has risen from 1 per cent to 6 per cent. Income inequality in the US is now at its highest level since 1928 (see this excellent Berkeley report for more data), when the top 1 per cent took home 23.9 per cent.

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As you'll notice, from the 1950s onwards, income distribution in the US remained broadly stable until the Thatcher-Reagan revolution. The neoliberal policies pursued by the Reagan administration - tax cuts for the wealthy (the top rate of tax was reduced from 50 per cent to 28 per cent), deregulation and privatisation, led to a dramatic rise in inequality.

Consequently, it's no surprise that even in the US, where the Tea Party has tilted the political spectrum rightwards, the majority of citizens support the aims of the 99 per cent movement. A recent Time/Abt SRBI poll found that 54 per cent had a "very favourable" (25 per cent) or "somewhat favourable" (29 per cent) view of the movement.

It was Alan Greenspan, a disciple of free-market guru Ayn Rand, who remarked in 2005: "This is not the type of thing which a democratic society - a capitalist democratic society - can really accept without addressing." Obama now has a huge political opportunity to win support for a renewed drive against inequality. He was memorably attacked during the 2008 presidential election for wanting to "spread the wealth" but the polls suggest that's exactly what the voters want him to do.

As for the UK, we're not doing much better. The richest 10 per cent now receives 31 per cent of national income and owns almost half of the country's personal assets, while the poorest 10 per cent takes home just 1 per cent of the total income. The coalition's decision to rely on spending cuts (which hit the poorest hardest), rather than tax rises, to reduce the deficit will inevitably widen the gap. Conservatives may criticise the Occupy London movement but they cannot deny that it reflects a grim empirical reality.

George Eaton is political editor of the New Statesman.

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There's nothing Luddite about banning zero-hours contracts

The TUC general secretary responds to the Taylor Review. 

Unions have been criticised over the past week for our lukewarm response to the Taylor Review. According to the report’s author we were wrong to expect “quick fixes”, when “gradual change” is the order of the day. “Why aren’t you celebrating the new ‘flexibility’ the gig economy has unleashed?” others have complained.

Our response to these arguments is clear. Unions are not Luddites, and we recognise that the world of work is changing. But to understand these changes, we need to recognise that we’ve seen shifts in the balance of power in the workplace that go well beyond the replacement of a paper schedule with an app.

Years of attacks on trade unions have reduced workers’ bargaining power. This is key to understanding today’s world of work. Economic theory says that the near full employment rates should enable workers to ask for higher pay – but we’re still in the middle of the longest pay squeeze for 150 years.

And while fears of mass unemployment didn’t materialise after the economic crisis, we saw working people increasingly forced to accept jobs with less security, be it zero-hours contracts, agency work, or low-paid self-employment.

The key test for us is not whether new laws respond to new technology. It’s whether they harness it to make the world of work better, and give working people the confidence they need to negotiate better rights.

Don’t get me wrong. Matthew Taylor’s review is not without merit. We support his call for the abolishment of the Swedish Derogation – a loophole that has allowed employers to get away with paying agency workers less, even when they are doing the same job as their permanent colleagues.

Guaranteeing all workers the right to sick pay would make a real difference, as would asking employers to pay a higher rate for non-contracted hours. Payment for when shifts are cancelled at the last minute, as is now increasingly the case in the United States, was a key ask in our submission to the review.

But where the report falls short is not taking power seriously. 

The proposed new "dependent contractor status" carries real risks of downgrading people’s ability to receive a fair day’s pay for a fair day’s work. Here new technology isn’t creating new risks – it’s exacerbating old ones that we have fought to eradicate.

It’s no surprise that we are nervous about the return of "piece rates" or payment for tasks completed, rather than hours worked. Our experience of these has been in sectors like contract cleaning and hotels, where they’re used to set unreasonable targets, and drive down pay. Forgive us for being sceptical about Uber’s record of following the letter of the law.

Taylor’s proposals on zero-hours contracts also miss the point. Those on zero hours contracts – working in low paid sectors like hospitality, caring, and retail - are dependent on their boss for the hours they need to pay their bills. A "right to request" guaranteed hours from an exploitative boss is no right at all for many workers. Those in insecure jobs are in constant fear of having their hours cut if they speak up at work. Will the "right to request" really change this?

Tilting the balance of power back towards workers is what the trade union movement exists for. But it’s also vital to delivering the better productivity and growth Britain so sorely needs.

There is plenty of evidence from across the UK and the wider world that workplaces with good terms and conditions, pay and worker voice are more productive. That’s why the OECD (hardly a left-wing mouth piece) has called for a new debate about how collective bargaining can deliver more equality, more inclusion and better jobs all round.

We know as a union movement that we have to up our game. And part of that thinking must include how trade unions can take advantage of new technologies to organise workers.

We are ready for this challenge. Our role isn’t to stop changes in technology. It’s to make sure technology is used to make working people’s lives better, and to make sure any gains are fairly shared.

Frances O'Grady is the General Secretary of the TUC.