Policy Wonk: Occupy movement got it more right than wrong

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We didn’t like their camping out in public spaces; they were sometimes too loud, in your face, or used foul language.

They were a varied lot. Many were untidy in appearance (threatening even), many were young, but many were older hippies, veterans, or homeless people.

Their message was mixed: jobs, raise the minimum wage, get out of Afghanistan, large corporations and Wall Street are corrupt, income inequality is grinding down the 99 percent, government is dysfunctional.

Moved by our sense of First Amendment rights, rights of assembly, the right to petition government, we listened to the Occupy movement for a time. Gradually, however, from Portland to Seattle, we closed them down. We didn’t like the tone, the unfocused messages, and we didn’t like the messengers. They made us uncomfortable.

But the truth is the vast majority of middle-income Americans (including middle-income Mainers) have been hurting for a very long time. Whether the correct focus is on the top 1 percent or 5 percent is irrelevant – those groups are doing well. The rest of us – the 99 or 95 percent of individuals and households – have seen almost no real income growth in the last 40 years.

Don’t take my word for it; Google “real income growth in the U.S.” You’ll find dozens of articles drawing on a variety of sources bearing out the underlying truth the Occupy movement was asserting. For nearly two generations, income inequality in the U.S. has been rising and now stands near the level of the Great Depression.

Not only has the gap between the rich and poor been increasing, but a recent report looking at 40 years of national data shows a shocking disparity between the mean income of the top 5 percent of U.S. households and the mean income of the lowest 20 percent of households.

Based on adjusted 2009 dollars, the top 5 percent averaged $272,500; the mean income for all U.S. households was $60,100; the lowest 20 percent averaged $20,500. The Occupy people were right to rub our nose in the harsh reality: What family can live with any semblance of dignity, safety, or hope for their children’s future on this level of household income?

Maine’s situation seemed slightly better: the gap between the top 5 percent and the lowest 20 percent was not as great as the national divide. Mean income for the lowest 20 percent of Maine households was $23,600 and our top 5 percent of households had an average income of $251,300. But this glimmer of good news is fast eroding.

Recent reports have identified Maine as one of 20 states where income inequality is growing: we have the fourth fastest rate of income inequality growth in the nation. This is a direct result of 2011 Lepage tax cuts, which disproportionately favored the wealthy. The Occupy people quite rightly railed against these cuts.

A last example supporting the thesis presented here grows out of recent news that Maine Medical Center, facing a deficit, cut 225 jobs. Halfway through its budget year Maine Med asserted it was looking at a $13.4 million budget shortfall. It blamed the loss on lower government and insurance payouts, shifts to lower revenue outpatient services, high levels of unreimbursed care, etc. Maine Med suggested that other hospitals were facing similar realities and making similar cuts.

Maine Med, according to Mainebiz, is the fourth largest employer in the state, with more than 6,000 employees. It is the second largest nonprofit corporate entity in the state, with more than $1 billion in assets. Of the 23 largest nonprofit corporate entities identified recently by Mainebiz, 13 were hospitals or health-care providers, and the smallest of these had more than $100 million in assets.

Of the 27 highest paid health-care professionals in the state, 25 were associated with one or another of these 13 hospitals/health-care providers; seven of the 25 were employed by Maine Med.

Based on 2010 salary data, the average annual salary of these seven physicians or executives was just under $1 million. The annual salary for the 27 professionals listed by Mainebiz ran from $1.3 million to $636,000; the average salary was $856,000. Beyond these 27 people, one might ask how many hundreds of employees (at these 13 Maine non-profit hospitals) have annual salaries between $636,000 and say, $300,000? The latter is not an ungenerous annual income by Maine standards. I dare say the number would be shocking.

In short, the Occupy people looking at the Mainebiz data and newspaper headlines proposing hospital employee layoffs would argue that it’s not revenue shortfalls that gave rise to deficits that must be bridged; nonprofit hospital greed has caused the deficit problem.

They would argue that the top of the hospital salary pyramid is out of sync with Maine pay scales: too many high salaries are being paid to too many people (the hospital 1 percent has looked out for itself), not to patients or blue-collar workers.

The Occupiers would get in our face to moderate this paradigm, which would avoid the proposed layoffs. These arguments make sense to me.

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Orlando Delogu of Portland is emeritus professor of law at the University of Maine School of Law and a longtime public policy consultant to federal, state, and local government agencies and officials. He can be reached at orlando.delogu@maine.edu.