States Where The Middle Class Is Dying: 24/7 Wall St.

Click here to see the states where the middle class is dying.

The American economy is by many measures well on the road to full recovery. The national unemployment rate was 6.2% in 2013, down from 9.3% in 2009; U.S. gross domestic product grew 5% in the third quarter of 2014; and the S&P 500 recently reached its all time high. And yet the middle class, which historically was the driver of economic growth, is falling behind. The average income among middle class families shrank by 4.3% between 2009 and 2013, while incomes among the wealthiest 20% of American households grew by 0.4%.

Based on average pre-tax income earned by the third quintile, or the middle 20% of earners in each state, middle class incomes in California declined the most in the country. Incomes among middle class Californian households fell by nearly 7% between 2009 and 2013, while income among the state’s fifth quintile, or the top 20% of state earners, grew by 1.3%. Based on an analysis of household incomes among America’s middle class, these are the states where the middle class is suffering the most.

Click here to see the states where the middle class is dying.

According to Joe Valenti, director of asset building at the Center for American Progress, the American middle class is essential for economic growth because middle income families are spending relatively large shares of their incomes on goods and services. “An additional dollar in the hands of a middle income earner is going to drive a lot more spending than an additional dollar in the hands of someone in that top quintile,” Valenti said. While households in the top quintile are able to spend enormous sums of money, “at some point there’s only so much that an individual can spend, even on all different kinds of luxury goods.”

While the middle class is the most important cohort in terms of spending and has in the past been essential for economic growth, middle income families have been the victims of wage stagnation. Valenti argued that as early as the 1970s, American companies started becoming much more productive. However, because of “a decoupling of productivity and wages,” wages among many workers have remained stagnant, and many in the middle class “have not been able to reap the benefits of higher productivity,” Valenti explained. Instead, returns from higher productivity have gone to owners and investors and not to the workers, he said. Many of the beneficiaries of these returns are likely part of the wealthiest 20% of households, whose incomes have grown in recent years.

Much of the income growth among the highest earning households is likely due to stock market gains. As Thomas Piketty argues in his book, “Capital in the 21st Century,” income inequality results from a higher return on capital — money used to make more money in the stock market or other revenue-generating assets — than wage and GDP growth. With the rich holding a disproportionate share of money in the stock market, their incomes have recovered much faster than those of middle class workers.

In all 10 of the states on this list, the share of total income earned by the bottom 80% of households fell between 2009 and 2013 and was redistributed to the highest quintile. The top 20% of U.S. households held more than 51% of total income in 2013, up 1.14 percentage points from 2009. Even among top earners, income was not evenly distributed. Over that five-year period, the top 5% of households accounted for nearly 75% of income gains in the top 20% of earners.

Income from capital gains may partly explain why the income distribution has skewed towards the rich in recent years. “We have seen the stock market recover quite well for many Americans who do have access to the market and who are investors,” Valenti said. Meanwhile, average workers do not.

According to data collected by Piketty, the average capital gain income of households in the bottom 90% was $558 in 2012. The average capital gains of the top 10% of households was nearly $30,000. And the comparable figure for the top 1% of U.S. households was a whopping $242,000 in 2012.

Several other factors, such as union membership rates and a particular state’s tax climate, such as no income tax or higher sales taxes, can also affect the redistribution of wealth across the nation. “Traditionally, union organizing has stepped in when policy makers have been unwilling to,” Valenti said. For example, depending on the union’s size and its sway, “policy makers may not feel the same pressure to pass or increase a minimum wage” if unions can negotiate a wage increase on their own.

While union organizing was a major component of the middle class’ formation in America after World War II, the level of labor force participation in unions fell from 12.4% in 2009 to 11.3% in 2013. In some states the decline was even more pronounced. Oregon’s union membership, for example, fell by 3.3%, the second largest decrease nationwide.

To determine the states where the middle class is suffering the most, 24/7 Wall St. used data on the average pre-tax income earned by each income quintile from the U.S. Census Bureau. We defined middle class as the third quintile, or the middle 20% of earners. We examined the growth in average incomes in the third and fifth quintiles between 2009 and 2013 to identify income trends in the middle and upper class. The final list was composed of states where middle class incomes fell by more than 4.3% and fifth quintile incomes rose by more than 0.4%, the national aver. Both benchmark figures reflect the national change of their respective quintiles. Because Census income data reflect pre-tax levels, they may overstate the degree of income inequality in the poorer quintiles. However, it is unlikely that the tax burden of the third quintile is significant enough to skew the data.

We also looked at data on the share of aggregate income by quintile from the Census Bureau, and how that share changed between 2009 and 2013. Also from the Census Bureau, we reviewed poverty rates, the share of households making less than $10,000 a year, as well as the share of households making more than $200,000 a year. All data are from 2009 to 2013. Additionally, we considered the Gini coefficient. The Gini coefficient indicates the degree to which an area’s incomes deviate from a perfectly equal income distribution. Scaled between 0 and 1, a coefficient of 0 represents perfectly equal incomes among all people. From the Bureau of Labor Statistics, we looked at annual unemployment rates from 2009 and 2013. The percentage of non-agricultural employees who identify as members of a union came from Unionstats.org. Tax data come from the Tax Foundation’s 2014 State Business Tax Climate Index.

These are the states where the middle class is dying, according to 24/7 Wall St.

Workers Sue McDonald's For Discrimination, Opening New Front In Franchise Fight

A group of former McDonald's workers from Virginia are suing their stores for racial discrimination and sexual harassment -- and they're taking the rare step of naming the world's foremost fast-food company as a defendant in the suit.

The 10 plaintiffs -- nine of whom are African-American, and one of whom is Hispanic -- say they were wrongfully fired last year and replaced with mostly white workers because their managers believed there had been "too many black people [working] in the store." The lawsuit (viewable here) alleges that women were harassed and groped and that minorities were subjected to racist taunts. It also claims that managers referred to one restaurant as "the ghetto store."

Although it's usually just franchisees that are sued under discrimination claims, in this case the plaintiffs are arguing that McDonald's itself should be held responsible for the actions inside a franchised store. They say the fast-food giant should have to pay damages because it sets companywide policies and has the power to enforce them.

"In order to maximize its profit, McDonald's Corporate has control over nearly every aspect of its restaurants' operations," the lawsuit asserts. "Though nominally independent, franchised McDonald's restaurants are predominantly controlled by McDonald's."

The plaintiffs in the suit have received legal assistance from the NAACP and the group Fight for $15, which advocates on behalf of fast-food workers. According to the suit, the plaintiffs had a combined 50 years working at McDonald's restaurants, 25 of them accrued by a 53-year-old shift manager who lost her job in July. The rest of the workers lost their jobs in a mass termination in May.

As the South Boston (Virginia) News & Record reported at the time, a total of 17 workers were abruptly fired from three McDonald's restaurants in the area. All three locations were run by Michael Simon, owner of Soweva, the company that franchised the stores. At the time, workers told the paper they were informed they "didn't fit the profile" that the company was looking for in its restaurants.

"Most, though not all, of the terminated employees are African-American," the paper noted. "Most of the workers who remain on the job at the local McDonald’s also are black. So, too, is [Soweva owner] Simon."

In the lawsuit, the plaintiffs say that their white supervisors wanted to drop black workers from the payrolls because the stores were "too dark," in a phrase attributed to one manager.

"I had no idea what they meant by the right profile until I saw everyone else that they fired as well," Willie Betts, one of the plaintiffs, said in a statement Thursday. "They took away the only source of income I have to support my family."

Simon did not immediately respond to a request for comment. In a statement at the time of the firings, Simon denied that race was a factor, saying his company "has a strict policy of prohibiting any form of discrimination or harassment in hiring, termination or any other aspect of employment."

In the lawsuit, the workers allege that when they brought their concerns to McDonald's corporate, the company "took no actions to remedy" the firings. The workers are now seeking damages from the chain under Title VII of the Civil Rights Act, which prohibits employment discrimination on the basis of race, color, religion or sex.

"We asked McDonald’s corporate to help us get our jobs back, but the company told us to take our concerns to the franchisee -- the same franchisee that just fired us," Pamela Marable, another plaintiff, said in a statement this week.

“We have not seen the lawsuit, and cannot comment on its allegations, but will review the matter carefully," McDonald's said in a statement Thursday.

"McDonald’s has a long-standing history of embracing the diversity of employees, independent Franchisees, customers and suppliers, and discrimination is completely inconsistent with our values," the company's statement continued. "McDonald’s and our independent owner-operators share a commitment to the well-being and fair treatment of all people who work in McDonald’s restaurants.”

The lawsuit in Virginia is just the latest salvo in a broader fight against the franchise model. McDonald's franchises roughly 90 percent of its stores, leaving the day-to-day operations to individual franchisees like Soweva. Since the franchisees run the stores, they're the ones that tend to get sued when labor law is broken. That's a major upside of the franchise model for companies like McDonald's.

But unions and worker groups have been arguing in court and before agencies like the National Labor Relations Board that big chains such as McDonald's should be held accountable for the working conditions inside the stores that bear their names.

Until now, that generally hasn't been the case. But that could be changing on some fronts. The NLRB's general counsel, for instance, has named McDonald's as a "joint employer" alongside several of its franchisees accused of violating labor law during the fast-food strikes. If the agency were to view the workers as employed under one big umbrella -- rather than by hundreds or thousands of individual franchisees -- it would be much easier for the workers to unionize en masse. As it is, the fact that McDonald's workers are technically employed by different franchisees means they would have to be unionized store by individual store.

Several lawsuits currently seek to hold McDonald's responsible for wage theft allegedly committed by its franchisees. As with the discrimination complaint in Virginia, the plaintiffs in those suits argue that McDonald's ultimately exerts control over the operations inside individual stores, and that it should be held accountable when the law is broken.

Your Chipotle Could Be Getting Carnitas Back Soon

Carnitas lovers rejoice! (Sort of.)

Finding carnitas during the ongoing Chipotle pork shortage may not be as hard as you originally thought. The Mexican chain is rotating the menu item through all of its restaurants, according to Chris Arnold, a Chipotle spokesman. Though one-third of its restaurants won't be selling carnitas until the shortage ends, that one-third will change periodically, so no restaurants are out of the protein for "extended periods," Arnold wrote in an email.

Chipotle suspended sales of carnitas last week after discovering that one of its pork suppliers wasn’t meeting its standards for responsibly raised meat. The news that the hottest fast food chain in the country was out of one of its few menu items made headlines, with carnitas fans taking to Facebook and Twitter to ask when the protein would be coming back.

When chipotle is out of carnitas pic.twitter.com/gVYZcIAP6N

— abby bova (@abby_bova) January 10, 2015

A carnitas fan mourns the loss.

The announcement also reminded Chipotle fans why they’re drawn to the chain in the first place. The burrito chain’s popularity has skyrocketed in recent years, in part because it sells itself as a fast food restaurant with a conscience -- hawking humanely raised meat and sustainably grown beans. At the same time, traditional fast food chains like McDonald’s are struggling to draw diners into their stores.

Despite Chipotle’s success, the carnitas shortage, which is now in its second week, highlights the challenges of running a large chain committed to serving humanely raised meat when there isn’t a lot of it out there.

Carnitas only make up about 6 percent of the entrees chipotle sells, Arnold said. The spokesman had some advice for those die-hard carnitas fans who want to make sure their local Chipotle is carrying the pork:

“The best way to know for sure would be to go.”

Workers Sue McDonald's For Discrimination, Opening New Front In Franchise Fight

A group of former McDonald's workers from Virginia are suing their stores for racial discrimination and sexual harassment -- and they're taking the rare step of naming the world's foremost fast-food company as a defendant in the suit.

The 10 plaintiffs -- nine of whom are African-American, and one of whom is Hispanic -- say they were wrongfully fired last year and replaced with mostly white workers because their managers believed there had been "too many black people [working] in the store." The lawsuit (viewable here) alleges that women were harassed and groped and that minorities were subjected to racist taunts. It also claims that managers referred to one restaurant as "the ghetto store."

Although it's usually just franchisees that are sued under discrimination claims, in this case the plaintiffs are arguing that McDonald's itself should be held responsible for the actions inside a franchised store. They say the fast-food giant should have to pay damages because it sets companywide policies and has the power to enforce them.

"In order to maximize its profit, McDonald's Corporate has control over nearly every aspect of its restaurants' operations," the lawsuit asserts. "Though nominally independent, franchised McDonald's restaurants are predominantly controlled by McDonald's."

The plaintiffs in the suit have received legal assistance from the NAACP and the group Fight for $15, which advocates on behalf of fast-food workers. According to the suit, the plaintiffs had a combined 50 years working at McDonald's restaurants, 25 of them accrued by a 53-year-old shift manager who lost her job in July. The rest of the workers lost their jobs in a mass termination in May.

As the South Boston (Virginia) News & Record reported at the time, a total of 17 workers were abruptly fired from three McDonald's restaurants in the area. All three locations were run by Michael Simon, owner of Soweva, the company that franchised the stores. At the time, workers told the paper they were informed they "didn't fit the profile" that the company was looking for in its restaurants.

"Most, though not all, of the terminated employees are African-American," the paper noted. "Most of the workers who remain on the job at the local McDonald’s also are black. So, too, is [Soweva owner] Simon."

In the lawsuit, the plaintiffs say that their white supervisors wanted to drop black workers from the payrolls because the stores were "too dark," in a phrase attributed to one manager.

"I had no idea what they meant by the right profile until I saw everyone else that they fired as well," Willie Betts, one of the plaintiffs, said in a statement Thursday. "They took away the only source of income I have to support my family."

Simon did not immediately respond to a request for comment. In a statement at the time of the firings, Simon denied that race was a factor, saying his company "has a strict policy of prohibiting any form of discrimination or harassment in hiring, termination or any other aspect of employment."

In the lawsuit, the workers allege that when they brought their concerns to McDonald's corporate, the company "took no actions to remedy" the firings. The workers are now seeking damages from the chain under Title VII of the Civil Rights Act, which prohibits employment discrimination on the basis of race, color, religion or sex.

"We asked McDonald’s corporate to help us get our jobs back, but the company told us to take our concerns to the franchisee -- the same franchisee that just fired us," Pamela Marable, another plaintiff, said in a statement this week.

“We have not seen the lawsuit, and cannot comment on its allegations, but will review the matter carefully," McDonald's said in a statement Thursday.

"McDonald’s has a long-standing history of embracing the diversity of employees, independent Franchisees, customers and suppliers, and discrimination is completely inconsistent with our values," the company's statement continued. "McDonald’s and our independent owner-operators share a commitment to the well-being and fair treatment of all people who work in McDonald’s restaurants.”

The lawsuit in Virginia is just the latest salvo in a broader fight against the franchise model. McDonald's franchises roughly 90 percent of its stores, leaving the day-to-day operations to individual franchisees like Soweva. Since the franchisees run the stores, they're the ones that tend to get sued when labor law is broken. That's a major upside of the franchise model for companies like McDonald's.

But unions and worker groups have been arguing in court and before agencies like the National Labor Relations Board that big chains such as McDonald's should be held accountable for the working conditions inside the stores that bear their names.

Until now, that generally hasn't been the case. But that could be changing on some fronts. The NLRB's general counsel, for instance, has named McDonald's as a "joint employer" alongside several of its franchisees accused of violating labor law during the fast-food strikes. If the agency were to view the workers as employed under one big umbrella -- rather than by hundreds or thousands of individual franchisees -- it would be much easier for the workers to unionize en masse. As it is, the fact that McDonald's workers are technically employed by different franchisees means they would have to be unionized store by individual store.

Several lawsuits currently seek to hold McDonald's responsible for wage theft allegedly committed by its franchisees. As with the discrimination complaint in Virginia, the plaintiffs in those suits argue that McDonald's ultimately exerts control over the operations inside individual stores, and that it should be held accountable when the law is broken.

Google To Sell Wireless Service In Deals With Sprint, T-Mobile: Report

(Reuters) - Google Inc is preparing to sell mobile phone plans directly to customers and manage their calls and mobile data over a cellular network, The Information reported, citing people familiar with the matter.

Google is expected to reach deals to buy wholesale access to Sprint and T-Mobile mobile voice and data networks, making it a mobile virtual network operator, the technology news website said. (http://bit.ly/1L1cnDv)

The project, codenamed "Nova", is expected to be launched later this year, The Information said.

Google was considering launching mobile phone plans for markets where it sells Google Fiber Internet service, according to the report.

It was not clear how widely Google plans to offer the wireless service, how much it would cost or which mobile device manufacturers, if any, have already agreed to work with Google for its new service.

Google, T-Mobile and Sprint could not be immediately reached for comment.

(Reporting by Sai Sachin R and Sneha Banerjee in Bengaluru; Editing by Ken Wills)

Walmart Settles With Family Of Comedian Killed In Tracy Morgan Crash

NEW YORK (AP) — The family of a comedian killed in the New Jersey Turnpike crash that seriously injured Tracy Morgan last summer has settled a wrongful death claim with Wal-Mart.

The out-of-court settlement between Wal-Mart Stores Inc. and the estate of James McNair is the first stemming from the June 7 crash in which a Wal-Mart truck slammed into a limo van carrying Morgan and others home from a show in Delaware.

Morgan, the former "Saturday Night Live" and "30 Rock" star, suffered a traumatic brain injury in the accident, according to his lawyer. Criminal charges against truck driver Kevin Roper are pending in state court in New Jersey.

McNair, 62, of Peekskill, grew up with Morgan in Brooklyn and was a friend and mentor to him over the years.

The terms of the settlement are confidential, but McNair family attorney Daryl Zaslow told The Associated Press that they were pleased with the outcome.

Wal-Mart "caused extensive damage" to the family but accepted responsibility and "more than stepped up to the plate and took care of this family," Zaslow said.

"Ultimately they did the right thing by the McNairs," he said.

Wal-Mart spokeswoman Brooke Buchanan said the company was working toward settlements with others injured in the accident.

"We know there is nothing we can do to change what happened to Mr. McNair," Buchanan said. "We're committed to doing what's right."

In an interview with the AP on Wednesday, McNair's children — Denita, 19, and Jamel, 26 — described their father as a humble, grounded man. They said he attained a level of fame but cared less about the trappings of celebrity than about helping others, whether through advice to young comedians or giving out free Thanksgiving turkeys to needy families in his hometown.

"You don't have to be a celebrity to make a difference in a lot of people's lives," Jamel McNair said. "My dad made a huge difference in a lot of people's lives."

Denita McNair was about to graduate from high school at the time of her father's death, and she said she hopes to go to college eventually after taking some time off. Jamel McNair is pursuing a singing career. Both said they haven't been contacted by Morgan or his representatives since the accident.

An attorney representing Morgan didn't immediately respond to a message seeking comment on the settlement Wednesday. The lawyer, Benedict Morelli, said last month that Morgan hadn't fully recovered from his brain injury and that it was uncertain if he would be "the Tracy Morgan he once was."

Passengers Ardley Fuqua, of Jersey City, New Jersey, and Jeffrey Millea, of Shelton, Connecticut, also suffered serious injuries in the June crash. A lawsuit filed against Wal-Mart by Morgan, Fuqua and Millea is proceeding in federal court.

Under terms of the settlement, Wal-Mart admitted no liability in the crash, Zaslow said, adding that the settlement was reached before the formal filing of a lawsuit.

Roper, the driver, has been charged with death by auto and four counts of assault by auto. According to the criminal complaint, Roper was operating the truck without having slept for more than 24 hours.

A preliminary investigation by the National Transportation Safety Board estimated that Roper was driving 65 mph in the 60 seconds before he slammed into the limo van. The speed limit on that stretch of the turnpike is 55 mph and was lowered to 45 mph that night because of construction.

You Can Now Get Your Tax Refunds In Cash At Walmart

This tax season, Walmart is luring shoppers into stores with cash -- their own cash.

The retail giant is offering people the chance to pick up their state and federal tax refunds in cash at its stores across the country, it announced on Tuesday.

The program, called Direct2Cash, is the first of its kind at any retailer, according to Walmart. In order to use it, customers must get their taxes done by a participating tax preparer, including some in Walmart stores.

Typically, tax filers get their refunds either through a check or a direct deposit to their bank account. But those options create problems for the so-called “unbanked” -- the 10 million U.S. households that don't use banks.

“Leveraging our size and scale to take on big challenges and create better ways to serve our customers is something we’re always working on,” Daniel Eckert, senior vice president of services for Walmart U.S., said on a conference call with reporters announcing the program.

The service won't necessarily be free: Though Walmart will charge nothing for it, participating tax preparers can charge up to $7 for helping with Direct2Cash, Walmart said. And tax preparers often charge a fee for preparing and filing returns. Right now, the Walmart cash option isn't available to e-filers or people who file themselves.

Still, it will be cheaper than many other options. Unbanked Americans, who are likely to be low-income, often rely on expensive check-cashing services or borrow against expected refunds at “usurious” rates, according to Mehrsa Baradaran, a professor at the University of Georgia School of Law.

“Walmart is definitely doing more for the unbanked than the government at this point,” said Baradaran -- adding that, ideally, a government entity not motivated purely by profit, such as the Post Office, would offer this service.

Of course, the service also benefits Walmart, which has been struggling in recent years as shoppers increasingly turn to the internet and smaller, urban stores for their needs.

It fits with the retailer’s mission to be a one-stop shop for basically everything. Shoppers can already cash checks, get their taxes prepared, see a health-care professional or get their hair done inside Walmart stores.

By offering the unbanked a cheap way to get their refunds in cash, Walmart can lure these people into its stores, where they might want to spend that cash.

Walmart could use the traffic. Until its most recent quarterly earnings report, Walmart U.S. had gone nearly two years without an increase in sales at stores open at least a year, an important retail metric.

Tax-refund time is typically a good one for Walmart and other retailers who cater to low-income customers, because shoppers often use the extra income to make big purchases they may have been putting off. Walmart executives blamed a less-than-stellar first quarter in 2014 partly on delayed and reduced tax refunds.

“It’s always a good thing, we believe, to have customers in our stores that have a jingle in their purses and in their wallets,” Eckert said. “That’s something we like to see.”