Wagemark Resources and News

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Canadian CEO pay jumped 11% in 2013
CBC News | June 2, 2014
Total compensation for chief executives at Canada’s largest companies climbed 11 per cent in 2013, according to consulting firm Global Governance Advisors, marking four years of sharp increases in pay for CEOs (VIDEO…)

How to fix executive compensation in Ontario’s public sector
The Toronto Star | February 23, 2014
Eighteen years after the introduction of Ontario’s sunshine list, which names any public servant earning more than $100,000, pressure is once again building to rein in public sector compensation.(MORE…)

The Agenda with Steve Paikin: Meet Wagemark
TVO | February 4, 2014
Despite the recession, pay rates of Canadian CEOs relative to the average workers’ hit historic highs in recent years. Steve Paikin talks to the Wagemark Foundation’s Peter MacLeod about their efforts to get companies to cap the salary gap. (VIDEO…)

Defining a Bold New Standard for Fair Pay
Too Much | January 19, 2014
A new Toronto-based campaign is aiming to change the global conversation on CEOs, workers, and the real value of their labor. (MORE…)

Wagemark gives consumers a say on executive pay
Toronto Star | Janauary 1, 2014
Wagemark is giving the average consumer a say on executive pay. Since its quiet launch last summer, 50 companies have signed up to be certified by the Toronto-based organization, founder Peter MacLeod says. (MORE…)

 
Corporate pay pals
Corporate Knights | December 9, 2013
On a sunny Thursday afternoon in September, Bellwoods Brewery is not yet full of customers, but it is buzzing with activity. Every employee in sight is moving, tending to tasks in the restaurant, retail and brew spaces.. (MORE…)

Corey Mintz cooks all-tomato feast for founder of Wagemark, a group promoting wage fairness
Toronto Star | September 13, 2013
We love to talk about how much money we spend, whether boasting of our ability to buy a yacht or proud of our thrifty talent to score a deal on bananas. But we don’t like to talk about how much money we earn. (MORE…)

More Equitable Pay
CBC Lang and O’Leary Exchange | September 10, 2013
Peter MacLeod explains the idea behind the Wagemark Foundation. (MORE…)

A Stamp of Approval
Policy Options | September 2013
While the economic effects of these discrepancies are hotly debated, there is a growing consensus that their visibility has a corrosive social effect. Enter the Toronto-based Wagemark Foundation, which aims to alleviate the most egregious disparities with a certification program aimed at persuading companies, government agencies and nonprofits to maintain a ratio of no more than 8:1 between the top-paid executive and the lowest-paid 10 percent of workers. (MORE…)

Cepos: Store løn-forskelle er helt rimelige
Politiken | July 31, 2013
Hvis direktøren tjener mindre end otte gange så meget som den lavestlønnede, skal virksomheden belønnes med en særlig smiley. (MORE…)

Betting that consumers will prefer companies that pay a fair wage
TIME | July 31, 2013
When Peter MacLeod thought about who might serve as the patron saint of Wagemark, the campaign that he launched this month to spur companies to narrow the pay gap between their highest and lowest earners, it didn’t take him long to choose. (MORE…)

Economy: Private and Public
Democracy and work | July 27, 2013
Response to listeners on “Wagemark.” (MORE…)

A New Standard for Fair Wages
Yonge Street Media | July 24, 2013
When the question of how to ensure workers are compensated reasonably for their work arises, one standard that is often invoked is the minimum wage: the notion that governments should protect workers from exploitation by ensuring they are paid a rate than covers their basic needs. (Whether or not current minimum wages accomplish that goal is a separate question.) (MORE…)

Wagemark Foundation proposes international wage standard
As It Happens, CBC Radio | July 19, 2013
This month, a new organization called the Wagemark Foundation opened shop for the first time in Toronto, with a goal of reducing income inequality. (MORE…)

New ‘Wagemark’ logo for fair-wage companies: Goar
Toronto Star | July 16, 2013
Very few businesses will make the cut. Most won’t even try. To display the “Wagemark” insignia, a company must pay its chief executive no more than eight times the amount its lowest paid worker earns. At the moment, the chief executives of Canada’s top 100 corporations make 235 times the average worker’s pay. (MORE…)


Featured Reports:


toptobottom A recent report released by the High Pay Centre, a UK think tank, proposes wage redistribution as a solution for a current income gap of Depression-era proportions. As a result, social cohesion and economic growth are suffering.

Today, 14.5 percent of the UK national income goes to the top one percent of earners, up from six percent in 1979; on the opposite end of the spectrum are 6.75 million workers who earn under £800 a month. According to the report, if individuals earning more than £150,000 (the top 0.9 percent) took a 10 percent pay cut, the bottom 25 percent of earners would get an hourly pay increase sufficient to lift them out of poverty within reach of a living wage—and boost economic growth by increasing spending power at the bottom in the process.

 

onethirdSimilarly, the UK research centre, One Society, recently reported that the average top-to-bottom pay ratio of surveyed FTSE 100 companies measured 262:1, with average estimated CEO renumeration topping out at some 408 times the National Minimum Wage and 219 times 2010 UK median earnings.

The report also found that excessive executive pay was closely associated with diminished company performance, in addition to billions of pounds of taxpayer costs through the benefits system, and heightened economic volatility. According to a 2011 YouGov poll referenced in the report, “78 percent of adults agreed that the government should take action to reduce the gap between high and low earners in the UK.”

 

Quest for Security In the newly released book,The Quest for Security: Protection Without Perfectionism and the Challenge of Global Governance, Karl Ove Moene from the University of Oslo argues in favour of a more egalitarian distribution of wages—or “wage compression”—as one key component of achieving economic equilibrium.

Ove Moene sites the Scandinavian model as a strong case in favour of the coexistence of egalitarian features with open market participation. This relationship is not only possible, he argues, but essential in order to foster healthy economic growth and a sound political framework. He writes: “If one takes a democratic implementation seriously, both optimal policies and good politics depend on the income distribution in society.”

Unhelpful Optimism and the Public Good

Is American optimism counterproductive for addressing inequality? It’s a question the Economist poses this week, in light of a recent segment by the British political satirist John Oliver on his HBO comedy show “Last Week Tonight.” Oliver’s riff hinged on a curious contradiction: that while 65 percent of Americans have observed a widened income gap that unfairly favours the elite, 60 percent remain convinced that “most people who work hard enough can make it.” A nice sentiment, until one considers how it leaves just about everyone off the hook.

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When incomes become drastically skewed, societies run the risk of undervaluing professions aimed at the common good. From WBUR’s “Cognoscenti” blog comes shrewd perspective from writer and psychotherapist Janna Malamud Smith:

Anyone who chooses to teach is choosing a tougher path. So, too, with pursuing social work, or working in the public sector or for a non-profit; or working as a union organizer, an adjunct professor, a nurse or a public defender. Choosing any of these important, wonderful professions — thanks to our country’s ever-widening income divide — disproportionately disadvantages the young adult whose peers choose careers in finance, big-business or corporate law.

This financial-cum-social devaluing of socially-conscious professions poses a startling threat to the health and protection of a collective wellbeing—or, more straightforwardly, a society that functions as one.

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Finally, urban theorist Richard Florida argues in the Atlantic’s“CityLab” site that the states with the most favourable business climates are also the most unequal. Citing a new study by economists David Neumark and Jennifer Nuz at the University of California-Irvine that subverts previous research findings that showed a positive relationship between economic growth and business climate indexes, Florida writes that state and local leaders should “keep in mind the very real tradeoff between economic growth and inequality,” and the social costs of doing business.

Speaking truth to plutocrats

In June, Politico Magazine released an op-ed by “proud and unapologetic capitalist” and billionaire Nick Hanauer, warning (his fellow) plutocrats against the ever-mounting stakes of rising inequality. The article invited Hanauer’s “fellow filthy rich” to “wake up” and consider the social and political precariousness of an increasingly unequal society; predictably, it struck a chord and went viral.

This week, Hanauer has returned to the fore with a Bloomberg TV interview that, again, hammers home is argument for why inequality is everybody’s problem:

If nothing changes, in another 30 years the top one percent will share 36, 37 percent of income, and the bottom 50 percent will share six. That’s not a capitalist economy, that’s a feudalist economy. An economy needs to work for everyone, or eventually it will work for no one. No one has a stake in a high-functioning, thriving middle class like capitalists, like me.

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While Hanauer is advises that his fellow ultra-rich be reined in, Noam Scheiber argues in a critique of Hillary Clinton’s soft-on-plutocrats inequality rhetoric in the New Republic that it’s impossible to discuss means of reversing inequality without acknowledging that top wealth-holders will ultimately need to take some sort of hit.

Scheiber writes:

Some have suggested we can solve the problem of inequality by growing the whole economy more and giving the poor and middle class a bigger share of the extra pie. Clinton herself occasionally hints at this, though in terms that are vague enough it’s hard to know exactly what she means. But given the rate at which the ultra-rich are increasing their earnings, there’s no plausible rate of economic growth that would allow the share of income going to the poor, middle class, and merely affluent to collectively gain on them.

Speaking frankly on the matter will not likely please everyone at the very top, and that’s the point.

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In the New Yorker this week, James Surowiecki writes of a growing flock of “corporate kvetchers,” billionaires displeased with the populist tenor of today’s anti-inequality debate (the venture capitalist Tom Perkins and Home Depot co-founder Kenneth Langowne have both, for instance, compared attacks on the rich to the Nazis’ persecution of Jews). But these attitudes of elite entitlement haven’t always been par for the course. During the Gilded Age—an era we find ourselves increasingly comparing to our own—magnates exercised a pragmatic concern for the wellbeing of the everyday worker.

A century ago, industrial magnates played a central role in the Progressive movement, working with unions, supporting workmen’s compensation laws and laws against child labor, and often pushing for more government regulation. This wasn’t altruism; as a classic analysis by the historian James Weinstein showed, the reforms were intended to co-opt public pressure and avert more radical measures. Still, they materially improved the lives of ordinary workers. And they sprang from a pragmatic belief that the robustness of capitalism as a whole depended on wide distribution of the fruits of the system.

Surowiecki goes on to suggest that perhaps today’s moguls are so sensitive because, at this stage in the game, only their egos are truly at stake.

“Odious wealth” and “buyer’s remorse” over superpower status

Inequality has been a top talking point in advance of November’s midterm congressional elections, and it isn’t hard to understand why. But as Miles Kimball argues in Quartz, the gap between rich and poor in and of itself might not be the crux of everyone’s ire. Instead, he suggests that mass frustration lies in “odious wealth” itself: the complacency that’s allowed the mega-rich to become mega-rich in the first place.

American extremes are hardly inevitable. Case in point: Denmark. According to the OECD, the ratio between the top and bottom 20% of earners averages at 4:1. A mere 2.6 percent of the population earns more than 500,000 kroner per year (just over $91,000 USD), while 42 percent of the working population remains comfortably middle-class. As Danske Bank’s chief economist, Steen Bocian, puts it: “You could probably have higher growth in Denmark, allowing for more income inequality. But it’s a political question whether you would pursue that.”

As far as political questions go, Farah Stockman in the Boston Globe suggests income inequality spurs several of its own. More than half of respondents in a recent Pew poll agreed that “the US should mind its own business internationally and let other countries get along as best they can on their own.” Other recent polls have reported similarly newfound wariness around free trade agreements and foreign aid. Stockman hypothesizes that income inequality might be to blame for the dramatic shift in attitude: “In recent years, mean household income for 40 percent of American families has flatlined. So it is any wonder that they’ve got buyers remorse on their superpower status?”

There is some hope. The Washington Post’s Reid Wilson reports that the growth of inequality between US states is slowing, a phenomenon owed in no small part to government transfer programs like Social Security, Medicare and public assistance. But a narrowing (or, at least, not-actively-widening) gap between states doesn’t quite mean that the gap itself is disappearing: in Mississippi, the per capita income is still only 77 percent of the national average.

Fair pay from IKEA, and a task force from U.S. mayors

This week, Swedish fast-fashion furniture megagiant IKEA announced it would be reforming its pay structure so that base-level wages would meet the “minimum standards of living” of the area each store is located in. This means that, beginning next year, roughly half of American IKEA employees will be seeing a raise. As Demos senior policy analyst Amy Traub told MSNBC, “I predict that we’ll see more companies stepping forward to raise wages, as well as pressure continuing to mount for cities, states and federal government to raise the minimum wage across the board.”

But Jamelle Bouie, who writes about politics, policy and race for Slate, warns against placing too much stock in the effect a raised minimum wage would have on inequality. Bouie does not, of course, condemn a higher minimum wage. Instead, he points out that while increased wages represent a necessary conduit for eliminating wealth gaps, there are other pieces of the puzzle to keep in mind. Urban vs. suburban segregation and, relatedly, limited public transportation infrastructure to and from IKEA’s largely suburban outposts, determine who has access to these suddenly fairer jobs—the face, as it were, of economic mobility. Bouie suggests the IKEA announcement might underscore “the critical importance of residential integration.”

For Politico magazine, Joseph E. Stiglitz similarly observes the structural limitations of the so-called American dream. “The life chances of a young American today are more dependent on income and education of his parents than in many other advanced countries, including “old Europe,”” he says. The social repercussions are universally detrimental, self-perpetuating, and alarming.

Finally, this week’s United States Conference of Mayors in Dallas saw discussions of inequality take centre stage. “Inequality makes it difficult to sustain the strong workforce, active consumer base, and vibrant civic life every city needs for lasting growth,” said Boston Mayor Martin Walsh, a sentiment echoed by mayors from New York City’s vocally anti-inequality mayor, Bill de Blasio, to the conference’s Dallas mayor host. A taskforce aimed at confronting the scourge, to be chaired by de Blasio, will meet in August.

From the Mouths of CEOs

Goldman Sachs CEO and Chairman Lloyd Blankfein made headlines (and dropped jaws) this week when he told CBS news that income inequality is “a very big issue and something that has to be dealt with.” But, as PolicyMic points out, it might have done Blankfein well to acknowledge the role he (vis a vis Wall Street) played in the mounting crisis.

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When it comes to economic inequality and wage stagnation, racialized populations suffer hardest. As economist Valerie Wilson writes for the National Journal, anyone concerned with the elimination of economic inequality must also be attuned to racial wage gaps. Broad-based wage growth, she argues, would be a start in narrowing persistent wealth, opportunity, and mobility gaps.

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A new paper released by economists Melissa Kearney and Phillip Levine (who coined the “economic despair” theory linking teen pregnancy rates with wealth disparities) suggests the economic despair theory might also apply to young men—this time, expressed in high school graduation outcomes. As Jordan Weissman writes in Slate, Kearney and Levine raise an interesting point: that conversations about income inequality shouldn’t solely revolve around the widening gulf between the very rich and everyone else. The space between the poor and the middle, and what occurs within that gap, demand attention and policy response.

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Meanwhile, in Canada, a new report shows that the income gap is likely even wider than previously believed, thanks to the likelihood of top earners to channel their take-home pay through private corporations. When accounting for this, the top 1 percent’s income share rises from 10 to 13.3 percent of all post-tax income. “We are for the first time ever shining a light on one of the more arcane mechanisms that high income people can use to arrange their affairs to pay less tax,” says University of Ottawa professor Michael Wolfson, one of the report’s authors. “I think it affects our sense of fairness.”

Consider Belíndia

When it comes to inequality, it’s best to think of money as the first collapsing domino in a chain of inequitable social distribution. As Reuters‘ Lawrence Summers argues, the repercussions in health and and educational opportunity brought on by inequality are every bit as crucial to consider as the out-of-whack compensation and taxation schemes that keep inequality going strong. Framing inequality in this light shifts the conversation from one of vague “haves and have-nots” to one about the distinct social ruptures that uneven wealth distribution perpetuates. It makes way for clearer policy solutions to address the outcomes.

And a growing body of evidence suggests those solutions can’t come quickly enough. A research paper to be released next week by the (U.S.) National Bureau of Economic Research details that young men of low socioeconomic status are more likely to drop out of high school in areas where the gap between families at the bottom tenth of income distribution and families in the middle is wider. In other words, the greater the distance between middle-income families and lower-income families, the less opportunity there is for mobility and morale.

Then there’s the gender wage gap, which turns out to be as stubbornly persistent among Millennial earners as it has been among their Boomer and older Gen X parents. So much for leaning in, ladies.

Finally, consider Belíndia. Yes, Belíndia—an imaginary country invented by Brazilian economist Edmar Bacha in 1974 to explain his homeland’s inequality, comprised of a small and wealthy Belgium enveloped by a large, poor India. With the World Cup under way, The Economist revisits Bacha’s invented nation and sees where things have improved (or not) for Brazil’s 20-odd states over the past half-century.

Garden Cities and Liberal Metros

Suppose the last four decades’ income inequality spike had never happened? Thus asks the Economic Policy Institute in a report released this week as a part of its “Raising America’s Pay” initiative, probing income trends from 1979 to 2009 to determine the precise shifts that led to today’s startlingly stratified society, and what might have happened in their stead. One notable finding: policy decisions and business practices were far greater determinants of middle-class wage stagnation than the oft-cited culprits of technological change and globalization. In other words, voluntary pay trends have a greater impact on the middle-class than labour market shifts.

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Over a century after British urban planner Ebenezer Howard launched his treatise on the idea of a Garden City—utopic communities marked by fresh air, greenery and affordable rents—a new era of inequality has revived interest in the Howardian vision. In The Guardian, curators Sam Jacob and Wouter Vanstiphout explain the relationship between planning and the demands of a democratic society.

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In The Atlantic‘s “CityLab,” urbanist Richard Florida wonders whether overwhelmingly liberal-voting metro areas might also be the most economically unequal—and, thus, more concerned with policies that would buck the trend. U.S. Census Bureau data suggests they just might be.

“There is a strong association between density and liberal politics,” writes Florida. “As more and more educated and affluent Americans move back into these blue cities, they are only becoming more unequal, and these trends may yet accelerate further”

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Speaking of liberal metros, income inequality in San Francisco is reportedly on par with Rwanda. In a beautiful feature for Guernica magazine, author Nathan Deuel delves into what this might mean:

Tech can’t fix everything—the water shortages or mental illness or my daughter’s need to pee—and in any case the levers of power behind any boom are always greased with money; left to their natural inclinations, the people who make the big bucks seek mainly to fill and refill their own ever-enlarging pot. Eventually every gush becomes a trickle. It’s up to us to decide who we will be and why, to play our own version of the game, and, perhaps, to raise a family.

Defending Piketty’s data and a look at top CEO salaries

Last week, the Financial Times reported that Thomas Piketty’s monumentally popular Capital in the 21st Century contained some troubling data errors, to which Mr. Piketty has replied with a resounding, “No way.” In the week following, the New York Times’ Paul Krugman and Matt O’Brien of the Washington Post’s “Wonkblog” have been among the legion of commentators to come to the French economist’s defence. Their key argument? That the Financial Times missed the point altogether. This cohesive summaryfrom Salon’s Paul Rosenberg assembles a few of those arguments to arrive at a conclusion worth considering: that errors aren’t what’s important for economists but, rather, the big picture that a collection of data fleshes out. Piketty’s numbers still matter, and a great deal.

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Indeed, levels of inequality have reached such a magnitude that we can straightfacedly throw around phrases like “rockstar anti-inequality numbers cruncher.” And, as it happens, New York City mayor Bill de Blasio counts himself among Piketty’s fans. De Blasio has been a vocal opponent of economic inequality, elected on a campaign against the city’s “tale of two cities.” As a de Blasio spokesperson told reporters this week: “Mr. Piketty’s detailed analysis of just how wide and pervasive the economic divide currently stands is especially welcome as the administration continues efforts to expand opportunity for every New Yorker.”

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Finally, the Wall Street Journal has released its annual Executive Salary Compensation ranking. Among the findings: CEO pay rose a median of 5.5% to $11.4 million last year.

The happiness coefficient, education gaps, and Piketty’s prescription

In The Atlantic’s CityLab, Richard Florida makes a case for the correlation between happiness and equality by measuring states’ reported satisfaction levels alongside their respective Gini coefficients. He finds that in states with lower Gini Coefficients (and thus, lower levels of income inequality), residents are more likely to describe their home as either the best, or one of the best, places to live. It might be prudent, in other words, to head for Montana.

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When it comes to school districts, however, New York City might prove a more attractive destination. The Washington Post‘s Emily Badger reports that the massive metropolis’ public school district spent more money on its nearly one million students during fiscal 2012 than any other large public school system in the country—and twice as much as Prince William County, just outside Washington D.C.

As Badger puts it: “When we think about the consequences of funding public education as we do in America — a system heavily reliant on local revenue that produces wide variation both across the country and within individual states — these numbers make plain the reality that where children live matters for how much we invest in them.”

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Speaking of schools, in a research paper released Thursday, MIT economist David Autor suggests that it’s college—and not the one percent—that might be to blame for the astronomical rise of the super rich against everyone else. According to Autor’s calculations, the growing pay differential between degree holders and non-degree holders outranks the gains achieved by top earners in comparison with the rest of the population, courtesy of labour market shifts and the stubbornly stagnant compensation for lower-skill workers.

“I don’t mean to say the 1 percent thing is not a big deal. It is,” says Autor. But, “the real reason to worry about inequality” is “because of the falling bottom.”

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Finally, as superstar economist Thomas Piketty told the CBC’s Lang & O’Leary Exchange this week, the time has come for a “pragmatic, non-ideological dialogue” about rising inequality, which would include more debate about whether high executive compensation has actually improved company performance. He also points out that while some degree of inequality can foster competition and innovation, too much of it crushes growth.

“It fosters a real feeling of equality and community”

This Thursday, fast-food workers held a daylong strike in 150 cities across over 30 countries to demand a $15-an-hour wage. The strikes follow April’s report by public policy organization, Demos, that showed that the CEO-fry cook pay ratio had skyrocketed from 692:1 to 1,203:1 between 2009 and 2012—a 470 percent increase over just three years.

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While fast-food isn’t the only industry guilty of excessively imbalanced CEO-worker compensation, some of the most guilty offenders might come as a surprise. This week, a study released by PayScale, Inc. Showed that American drugstore giant CVS had the greatest disparity between CEO pay and the median wage of its employees among the 100 highest-grossing companies in the U.S., with a ratio of 422:1. Companies Goodyear Tire & Rubber and Walt Disney didn’t fall far behind. The report, released on Thursday, can be found here.

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Meanwhile, in the UK, a handful of charities have cited the establishment of wage ratios between highest and lowest paid staff as a key priority, following a series of 2013 media stories that pointed out the astronomical compensation of some charity leaders, which prompted its share of public outcry. The organizations Citizens Advance, Reprieve, Médecins Sans Frontières and Mary’s Meals are among the groups that have recently come out as vocal defenders of wage ratios; the latter three already have such structures in place.

Says Reprieve’s executive director, Clare Algar: “The benefits of our pay structure are numerous: every staff member knows exactly where they stand, and that their work is just as valued by the organisation as everyone else’s. It fosters a real feeling of equality and community. We’re a much stronger organisation for it.”

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Discussions of wage ratios in UK’s charity sector come as a new report shows that Britain’s richest one percent have accumulated as much wealth as the poorest 55% of the population, prompting Oxfam’s head of poverty in the UK to decry a “shocking chapter in a tale of two Britains.”