That's rich

[JayB]

Always has, always will.

In relative terms thats not true.

 

vs.

 

It would also be useful to see what those graphs look like in terms of the inflation adjusted dollar value of total compensation, including health and other benefits, then normalized to account for changing family composition over the duration of the time period under consideration, e.g. real wages per-hour per full time worker. The number of wage-earners per household is not consistent across the range of incomes, or the time-scale represented by the charts, and one of the frequent sources of distortion in such comparisons of family income is comparing intact families in which both parents are working versus single-parent households.

 

The other factor to consider is how, exactly, someone else making more money than a given person affects the said person's well-being. Other than perhaps inspiring jealousy it's hard to see how this has any effect on them if their income has even stayed constant in inflation adjusted terms. If this graph is accurate, then even the least-skilled have seen an increase in their incomes over the time-scale represented in the lower graph.

 

The other thing to recall is that income, whether earned by an individual or family is rarely static, and changes over the course of one's normal working life - and I would venture that except for those families in which the primary wage-earner is either terribly unskilled and has failed to acquire new skills over a 20 year period, or is blighted by a variety of personal problems, its unlikely that most families stay fixed in a given quintill for all of their lives.

[olyclimber]

ya...those so called rich people aren't really rich. like richie rich, the poor little rich kid.

 

Define rich. Of course, you'll be excluded from the definition.

 

You define rich, chump! I don't do the dirty work...thats for poor people like you.

[cj001f]

The other factor to consider is how, exactly, someone else making more money than a given person affects the said person's well-being.

JayB-

You don't seriously believe that, do you?

[mec]

I don't believe it's the fact that there is inequity in pay structure, it's just that the inequity is so great. Why do some of the CEO's deserve the money if they have no ethics, eg, Enron, WorldCom, Tyco,...

 

and how many of them are in prison right now?

[JayB]

If my real, inflation adjusted income stays fixed or increases at a slow rate, and yours increases rapidly - how does that harm me economically or otherwise?

[mec]

I agree JayB, it doesn't. However, the issue is with the bottom 20% or maybe more. If their real, inflation adjusted income stays fixed or slowly increases, they are still poor, and are struggling to make rent payments, or childcare, etc.

 

I do agree the rich whose fortunes are rapidly increasing, has little effect on those poor folks other than to piss them off because they make so much.

[cj001f]

If my real, inflation adjusted income stays fixed or increases at a slow rate, and yours increases rapidly - how does that harm me economically or otherwise?

To an economist in the ivory tower it doesn't. But that is to plead ignorance to the raft of social changes occuring. The very real outcome is a decrease in social mobility, which has always been the hallmark of America and one of the reasons for its success.

[Stonehead]

Seems the monied interests talk about wage increase being inflationary, ie, it's a bad thing for the economy. But they don't have a problem with increasing CEO salaries & benefits.

 

The monied interests also don't have a problem with easing credit to start spending sprees then ratcheting up rates steadily.

[slothrop]

It would also be useful to see what those graphs look like in terms of the inflation adjusted dollar value of total compensation, including health and other benefits, then normalized to account for changing family composition over the duration of the time period under consideration, e.g. real wages per-hour per full time worker. The number of wage-earners per household is not consistent across the range of incomes, or the time-scale represented by the charts, and one of the frequent sources of distortion in such comparisons of family income is comparing intact families in which both parents are working versus single-parent households.

 

Does it really matter how much money is made per worker in a family, or whether they're full-time or not? I don't think so. A family is the smallest unit for which measuring income makes sense.

 

Measuring in real dollars makes sense, of course, but once you start "normalizing" for social changes (health care as compensation), it gets complicated. You'd have to adjust for the changing numbers of children per household, for instance, and soon your data are normalized to irrelevance. I mean, the number of children a family has also depends on income... and so on.

 

The other factor to consider is how, exactly, someone else making more money than a given person affects the said person's well-being. Other than perhaps inspiring jealousy it's hard to see how this has any effect on them if their income has even stayed constant in inflation adjusted terms. If this graph is accurate, then even the least-skilled have seen an increase in their incomes over the time-scale represented in the lower graph.

 

Whether huge income disparity is a problem doesn't seem very debatable to me. Jealousy is a powerful human emotion, with far-reaching effects not easily quantified. It doesn't much matter to people whether they make more money every year if everyone else is making even more still.

 

For example, people living in the US, with a TV in every room, two cars, a house, and food on the table every day still manage to complain that they are poor, yet their material means are hugely greater than most people in the world. The only comparisons people take seriously are those they can make based on what they see with their own eyes.

 

The other thing to recall is that income, whether earned by an individual or family is rarely static, and changes over the course of one's normal working life - and I would venture that except for those families in which the primary wage-earner is either terribly unskilled and has failed to acquire new skills over a 20 year period, or is blighted by a variety of personal problems, its unlikely that most families stay fixed in a given quintill for all of their lives.

 

Well, you can venture all you want, but where's your data? The NY Times ran a feature a while back on this very issue, income mobility. In general, people in the lower 3/5 were more likely than not to stay where they were or move down. People in the upper 2/5 were only barely more likely than not to stay put or move up. It was hardest to move up from middle class to upper-middle class (only 37.5% did so after 10 years).

 

http://www.nytimes.com/packages/html/national/20050515_CLASS_GRAPHIC/index_01.html

[slothrop]

You can always count on me to kill threads with a long-winded reply that takes JayB or Peter Puget seriously.

[tomtom]

http://www.nytimes.com/packages/html/national/20050515_CLASS_GRAPHIC/index_01.html

 

90th Percentile.

[jon]

Of course the rich will get richer, you reach a point when you no longer have to take out loans or have things on credit. More money for you.

 

You know something I never hear about in all of this economic bullshit is a persons/family disposable income, because in my mind that is a very important indicator of economic viability. People can be considered middle class, but between a mortage, a car payment, kids daycare, a family who's gross income is 80k a year could have a disposable income of $300/month, especially in an area like Seattle. These people aren't travelling, aren't eating out, stuff like that which has a huge trickle down effect if you think about it. I think a good indication is that thing in the paper today about the increase in delinquent credit card payments being up 5%, more people are being pushed over the edge of being financially solvent. 5% being pushed over the edge is A LOT OF PEOPLE!!! What would happen to most businesses if they lost 5% of their clientelle, like a restaraunt, because these people couldn't all of the sudden afford to eat there. Most businesses wouldn't be able to survive that with the cost of everything increasing at such a rapid rate as it is. Most business are on the edge to begin with.

 

Does anyone else think our ecomony is seriously fucked?

[catbirdseat]

You can always count on me to kill threads with a long-winded reply that takes JayB or Peter Puget seriously.

I really liked your post. You totally hit the nail on the head and I couldn't have said it better. What it comes down to is A) it doesn't matter what the cause of the income disparity is. B) it doesn't matter if the poor are not worse off than they were. All that matters is the disparity itself and the PERCEIVED injustice.

[JayB]

It would also be useful to see what those graphs look like in terms of the inflation adjusted dollar value of total compensation, including health and other benefits, then normalized to account for changing family composition over the duration of the time period under consideration, e.g. real wages per-hour per full time worker. The number of wage-earners per household is not consistent across the range of incomes, or the time-scale represented by the charts, and one of the frequent sources of distortion in such comparisons of family income is comparing intact families in which both parents are working versus single-parent households.

 

Does it really matter how much money is made per worker in a family, or whether they're full-time or not? I don't think so. A family is the smallest unit for which measuring income makes sense.

 

Measuring in real dollars makes sense, of course, but once you start "normalizing" for social changes (health care as compensation), it gets complicated. You'd have to adjust for the changing numbers of children per household, for instance, and soon your data are normalized to irrelevance. I mean, the number of children a family has also depends on income... and so on.

 

The other factor to consider is how, exactly, someone else making more money than a given person affects the said person's well-being. Other than perhaps inspiring jealousy it's hard to see how this has any effect on them if their income has even stayed constant in inflation adjusted terms. If this graph is accurate, then even the least-skilled have seen an increase in their incomes over the time-scale represented in the lower graph.

 

Whether huge income disparity is a problem doesn't seem very debatable to me. Jealousy is a powerful human emotion, with far-reaching effects not easily quantified. It doesn't much matter to people whether they make more money every year if everyone else is making even more still.

 

For example, people living in the US, with a TV in every room, two cars, a house, and food on the table every day still manage to complain that they are poor, yet their material means are hugely greater than most people in the world. The only comparisons people take seriously are those they can make based on what they see with their own eyes.

 

The other thing to recall is that income, whether earned by an individual or family is rarely static, and changes over the course of one's normal working life - and I would venture that except for those families in which the primary wage-earner is either terribly unskilled and has failed to acquire new skills over a 20 year period, or is blighted by a variety of personal problems, its unlikely that most families stay fixed in a given quintill for all of their lives.

 

Well, you can venture all you want, but where's your data? The NY Times ran a feature a while back on this very issue, income mobility. In general, people in the lower 3/5 were more likely than not to stay where they were or move down. People in the upper 2/5 were only barely more likely than not to stay put or move up. It was hardest to move up from middle class to upper-middle class (only 37.5% did so after 10 years).

 

http://www.nytimes.com/packages/html/national/20050515_CLASS_GRAPHIC/index_01.html

 

You'll have to show me which graph that you are referring too at the NYT.

 

I do think that having a graph that attempts to compare something like income per family, yet does not attempt to define what exactly constitutes a family - warrants extra scrutiny at the very least, as broad demographic changes do have a very real impact on things like average income per family.

 

Another demographic reality beyond the advent of the single-parent household that surely has an impact on things like income mobility is the average age of the population. The normal workers income trajectory normally involves an increase throughout the 20's and 30's, a plateu at midlife, and a decline in retirement. The fact that the population has been aging throughout the period under consideration surely has a real impact on income mobility. As a matter of fact, one could reasonably expect to see a greater portion of the population drop a quintile or two in the income classifications in the next decade or two, as boomers retire en-masse. My parents have just retired, and their cash-income has dropped precipitously, but since they've accumulated other assets and payed off their house, their standard or living really hasn't changed, and their quality of life has vastly improved.

[Dru]

The rich get richer

The poor get the picture

The bombs never hit ya

When you're down so low

[JayB]

You can always count on me to kill threads with a long-winded reply that takes JayB or Peter Puget seriously.

I really liked your post. You totally hit the nail on the head and I couldn't have said it better. What it comes down to is A) it doesn't matter what the cause of the income disparity is. B) it doesn't matter if the poor are not worse off than they were. All that matters is the disparity itself and the PERCEIVED injustice.

 

Hey - I couldn't disagree more. I think it matters tremendously what the cause of the changes are actually due to, as the only possible way in which to remedy the problem, if there is one, is to understand the true causes of the phenomena. To me it matters very little whether or not they constitute a perceived injustice on anyone's part, unless the "anyone" in question is in a position to influence economic policy, and their efforts to solve a perceived problem result in real economic damage to the economy, which will in turn result in real hardships sustained by those who the policies were intended to benefit.

[sobo]

http://www.nytimes.com/packages/html/national/20050515_CLASS_GRAPHIC/index_01.html

 

86th percentile

 

woulda thought it would be up there with tomtom's. I guess it's my job that's keeping the thumb down on me... I need a more prestigious occupation than "civil engineer."

[KaskadskyjKozak]

B) it doesn't matter if the poor are not worse off than they were. All that matters is the disparity itself and the PERCEIVED injustice.

 

Ah, there it is: it's FEELINGS that matter, not reality.

 

Of course demo-liberals will capitalize on these FEELINGS in their class-warfare politics.

[Fairweather]

Two factors not yet injected into this discussion are:

 

a.) The percentage of wealthy who are college educated versus the general population. I'm particularly interested in how the altruistic spirit taught in so many public (and private) universities translates into real wealth redistribution through (voluntary) charity. I suspect that holders of a Bachelor's Degree or above represent wealthier individuals, but I'm just not sure. Does a degree really represent an economic advantage in this country? And to what extent? Would more college access really change the mix of rich v poor?

 

b.)The transition from a manufacturing economy to a service economy. I'm having serious doubts about free trade. This country's tax system was founded primarily on tariffs which not only filled government coffers, but nullified the advantage of cheap overseas labor. (Not that this factor was a major issue in 18th or much of 19th century, pro-slavery america)

[catbirdseat]

B) it doesn't matter if the poor are not worse off than they were. All that matters is the disparity itself and the PERCEIVED injustice.

 

Ah, there it is: it's FEELINGS that matter, not reality.

 

Of course demo-liberals will capitalize on these FEELINGS in their class-warfare politics.

I'm so glad that you finally understand. Feelings are important. It's feelings that drive crime. Feelings are why we had a Watts Riot. Feelings are what determines social stability. Don't discount it.

[tomtom]

Feelings, nothing more than feelings,

Trying to forget my feelings of love.

Teardrops rolling down on my face,

Trying to forget my feelings of love.

 

Feelings, for all my life I'll feel it.

I wish I've never met you, girl;

You'll never come again.

 

Feelings, wo-o-o feelings,

Wo-o-o, feel you again in my arms.

 

Feelings, feelings

Like I've never lost you

And feelings like I've never

 

Have you again in my heart.

 

Feelings, for all my life I'll feel it.

I wish I've never met you, girl;

You'll never come again.

 

Feelings, feelings like I've

Never lost you

And feelings like I've never have you

Again in my life.

 

Feelings, wo-o-o feelings,

Wo-o-o, feelings again in my arms.

Feelings...

[catbirdseat]

[Fairweather]

B) it doesn't matter if the poor are not worse off than they were. All that matters is the disparity itself and the PERCEIVED injustice.

 

Ah, there it is: it's FEELINGS that matter, not reality.

 

Of course demo-liberals will capitalize on these FEELINGS in their class-warfare politics.

I'm so glad that you finally understand. Feelings are important. It's feelings that drive crime. Feelings are why we had a Watts Riot. Feelings are what determines social stability. Don't discount it.

 

Um, Catbird, have you checked the latest crime statistics? Almost all categories at all time lows since national records began compiling in the late 60's early 70's. I think this represents a major hole in the poverty = crime argument, at least as it's being presented here. Don't you?

 

 

 

Edited September 30, 2005 by Fairweather

[knelson]

Looking at the website those came from, I see their data source is different for each graph. Bells and whistles should be going off in the head when this happens to be watching for some funny business with the statistics.

Umm "Source: Analysis of U.S. Census Bureau data in Economic Policy Institute, The State of Working America 1994-95 (M.E. Sharpe: 1994) p. 37, and U.S. Census Bureau, Historical Income Tables, Table F-3." those are the same sources. Historically part of the reason behind seamingly punitive tax policies was income redistribution, to combat the capital gap.

 

Umm... nope. Try again. You conveniently left out the date range info from the page at http://www.faireconomy.org/research/income_charts.html which then makes it appear to be from the same source. Here's what it says for those that are too lazy to check it out for themselves...

 

Data Sources:

 

1947-1979: Analysis of U.S. Census Bureau data in Economic Policy Institute, The State of Working America 1994-95 (M.E. Sharpe: 1994) p. 37.

 

1979-2001: U.S. Census Bureau, Historical Income Tables, Table F-3

 

OK... the latest chart's info is directly from the US Census Bureau. The older info is from something called "Economic Policy Institute, The State of Working America 1994-95" written by ME Sharpe, that is supposedly an "analysis" of US Census Bureau data. NOT THE SAME SOURCES.

 

And I'm sure the "Economic Policy Institute" is an unbiased think tank.

 

Look - I know the gap is getting bigger, but common sense says the gap has always been there and has always been growing. But that growth is not linear - it's most likely exponential, just like compounding interest. And we're just now probably starting to see that curve take off.

 

-kurt

[catbirdseat]

Fairweather, did you also mention that over the same period (1980-2000) the prison population increased by four-fold?