Posted on 01/29/2006 2:35:37 PM PST by Stultis
The headline:
Study Finds Rich-Poor Income Gap Growing
The story by Mark Johnson of the Associated Press begins:
The disparity between rich and poor is growing in America as the federal minimum wage has remained flat for years, union membership has declined and industries have faced global competition, according to a study released Thursday.
Interesting. Let me try a different first sentence:
The disparity between rich and poor is growing in America as the Red Sox won their first World Series in 86 years, Mars came very close to the earth and the global frog population plummeted.
I don't actually believe that the disparity between rich and poor is growing. At least I don't believe the numbers that supposedly tell us so. Or more accurately, I don't believe that the interpretation of the numbers is the right one. But even if the interpretation is the right one, how can an Associated Press story list the supposed causes of that growing disparity as if they were facts rather than the pet agenda items of the groups that put out the study?
The story continues:
The report by the Center on Budget and Policy Priorities and the Economic Policy Institute, both liberal-leaning think tanks, found the incomes of the poorest 20 percent of families nationally grew by an average of $2,660, or 19 percent, over the past 20 years. Meanwhile, the incomes of the richest fifth of families grew by $45,100, or nearly 59 percent, the study by the Washington-based groups said.
Families in the middle fifth saw their incomes rise 28 percent, or $10,218.
The figures, based on U.S. Census data, compare the average growth from 1980-82 to 2001-03, after adjusting for inflation.
The poorest one-fifth of families, the report said, had an average income of $16,780 from 2000-03, while the top fifth of families had an average income of $122,150 — more than seven times as much. Middle-income families' average income was $46,875.
This is fake analysis. It's comparing two snapshots over time and pretending that the people in the snapshots are the same people. The implication is that if you were a poor family in 1980, you barely got ahead while the rich families, turbo-charged ahead of everyone else and left them in the dust. The rich get richer and the poor basically stay poor.
But they're not the same people in the two snapshots. The comparison of the two snapshots is close to meaningless. The bottom quintile of families today includes a bunch of people who weren't there in 1980. Some of the families are recent immigrants to the United States seeking opportunity. Some of the families are young and just starting out. Some are the result of a divorce that has dumped one or both partners into poverty and it will take time for them to recover.
And most importantly, some of those rich families today that have allegedly zoomed ahead were poor in 1980 but have become rich in the meanwhile, an experience that is the exact opposite of what the headline would have you believe.
In short, the people who did the study are lazy. But I expect them to be. They're from the Center on Budget and Policy Priorities and the Economic Policy Institute. That's their job—to produce pessimistic analyses that make people think the rich are getting richer and the poor are getting poorer and to claim a causal connection between bad times and weakened unions.
But that isn't Mark Johnson's job. Mark, your job is to inform. Or maybe to help sell newspapers. But either way, it doesn't speak well of you or your job to simply run the press release from the Center on Budget and Policy Priorities and the Economic Policy Institute under your byline. If your job is to inform, you might want to interview a few people who don't think about the world in the same way as the CBPP and EPI. If your job is to sell newspapers, a little tension and counterpoint make more interesting reading.
To be fair to Mr. Johnson, he did call someone who didn't work for the people who did the study to add some "balance" to the story. So who did he call? Another pro-union activist:
Trudi Renwick, an economist with the union-backed Fiscal Policy Institute in New York, said globalization, the decline of manufacturing jobs, the expansion of low-wage service jobs, immigration and the weakening of unions have hurt those on the lower end of the economic scale.
After some data on state-level inequality, Mark Johnson finally quotes someone "on the other side," someone from the business community:
Matthew Maguire, a spokesman for the Business Council of New York state, said the money earned by the state's wealthiest residents is "something that everybody who cares about New York should be pleased about."
"New York's wealthy pay huge sums in taxes and those wealthy people and their taxes make it possible for New York to provide the nation's most generous social service programs to less fortunate New Yorkers," he said. "It also reflects the fact the state is a magnet for immigrants who come from the four corners of the globe to a state they see as symbol of economic activity."
Isn't this rich? (Aren't we a pair?) The voice from "the other side" accepts the analysis as true but disputes the implication that rich people getting richer is bad. It's good! What a loveable counterpoint.
And then Johnson closes the piece giving more space for Trudi Renwick's agenda, the same agenda of the Economic Policy Institute:
Renwick said the government "needs to continue its commitment to correcting the natural outcomes of the marketplace" by raising the minimum wage with inflation and by tax policies like the earned income tax credit.
Renwick also suggested that governments, when giving tax breaks to companies, insist those companies provide jobs that pay higher wages.
That's it. Not one quote from someone who is skeptical of the analysis. Not one quote from someone without an ax to grind.
Mark, call someone else other than union-backed economists or business lobbyists. Call someone at a university. Or if you want to stick with think tanks, call Robert Rector at Heritage. He can explain why the numbers you swallowed are silly. Do your job.
http://cafehayek.typepad.com/hayek/2005/05/inequality_vi.html
CH ping
Nice round-up of the usual suspects. Too bad Public Citizen or Common Dreams weren't mentioned, or else we would've hit the jackpot.
...Brought to you by your local Socialist Workers Party chapter....Have a commie day!
Uncontrolled illegal immigration is destroying the American economy. Today it's manual labor and child care, tomorrow it will be computer and automotive repair, nursing, and other specialized tasks.
We're in a race to the bottom, and we're all competing against the people who can do everything and the people who will do anything. And no dollar amount is so low that 'no one' will do the job (no one outside the welfare system, that is).
We are one ineffectual crowd-pleaser away from becoming an unemployed, second-rate world power.
No, please don't--you'll just get enthusiastic agreement with the analysis, a call for a "worker's revolution", and blame placed squarely on George Bush.
Nice analysis.
Here is a good example:
Sergey Mihailovich Brin (Russian: Ñåðãåé Ìèõàéëîâè÷ Áðèí) (born August 1973 in Moscow, Russia) is an American entrepreneur. Born in Russia, Brin studied computer science and mathematics before co-founding Google with Larry Page. Brin is the President of Technology at Google and has a net worth estimated at 11 billion U.S. dollars
So 20 years ago, Mr. Brin was a 13 year old kid with an income most likely in the bottom 20%. Also due to the recent tripling in value of google, I suspect his net worth is about 35 billion.
Yep, Mr. Brin certainly helped ruin the US economy.
Sergey Mihailovich Brin (Russian: Ñåðãåé Ìèõàéëîâè÷ Áðèí) (born August 1973 in Moscow, Russia) is an American entrepreneur. Born in Russia, Brin studied computer science and mathematics before co-founding Google with Larry Page. Brin is the President of Technology at Google and has a net worth estimated at 11 billion U.S. dollars
...and what does minimum wage have to do with the disparity? How many people actually work for minimum wage? Not even those who work at Wal-Mart or McDonald's.
If this is true, the rich getting richer etc. Then my W-2 says I'm getting poorer, and trust me I'm not real worried about how much Bill Gates is raking in, I'd be more worried if Gates, Allen and Trump were getting poorer.
Dis is world distruction, your life ain't nuttin. De human race is becoming a disgrace.Da rich get richa, da poor ah geh-in poora...
Just Damn! I love frog legs.
I said nothing about Brin, and wouldn't have included him anyway. He is an entrepreneur who helped create a market; those are the kind of people we need.
My arguement is this--say you work in construction. You make $10 an hour (for the sake of arguement; I've never worked construction, I have no idea how much it pays).
Now your employer, ConstructCorp, decides they need to cut costs. They find Pedro, who will work for $4 an hour. You're out on your ass, because there is no way you can work for just $4 an hour--you have a mortgage, the kid needs braces, you need gas for the car, etc. Pedro can, because he is used to living in 2-bedroom apartments with 12 other people. Illegal immigration fans also provide him with free health care (emergency rooms) and point out where he can get other services for free or at a reduced cost. Also, immigrant communities tend to be tightly knit--everybody knows everybody, or knows somebody who knows somebody. You can get nearly anything else you need.
What are your choices? You can learn to live like Pedro (12 to an apartment, "free" social services, the Hispanic hookup), or you can do what most other Americans are doing; they're going back to school, gaining new specialized skills, etc. You're doing this to maintain the lifestyle to which you have become accustomed--you know, silly things like owning your own home, buying your own groceries, etc. Maintaining your dignity and independence.
Now you're happy at your new employer--times were tough at first, but now you make even more money (let's say $20 an hour) and you like your new job better. What happens when your new employer (lets say, a computer firm) decides to go look for someone with the same skills as yours? Chang will work for $4 an hour too, and once again, you're out on your ass. And it will keep happening--you can only go to school for so long or improve your skills so much.
Employers have a trump card; they can hire anyone they want, and pay whatever they want, and someone somewhere will take the job. Paying lower wages = higher profits.
Illegal immigrants and outsource labor have the other trump card; they don't need as much money as you do to maintain the lifestyle that they are accustomed to. They'll get your job every time, because it costs less to hire them. You with no job and Pedro working your own job for less wages = lower income for the "non-rich."
Higher income for the wealthy + lower income for workers = wider wealth gap.
I worked for a construction company for several years. Mexicans (actually El Salvadorians in our case) got paid the same as anyone else. A couple with us for years worked up to foreman and got paid the same as other foremen. Several were equipment operators, and got paid that rate. Basic laborers, btw, started at $8.00 per hour minimum, and most made $10 with some experience.
But let's say Pedro USED to be willing to work for $4.00 per hour. If so it was only because he was doing seasonal work and would head back to Mexico in the winter where the cost of living is cheap (and where he might capitalize his earnings by buying building supplies and working during the winter on his retirement home in Mexico, or a house he can sell for profit).
However that's not the case anymore, since we've listened to isolationists like you (although I agree it's necessary in the circumstances) and tightened the border.
(Yeah, yeah. I know you still think the border is like a sieve. It's still too open objectively, but to pretend there has not been a huge relative tightening since pre-911 is simply delusional. "Coyotes" -- people smugglers -- that used to charge around a hundred dollars now typically charge thousands.)
Now it's too iffy, dangerous and expensive for Pedro to dependably cross the border twice a year or more (going back to Mexico in the Winter and coming back to the U.S. in the Spring or Summer).
Now Pedro decides he has to stay in the United States year round. He might not be able to get back in if he leaves. Now low paid seasonal work is no longer suitable. He needs to work year round and he needs to work at a higher wage job because his cost of living is higher. He's going to compete for jobs that he wouldn't have tried for before. And he's going to be in more direct competition with American blue collar workers than he ever was before.
We could solve this by instituting a sensible work visa program, so that labor can flow back and forth across the border in direct and proportionate response to demand as it did (albeit illegally) in the bygone days of loose borders. Or we could massively increase legal immigration (which would be a huge help btw with our looming demographic crisis since immigrants are overwhelmingly young working age people). But you nativist/isolationist types oppose any reasonable foreign workers' program, and massive immigration increases. So you're going to have to compete with Pedro for high wage jobs, and Pedro won't be there to pick your fruit. But he will be there, year round, to consume public services. You better hope he finds a job.
I think I'm glad I don't know who that is.
I had a similar problem last week with [**title of intolerably puerile yet horribly infectious song DELETED for your safety**] and found that It's A Shame by The Spinners is an effective brain cleanser. I speculate that the sonic harmonies of the falsetto sections help drive troublesome songs from the gray matter.
It's interesting that you chose the construction industry for your example. From 1995 to 2005, we created almost 2 million construction jobs in this country. The average earnings for a construction worker went from $14.73 per hour in 1995 to $19.72 in 2005. This increase easily outpaced the rate of inflation. Pedro may be working but he isn't doing it for $4.00/hr.
They'll get your job every time, because it costs less to hire them.
I guess you don't believe the old axiom that you get what you pay for?
Higher income for the wealthy + lower income for workers = wider wealth gap.
If you look at this graph showing the income gap between rich and the poor you'll see that, even though the gap is wider, everyone is becoming wealthier because both the top and bottom are rising to levels much higher than before.
From the Freedom Keys website:
Funny, that's not the way I hear it.
That's right Mase, forget all the facts you posted, Alien Gunfighter has some good anecdotes for you.
Or maybe that's just not the way you perceive it. Your previous post makes it pretty clear you don't believe there's such a thing as a labor market (e.g. that the employer side all but exclusively determines wage rates, that workers will willing provide their labor for a fraction of the market rate, etc). When your assumptions are wildly unreal, your conclusions are likely to be the same.
The gap is irrelevant - socialist propaganda. Are the poor getting poorer or richer in real dollars? Are there more rich people than ever before?
Besides, the rich keep getting richer 'cause they keep doing what made 'em rich in the first place and have more money with which to do it. You would expect the gap to keep getting bigger.
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