America takes notice of gap in incomes

Houston Chronicle) ^ | December 16, 2006 | MATTHEW BENJAMIN

[GodGunsGuts]

...

The portion of national income earned by the top 20 percent of households grew to 50.4 percent last year, up from 45.6 percent 20 years ago; the bottom 60 percent of U.S. households received 26.6 percent, down from 29.9 percent in 1985, according to the Census Bureau.

Meanwhile, average pay for corporate chief executive officers rose to 369 times that of the average worker last year, according to finance professor Kevin Murphy of the University of Southern California; that compares with 131 times in 1993 and 36 times in 1976.

...

[Alia]

It has been my great fortune, living in the SF Bay Area, to learn a great deal from those who lived under "communist" China's rule and have escaped to America. They taught me that a certified Medical Doctor being forced to work in the rice paddies tends to resent the work he's forced to do by his government. Kill a man's spirit, and you kill production.

[A. Pole]

Class warfare alert.
Every warfare needs TWO sides

Looks like you are on losers side...

In many cases it is better to be on loser side.

[A. Pole]

They taught me that a certified Medical Doctor being forced to work in the rice paddies tends to resent the work he's forced to do by his government. Kill a man's spirit, and you kill production.

This applies both to the highly skilled professionals like medical doctors and unskilled workers. You need some degree of freedom and fairness as well for the society to prosper.

If you consider the wealth (which is is different from income) you can see the countries where the few owes so much that the working people of both categories (skilled and unskilled) get discouraged and demoralized. Some great countries of the past have fallen for this reason.

[M. Dodge Thomas]

Neither the Private Industry NOR Government is required to guarantee an "outcome" -- especially since no contract has been signed or consented to.

What the polls show is that "middle-calss" voters are increasingly looking to the government to limit the most severe downsides of typical personal economic histories, for example to provide insurance against catastrophic health care costs during periods of unemployment.

Conservatives have the choice of arguing against such protections on principle, or attempting to formulate plans which attempt to limit the social and economy downsides of such programs.

IMO, if conservatives limit their policy options to explaining to someone who is facing bankrupcy as a result of non-discterionary medical expenses - while the person who worked net to them for twenty years but was lucky enough to escape the layoff is still insured - that (for example) it's their own fault because they could not immediately find work offering insurance, conservatives have no reason to complain that voters are attracted to liberal politicians with other options on offer.

You a lawyer?

No. Nor is my livelihood at risk from "off-shoring".

[Toddsterpatriot]

Both are only worth as much as the faith people have in them. In other words, there is no intrinsic value in FR notes.

So, when he said, "Thus, then, there is an official check-kiting between the US Treasury and the Federal Reserve. The former issues bonds with which FR notes are backed; the latter issues notes used to pay off the bonds at maturity".

He didn't mean "bonds with which FR notes are backed" he really meant the notes aren't backed at all. So you were saying???

Are you going to use some of your derivative knowledge to explain "How you can write contracts to buy bonds, five times greater in amount than all the bonds in existence?" Or maybe you'll explain cash settlement? LOL!

[Tenacious 1]

[There’s a lot of room for conservative influence on the direction of America in that debate, but not if conservatives just say “work harder ‘cause everybody is getting what they deserve” in an economy where it’s increasingly hard for many hard-working families to get and stay ahead.]

I agree with some of the responses that have already been posted to this. Your point about the perception of opportunity Vs. result is interesting. However, if you believe in the idea that the government is responsible for opportunity given equally to all American's, then your thought is completely contradictory (IMO). Our constitution was pretty specific about the roles and responsibilities of our federal government with respect to the citizens of the USA. There was never promised free healthcare or education. This is not to say that our nation cannot afford to help citizens with the opportunity to get both. Unfortunately, the governements involvement in healthcare and education does more harm than good. There are a handful of citizens that may be able to captilize on opportunities afforded them by our federal government. But the expense to the rest of the citizens is so high to provide for the few, that many others are priced out of the equal opportunity. Let's face it, our federal government can only make war efficiently (and even that is up for debate). To level the playing field the federal government would have to get out of the way and let the private sector market to all citizens.

Not everybody can afford car insurance. Think about what would happen if the government started working with auto insurance companies to make sure that every driver in America was insured? I think we would all get to pay about 30% more and our employers would start partnering up with auto insurance companies to give big group rates.....

You get the point. Auto insurance would drastically increase.

Public Education should be controlled first at the state level and then at the private level. The federal guvmnt should be out of the picture completely. I believe that supply and demand market works to provide the most "equal" opportunity for all.

[Mase]

U.S. Census data that shows that the real median income of full-time, year-round male workers has been stagnant since 1973:

I saw an article recently where Paul Krugman came to the same conclusion. He didn't bother to explain how it is, 33 years later, that we're able to afford much larger homes with all sorts of upgrades our parents never dreamed of. He also didn't explain how it is that we have more cars, appliances, vacations, recreation vehicles, clothing, meals out, wealth etc. then we did in 1973. I guess all that wealth is just a figment of our imagination since the real median incomes of male workers hasn't increased since 1973.

Alan Reynolds took Krugman to task on this nonsense in an article called Unreal Wages.

The BLS has half a dozen superior measures of labor earnings -- the Census Bureau, Social Security Administration and Bureau of Economic Analysis have others. Real compensation per hour, for example, has risen 43.6 percent since 1973. So how could the real wages of 80 percent of the workforce have "fallen in most years" since then? They didn't. Wage stagnation is an old statistical hoax whose time is coming to an end.

Like me, Reynolds believes that real consumption per capita is a better measure of our increased living standards. Since 1973, he says our real consumption per capita has doubled. How can it double if our real per-capita wages aren't increasing?

Brian Westbury also addresses the doomers in his aptly titled article Pouting Pundits of Pessimism.

Moreover, for the past 30 years, real average hourly earnings have declined by an annual average of 0.1%. But this can't possibly reflect reality. In the past 30 years, cell phones and computers have become ubiquitous. Home and auto ownership have climbed. More people dine out; travel; attend sporting events, movies and rock concerts; and join health clubs. Over those same 30 years, real per capita consumption has increased at an average annual rate of 2.3%. Hourly earnings data do not include tips, bonuses, commissions or benefits, and therefore will always lag actual increases in living standards.

I've previoulsy linked you to Stephen Moore's article on income and wealth growth in this country since 1967. His findings should be repeated here:

The Census data from 1967 to 2004 provides the percentage of families that fall within various income ranges, starting at $0 to $5,000, $5,000 to $10,000, and so on, up to over $100,000 (all numbers here are adjusted for inflation). These data show, for example, that in 1967 only one in 25 families earned an income of $100,000 or more in real income, whereas now, one in six do. The percentage of families that have an income of more than $75,000 a year has tripled from 9% to 27%.

the Census data indicate that the income cutoff to be considered "middle class" has risen steadily. Back in 1967, the income range for the middle class (i.e., the middle-income quintile) was between $28,000 and $39,500 a year (in today's dollars). Now that income range is between $38,000 and $59,000 a year, which is to say that the middle class is now roughly $11,000 a year richer than 25 to 30 years ago.

The upper-middle class is also richer. Those falling within the 60th to 80th percentile in family income have an income range today of between $55,000 and $88,000 a year, which is about $24,000 a year higher than in 1967.

we estimated that number by taking the average ratio of mean wealth to median family wealth over the past 10 years. This yields an estimate of $105,000 in 2004. This is almost double the median family-wealth level of 1983 and nearly triple the level of 1962.

No way all this good news is possible if per-capita income for men, or any other demographic for that matter, has remained stagnant since 1973. For you to be right, all these guys have to be wrong, the household and median wealth numbers have to be fraudulent and all those cars, houses and toys we own today, along with the $4 trillion in capitals gains we've cashed in since 1997, have to be a cruel hoax being inflicted upon us by our overactive imaginations.

[M. Dodge Thomas]

IMO, the question here is do you want the unobtainable ideal, or the obtainable good (or at least, "least bad").

Many conservatives may want a program that appeals to to posters here, but what they need need is a program that appeals to a majority of voters - otherwise they might just as well stay home on election day.

And if one of those voters, or a friend, or someone in their family is (for example) a woman having to decide between bankruptcy and a course of radiation treatment after cancer surgery because after 25 year in the workforce she had been laid off and is uninsured, and you tell her:

It's simple: "The federal guvmnt should be out of the picture completely. I believe that supply and demand market works to provide the most "equal" opportunity for all."

You are going to get asked, "How, exactly, will that solve my problem?"

And if conservatives don't have a realistic proposal to do so, or at least a convincing argument about why any of the realistic alternatives are worse than her current situation, IMO they have little reason to complain if such voters prefer someone who does appear to have one.

[Tenacious 1]

[And if one of those voters, or a friend, or someone in their family is (for example) a woman having to decide between bankruptcy and a course of radiation treatment after cancer surgery because after 25 year in the workforce she had been laid off and is uninsured, and you tell her:]

First, I tell her bankruptcy is the least of her worries and she needs to work hard to save her life. America supports her, she gets the treatment, if she is lucky, she survives the ordeal and has to start over in life financially. America has thus provided for her, any healthcare she could not afford, as they cannot refuse treatment, legally. Now liberals would argue that it is not fair that her financial life is ruined and America should also pay to make her life easier. I would argue that America is paying as there is a Social Security Program and prescription drug benefits, and welfare programs, etc. that will allow her the minimums required for her most basic needs.

Undoubtedly, she is in for a tough run of it. We don't all get dealt a full house straight from the deck. Most of us start out drawing for better cards. And some of us will even have to play more than one hand. But we must all play the cards we are dealt and do the best we can with them. LIFE IS NOT FAIR, though liberals are out to convince us that it is.

A better social program that provides equality for all that we could debate is Social Security. This is closer to what I am talking about as there has been national debate on the looming disaster and how to mitigate it. President Bush made a mistake IMO buy trying to avoid calling it privatization. HE got so wrapped up in arguing about whether or not it was "privatizing" it, that he failed miserably to explain what it was and how obviously it would help. He should have stood in front of America and said,

"The government manages money poorly and social security is no exception. Unfortunately, the government owes many workers money that it will have to default on someday. There are millions of folks in this country that manage money for profit and this plan would engage their services to manage a small percentage of your social security in the most conservative investment accounts, at your discretion. Even the most conservative return on the small portion that is to be invested would outpace anything the federal government could fathom after the cost to manage the program is factored in."

HE did not say this. But it would have been a move to get the government out of the pockets and welfare of citizens. As it stands now, I am paying for promises the government has made to make things more equal for those that otherwise would be less fortunate enough to have saved for their own welfare in retirement. By leveling the playing field, they have brought a segment of the population down (taxes) to prop a small segment of the population up.

All that said, there is nothing the government could do to immediately revert back to "privatization" of healthcare and education. It would have to be a long and storied period of adjustment over 15 to 20 years. This will never happen because no politician cares about the state of affairs or the opinions and welfare of citizens 20 years down the road (unless you are Bill Clinton).

[KevinDavis]

Well I prefer to be on the winning side..

[ozzymandus]

I got a gap in my income.

[A. Pole]

Well I prefer to be on the winning side.

Always? What about the successful mugger and his victim?

[Toddsterpatriot]

What about the successful mugger and his victim?

Because trade is like a mugger and his victim? Or is America like a mugger and his victim?

[remember]

I saw an article recently where Paul Krugman came to the same conclusion. He didn't bother to explain how it is, 33 years later, that we're able to afford much larger homes with all sorts of upgrades our parents never dreamed of. He also didn't explain how it is that we have more cars, appliances, vacations, recreation vehicles, clothing, meals out, wealth etc. then we did in 1973. I guess all that wealth is just a figment of our imagination since the real median incomes of male workers hasn't increased since 1973.

You seem to be saying that it is mathematically impossible for total wealth to be increasing at the same time that the real median incomes of male workers are stagnating. Surely you know that this is false. Why do we look at both wealth and income if both move perfectly in tandem? Why do we bother looking at income growth per quintile if the income of each quintile always increase at the same rate?

Like me, Reynolds believes that real consumption per capita is a better measure of our increased living standards. Since 1973, he says our real consumption per capita has doubled. How can it double if our real per-capita wages aren't increasing?

Once again, per-capita consumption and per-capita wages are two different things. And what convinces you that either of them precisely tracks the real median income of male workers?

I've previoulsy linked you to Stephen Moore's article on income and wealth growth in this country since 1967. His findings should be repeated here:

I don't recall you linking it before. In any case, it does no good to link Wall Street Journal articles whose full content requires a subscription to read unless you're planning to give me a guest subscription for Christmas! :)

No way all this good news is possible if per-capita income for men, or any other demographic for that matter, has remained stagnant since 1973. For you to be right, all these guys have to be wrong, the household and median wealth numbers have to be fraudulent and all those cars, houses and toys we own today, along with the $4 trillion in capitals gains we've cashed in since 1997, have to be a cruel hoax being inflicted upon us by our overactive imaginations.

Once again the whole point of this thread is the GAP in incomes not the decline of ALL incomes. It's possible for the Census, BLS, and other figures given here to all be basically correct. Regardless of whether the wages of certain segments of the population are increasing, stagnant, or decreasing, most of the figures that I've seen are in agreement that there is a widening gap in income, even when looking at households (rather than individuals). For example, the following graph shows the increase in household income since 1967 for each quintile and the top 5 percent:

The actual numbers and sources are at http://home.att.net/~rdavis2/income.html. As can be seen, the top quintile separated noticeably from the other quintiles in the mid-eighties. This separation is in agreement with most all data that I've seen on the subject.

[Alia]

What the polls show is that "middle-calss" voters are increasingly looking to the government to limit the most severe downsides of typical personal economic histories, for example to provide insurance against catastrophic health care costs during periods of unemployment.

What poll, where -- is portraying this, pls?

Long Term Disability and Unemployment Insurance policies have been on the market and available for quite a number of years.

Your last paragraph in post:

IMO, if conservatives limit their policy options to explaining to someone who is facing bankrupcy as a result of non-discterionary medical expenses - while the person who worked net to them for twenty years but was lucky enough to escape the layoff is still insured - that (for example) it's their own fault because they could not immediately find work offering insurance, conservatives have no reason to complain that voters are attracted to liberal politicians with other options on offer.

Perhaps you are unaware that there are all kinds of programs which have been made available by the U.S. Government to assist persons in these types of horrid circumstances. Americans have been using and taking advantage of these assistance programs for low and behold excess of 40 years.

IME, however, the problem arises when someone in that position goes to local/state government to learn about such programs and meets up with a "government employee" who is clueless about the programs (or is into power tripping) and tells the person "Sorry, no help for you".

Like pub education, usually these least qualified wish to work as civil servants. And the problems go round and around. Government should NOT be in the business of playing Big Momma to adults who have absolutely every opportunity and assistance within finger tip dialing access.

The Bush Admin HAS made medical reform - who fights it? Democrats. Dittos, Social Security. Dittos, Tort Reform.

Medical Savings Accounts ARE and HAVE been what Repubs have been trying to get passed for 15 years. Who blocks them every single step of the way? Democrats. Who just voted in Democrats this past election. The "people".

And so yours on what the "people" allegedly wish seems more of your own take, rather than an "ism" about the American voter. Following your logic, the people wish to be taken care of but they wish to ensure it never really happens.

Or do you mean to suggest that everyone in America wishes to become a civil servant?

[Alia]

And this great country, the United States of America, people can leave one blighted area for one in another state which is prosperous.

Partly the reason for such "fallen countries" is that the countries are perhaps the size of one US state, and that entering another country is in fact -- entering another country with all that pertains. Quite different from moving from one US State to another. The European Union "proposals" from years back attempted to address this issue.

[Alia]

Thank you :)

[Alia]

Anyone in America can become a millionare. It's been proven time and time again. They have to wish it, focus on it, learn everything about it, and accomplish it.

Whining over one's decisions is pathetic. Obviously in your post you are carefully dancing around the socialistic brick of, discrimination, without being direct about it.

The smartest thing a person can do is teach their children about savings and investments.

The problem is, people get caught up in the "magazine" world, as in... to live like the "tv people" do, one must buy that car, that couch, etc. And so it becomes a mantra of "I can only feel good if I have the perfectly presentable "image".

Really, it comes down to self-discipline.

In re your hardluck stories. Hard-hearted Hannah here says: Welcome to Life! What do you suggest for children born with disabilities through no one's fault but of genetics? Sue God?

You posit that in order to be a more "caring" nation, everyone should always focus upon "victims". In so doing, you create more victims. MSM and Democrats has been doing this for so long -- and because it "sells" advertising and political agendas. And creates a whole new minefield for the "victim ideologues" to create a larger and fouler industry -- that of encouraging a nation of adults to... just submit to anything life tosses at them.

I grew up in "utopia" -- the San Francisco Bay Area. And I learned what hell, first hand created under this type of "caring" programs and ideologies. It's a freakin war zone out in the west. Everyone vying with each other for who has it worst in life. Who's the bigger or more important victim?

Then you get to read the transcripts of panels wherein the victim groups get together and prioritize which victim is the victim for this season, and who gets the second spot afterwards.

It's one huge AA meeting, or tent revivalist meeting perfectly parodied in Monty Python's "I was born in a rolled-up newspaper".

[Alia]

I just recently got cable. I haven't had cable since 1993. I'm a genuine Rip Van Winkle. And what have I learned? I've missed absolutely nothing by not having cable all these years. (I do like the weather channel, at moment, however.)

I watched a show this past weekend. Plastic surgery. A woman in Los Angeles, divorced, two small children, was getting the "whole" do-over. Cost $35,000. She works full-time while working to get a degree in Accounting.

This woman also fits inside your script about "what appeals" to voters. Who do you think will be paying the costs for her possible bankrupty?

How important do you think it is that she "feel good" about herself, and what types of government programs do you think she'd demand to see enacted into congress?

Why wait? She can move to CA where many types of cosmetic surgeries ARE being covered. Including sex changes.

[Alia]

I just recently got cable. I haven't had cable since 1993. I'm a genuine Rip Van Winkle. And what have I learned? I've missed absolutely nothing by not having cable all these years. (I do like the weather channel, at moment, however.)

I watched a show this past weekend. Plastic surgery. A woman in Los Angeles, divorced, two small children, was getting the "whole" do-over. Cost $35,000. She works full-time while working to get a degree in Accounting.

This woman also fits inside your script about "what appeals" to voters. Who do you think will be paying the costs for her possible bankrupty?

How important do you think it is that she "feel good" about herself, and what types of government programs do you think she'd demand to see enacted into congress?

Why wait? She can move to CA where many types of cosmetic surgeries ARE being covered. Including sex changes.