Finance: the Downscaling of America

Reuters ^ | July 5, 2003 | Linda Stern

[sarcasm]

As you might note, if you paid attention, I was talking about the decline in real income levels or the stagnation of same for a substantial portion of the population. The graph shows the level of wages in the economy as a whole. Real wages for lower level jobs have declined over the years.

[narses]

How does the Catholic voter feel about this trend?

[sarcasm]

How many families have gone from one wage earner to two in order to make ends meet?

[Ukiapah Heep]

Shut up, suck it in and work for coolie wages. This has been an unpaid sarcastic announcement from ther freetradeniks.

[Southack]

"The graph shows the level of wages in the economy as a whole. Real wages for lower level jobs have declined over the years."

Nonsense. Your graph showed a .2% average annual increase in real wages.

If you want to show something different, then post a different graph.

[spetznaz]

You make a key error in your argument Southack about the poor not getting poorer (and that whole tirade with graphs and what-not). You basically left out the REAL cost of living, REAL income, and OPPORTUNITY COST. You basically took the dollar figures and made a direct correlation based on the results. However in REAL economics and fiscal mechanisms things are not as linear as you would like.

For example, the poverty level income is around 14K. However if you factor in various indices and financial realities, including things like the CPI and inflation, it should factor in much higher than that! 14K is a joke. Even, to be honest, in major cities an income of 35K would be a sustainance level.

The poor are getting poorer! Just look at the job situation! Most people look at it based on the unemployment index ......but totally ignore the UNDER-employed index! That is the real killer! People who are workign several strata beneath what they are truly worth .....yet because they are 'employed' they are not taken into consideration in any statistical study.

And by the way statistics can be easily manipulated one way or the other. Anyways..........

The average family has a higher dollar income than a family in the 1950s .....but their PURCHASING POWER (another factor your graphs ignore) is by far lower! Their JOB POTENTIAL has also gone down the drain (there is rampant outsourcing of white-collar jobs to places where the pertinent costs are less), meaning that the competition for good jobs has exploded .....globally! You are not just competing against Joe Blow from Michigan but also against Chinese Cho from Hong Kong, Slim Siam from Singapore, Pritesh Shah from Calcutta, and Simon Assegai from South Africa!

As for the rich they are getting richer. The average CEO earns several hundred % more than the average worker compared to a CEO from a couple of decades ago! And because of their connections they can ensure their offspring get good jobs (even with all the outsourcing certain jobs, the high-octane ones, remain in the US .....and the rich ensure their kids go to the right schools and know the right people so as to increase their chances of being a big-shot. Why do you think there is such competition to get into Baby-Ivies ....essentially elite nursery and kindergarten schools? Jack Grubman for example commited fraud and enhanced the profile of a useless stock just to get a recommendation for his kid to go to an elite preparatory school! Why?)

And the gap between the rich and the poor is getting wider! And as the gulf widens the middle class gets thinned.

And the one of the true wonders of the US (which anyone who has travelled globally can attest to) si that it is one of the few places in the globe that has a TRUE middle-class.

That middle-class may be facing extinction .....protracted yes, but seemingly inevitable!

[snopercod]

For some "real world" statistics, check out the jobs listed in [this post]. You might find them educational.

[Southack]

"The poor are getting poorer!"

Not according to the inflation-adjusted graph in post #15.

That graph shows average **real** salaries and wages increasing by .2% per year even in the very worst periods of inflation and wages.

[freedumb2003]

>>How many families have gone from one wage earner to two in order to make ends meet?
<<

Only the selfish, SUV-driving, 5K2-foot-house ones. By the time you factor in the costs (2nd car, wardrobe, having strangers raise the kids, etc.) of a 2nd income, the 2nd income is pretty much eaten up.

Don't have kids if you can't afford them. Sacrifice if you do.

[The Westerner]

bump for later

[sarcasm]

.Table IE-3. Household Shares of Aggregate Income by Fifths of the Income Distribution: 1967 to 2001

[Maximilian]

Some seem to think that 0.2% income growth from 1965 - 2002 is good news, since it indicates "growth even during the worst period on the chart." But first let's define the time period as "during our lifetimes" (for most of us). So "our lifetime" is the same as "the worst period on the chart" for economic growth.

Let's look also at the cost. Back in 1965 most people didn't need a college education to make good money. Now you do. This puts you in debt and behind the 8-ball before you even start your career.

Rather than "rich get richer while poor get poorer," I see it as a lottery economy. A small sample (movie stars, athletes, dot-com millionaires) get fabulously wealthy, while the rest of the population stagnates and lives vicariously through these "celebrities." The enormous growth in actual gambling including state-sponsored lotteries is part of this trend.

What happens when we try to connect the economy to the lives of real people? The fact is that the populations of western countries are not reproducing themselves. Somehow the economy is not generating the income and the security to encourage people to have enough children to continue our society. National suicide would seem to be the ultimate negative indicator for a society, just as personal suicide might be considered the ultimate negative indicator for an individual's well-being.

An obvious question is "Where did all the money go?" We have lived through the computer age, to give one example. This has had a revolutionary effect on society the way that trains, petroleum and cars have done in the past. Yet somehow we haven't made any money from this enormous leap forward in technology. Clearly there are countries like Taiwan, China, Korea and even Japan that are much better off today than they were in 1965. But it seems that the average American has not been able to profit.

[Southack]

Income distribution will **always** flow to the most productive members of an increasingly affluent society, away from those who contribute the least.

That's how capitalism works. Money flows to those who are willing and able to best make money for others.

But that doesn't mean that the poor get "poorer", only that the poorer will steadily get further from the wealth levels of the richest.

Think of it as .1% annual **real** salary increases versus 4% real annual increases. Obviously both groups are getting better, but the difference between the two groups will keep growing.

[Maximilian]

Don't have kids if you can't afford them. Sacrifice if you do.

Thank you for living up to your screen name by verbalizing the ultimate in self-destructive philosophies. Children, who needs children? They are just a personal choice, society doesn't need a next generation. Are you really unable to see any societal value in having a next generation of Americans, or perhaps I am misunderstanding you, and you were being sarcastic?

Virtually every western nation is facing a social security crisis because there are not enough young people to support the retirees. America is about the best off compared to any developed country because of our immigration. Italy, Japan, Germany, France, they're all facing bankruptcy in their retirement programs. Personally I find that the least of the reasons for wanting to produce a next generation of human beings, but for selfish pragmatic reasons alone, it should be clear that society cannot function when everyone wants to live off someone else's children.

By the time you factor in the costs (2nd car, wardrobe, having strangers raise the kids, etc.) of a 2nd income, the 2nd income is pretty much eaten up.

You make a very valid point on this one. Virtually all second jobs produce a negative return for the family, unless the wife is in the tiny percentage of high-paying jobs like doctor or lawyer. In addition to the costs you've already mentioned, don't forget taxes (the second income is taxed at a much higher rate since you've already used up your deductions) and food (2-income families spend enormous amounts of money on prepared food, affecting not only their budget but contributing to the obesity epidemic in America).

[Southack]

"I see it as a lottery economy. A small sample (movie stars, athletes, dot-com millionaires) get fabulously wealthy, while the rest of the population stagnates and lives vicariously through these "celebrities."

America now has 2 million real-wage millionaires today, versus some 50,000 or so back in 1950.

So what you are seeing isn't that the poor are getting poorer, only that the poor are noticing that more and more people are getting rich, and that the rich are getting rich faster and faster.

That's to be expected. The whole system of capitalism gives rewards and incentives for continued new success.

[Maximilian]

So what you are seeing isn't that the poor are getting poorer, only that the poor are noticing that more and more people are getting rich, and that the rich are getting rich faster and faster.

What you are seeing is that an entire generation of economic growth and productivity has benefited only a very small percentage of the population. The average guy has actually gone backwards, especially when you figure in affirmative action and government expenditures. This is not "capitalism" but a Marxian parody of capitalism. And we haven't seen the real bad times yet. If a real depression hits, you'll see pent-up hostility explode like hasn't been seen in the US since the thirties, if ever.

[Southack]

"The average guy has actually gone backwards"

No, the **average** guy has only gotten ahead of inflation by .2% per year in the worst periods of American inflation and wage changes.

That's not going backwards. See the graphs in post #15.

[sarcasm]

source

In the United States, for example, wages of less-skilled workers have fallen steeply since the late 1970s relative to those of the more skilled. Between 1979 and 1988 the average wage of a college graduate relative to the average wage of a high school graduate rose by 20 percent and the average weekly earnings of males in their forties to average weekly earnings of males in their twenties rose by 25 percent. This growing inequality reverses a trend of previous decades (by some estimates going back as far as the 1910s) toward greater income equality between the more skilled and the less skilled. At the same time, the average real wage in the United States (that is, the average wage adjusted for inflation) has grown only slowly since the early 1970s and the real wage for unskilled workers has actually fallen. It has been estimated that male high school dropouts have suffered a 20 percent decline in real wages since the early 1970s.

[bert]

Well, most of the shrinkage is back to the average or normal level. There were zillions of $$$ raised in the capital markets expended on lots of nefarious business projects. That is, the money was stuffed down lots of rat holes, including inflated salaries and wages. Some of the froth slopped over on even the stoggiest of companies.

I wonder if there are still companies with "Bring your kid to work " Fridays. I wonder if there are companies still "burning" money or measuring their time to death by watching the burn rate.

The article describes a return to normalcy and a good rather than a bad condition.