Finance: the Downscaling of America

Reuters ^ | July 5, 2003 | Linda Stern

[ninenot]

and government expenditures

Thanks, Max, for the Insight of the Thread!!!

While earnings/wages have trended upward, beyond inflation, over the last few decades...

It's DISPOSABLE INCOME that counts--and pays the bills.

Taxes have risen at a far greater rate than wages, thus disposable income has decreased. Taxes rise, by and large, even when wages decrease.

From 1951 through 1997, Tax Freedom Day has advanced from March 10th to May 9th (and has hung around early May ever since.)

This represents a 16% increase in tax burden.

That's where all the money went...

[1rudeboy]

I wish that we, as FReepers, could decide whether REAL wages have gone up or down. Not REAL wages in the urinal-cake industry, or REAL wages relative to the sun-spot cycle, simply REAL wages.

[ninenot]

The myth of the "we need 2 incomes to have kids" infuriates me. The suggestion "the taxpayers have to pay for my kids" drives me through the roof. The statement "we should have kids because we can" is just idiotic.

ONe at a time--and Max never said any of them.

One can live on one income and have children--as long as the income is above $35K (my SMSA COL as a reference) and doesn't mind an inner-city dump residence. Only the guns and ammo you need are luxury...

The taxpayers actually DO have to pay for children--that's public policy, just re-inforced by GWB in the tax-reduction act. (I am NOT referring to the "refund-but-no-taxes garbage.) The public policy of the USA was written into IRS code first as a deduction, then as a deduction-plus-credit--and most recently, with larger deductions and credits. Yes, the taxpayers DO have to pay for my children--and they should be damn grateful, because it's my children who will pay for their drugs and nursing-home care in about 15 years.

Finally, we SHOULD have children (given a real, man-and-wife marriage and reasonable job-expectations) because not only does the Gummint think it's good public policy--but so does God.

I am certain that your ire is directed, properly, at those who reproduce out-of-wedlock as a methodology of increasing their welfare checks--

[ninenot]

The advent of "women's liberation", where women are expected, instead of having a choice, to work, the labor market has been flooded, which depresses wages.

Actually, the main trigger event was not "liberation," but the EEO Act and Executive Order 11257 (?) signed by LBJ.

Forcing employers to aggressively recruit women (and minorities, a separate and different issue) and then paying them comparably to men had a braking effect on the salaries of men.

It also had a significant effect on the cost of housing--upward. In 1967, (again, my town) one could buy a new 3BR ranch for about $35K. Now that ranch sells for $230K. After inflation, the difference is largely attributable to women being paid; but it had the unintended consequence of minimizing the pay of their husbands while increasing the cost of living.

[1rudeboy]

Your "real wages are falling" buddies need help.

[SauronOfMordor]

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).

But the government and the Left likes having 2-income families, because it provides work for the low-skill people who staff the eateries, cleaners, etc that such a family needs to use

[Southack]

"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."

Do you understand the implications of the word "relative", as bolded above?

That doesn't mean that wages of less-skilled workers actually declined. No, it means that those wages didn't rise as fast as the wages of others.

It is simply a dishonest writer who used the term "declined" inline with "relative" that is at issue, as that writer clearly meant to decieve you, and seems to have succeeded in convincing you that wages of less skilled workers actually declined, rather than declined **relative** to the enormous raises of others (in other words, didn't decline at all in real terms).

[Maximilian]

But the government and the Left likes having 2-income families, because it provides work for the low-skill people who staff the eateries, cleaners, etc that such a family needs to use

The government and the Left particularly like it when activities are taken out of the truly private sector where no money changes hands, and put into the public domain where they can control and regulate and take their cut. So when women make dinners for their own families, and wash their own clothes, and watch their own children, the government and the Left gnash their teeth at their inability to get their greedy paws on this economic activity. But when women go out and get jobs, and then use 100% or more of the income to pay other women to cook for them, other women to wash their clothes, other women to raise their children, now the government and the Left can step in and take charge of the situation with anti-discrimination laws, social meddling, subsidies for day care, and most of all, tax revenues to spend.

[sarcasm]

Reading the entire post is helpful - it seems that you missed this:

It has been estimated that male high school dropouts have suffered a 20 percent decline in real wages since the early 1970s.

[sarcasm]

Is the solution the government mandated euthanasia for this despised class of citizens?

[Southack]

"It has been estimated that male high school dropouts have suffered a 20 percent decline in real wages since the early 1970s."

Can you comprehend what the word "average" means?

Sure, various small segments of society, such as male high school dropouts, have had declines in real wages. I haven't argued any differently.

But just because one small segment has had a decline has no controlling bearing on the overall average.

And the national **average** for real, inflation-adjusted wages has increased by .2% per year even in the worst of times in America.

[sarcasm]

That's not what you said here:

To: sarcasm

"Real income levels for a substantial portion of the population have either been stagnant or have declined since the 1970's."

Nonsense.

As you can see from the data (for secretaries, with a link to 3,200 other professions included) in the above post, average incomes have soared from $3,060 in 1950 up past $28,000 by 1995, and they continue to climb today.

13 posted on 07/05/2003 3:47 PM EDT by Southack (Media bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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Where's the retraction?

[rdb3]

It's no secret that the U.S. has been on a rich-get-richer, poor-get-poorer track for several years.

True to form, Reuters publishes left-wing class warfare talking points. And FR's resident doom-and-gloomers lap it up like thirsty canines.

I'm deeply saddened. </sarcasm>

[sarcasm]

I notice that you aren't disputing the validity of the statement.

[Southack]

"While earnings/wages have trended upward, beyond inflation, over the last few decades... It's DISPOSABLE INCOME that counts--and pays the bills. Taxes have risen at a far greater rate than wages, thus disposable income has decreased. Taxes rise, by and large, even when wages decrease. From 1951 through 1997, Tax Freedom Day has advanced from March 10th to May 9th (and has hung around early May ever since.)"

You make some points that are worth commenting on. Yes, disposable income counts, but what counts even **MORE** than disposable income is the speed of money. It matters not that you have money to spend if you emulate the idle rich in South America and hoard all of your money like a miser. Rather, it matters that you spend your money quickly, get new money from some source (fast), and then spend it. The faster the economy churns financial transactions, the faster our economy grows and the more wealth potential exists. Even if you have absolutely no disposable income, if everybody is spending their last penny on necessities, and doing so rapidly, the economy will boom!

And taxes have risen faster than wages up until 2001, but Bush's two major income tax cuts, plus the dividend tax cut and the capital gains tax cut have really changed the equations.

A family of four making $40,000 per year now pays only $45 per year in total federal income taxes! That's a tax freedom day of January 1 (2.5 hours labor), not May 9th.

Moreover, if that family is investing in their tax-free 401(k), IRA, as well as in dividend-paying stocks, huge swaths of additional money can be earned tax free (as of 2004, at least).

Added to any such taxes, of course, you're going to be paying up to 15.6% taxes (on wages below six figures, at least) on your Medicare and Social Security, but you really do get some portion of your social security and medicare back eventually, so it's hard to associate a permanent tax-day-penalty-period for those amounts.

So calculating Tax Independence Day has never been more difficult, especially factoring in all of the possible state and local taxes, as well as how investing in different ways impacts all of the above.

Property taxes in rural Alabama are going to run you about .000025% per year (figure $400 per year on a $155,000 home and land). State income taxes don't even exist in Texas, Florida, Nevada, Tennessee, and Alaska. Sales taxes can be as little as 4% in many parts of the country.

Now granted, you are going to pay a tax premium to live in more urban areas of any state, but that's a free-will choice. In my opinion tax indepedence day should be calculated based upon the lowest possible taxed area to live in America.

[Southack]

"As you can see from the data (for secretaries, with a link to 3,200 other professions included) in the above post, average incomes have soared from $3,060 in 1950 up past $28,000 by 1995, and they continue to climb today."

What part of the word "Average" are you having difficulty with?

[sarcasm]

Your reply to my comment was "nonsense" - I've proved my point, however, you don't have the guts to acknowledge that you were wrong.

[Ciexyz]

All I know is that my taxes are going up because of PA tax-and-spend Governor Rendell. So my disposable income is going downward, esp. since I'm facing early retirement.

[DLfromthedesert]

The people I see on Access (that's Medicaid in AZ) Have cell phones, eyebrow rings, tattoos, and expensive cars.

I hear "poor" people calling into C-SPAN all the time with their complaints that the government is not doing enough for them. I wonder who's paying their cable bill.