11 ms·

The rich are hoarding economic growth

135 points by rubicon33 9y ago

jgalt212 9y ago
I don't want obfuscate correlation and causality but over the same time period we have seen the greatest bond bull market in history. The upshot is that the rich, more specifically the super rich, benefit disproportionately from lower/lowering interest rates.
gscott 9y ago
This is why I appreciate the $15 an hour minimum wage movement. Paying people more is better then taxing the rich more. The super-rich own congress but at the city and State level there is depending upon the state some room to grow wages. Higher wages equals fewer people on public subsidies which is good for cities and states.
- aoeuasdf1 9y ago
  Why not an earned income tax credit instead of an arbitrary cutoff at which point labor becomes worthless and illegal to sell?
- sokoloff 9y ago
  Higher minimum wages means fewer employed people on public subsidies. It's less clear to me that it makes for fewer people overall on subsidies. If the economic value of someone's labor is only $10/hr, they are less likely to be employed with a $15 minimum wage than a $9 minimum wage.
  - WaxProlix 9y ago
    What labor has value below the required amount to exist as a human? I think the reasoning is - if it's worth being done, it's worth paying someone a meager living wage to have it done.
    - nopriorarrests 9y ago
      All labor which could be done by people in, say, Vietnam or Laos, has value below the required amount to exist as a human in USA. So, more and more of it.
    - sokoloff 9y ago
      That's the point: there is almost certainly work being done now for $10/hr that is not economically worth being done if the lower limit by statute is $15/hr. If someone is capable of holding down that $10/hr job but not capable of landing a $15/hr job, they are harmed by an increase in minimum wage in two ways: 1. The direct loss of job, income, status. 2. They are now shopping in an economy where the goods/services they purchase are likely to be marginally more expensive.
      - lordCarbonFiber 9y ago
        >If someone is not capable That mindset continues to be disgusting to me. Humans are some of the most impressive creatures on Earth; baring actual disability, you can teach them to do all sorts of things. I'm going to love watching the tech scene's existential panic over the next 2 decades as the population increasingly realizes that making CRUD apps and junk SAS is a job many Americans are more than capable of doing.
        closeparen 9y ago
        "Capable" isn't a binary, lifelong condition. The remedy for incapability is generally considered to be education.
        lordCarbonFiber 9y ago
        The dirty secret is that there's a whole class of jobs, mostly decently paying white collar jobs, that have most of the training on the job. Hell most of the jobs that only require an undergraduate degree involve extensive on the job training; college is used as a weak signal for aptitude, interest, and class not really capability (this is the entire business model around coding boot-camps).
- gehwartzen 9y ago
  We need to just peg the minimum wage to inflation so we don't have to do this every decade or two.
  - helthanatos 9y ago
    Minimum wage++ == Inflation++
    - jaggederest 9y ago
      Except that they've tracked that, and it doesn't. There was a nice recent natural experiment in Seattle, and the effect was negligible. Do you have any empirical evidence otherwise?
  - matt_wulfeck 9y ago
    Ugh yeah. I'm glad I'm not the only one that hates this generalized fight for a number that's ultimately irrelevant.
- ams6110 9y ago
  The problem is that if you set a minimum wage that is higher than the real value of the work performed, it means those jobs just simply won't exist anymore.
  - FLUX-YOU 9y ago
    The real value of a lot of products and services is more adjustable than your statement would lead someone to believe. Reality is absolutely not an efficient marketplace that immediately culls jobs and workers the moment a certain price of labor threshold is reached.
    - prostoalex 9y ago
      And yet ATMs, self-checkout lines and online shopping are a thing, and so are bank branch closures, retail bankruptcies and mall vacancy rates.
      - chillwaves 9y ago
        That is efficiency. We won't pay people to dig ditches when we have machines to do it. Efficiency is not the enemy, resource distribution is.
  - enraged_camel 9y ago
    As far as I'm aware, none of the studies on increasing minimum wage have shown this.
    - johnnyb9 9y ago
      http://www.seattletimes.com/business/uw-study-finds-seattles-minimum-wage-is-costing-jobs/ http://www.seattletimes.com/business/uw-study-finds-seattles...
  - yen223 9y ago
    In a world where CEOs can receive massive bonuses for driving a company to the ground, that's not easy to believe at all.
- guelo 9y ago
  Minimum wage costs are mostly passed on as increased prices paid by the middle class. The profits to the .01% class are barely affected.
  - AlexandrB 9y ago
    This is entirely a consequence of economic policy set the by the US government. Not some immutable property of our world. As such it can be changed through, for example, a more progressive tax policy.
- derping69 9y ago
  Why stop there? Just make it 100$ and hour and everyone will be rich! Oh wait, arbitrary wage increases don't really work out in real life. https://fivethirtyeight.com/features/seattles-minimum-wage-hike-may-have-gone-too-far/ https://fivethirtyeight.com/features/seattles-minimum-wage-h... Seattle's socialist member of the city council fired the Unversity of Washington team after the results came out and hired an anti-capitalist professor from berkeley to ensure the study finds the right results. http://www.foxnews.com/politics/2017/06/29/seattle-commissions-new-minimum-wage-study-after-dismissing-first-results.html http://www.foxnews.com/politics/2017/06/29/seattle-commissio...
  - baobrain 9y ago
    Note that your fivethirtyeight article even mentions a caveat to the study: > The paper’s findings are preliminary and have not yet been subjected to peer review. And the authors stressed that even if their results hold up, their research leaves important questions unanswered, particularly about how the minimum wage has affected individual workers and businesses. > Many economists, meanwhile, have acknowledged substantial uncertainty over the likely effects of the recent wage hikes. Most — though by no means all — past research has found that modest increases to the minimum wage have little impact on employment, and that if employers do eliminate jobs or cut back hours, those losses are dwarfed by the income gains enjoyed by the majority of workers who keep their jobs. But those studies were mostly based on minimum wages that were much lower than the ones beginning to take effect now. Even some liberal economists have expressed concern, often privately, that employers might respond differently to a minimum wage of $12 or $15, which would affect a far broader swath of workers than the part-time fast-food and retail employees who typically dominate the ranks of minimum-wage earners. Other economists said there simply wasn’t enough evidence to predict the impact of minimum wages that high. The new laws in Seattle and other cities, then, could provide an ideal testing ground. Additionally, here is a post by Jared Bernstein related to the minimum wage hike[0]. Here is the book mentioned in the aforementioned post [1]. Another analysis[2] finding that "Once this publication selection is corrected, little or no evidence of a negative association between minimum wages and employment remains." While I also do not know for certain the effects of a minimum wage, one of your sources fairly lists caveats and uncertainty for the study it mentions, and the other is fox news. [0] http://jaredbernsteinblog.com/the-minimum-wage-increase-and-the-cbos-job-loss-estimate/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JaredBernstein+%28Jared+Bernstein%29 http://jaredbernsteinblog.com/the-minimum-wage-increase-and-... [1] http://www.upjohn.org/publications/upjohn-institute-press/what-does-minimum-wage-do http://www.upjohn.org/publications/upjohn-institute-press/wh... [2] http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8543.2009.00723.x/abstract http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8543.2009....
- deleted 9y ago
  [deleted]
- prostoalex 9y ago
  If the minimum wage is a universal solution works for everybody, why are there so many exemptions and carveouts? Family-owned businesses like restaurants are exempt, self-employed individuals are exempt, piecemeal farm labor is exempt, babysitters and other "occasional" labor have their own exemption, tipped workers have a carveout. There's a special rate for minors because apparently nobody thinks high school kids will produce $15 of value per hour yet they still need to learn the ropes of the business and personal responsibility somehow.
sokoloff 9y ago
1% real income growth per year is still fairly substantial IMO. Over a 41 year career, your purchasing power goes up by half, yet that's treated as "stagnating" which implies something far worse than 1% per year.
- johngarrison 9y ago
  Not if inflation is 3-4% per year.
  - sokoloff 9y ago
    Real income growth is, by definition, after accounting for inflation. The opposing term is "nominal income growth" which does not account for inflation.
  - kevinnk 9y ago
    "Real income growth" is the growth in income post inflation.
  - WaxProlix 9y ago
    He said 'real' income growth, which I take to mean adjusted for inflation and maybe also various cost of living increases/decreases.
  - Sophistifunk 9y ago
    And even less so if "inflation" has been redefined specifically to be lower, in order to reduce the amount of real money that needs to go into social security.
- mdorazio 9y ago
  I think the nuance here is that it's stagnating relative to overall income growth. I.e. 1% isn't terrible if everyone is getting roughly 1%. But that's not the situation - the economy is growing more rapidly than that, but only a tiny percentage of people are seeing big gains for their own incomes.
  - 9y ago
Animats 9y ago
We know.
jkroso 9y ago
So what caused the change in 1973?
- atlih 9y ago
  Financialization of the economy. The fall of Bretton-Woods. The fall of the gold standard. The repeal of Glass-Steagall.
  - viridian 9y ago
    >The fall of the gold standard. >The fall of Bretton-Woods. 1971, not 1973 >The repeal of Glass-Steagall. 1999, not 1973
    - atlih 9y ago
      Macroeconomic changes take longer than just a few hours to have an impact. I included Glass-Steagall repeal because merely focusing on 1970's and nothing that happened there after is myopic
- mac01021 9y ago
  Here's an article which argues that wages have not been growing in line with productivity since 1973 because, since then, workers have been compensated with fringe benefits of increasing value, in lieu of greater wages. [http://www.heritage.org/jobs-and-labor/report/productivity-and-compensation-growing-together http://www.heritage.org/jobs-and-labor/report/productivity-a...] I'm sure that this is not the whole story, but I bet it's a big part of it.
- flatfilefan 9y ago
  Could it be an oversupply of labor that was caused by the availability of the pill and the following growing immigration asking for lower wages instead of incumbents https://tradingeconomics.com/united-states/labor-force-participation-rate https://tradingeconomics.com/united-states/labor-force-parti...
victor106 9y ago
This quote by the fed chairman during the Great Depression, Marriner S. Eccles, seems apt "As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants.In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped."
- sjg007 9y ago
  This is true even more so today.
- WalterBright 9y ago
  The GD was caused in large part by the Fed's poor understanding of economics. I wouldn't take what the chairman of the time said too seriously.
ekiminmo 9y ago
Forgive my ignorance, but why wouldnt we expect to see exponential growth in wealth, and as a result a greater discepency between the top 1% and everyone else?
- quickben 9y ago
  Technically we would, but not at the cost of such discrepancy, as it usually had a violent ending in the past. Costing lives and entire countries social stabilities.
cs702 9y ago
The title and the tone of the OP are a bit inflammatory for my taste, but the data and graphs from the research paper are eye-opening: most economic growth in the US over the past three decades has indeed gone to the top 1%, and particularly to the top 0.01%, leaving everyone else behind.[1] Here's the money shot: https://cdn.vox-cdn.com/uploads/chorus_asset/file/9013427/Screenshot_2017_08_08_12.34.47.png https://cdn.vox-cdn.com/uploads/chorus_asset/file/9013427/Sc... However, rather than debate the causes of this divergence, or accuse "the rich" of anything, we should instead be coming up with WORKABLE SOLUTIONS for increasing the income -- and therefore the spending power -- of the masses in a sustainable manner. I imagine a tremendous amount of pent-up consumer demand would be unleashed, because THE MORE THE MASSES EARN, THE MORE THEY SPEND ON PRODUCTS AND SERVICES, including those created by entrepreneurs. [1] Here's the paper: http://gabriel-zucman.eu/files/PSZ2017.pdf http://gabriel-zucman.eu/files/PSZ2017.pdf
- Taek 9y ago
  The core of the problem isn't any sort of tax setup, it's the foundation of our economy. The first employee of a startup usually gets less than 2% equity. Apple made $700k per employee in a single quarter. Our whole economy is set up to funnel money to the top. We need a new way of structuring corporations to change that.
  - deegles 9y ago
    Or create a more widespread culture of stock ownership.
    - gehwartzen 9y ago
      This is the key. For an economic system based on capitalism we have surprisingly few 'real' capitalists. For the vast majority of people who own company equity it is tied up in retirement funds. Our system is designed to concentrate money in the hands of those that have it to begin with. As soon as more workers outside of startups start earning equity in the companies they work for we will see the income distribution change. And I suspect we would see a massive boom in worker productivity as they directly realize the financial gains. "In terms of types of financial wealth, in 2013 the top one percent of households had 49.8% of all privately held stock, 54.7% of financial securities, and 62.8% of business equity. The top ten percent had 84% to 94% of stocks, bonds, trust funds, and business equity, and almost 80% of non-home real estate."
aiyodev 9y ago
People who buy this garbage have no perspective of how much the federal government taxes and spends. Everything discussed here is insignificant in the scope of the federal agencies spending $11 billion a day. Personal incomes are less than their rounding errors.
- tamcap 9y ago
  I'm curious, in what sense is it insignificant? Quoting from (likely faulty) memory, 30% of federal budget comes from income tax directly, and the another 20% or so is covered by employer associated employment taxes. So out of that $11bn a day, Americans pay in $6.5bn every day. If we were to adequately tax the 0.01%, the budget would feel the difference.
pg_bot 9y ago
Why is there no talk about the dramatic increase in the supply of workers over the last 40 years? Globalization has brought millions out of poverty and those people are now competing with Americans when they wouldn't before. It makes sense from an economic standpoint that the price of labor would not rise when the supply is increased and is likely the cause of income inequality in the US.
- gottam 9y ago
  pretty much this. its why there was a lot of h1b visa abuse. top 0.01% doesnt want to pay a lot for tech workers but the demand is high, so increase the supply of tech workers.
  - deleted 9y ago
    [deleted]
- DanielBMarkham 9y ago
  And in response to the overload of cheap labor, the central banks have been printing currency -- which means that people who own lots of equity end up with more money than they had before. (more money with the same assets means suddenly your assets are worth much more money) Also "hoarding" implies intent and capability. From all I can see, what's happening is the natural consequences of lifting billions of people out of poverty.
  - AlexandrB 9y ago
    > From all I can see, what's happening is the natural consequences of lifting billions of people out of poverty. Ah yes, billionaire CEOs and investors have lifted millions out of poverty and so the market has rewarded them with steadily increasing incomes. But wait! I thought the market only cared about profits!? Why would it reward them for lifting millions out of poverty?? Is it possible that the modern American political system has been bent to the exclusive benefit of the rich at the expense of everyone else? Nah.
    - 9y ago
Temasik 9y ago
that's why a lot of people opt-out of working people are not stupid if it's not worth their time they rather not do
ilaksh 9y ago
We know there are serious problems. I think the general direction we are going to try to solve them is a good start, but without severely improving the current plans, will be completely inadequate and repeat history in some ways. Many people have looked at the US' economic situation and compared it to China or other areas and predicted that the relatively high wealth and consumption in the US just cannot continue due to things like math (large deficits, low production of real goods, retired workers) and political pressure. The expectation for many is that there will eventually start to be a much more equitable distribution of resources and power towards places like China and/or Africa or India. This will mean there is significantly less real wealth for Americans. This, combined with the pressure to increase sustainability, means that the real world economy in the US is either not growing or growing very sluggishly. When the economy is not really growing, our current systems don't function well, people start looking to conserve and cooperate rather than compete so much. A general trend of increasing socialism is good for the US to some degree I believe, but won't solve the problems. What we have now are very large technopolies like Amazon, Google and Uber controlling large segments of our economy. Because the power is so concentrated, it is actually almost as bad as having government agencies control these things. Now people are talking about technocracy, which is essentially high-tech communism. I used to advocate for a Resource Based Economy and all of that stuff, and I still think RBE and technocratic-type ideas are a good starting point to think about solutions, but it seems like the thought process is stuck in the 50s. Having very large organizations controlling everything is not going to work out,no matter how much technology you add to it. The real problem for America is going to be less fossil fuels being able to be imported. Just because there is a big imbalance now, and unless we actually start nuking countries, within a few decades the demands will be such that those countries are forced to fight the US for those resources. In order to avoid WWII there has to be a plan that allows the US and other high-consumption countries to significantly reduce real-world consumption and still have functioning economies. The problem is that we are looking at these giant tech companies just becoming more official and entrenched. This does give us platforms for efficiency, but the fact that these are centralized organizations means big problems in terms of power distribution and freedom as well as the evolvability of systems. The solution is going to be technical upgrades to our social frameworks. A concrete example: Amazon has a streamlined website and logistic network. Instead of leaving this in the hands of one company, we need to come up with equivalent decentralized distributed protocols and systems that accomplish the same things without making Bezos the unofficial Minister of Distribution. I'm not saying it's easy, because we need systems with almost the same level of holistic integration and analysis on some levels that Amazon has, but still flexible enough to evolve and allow freedom. We are also going to need these advanced distributed but holistic on some level evolvable systems to be properly integrated into societal structures in order to properly measure and plan if we want to have something like universal basic income. Although I must also say that we need also to facilitate free competition more at the same time otherwise the technopolies strangleholds prevent most from rising past the basic level and participating.
the_cat_kittles 9y ago
if your rich as hell, give it away. if your voting, vote for people who want to tax the higher earners more and lower earners less. seems pretty reasonable to me
refurb 9y ago
It's important to note that the top 1% (pick whatever bracket you want) is not static. There is a lot of turnover. According to research from Cornell University, over 50 percent of Americans find themselves among the top 10 percent of income-earners for at least one year during their working lives. Over 11 percent of Americans will be counted among the top 1 percent of income-earners (i.e., people making at minimum $332,000 per annum) for at least one year. [1] https://www.cato.org/blog/high-turnover-among-americas-rich https://www.cato.org/blog/high-turnover-among-americas-rich
gehwartzen 9y ago
Nobody seems surprised when all wealth is accumulated by one player at the end of a game of Monopoly. The figures in the article should then also not surprise anyone. This is not some flow in our system, this is the natural progression of capitalism as designed.
- tobessebot 9y ago
  Right. The economy has a fixed amount of assets that generate money. Oh, wait.
- Deadolus 9y ago
  Monopoly was actually originally designed to demonstrate the "surprising" effect of accumulation of wealth by a single player (via rents). With the implied moral judgment that this is unfair/unjust: https://en.wikipedia.org/wiki/The_Landlord%27s_Game https://en.wikipedia.org/wiki/The_Landlord%27s_Game edit: via rents, not property taxes
flatfilefan 9y ago
Can the stagnation be caused by the oversupply of the labor that has started about the 1965 (the pill?) https://tradingeconomics.com/united-states/labor-force-participation-rate https://tradingeconomics.com/united-states/labor-force-parti...

135 points by rubicon33 9y ago

I don't want obfuscate correlation and causality but over the same time period we have seen the greatest bond bull market in history. The upshot is that the rich, more specifically the super rich, benefit disproportionately from lower/lowering interest rates.

gscott 9y ago

This is why I appreciate the $15 an hour minimum wage movement. Paying people more is better then taxing the rich more. The super-rich own congress but at the city and State level there is depending upon the state some room to grow wages. Higher wages equals fewer people on public subsidies which is good for cities and states.

aoeuasdf1 9y ago
Why not an earned income tax credit instead of an arbitrary cutoff at which point labor becomes worthless and illegal to sell?
sokoloff 9y ago
Higher minimum wages means fewer employed people on public subsidies. It's less clear to me that it makes for fewer people overall on subsidies. If the economic value of someone's labor is only $10/hr, they are less likely to be employed with a $15 minimum wage than a $9 minimum wage.
- WaxProlix 9y ago
  What labor has value below the required amount to exist as a human? I think the reasoning is - if it's worth being done, it's worth paying someone a meager living wage to have it done.
  - nopriorarrests 9y ago
    All labor which could be done by people in, say, Vietnam or Laos, has value below the required amount to exist as a human in USA. So, more and more of it.
  - sokoloff 9y ago
    That's the point: there is almost certainly work being done now for $10/hr that is not economically worth being done if the lower limit by statute is $15/hr. If someone is capable of holding down that $10/hr job but not capable of landing a $15/hr job, they are harmed by an increase in minimum wage in two ways: 1. The direct loss of job, income, status. 2. They are now shopping in an economy where the goods/services they purchase are likely to be marginally more expensive.
    - lordCarbonFiber 9y ago
      >If someone is not capable That mindset continues to be disgusting to me. Humans are some of the most impressive creatures on Earth; baring actual disability, you can teach them to do all sorts of things. I'm going to love watching the tech scene's existential panic over the next 2 decades as the population increasingly realizes that making CRUD apps and junk SAS is a job many Americans are more than capable of doing.
      - closeparen 9y ago
        "Capable" isn't a binary, lifelong condition. The remedy for incapability is generally considered to be education.
        lordCarbonFiber 9y ago
        The dirty secret is that there's a whole class of jobs, mostly decently paying white collar jobs, that have most of the training on the job. Hell most of the jobs that only require an undergraduate degree involve extensive on the job training; college is used as a weak signal for aptitude, interest, and class not really capability (this is the entire business model around coding boot-camps).
gehwartzen 9y ago
We need to just peg the minimum wage to inflation so we don't have to do this every decade or two.
- helthanatos 9y ago
  Minimum wage++ == Inflation++
  - jaggederest 9y ago
    Except that they've tracked that, and it doesn't. There was a nice recent natural experiment in Seattle, and the effect was negligible. Do you have any empirical evidence otherwise?
- matt_wulfeck 9y ago
  Ugh yeah. I'm glad I'm not the only one that hates this generalized fight for a number that's ultimately irrelevant.
ams6110 9y ago
The problem is that if you set a minimum wage that is higher than the real value of the work performed, it means those jobs just simply won't exist anymore.
- FLUX-YOU 9y ago
  The real value of a lot of products and services is more adjustable than your statement would lead someone to believe. Reality is absolutely not an efficient marketplace that immediately culls jobs and workers the moment a certain price of labor threshold is reached.
  - prostoalex 9y ago
    And yet ATMs, self-checkout lines and online shopping are a thing, and so are bank branch closures, retail bankruptcies and mall vacancy rates.
    - chillwaves 9y ago
      That is efficiency. We won't pay people to dig ditches when we have machines to do it. Efficiency is not the enemy, resource distribution is.
- enraged_camel 9y ago
  As far as I'm aware, none of the studies on increasing minimum wage have shown this.
  - johnnyb9 9y ago
    http://www.seattletimes.com/business/uw-study-finds-seattles-minimum-wage-is-costing-jobs/ http://www.seattletimes.com/business/uw-study-finds-seattles...
- yen223 9y ago
  In a world where CEOs can receive massive bonuses for driving a company to the ground, that's not easy to believe at all.
guelo 9y ago
Minimum wage costs are mostly passed on as increased prices paid by the middle class. The profits to the .01% class are barely affected.
- AlexandrB 9y ago
  This is entirely a consequence of economic policy set the by the US government. Not some immutable property of our world. As such it can be changed through, for example, a more progressive tax policy.
derping69 9y ago
Why stop there? Just make it 100$ and hour and everyone will be rich! Oh wait, arbitrary wage increases don't really work out in real life. https://fivethirtyeight.com/features/seattles-minimum-wage-hike-may-have-gone-too-far/ https://fivethirtyeight.com/features/seattles-minimum-wage-h... Seattle's socialist member of the city council fired the Unversity of Washington team after the results came out and hired an anti-capitalist professor from berkeley to ensure the study finds the right results. http://www.foxnews.com/politics/2017/06/29/seattle-commissions-new-minimum-wage-study-after-dismissing-first-results.html http://www.foxnews.com/politics/2017/06/29/seattle-commissio...
- baobrain 9y ago
  Note that your fivethirtyeight article even mentions a caveat to the study: > The paper’s findings are preliminary and have not yet been subjected to peer review. And the authors stressed that even if their results hold up, their research leaves important questions unanswered, particularly about how the minimum wage has affected individual workers and businesses. > Many economists, meanwhile, have acknowledged substantial uncertainty over the likely effects of the recent wage hikes. Most — though by no means all — past research has found that modest increases to the minimum wage have little impact on employment, and that if employers do eliminate jobs or cut back hours, those losses are dwarfed by the income gains enjoyed by the majority of workers who keep their jobs. But those studies were mostly based on minimum wages that were much lower than the ones beginning to take effect now. Even some liberal economists have expressed concern, often privately, that employers might respond differently to a minimum wage of $12 or $15, which would affect a far broader swath of workers than the part-time fast-food and retail employees who typically dominate the ranks of minimum-wage earners. Other economists said there simply wasn’t enough evidence to predict the impact of minimum wages that high. The new laws in Seattle and other cities, then, could provide an ideal testing ground. Additionally, here is a post by Jared Bernstein related to the minimum wage hike[0]. Here is the book mentioned in the aforementioned post [1]. Another analysis[2] finding that "Once this publication selection is corrected, little or no evidence of a negative association between minimum wages and employment remains." While I also do not know for certain the effects of a minimum wage, one of your sources fairly lists caveats and uncertainty for the study it mentions, and the other is fox news. [0] http://jaredbernsteinblog.com/the-minimum-wage-increase-and-the-cbos-job-loss-estimate/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JaredBernstein+%28Jared+Bernstein%29 http://jaredbernsteinblog.com/the-minimum-wage-increase-and-... [1] http://www.upjohn.org/publications/upjohn-institute-press/what-does-minimum-wage-do http://www.upjohn.org/publications/upjohn-institute-press/wh... [2] http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8543.2009.00723.x/abstract http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8543.2009....
deleted 9y ago
[deleted]
prostoalex 9y ago
If the minimum wage is a universal solution works for everybody, why are there so many exemptions and carveouts? Family-owned businesses like restaurants are exempt, self-employed individuals are exempt, piecemeal farm labor is exempt, babysitters and other "occasional" labor have their own exemption, tipped workers have a carveout. There's a special rate for minors because apparently nobody thinks high school kids will produce $15 of value per hour yet they still need to learn the ropes of the business and personal responsibility somehow.

sokoloff 9y ago

1% real income growth per year is still fairly substantial IMO. Over a 41 year career, your purchasing power goes up by half, yet that's treated as "stagnating" which implies something far worse than 1% per year.

johngarrison 9y ago
Not if inflation is 3-4% per year.
- sokoloff 9y ago
  Real income growth is, by definition, after accounting for inflation. The opposing term is "nominal income growth" which does not account for inflation.
- kevinnk 9y ago
  "Real income growth" is the growth in income post inflation.
- WaxProlix 9y ago
  He said 'real' income growth, which I take to mean adjusted for inflation and maybe also various cost of living increases/decreases.
- Sophistifunk 9y ago
  And even less so if "inflation" has been redefined specifically to be lower, in order to reduce the amount of real money that needs to go into social security.
mdorazio 9y ago
I think the nuance here is that it's stagnating relative to overall income growth. I.e. 1% isn't terrible if everyone is getting roughly 1%. But that's not the situation - the economy is growing more rapidly than that, but only a tiny percentage of people are seeing big gains for their own incomes.
- 9y ago

Animats 9y ago

We know.

jkroso 9y ago

So what caused the change in 1973?

atlih 9y ago
Financialization of the economy. The fall of Bretton-Woods. The fall of the gold standard. The repeal of Glass-Steagall.
- viridian 9y ago
  >The fall of the gold standard. >The fall of Bretton-Woods. 1971, not 1973 >The repeal of Glass-Steagall. 1999, not 1973
  - atlih 9y ago
    Macroeconomic changes take longer than just a few hours to have an impact. I included Glass-Steagall repeal because merely focusing on 1970's and nothing that happened there after is myopic
mac01021 9y ago
Here's an article which argues that wages have not been growing in line with productivity since 1973 because, since then, workers have been compensated with fringe benefits of increasing value, in lieu of greater wages. [http://www.heritage.org/jobs-and-labor/report/productivity-and-compensation-growing-together http://www.heritage.org/jobs-and-labor/report/productivity-a...] I'm sure that this is not the whole story, but I bet it's a big part of it.
flatfilefan 9y ago
Could it be an oversupply of labor that was caused by the availability of the pill and the following growing immigration asking for lower wages instead of incumbents https://tradingeconomics.com/united-states/labor-force-participation-rate https://tradingeconomics.com/united-states/labor-force-parti...

victor106 9y ago

This quote by the fed chairman during the Great Depression, Marriner S. Eccles, seems apt "As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants.In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped."

sjg007 9y ago
This is true even more so today.
WalterBright 9y ago
The GD was caused in large part by the Fed's poor understanding of economics. I wouldn't take what the chairman of the time said too seriously.

ekiminmo 9y ago

Forgive my ignorance, but why wouldnt we expect to see exponential growth in wealth, and as a result a greater discepency between the top 1% and everyone else?

quickben 9y ago
Technically we would, but not at the cost of such discrepancy, as it usually had a violent ending in the past. Costing lives and entire countries social stabilities.

cs702 9y ago

The title and the tone of the OP are a bit inflammatory for my taste, but the data and graphs from the research paper are eye-opening: most economic growth in the US over the past three decades has indeed gone to the top 1%, and particularly to the top 0.01%, leaving everyone else behind.[1] Here's the money shot: https://cdn.vox-cdn.com/uploads/chorus_asset/file/9013427/Screenshot_2017_08_08_12.34.47.png https://cdn.vox-cdn.com/uploads/chorus_asset/file/9013427/Sc... However, rather than debate the causes of this divergence, or accuse "the rich" of anything, we should instead be coming up with WORKABLE SOLUTIONS for increasing the income -- and therefore the spending power -- of the masses in a sustainable manner. I imagine a tremendous amount of pent-up consumer demand would be unleashed, because THE MORE THE MASSES EARN, THE MORE THEY SPEND ON PRODUCTS AND SERVICES, including those created by entrepreneurs. [1] Here's the paper: http://gabriel-zucman.eu/files/PSZ2017.pdf http://gabriel-zucman.eu/files/PSZ2017.pdf

Taek 9y ago
The core of the problem isn't any sort of tax setup, it's the foundation of our economy. The first employee of a startup usually gets less than 2% equity. Apple made $700k per employee in a single quarter. Our whole economy is set up to funnel money to the top. We need a new way of structuring corporations to change that.
- deegles 9y ago
  Or create a more widespread culture of stock ownership.
  - gehwartzen 9y ago
    This is the key. For an economic system based on capitalism we have surprisingly few 'real' capitalists. For the vast majority of people who own company equity it is tied up in retirement funds. Our system is designed to concentrate money in the hands of those that have it to begin with. As soon as more workers outside of startups start earning equity in the companies they work for we will see the income distribution change. And I suspect we would see a massive boom in worker productivity as they directly realize the financial gains. "In terms of types of financial wealth, in 2013 the top one percent of households had 49.8% of all privately held stock, 54.7% of financial securities, and 62.8% of business equity. The top ten percent had 84% to 94% of stocks, bonds, trust funds, and business equity, and almost 80% of non-home real estate."

aiyodev 9y ago

People who buy this garbage have no perspective of how much the federal government taxes and spends. Everything discussed here is insignificant in the scope of the federal agencies spending $11 billion a day. Personal incomes are less than their rounding errors.

tamcap 9y ago
I'm curious, in what sense is it insignificant? Quoting from (likely faulty) memory, 30% of federal budget comes from income tax directly, and the another 20% or so is covered by employer associated employment taxes. So out of that $11bn a day, Americans pay in $6.5bn every day. If we were to adequately tax the 0.01%, the budget would feel the difference.

pg_bot 9y ago

Why is there no talk about the dramatic increase in the supply of workers over the last 40 years? Globalization has brought millions out of poverty and those people are now competing with Americans when they wouldn't before. It makes sense from an economic standpoint that the price of labor would not rise when the supply is increased and is likely the cause of income inequality in the US.

gottam 9y ago
pretty much this. its why there was a lot of h1b visa abuse. top 0.01% doesnt want to pay a lot for tech workers but the demand is high, so increase the supply of tech workers.
- deleted 9y ago
  [deleted]
DanielBMarkham 9y ago
And in response to the overload of cheap labor, the central banks have been printing currency -- which means that people who own lots of equity end up with more money than they had before. (more money with the same assets means suddenly your assets are worth much more money) Also "hoarding" implies intent and capability. From all I can see, what's happening is the natural consequences of lifting billions of people out of poverty.
- AlexandrB 9y ago
  > From all I can see, what's happening is the natural consequences of lifting billions of people out of poverty. Ah yes, billionaire CEOs and investors have lifted millions out of poverty and so the market has rewarded them with steadily increasing incomes. But wait! I thought the market only cared about profits!? Why would it reward them for lifting millions out of poverty?? Is it possible that the modern American political system has been bent to the exclusive benefit of the rich at the expense of everyone else? Nah.
  - 9y ago

Temasik 9y ago

that's why a lot of people opt-out of working people are not stupid if it's not worth their time they rather not do

ilaksh 9y ago

We know there are serious problems. I think the general direction we are going to try to solve them is a good start, but without severely improving the current plans, will be completely inadequate and repeat history in some ways. Many people have looked at the US' economic situation and compared it to China or other areas and predicted that the relatively high wealth and consumption in the US just cannot continue due to things like math (large deficits, low production of real goods, retired workers) and political pressure. The expectation for many is that there will eventually start to be a much more equitable distribution of resources and power towards places like China and/or Africa or India. This will mean there is significantly less real wealth for Americans. This, combined with the pressure to increase sustainability, means that the real world economy in the US is either not growing or growing very sluggishly. When the economy is not really growing, our current systems don't function well, people start looking to conserve and cooperate rather than compete so much. A general trend of increasing socialism is good for the US to some degree I believe, but won't solve the problems. What we have now are very large technopolies like Amazon, Google and Uber controlling large segments of our economy. Because the power is so concentrated, it is actually almost as bad as having government agencies control these things. Now people are talking about technocracy, which is essentially high-tech communism. I used to advocate for a Resource Based Economy and all of that stuff, and I still think RBE and technocratic-type ideas are a good starting point to think about solutions, but it seems like the thought process is stuck in the 50s. Having very large organizations controlling everything is not going to work out,no matter how much technology you add to it. The real problem for America is going to be less fossil fuels being able to be imported. Just because there is a big imbalance now, and unless we actually start nuking countries, within a few decades the demands will be such that those countries are forced to fight the US for those resources. In order to avoid WWII there has to be a plan that allows the US and other high-consumption countries to significantly reduce real-world consumption and still have functioning economies. The problem is that we are looking at these giant tech companies just becoming more official and entrenched. This does give us platforms for efficiency, but the fact that these are centralized organizations means big problems in terms of power distribution and freedom as well as the evolvability of systems. The solution is going to be technical upgrades to our social frameworks. A concrete example: Amazon has a streamlined website and logistic network. Instead of leaving this in the hands of one company, we need to come up with equivalent decentralized distributed protocols and systems that accomplish the same things without making Bezos the unofficial Minister of Distribution. I'm not saying it's easy, because we need systems with almost the same level of holistic integration and analysis on some levels that Amazon has, but still flexible enough to evolve and allow freedom. We are also going to need these advanced distributed but holistic on some level evolvable systems to be properly integrated into societal structures in order to properly measure and plan if we want to have something like universal basic income. Although I must also say that we need also to facilitate free competition more at the same time otherwise the technopolies strangleholds prevent most from rising past the basic level and participating.

the_cat_kittles 9y ago

if your rich as hell, give it away. if your voting, vote for people who want to tax the higher earners more and lower earners less. seems pretty reasonable to me

refurb 9y ago

It's important to note that the top 1% (pick whatever bracket you want) is not static. There is a lot of turnover. According to research from Cornell University, over 50 percent of Americans find themselves among the top 10 percent of income-earners for at least one year during their working lives. Over 11 percent of Americans will be counted among the top 1 percent of income-earners (i.e., people making at minimum $332,000 per annum) for at least one year. [1] https://www.cato.org/blog/high-turnover-among-americas-rich https://www.cato.org/blog/high-turnover-among-americas-rich

gehwartzen 9y ago

Nobody seems surprised when all wealth is accumulated by one player at the end of a game of Monopoly. The figures in the article should then also not surprise anyone. This is not some flow in our system, this is the natural progression of capitalism as designed.

tobessebot 9y ago
Right. The economy has a fixed amount of assets that generate money. Oh, wait.
Deadolus 9y ago
Monopoly was actually originally designed to demonstrate the "surprising" effect of accumulation of wealth by a single player (via rents). With the implied moral judgment that this is unfair/unjust: https://en.wikipedia.org/wiki/The_Landlord%27s_Game https://en.wikipedia.org/wiki/The_Landlord%27s_Game edit: via rents, not property taxes

flatfilefan 9y ago

Can the stagnation be caused by the oversupply of the labor that has started about the 1965 (the pill?) https://tradingeconomics.com/united-states/labor-force-participation-rate https://tradingeconomics.com/united-states/labor-force-parti...