11 ms·

Politicians caused a pay ‘collapse’ for the bottom 90 percent, researchers say

79 points by WalterSear 8y ago

kevin_b_er 8y ago
This is the standard of Trickle-Down Economics. The goal is to concentrate money at the top and permit a small portion to trickle down.
- manfredo 8y ago
  Interestingly, the US States with the highest levels of inequality often have some of the most progressive taxation and government policies. New York and Connecticut at the top. Alaska, Utah, and Wyoming at the bottom: https://www.zippia.com/advice/states-highest-lowest-income-inequality/ https://www.zippia.com/advice/states-highest-lowest-income-i...
  - jvanderbot 8y ago
    No sense adopting the progressive tax codes when inequality isn't a huge factor vs Progressive taxation causes income inequality
  - BoiledCabbage 8y ago
    I haven't dug into your stats, but Alaska has the 46th smallest economy and Wyoming the 49th. They don't really have enough of an economy by US standards to have high wealth disparity. New York is #3. Connecticut is and exception at #23, but I wouldn't be surprised if a lot of it is finance commuters from Wall St. In New York. While there are exceptions, that list seems to correlate pretty well with the list of states ranked by GDP. While probably intentionally non committal, I think your post is still a bit misleading.
    - manfredo 8y ago
      You are indeed correct that inequality is correlated with GDP. But interestingly, it's also correlated with median GDP per capita (Connecticut is #1 there iirc). Basically, it counters the assumption that "higher inequality == worse condition for the average folk". I saw a graph that plotted both together, I'll see if I can dig it up.
      - mcguire 8y ago
        "Median GDP per capita?" Do you mean median income?
    - arminiusreturns 8y ago
      In that case I think comparing Texas would be a good fit instead perhaps?
  - _archon_ 8y ago
    Everywhere has poor people, but places with progressive taxation and gov policies have lots of rich people too.
- tick_tock_tick 8y ago
  We've never tried Trickle-Down Economics as a single country. For as long as it's been a driving economic policy globalization has meant that the bottom is a 3rd world country somewhere rather then whichever country was practicing it.
- isoskeles 8y ago
  Which would be a problem if the economy were a zero-sum game, but it's not, so the share of wealth for the X percent isn't extremely meaningful. I don't see a reason to say it should be frozen in time at whatever level it was in 1978 or progress to a utopia where every single person earns the same (or where every X percentile of people owns exactly X percent of the wealth). This isn't to say that the current system is helping people, but pointing at this particular chart doesn't seem to do any justice to the idea of why life might be worse for the average US citizen. We could just as well reverse course and have a chart where income tends toward total "equality" and still make the world a living hell. I believe in our ability to do that.
chrisco255 8y ago
How is there no mention of globalization whatsoever, as a contributing factor?
- philipkglass 8y ago
  The original report cites trade effects. "Finally, economic theory and evidence clearly indicates that growing trade with low-wage countries should boost wage inequality in the United States and lower wages for workers without a four-year college degree. This type of trade grew significantly since the 1970s. Imports from low-wage countries were equal to 0.7 percent of U.S. GDP in 1973, but 6.3 percent in 2016." From the original by the Economic Policy Institute here: https://www.epi.org/publication/what-labor-market-changes-have-generated-inequality-and-wage-suppression-employer-power-is-significant-but-largely-constant-whereas-workers-power-has-been-eroded-by-policy-actions/ https://www.epi.org/publication/what-labor-market-changes-ha... This part of the WaPo article seems at odds with that original report: "While many economists pin much of the blame for wage stagnation on impersonal market forces, such as free trade and technological change, EPI’s Josh Bivens and Heidi Shierholz contend that specific policy decisions — including efforts to weaken unions, the decay of the minimum wage and monetary policy that prioritizes low inflation over full employment — are responsible for tilting the balance of power away from workers and toward their employers." That sentence implies that the EPI report excludes trade as a cause but the EPI report does no such thing, even if it doesn't highlight trade first and foremost.
- tick_tock_tick 8y ago
  People don't like to talk about how globalization destroyed labors power in the USA.
- stmfreak 8y ago
  Because, somehow, more globalization will be sold as the cure.
8bitsrule 8y ago
1979 was followed by what Bush 1 termed 'Voodoo economics'. So yah, the 'teflon president' led the way.
- charlesism 8y ago
  https://youtu.be/s7VD8kjqzpU https://youtu.be/s7VD8kjqzpU
known 8y ago
Sounds like https://en.wikipedia.org/wiki/Protection_money https://en.wikipedia.org/wiki/Protection_money
corporateguy6 8y ago
Not to sound too political here, but somehow the Democratic Party is paradoxically known as the party “of the people”. They are staunchly for open borders and oppose the current administrations trade policies. Both of these stances completely oppose the American worker and their ability to complete for jobs and good wages.
CryptoPunk 8y ago
https://www.influencewatch.org/non-profit/economic-policy-institute/ https://www.influencewatch.org/non-profit/economic-policy-in... >>Labor unions provided over $1.6 million to EPI in their 2015 fiscal years. The top union funders include the American Federation of Teachers; National Education Association; American Federation of State, County, and Municipal Employees (AFSCME); Service Employees International Union (SEIU); the AFL-CIO; the United Auto Workers National Capital Council; and the United Steelworkers, which each provided at least $100,000 to EPI.[18] It's no surprise the EPI report concludes that the cause of wage stagnation is politicians "weakening unions" (lightening restrictions that prevent people from contracting freely). In reality, restrictions imposed from the 1930s through to the 1950s, to strengthen unions, have played a major role in reducing the growth of the industrial sector and the high-paying jobs that come with it. These anti-free-market laws are what created the structural forces that led to a large part of the entire manufacturing supply chain being outsourced. Also, the WP's writers and editors are unionized, and benefit from these restrictive laws.

79 points by WalterSear 8y ago

This is the standard of Trickle-Down Economics. The goal is to concentrate money at the top and permit a small portion to trickle down.

manfredo 8y ago
Interestingly, the US States with the highest levels of inequality often have some of the most progressive taxation and government policies. New York and Connecticut at the top. Alaska, Utah, and Wyoming at the bottom: https://www.zippia.com/advice/states-highest-lowest-income-inequality/ https://www.zippia.com/advice/states-highest-lowest-income-i...
- jvanderbot 8y ago
  No sense adopting the progressive tax codes when inequality isn't a huge factor vs Progressive taxation causes income inequality
- BoiledCabbage 8y ago
  I haven't dug into your stats, but Alaska has the 46th smallest economy and Wyoming the 49th. They don't really have enough of an economy by US standards to have high wealth disparity. New York is #3. Connecticut is and exception at #23, but I wouldn't be surprised if a lot of it is finance commuters from Wall St. In New York. While there are exceptions, that list seems to correlate pretty well with the list of states ranked by GDP. While probably intentionally non committal, I think your post is still a bit misleading.
  - manfredo 8y ago
    You are indeed correct that inequality is correlated with GDP. But interestingly, it's also correlated with median GDP per capita (Connecticut is #1 there iirc). Basically, it counters the assumption that "higher inequality == worse condition for the average folk". I saw a graph that plotted both together, I'll see if I can dig it up.
    - mcguire 8y ago
      "Median GDP per capita?" Do you mean median income?
  - arminiusreturns 8y ago
    In that case I think comparing Texas would be a good fit instead perhaps?
- _archon_ 8y ago
  Everywhere has poor people, but places with progressive taxation and gov policies have lots of rich people too.
tick_tock_tick 8y ago
We've never tried Trickle-Down Economics as a single country. For as long as it's been a driving economic policy globalization has meant that the bottom is a 3rd world country somewhere rather then whichever country was practicing it.
isoskeles 8y ago
Which would be a problem if the economy were a zero-sum game, but it's not, so the share of wealth for the X percent isn't extremely meaningful. I don't see a reason to say it should be frozen in time at whatever level it was in 1978 or progress to a utopia where every single person earns the same (or where every X percentile of people owns exactly X percent of the wealth). This isn't to say that the current system is helping people, but pointing at this particular chart doesn't seem to do any justice to the idea of why life might be worse for the average US citizen. We could just as well reverse course and have a chart where income tends toward total "equality" and still make the world a living hell. I believe in our ability to do that.

chrisco255 8y ago

How is there no mention of globalization whatsoever, as a contributing factor?

philipkglass 8y ago
The original report cites trade effects. "Finally, economic theory and evidence clearly indicates that growing trade with low-wage countries should boost wage inequality in the United States and lower wages for workers without a four-year college degree. This type of trade grew significantly since the 1970s. Imports from low-wage countries were equal to 0.7 percent of U.S. GDP in 1973, but 6.3 percent in 2016." From the original by the Economic Policy Institute here: https://www.epi.org/publication/what-labor-market-changes-have-generated-inequality-and-wage-suppression-employer-power-is-significant-but-largely-constant-whereas-workers-power-has-been-eroded-by-policy-actions/ https://www.epi.org/publication/what-labor-market-changes-ha... This part of the WaPo article seems at odds with that original report: "While many economists pin much of the blame for wage stagnation on impersonal market forces, such as free trade and technological change, EPI’s Josh Bivens and Heidi Shierholz contend that specific policy decisions — including efforts to weaken unions, the decay of the minimum wage and monetary policy that prioritizes low inflation over full employment — are responsible for tilting the balance of power away from workers and toward their employers." That sentence implies that the EPI report excludes trade as a cause but the EPI report does no such thing, even if it doesn't highlight trade first and foremost.
tick_tock_tick 8y ago
People don't like to talk about how globalization destroyed labors power in the USA.
stmfreak 8y ago
Because, somehow, more globalization will be sold as the cure.

8bitsrule 8y ago

1979 was followed by what Bush 1 termed 'Voodoo economics'. So yah, the 'teflon president' led the way.

charlesism 8y ago
https://youtu.be/s7VD8kjqzpU https://youtu.be/s7VD8kjqzpU

known 8y ago

Sounds like https://en.wikipedia.org/wiki/Protection_money https://en.wikipedia.org/wiki/Protection_money

corporateguy6 8y ago

Not to sound too political here, but somehow the Democratic Party is paradoxically known as the party “of the people”. They are staunchly for open borders and oppose the current administrations trade policies. Both of these stances completely oppose the American worker and their ability to complete for jobs and good wages.

CryptoPunk 8y ago

https://www.influencewatch.org/non-profit/economic-policy-institute/ https://www.influencewatch.org/non-profit/economic-policy-in... >>Labor unions provided over $1.6 million to EPI in their 2015 fiscal years. The top union funders include the American Federation of Teachers; National Education Association; American Federation of State, County, and Municipal Employees (AFSCME); Service Employees International Union (SEIU); the AFL-CIO; the United Auto Workers National Capital Council; and the United Steelworkers, which each provided at least $100,000 to EPI.[18] It's no surprise the EPI report concludes that the cause of wage stagnation is politicians "weakening unions" (lightening restrictions that prevent people from contracting freely). In reality, restrictions imposed from the 1930s through to the 1950s, to strengthen unions, have played a major role in reducing the growth of the industrial sector and the high-paying jobs that come with it. These anti-free-market laws are what created the structural forces that led to a large part of the entire manufacturing supply chain being outsourced. Also, the WP's writers and editors are unionized, and benefit from these restrictive laws.