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Typical U.S. full-time salary would be $102k if wages had kept up with growth
- Pfhreak 6y agoThe title threw me a bit, i was expecting an article on redistribution of existing wealth. The thesis is that if wage growth kept pace with GDP growth, the median salary would be 102k. Wages for the bottom 90% have stayed fairly constant, while the top ten percent have quadrupled their wages.
- CPLX 6y agoLoosely speaking it’s the same concept. The point is that the gains as the economy grows are nearly all going to the same small group of people.
- gridlockd 6y agoIt's not the same concept at all, it's an undue conflation of GDP growth, income and income inequality. (See my other reply)
- pnutjam 6y agoThat's the GOP plan, classic horse and sparrow economic policy (old name for "trickle down").
- 082349872349872 6y agoFor those unfamiliar with "horse and sparrow", an admittedly rural metaphor: http://2.bp.blogspot.com/-nHfCt5rEDOI/UVqr2tUVvpI/AAAAAAAARAI/rWeqaz4yKe4/s800/redwingsma1617.jpg http://2.bp.blogspot.com/-nHfCt5rEDOI/UVqr2tUVvpI/AAAAAAAARA... https://www.chronofhorse.com/forum/forum/discussion-forums/around-the-farm/9812354-what-creature-is-constantly-scattering-the-manure-around https://www.chronofhorse.com/forum/forum/discussion-forums/a...
- randomdata 6y agoWhich makes sense, I suppose, as they are the ones who are responsible for the mechanization/automation that allowed productivity to continue to grow beyond the natural capability of humans alone. They decided to invest in that technology explicitly for the added gains it would bring them personally. There was once a promise that schooling would provide the path to allow everyone to contribute their own automation to the economy, allowing everyone’s income to continue to increase with the productivity gains they created, but it hasn’t played out in practice. The burger flipper still flips burgers rather than focusing on developing a burger flipping machine.
- ovi256 6y agoA substantial part of that can be explained by the decrease in labor force participation. A lower number of wage earning workers must support more non-earners, so various redistribution mechanisms do that.
- clircle 6y agoThe first chart is kind of shocking to me. Look at the 95th percentile line. Is it really the case that in 2018, 1 in 20 Americans was making > ~190k? Are these household incomes?
- Amfy 6y agoHas to be household income, or tech workers working two tech jobs?
- giantg2 6y agoI think they are individual. That would be the top 5%, which I think makes sense based on other numbers I've seen.
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- projektfu 6y agoIt appears to be full time, prime age workers. https://www.rand.org/content/dam/rand/pubs/working_papers/WRA500/WRA516-1/RAND_WRA516-1.pdf https://www.rand.org/content/dam/rand/pubs/working_papers/WR...
- tyingq 6y agoI assume some of this is related to all of the manufacturing jobs disappearing. I made $15/hour ($31k/year) working in a lightbulb factory in 1985, at the lowest entry level, with nothing but a high school diploma. That would be $75k inflation adjusted to today's dollars.
- asdasfasdfasdf 6y agoAre there comparable jobs in the country today? Entry level with no experience for $75k/year? Seems like the norm is more like $31k without adjusting for inflation?
- giantg2 6y agoI generally agree, but I think we also have to look at total comp. Healthcare costs have risen faster than inflation, eating into take-home pay.
- onetimemanytime 6y ago>>Healthcare costs have risen faster than inflation, eating into take-home pay. Who's fault it is? The government has the power to change all that. You cannot pay your rent with a copy of your health insurance bill. I wonder if people still pay way more out of pockets expenses for healthcare now, despite having super-expensive insurance.
- giantg2 6y agoI'm just saying that total compensation is a better comparison of employee compensation over time. It would also depend on the tax structure to support healthcare as to whether that helps the total comp.
- qppo 6y agoIt wouldn't surprise me if an aging and extremely unhealthy population was a contributing factor. We have a 42% prevalence of obesity among adults (1), median age grew in the new millennium (2). And ironically, smokers die so fast that they cost less money than non smokers to support in the healthcare system, so the decline in tobacco usage has probably contributed to rising insurance costs. I guess my point is that there are tangible changes to our society that contribute to skyrocketing healthcare costs. (1) https://www.cdc.gov/obesity/data/adult.html https://www.cdc.gov/obesity/data/adult.html (2) https://www.statista.com/statistics/241494/median-age-of-the-us-population/ https://www.statista.com/statistics/241494/median-age-of-the...
- MrPowers 6y agoAnalyzing some statements from the article: * "It's easier to achieve the American Dream in China, South Africa, and Brazil than it is in the US." South Africa and Brazil are two of the most unequal countries in the world as measured by the Gini Coefficient. I think the author is reading the data backwards. * "as US billionaires got $637 billion richer since March" - seems like this is cherry picking a market low. If you start the year with 100, it goes down to 60 in March, and is currently 120, I'd say it's more accurate to say your worth has gone up 20% I agree with Shiller that growing inequality is a big problem facing the US: https://www.youtube.com/watch?v=NwhUN42BGE8&ab_channel=sssirob https://www.youtube.com/watch?v=NwhUN42BGE8&ab_channel=sssir.... This article is a low quality analysis in my opinion.
- bryanrasmussen 6y ago>South Africa and Brazil are two of the most unequal countries in the world as measured by the Gini Coefficient. maybe using hyperbole for rhetorical effect.
- MrPowers 6y agoAccording to The World Bank Data, South Africa has the highest Gini in the world: https://data.worldbank.org/indicator/SI.POV.GINI?most_recent_value_desc=true https://data.worldbank.org/indicator/SI.POV.GINI?most_recent... Brazil is up there. Some of the data is old, let me know if you have a better source. I wasn't trying to exaggerate.
- bryanrasmussen 6y agoI meant that maybe the original article was trying to exaggerate to make a rhetorical point about U.S inequality.
- aaaxyz 6y ago> "It's easier to achieve the American Dream in China, South Africa, and Brazil than it is in the US." South Africa and Brazil are two of the most unequal countries in the world as measured by the Gini Coefficient. I think the author is reading the data backwards. Gini Coefficient and social mobility aren't perfectly correlated. I.e. imagine a society where people's accumulated lifetime wealth is highly unequal but where a 100% inheritance tax effectively resets familial wealth every generation.
- throwanem 6y agoWhen even a national security think tank established to help manage the existential risks of the Cold War says that income inequality is a problem...
- scarface74 6y agoMilitary leadership also expresses views that go against conservative orthodoxy. - they believe climate change is a real threat. - they are constantly trying to get rid of weapons and military bases they don’t need to save money. But the civilian leadership won’t allow them because of loss jobs. - they are constantly warning that the deficits caused in part by military spending put the US at risk. While this may seem counterintuitive, but most wasteful military spending isn’t done for the benefit of the military or the enlisted. It’s done to support the private military industrial complex.
- dx87 6y agoThe Iraq War was also a big example. Military leadership wanted 3-4x the troops and to immediately start working with the existing Iraqi military and government in order to secure the country and get it back on its feet. Instead, the civilian leadership only sent in enough troops for a military victory and disbanded the Iraqi military and government because they believed America knows best and didn't need help from the locals.
- scarface74 6y agoI’ve never been in the military. But looking from the outside and having interacted with a lot of military veterans, it seems like all of the issues with the current US military is because of the corrupt, idealogical civilian leadership. This isn’t meant to be partisan. I think Bush I executed the first Iraq war well.
- phenkdo 6y agoMany (most?) of us business-founders/owners do worry about inequalities, please don't label us all as a heartless one-track automatons. There are many entrepreneurs/CEOs who would like universal healthcare, justice system reform, and some form of UBI.
- gridlockd 6y agoThe headline is a non-sequitur of the finding, which says that if GDP growth was equal to salary growth, the median salary would be $102,000. That has nothing to do with income inequality. GDP itself is a problematic figure, but its relation to income is rather loose. If everybody earned the mean income, that would be perfect income equality. For the US, mean household income is around $72,000, whereas median household income is around $62,000. https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United...
- projektfu 6y agoIt appears to be about prime age, full time workers. This could result in a higher number than mean household income because it excludes retired households, those with significant non work income, unemployed households, etc. https://www.rand.org/content/dam/rand/pubs/working_papers/WRA500/WRA516-1/RAND_WRA516-1.pdf https://www.rand.org/content/dam/rand/pubs/working_papers/WR...
- gridlockd 6y agoI don't see anything wrong with the paper, just with the conclusion of the BI article. If you look at table C1b, to keep up with 118% GDP growth, you would have to be in the top 1%, in which case your income growth would've been 138.8%. We can then see that redistribution of those extra 20% among the bottom 99% could not possibly turn a median of $50,000 into a median of $102,000.
- projektfu 6y agoIn your calculation using that table you are leaving out the income of the top 1%. The 99%ile represents the income of the top of "the 99%". In table 2.b, in the main article, you get a taste of the size of the 1% income, which is on average twice the 99%ile. In the paper I didn't find figures that I could use to reconstruct how much money would have to end up in someone else's hands to achieve the counterfactual, just that it's obvious that the 1% average going from $1,384,000 to $630,000 would represent a lot on its own. The other groups above the median would also have received less of a share. Also note that it may have happened that between 2007 and 2018 the 90-98%iles may have already received some of the money that used to accrue to the 99%ile, who knows why. I think BI properly quoted the article, but there would be a lot of work to do to contextualize the whole thing. If growth were more shared, would there be more or less growth? That depends on whether the top 1% are actually creating GDP or whether they are just better at capturing the income from it. If there was a system in place that had paid the bottom 98% more, would there have been more inflation, eating away at real GDP growth? What does that big swing from 2007 to 2018 really mean for the 99%ile in C1b, not reflected in C1a? Honestly, this paper raises more questions to me than it answers.
- abeppu 6y agoI get that the "top 1% average" will be pulled up by extreme cases. But I'm surprised at the divergence in the graph between the 99th percentile and even the 95th percentile. Even at the beginning of the period, the difference between the 99p and 95p looks larger than between the 95p and 25p. A mostly unrelated thought is how stable is the membership in each quantile bucket over time? This is maybe a tone deaf question, bc clearly income inequality is very extreme. But for a tech readership, especially those in startups ... One could earn near the 95p level most years, but when you finally liquidate stock that took you years to acquire, your income can jump up for a year. Similarly, if you're a high earner but you take a year away from work to travel and think, your income drops precipitously. If some fraction of the top k% in any given year were people with infrequent windfalls (selling real estate which appreciated over decades, inheritance, maybe legal settlements?), and some fraction of the lower quantiles is people who are temporarily not working ... then the income distribution is a combination of long term inequality between people, and variability across people's lifetime, which might be hard to disentangle.
- PaulDavisThe1st 6y agoEconomic mobility in the US is the lowest or 2nd lowest among all OECD nations. I think this means that what anecdotal stories one can tell or find about economic mobility ("Look! Kid from poor impoverished rural town made big bugs as a software developer!" or whatever), the more important reality is that Americans do not move between quartiles or quintiles as much as people in other OECD countries, let alone as much as they like to imagine happens. [ Edit: as of 2020, the US is roughly middle of the pack for economic mobility among OECD nations, and was not lowest or 2nd lowest, but 4th lowest in 2012 ]
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- jandrewrogers 6y agoI would caution that "economic mobility" is a term of art that does not mean what most people intuit it to mean, usually conflating it with the ease of improving absolute financial position. You can easily improve your absolute financial position and still have "low mobility", and you can have "high mobility" while having minimal opportunity to improve your financial position. A limitation of economic mobility is that it is only comparable between countries with similar geographic/population size and with similar levels of wage compression. The US is an outlier in all three terms. Average people want the opportunity to significantly improve their financial position, and economic mobility doesn't measure that. As a country, the US outperforms most other industrialized countries at the former.
- baron816 6y agoDoes this study account for all of the women that have entered the workforce? Or the greater access to jobs blacks and other minorities have gained in this time. Or the influx of immigrants? A lot of labor activists complain about “greedy corporations moving jobs to low wage countries.” What does replacing one $50k job here with 10 $5k job in India do to inequality? In a global economy, I don’t think you can have a serious conversation about inequality unless you talk about global inequality. I don’t know what the data there says, but there’s no question that there are far fewer people living in extreme poverty now than 50 years ago. Part of that is driven by some (low skilled) Americans living a slightly less cozy lifestyle.
- ChomskyNormal4m 6y ago> Or the greater access to jobs blacks and other minorities have gained in this time. The black unemployment rate - 13% according to the Federal Reserve - is higher than it was a half century ago.
- refurb 6y agoBlack unemployment was 5% back in November. Lowest in 40 years. Of course it went up when the gov’t said businesses have to shutdown.
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- matthewmacleod 6y agoThis is wildly misleading because it’s obviously a terrible time to make any useful historical comparisons. At the end of 2019, unemployment rate among Black people in the US was about 5.5%.
- ChomskyNormal4m 6y agoIf saying "now" is "terribly misleading" - the Federal Reserve says black unemployment was higher from 2010 to 2012 then it is now.
- ffggvv 6y agohonest question for those whose main concern in life is income inequality: Which of the following 2 example worlds would you prefer: 1. everyone makes exactly 50k (0 inequality) 2. median income is 55k but there is vast inequality.
- zdw 6y agoNot enough information. It greatly depends on what money is required to live a reasonable life. In one of these scenarios, is child poverty eliminated? People going bankrupt because of medical bills? Are there predatory lending practices and pervasive rent seeking monopolies? In general people concerned with inequality are worried about people at the low end of the income spectrum not being able to survive and thrive, not abstract dollar amounts which don't equate into purchasing power for someone's next meal or monthly dose of prescriptions. Figure out how to expand the social safety net on the low end, and people will care far less about people on the high end making fairly obscene amounts of money, as long as they don't abuse that into extending their power and privilege.
- ffggvv 6y agothen why is virtually all of the rhetoric focused on the 1% and jeff bezos and taxing the rich? i don’t hear any concern for the poor, only hatred of the rich
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- defterGoose 6y agoWhich would you prefer to be true? 1. Out understanding of the differences between capitalism and socialism are freeze-framed in the 1950s, or 2. Our heuristics are updatable as history unfolds.
- matthewmacleod 6y ago
- AlexTWithBeard 6y agoA somewhat off topic question, but every time liberte, egalite, fraternite is discussed I want to ask a question: what do we do with stupid and lazy people? And then for extra credit: what do we do with the children if stupid and lazy people?
- mareko 6y agoThis is good argument for increasing minimum wage. The federal minimum wage is still only $7.25. Inflation adjusted, it has been decreasing since 1968 [1]. Once you factor in rising healthcare spending, which has gone up by 5.5x in the same timeframe (inflation adjusted) [2], the problem is further compounded. Given the high GDP growth in the same time frame, it feels like a big miss by the federal government. 1. https://www.cnn.com/interactive/2019/business/us-minimum-wage-by-year/index.html https://www.cnn.com/interactive/2019/business/us-minimum-wag... 2. https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#item-nhe-trends_total-national-health-expenditures-us-per-capita-1970-2018 https://www.healthsystemtracker.org/chart-collection/u-s-spe...
- ramoz 6y agoa bit off-topic/random thought: How will inequality evolve as technology continues to rapidly progress through automation? COVID resulted in large unemployment... yet we still function optimally when it comes to manufacturing/supplying/delivering life's basic necessitates, as well as generally performing work function on a large digital infrastructure primarily capitalizing on its continued evolution. To me this is an alarm that makes apparent our market economy is not aligned with technology's true state and our society is very vulnerable to rapid risk we can't rapidly mitigate or adjust to. Also showing that other countries like China are in an operating model (whether humane or not) that is better aligned. "AI" basically pitches an optimum point called the "singularity" and something I understand simply to be a technology that can make improvements to itself without us helping it. -- implying automation for all aspects of life. So what happens along the way? ... because we're approaching any singularity very iteratively and where 1 person can own some automation that replaces a million jobs. Inequality seems like it's only going to get worse. Hoping someone can reference any research in this area or how our market economy can evolve (admit my thought process here is very naive and anecdotal)