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Low income salaries actually experienced a higher increase than higher income salaries between 2014-2019 (basically pre-COVID) -> https://www.cbsnews.com/news/l

• joppy 6y ago
  Taking some vague numbers from that article, a low-income salary might be $20,000, which gets an increase of 5%, so $1000. Meanwhile a high-income salary of say $100,000 gets an increase of 2.5%, so $2500. Which one is the bigger increase? Measuring these things in percentages hides the fact that the underlying numbers are immensely different. Perhaps if we reported numbers differently, we would say that the pay increase for the high-paid worker was 2.5x the pay increase for the low-paid worker.
  • read_if_gay_ 6y ago
    In terms of what it'll do for you, an extra $1000 at $20,000 p.a. is definitely a bigger increase than $2500 when you're making six figures.
• jahaja 6y ago
  Alright, let's actually follow up on two of your links for once. Regarding "The IMF was unable to reproduce": "Piketty's response[54] noted, however, that Góes used measures of income inequality rather than wealth inequality, and inappropriately took the interest rate on sovereign debt as his index of the rate of return on capital, which makes his results not commensurate with those of Piketty's study." Regarding "Auten & Splinter further refuted": "There’s plenty of other literature, mentioned in the Auten-Splinter paper, the Economist articles and elsewhere, that challenges the methods used by Piketty and his collaborators. Such challenges are mainly possible because tax data draw an incomplete and often difficult-to-interpret picture of the income distribution. Tax systems are complex, different governments choose not to tax different kinds of income, and of course people, rich and poor, cheat on their tax returns. Measuring wealth inequality rises to a whole new level of difficulty: Since so few countries have wealth taxes these days, only guesstimates of the wealth distribution are possible. So on Tuesday, Piketty, Saez, Zucman and a long list of other signatories issued a sweeping response to critics of the popular inequality narrative, pointing out that all the data-based arguments can be settled by making solid data available." Unsurprisingly, these two doesn't seem to very convincing "refutations".
  • bhupy 6y ago
    I'm not convinced you actually read through either of those sources, especially considering that none of your quotes actually ever appear in them. First, and foremost, Piketty's findings are based on theoretical models, not empirical observations. The two fatal flaws Piketty makes are 1) he models a zero-sum world where wealth is fixed, and 2) doesn't take into account taxes & transfers. From the IMF research: Using a sample of 19 advanced economies spanning over 30 years, I find no empirical evidence that dynamics move in the way Piketty suggests. Results are robust to several alternative estimates of r-g. I find no empirical evidence that the dynamics move in the way Piketty suggests. In fact, for at least 75% of the countries examined, inequality responds negatively to r − g shocks, which is in line with previous single-equation estimates by Acemoglu and Robinson (2015). The results also suggest that changes in the savings rate, which Piketty takes as relatively stable over time, are likely to offset most of the impact of r − g shocks on the capital share of the national income. Thus, it provides empirical evidence to the model developed by Krusell and A. Smith (2015), who say Piketty relies on flawed theory of savings. The conclusions are robust to alternative estimates of r − g and to the exclusion or inclusion of tax rates in the calculation of the real return on capital. From Auten & Splinter Our estimates also differ for the bottom half of the distribution. PSZ estimated that the bottom 50 percent share of pre-tax and after-tax shares decreased by about 7.5 and 6.2 percentage points since 1979. In contrast, we estimate that pre-tax and after-tax income shares decreased by 5.6 and 2.2 percentage points over this period. Our estimates suggest that taxes and transfers offset most of the recent changes in both bottom and top income shares. In contrast with the PSZ estimate that average real pre-tax incomes of the bottom 50 percent remained virtually unchanged, we estimate that they increased by nearly one-third. For pre-tax/after-transfer income (which includes Social Security benefits) and after-tax income, we estimate a real increase for the bottom half of the distribution of nearly two-thirds
    • jahaja 6y ago
      > I'm not convinced you actually read through either of those sources, especially considering that none of your quotes actually ever appear in them. Of course I didn't? That would require me to spend several hours to go through those reports, hence I refer to other who have. Why don't you answer the replies to each report instead - of people that have actually had the time to go through them and reply?
• xg15 6y ago
  > Low income salaries actually experienced a higher increase than higher income salaries In percentage points. If someone gets a pay rise from $1/hr to $2/hr, they will experience a dizzying 100% wage growth, more than any CEO could ever hope for. This is simply a mathematical property if small numbers, it doesn't contain any meaningful information on economic development or policy.
  • bhupy 6y ago
    That's correct, but also not particularly relevant, as there's no society on the planet where low income salaries experience a higher absolute increase than higher income salaries. The fundamental point is: there's a narrative that lower income salaries 1) don't increase at all, and 2) increase at a slower rate than higher income salaries, and both are false. It's also important to remember that the increase in salaries at the lower income levels, do NOT necessarily represent a single earner's pay history. Those numbers show us the snapshot-in-time income numbers for everyone currently at that salary level, but does not account for people actually moving income levels as they progress in their career. The data isn't "here's the life of Joe over the last 5 years", it's "here's the life of people without college degrees that are X years old with Y years of experience with X & Y held constant over 5 years".
    • notacoward 6y ago
      If low-end wages double and home prices double, the ratio remains the same but the poor person is still falling behind due to fixed expenses. You'd need disposable income to double for the effect to be neutral (probably a bit more because even poor people deserve a bit of indulgence now and then). As it is, poor people are more sensitive to housing inflation. Even if wages and home prices move up in lockstep (which they haven't) they'll take more years to save up enough for a down payment. That's why so many remain permanent renters, denied the equity and tax advantages of home ownership and putting them at even further disadvantage. So yes, the point about inequality damn well is relevant. Anyone who wants to pretend they know about statistics should know that distributions matter as much as averages and medians.