
U.S. Income Inequality Hits a New Threshold - cmurf
https://www.bloomberg.com/news/articles/2018-03-01/america-s-wage-growth-remains-slow-and-uneven
======
LarryDarrell
What gets me is the job holders in the upper 20% who actively support a system
that benefits the non-working (or don't need to work) top 1%.

I make a pretty high wage compared to a cashier at a store, but my interests
align with them a lot more than a Walton. Yet my peers are convinced that
because they have the trappings of the petite bourgeoisie and a well funded
401k that they have more in common with a Koch.

I'm not familiar with a society that experienced such high inequality and did
not have very disruptive upheaval afterwards. One would think the wealthy
would advocate for universal health care, education and safety nets as a small
price to pay for their own self preservation. On the other hand, they haven't
had much to fear from the lower classes for a long time now.

~~~
hueving
Because there has been a successful campaign to vilify the 1%. When you look
at income levels, the 1% includes doctors, lawyers, lots of small business
owners, and even many software engineers that got good stock grants in Silicon
Valley.

So picking 1% as the threshold was very ill-conceived because now it includes
many expert professionals and small business owners. So it's very easy to
relate to them if you are also an expert or small business owner.

~~~
evanlivingston
er, small business owners making $800,000+ a year? I don't think that's very
easy to relate to.

Who is waging this campaign?

I don't think is a campaign to vilify the 1% as much as it's an increased
awareness by the 99% that _no one_ needs to be making $800,000 a year. As
people see home ownership being increasingly implausible, healthcare difficult
to afford, fulfilling work unable to be found and less than $1000 in savings,
is it any wonder people are upset, bothered and judgemental of people who make
an impossibly larger amount of money than 99% of people?

~~~
hueving
The number you're looking for is $465k.
[https://www.investopedia.com/news/how-much-income-puts-
you-t...](https://www.investopedia.com/news/how-much-income-puts-you-
top-1-5-10/)

>that no one needs to be making $800,000 a year.

And that's where the mistake is. A significant number of people (including me)
are fine with someone creating a company, selling it for a few million, or
just having 10 good years of operation and retiring. The rewards for creating
something new need to be worth the risk of complete failure and loss of income
for those years.

This is the problem with using 1%. The bottom of the 1% is filled with normal
professionals that took huge risks (starting businesses) or spent a
significant amount of time in training (brain surgeon).

>As people see home ownership being increasingly implausible

Not if you give up on living in the most expensive parts of the US. Even then,
a housing shortage is hardly attributable to income inequality. Just look at
the bay area where there are people making good money. The housing shortage
has caused prices to sky rocket to absorb up all of that difference. If you
have 1000 people fighting for 100 houses, 900 people are going to get screwed
regardless of income inequality.

> healthcare difficult to afford,

A broken healthcare system can't be fixed by fewer rich people.

>fulfilling work unable to be found and less than $1000 in savings

Capping incomes of successful professions will not add more fulfilling
professions nor will it increase their savings.

>Who is waging this campaign?

Well people like you who claim nobody needs to make a lot of money and then
blame a bunch of unrelated issues on income inequality. I can't tell if it was
just the mathematical ignorance of who started the movement or if it was
partially orchestrated by the super-rich. But by making it include skilled
professionals that had to put in huge risks to get where they are, they lost
significant support of the population within 50% of that income.

>is it any wonder people are upset, bothered and judgemental of people who
make an impossibly larger amount of money than 99% of people?

I don't know what "impossibly larger" is supposed to mean in this context.
Someone who makes $250k will not see someone who makes $500k as making an
"impossibly larger" amount of money than them.

If this whole movement had been more carefully crafted to exclude people that
had to go to medical school and go $350k into debt, I don't think there would
have been very much disagreement from a significant chunk of the US. As it
stands, it just looks like an arbitrary cut-off screwing the people who
managed to secure a good life rather than being focused on people with enough
money to hire full-time Washington lobbyists.

~~~
evanlivingston
> The number you're looking for is $465k.

The link references data from 2014.

> The rewards for creating something new need to be worth the risk of complete
> failure and loss of income for those years.

New things are not inherently valuable by virtue of being new. I don't feel
that we ought to reward people who for merely creating things that are new.
And why should anyone be rewarded beyond having a comfortable, easy life?
$465,000 is an insane salary, magnitudes larger than is required for a
comfortable life.

> Not if you give up on living in the most expensive parts of the US.

You're thinking in a narrow context. For someone like me who moved from the
midwest to the west coast, yah, I could just go back "home". The larger issue
however is that, to borrow a tired phrase, it takes a village to raise a
child. The jobs that make a city work are largely not high-income earning
jobs. That is: paramedics, firefighters, teachers, bus drivers, road
repairmen, linemen, auto mechanics, delivery drivers, locksmiths, and on and
on. Much fewer of these people are transplants than the high-earners and don't
have support networks in those cheaper parts of the country. Creating cities
where only the wealthy can afford to live necessarily, forcefully pushes other
people out.

> Even then, a housing shortage is hardly attributable to income inequality.

While I agree that it's vital to build enough housing for the demand, there is
one reason alone that a house can cost $600,000. That is because someone has
~$120,000 in liquid, spendable cash. If everyone had only $1000 of cash, how
much could a house possibly cost.

> A broken healthcare system can't be fixed by fewer rich people.

I agree, the healthcare system is broken and the problem isn't for lack of
money. But when you see politicians attempting to gut medicare for tax breaks
for the rich it doesn't little to instill confidence that that money could be
better spent.

> Capping incomes of successful professions will not add more fulfilling
> professions nor will it increase their savings.

I agree.

> But by making it include skilled professionals that had to put in huge risks
> to get where they are

"Huge Risks"? If you have stories about skilled professionals who risked their
security and failed I'd love to hear them.

> I don't know what "impossibly larger" is supposed to mean in this context.
> Someone who makes $250k will not see someone who makes $500k as making an
> "impossibly larger" amount of money than them.

Sure, but someone who makes $45,000 is likely to see $100,000 as impossibly
larger. Referencing the professions I listed above, can those skilled
professional expect to make $250,000 a year in their profession?

> If this whole movement had been more carefully crafted to exclude people
> that had to go to medical school and go $350k into debt

While I only know a handful of people who have gone to medical school or law
school, the path to repaying those loans seems to be pretty straightforward
and perhaps a little nerve-racking at times, but I don't know anyone who's
gone destitute as a result of those loans. Also, I'm critical of a system that
puts the burden of risk on the individual for training individuals to do those
important, necessary jobs.

Their risk-taking isn't what we ought to be rewarding, it's the value that
those professions bring to the general population.

These problems are all intersectional. Is it the fault of rich people that
there are poor people? Often not, in some cases yes. There have long been
abuses of the lower economic classes by the higher economic classes. I think
one the largest problems is how quickly wealthy people lose solidarity with
lower earners and believe that it's their "hard work" that got them their
wealth. People stuck in lower incomes know how ignorant that belief is. It's
also exceedingly difficult for a person living paycheck to paycheck, raising a
family or caring for dependent parent or whatever, to solidarity with someone
who was in a position to go to med school or study law. Anger is often
misplaced and I agree that the delineation between the %1 and the %99 percent
is often fuzzed, but that doesn't make the anger an less real, any less
meaningful.

~~~
jjeaff
> it's the value that those professions bring to the general population.

I suppose you will be heading up the committee to decide the value of what
people do for the community.?

If only there were some automatic way where the markets could decide what is
valuable and what is not.

------
athenot
The original link is more instructive:

[http://www.epi.org/publication/the-state-of-american-
wages-2...](http://www.epi.org/publication/the-state-of-american-
wages-2017-wages-have-finally-recovered-from-the-blow-of-the-great-recession-
but-are-still-growing-too-slowly-and-unequally/)

The Bloomberg article didn't even mention whether the changes were adjusted
for inflation (they are).

~~~
sokoloff
The Bloomberg article specifies them as "real wages", which are, by
definition, adjusted for inflation.

------
lkrubner
This is in keeping with a long term trend in which the standard of living for
the median American has been allowed to stagnate for a long time. The male
median wage has been stagnant or declining since 1973. This was previously
discussed on Hacker News:

[http://www.smashcompany.com/philosophy/do-men-become-
warlike...](http://www.smashcompany.com/philosophy/do-men-become-warlike-if-
they-do-not-have-women)

Also, consider that, when it comes to death-by-childbirth, the USA is among
the very worst developed countries:

[https://maternityneighborhood.com/the-case-for-care-model-
in...](https://maternityneighborhood.com/the-case-for-care-model-innovation-
in-maternity-care/)

~~~
rory096
Median wage is a bad metric in a world where health insurance costs (and thus
non-wage benefits) are rapidly rising. Median household wage is doubly bad in
a world of changing household composition.

[https://www.minneapolisfed.org/publications/the-
region/where...](https://www.minneapolisfed.org/publications/the-region/where-
has-all-the-income-gone)

------
jeffreyrogers
The statistics for gender are misleading. If you're just comparing the average
wage of men and women then of course women are going to earn less: they work
less than men on average. If you control for age and whether women have
children the gap shrinks a lot (in some areas it reverses).

And an increasing share of wages going to the top income brackets isn't in
itself cause for concern, only if the members of the top income brackets are
largely static does it matter (since it means income is going to a small group
of individuals, rather than a broader group of individuals who are swapped in
and out of the top income groups).

So these statistics are hardly "disturbing", though they do merit further
research to see how much of a problem these things actually are.

~~~
knuththetruth
>And an increasing share of wages going to the top income brackets isn't in
itself cause for concern, only if the members of the top income brackets are
largely static does it matter (since it means income is going to a small group
of individuals, rather than a broader group of individuals who are swapped in
and out of the top income groups).

So a society in which there's competition to be among a handful of feudal
lords, but where everyone else suffers tenuous and desperation is
unconcerning? How so?

We've been through this in American history. It was called the Gilded Age and
it was a nightmare for all but a handful of robber barons, resulted in
widespread social and political instability, and violence.

~~~
jeffreyrogers
No, that's not what I said. I'm arguing for the same thing you are. But income
inequality isn't itself a problem if there is mobility between the income
groups. They statistics in the Bloomberg article show income inequality but
don't show lack of mobility, and then say we've hit "a disturbing new
threshold".

There may be lack of mobility along with income inequality, but the article
doesn't demonstrate it.

~~~
mtgx
That's not what's happening though. First off, social mobility is declining,
so let's get that out of the way:

[http://www.businessinsider.com/social-mobility-is-on-the-
dec...](http://www.businessinsider.com/social-mobility-is-on-the-decline-and-
with-it-american-dream-2017-7)

Second, I think it's still a problem if the income of 90-98% of the country
_stagnates for decades_ , while the top earners get higher and higher income.
Of course that affects inequality.

I'm also not sure it matters that much if the players at the top switch around
if they have increasingly larger leverage on society.

For instance, we're seeing CEOs get rewarded larger and larger amounts of
money every year, _even if the companies lose money_ , like in this absurd
case:

[https://techcrunch.com/2018/02/22/snap-ceo-evan-spiegel-
got-...](https://techcrunch.com/2018/02/22/snap-ceo-evan-spiegel-
got-a-637-million-bonus-last-year/)

Where's that money coming from? The employees' potential salary increases? The
retail investors' money? It seems to me that the rich keep siphoning off money
from everyone else, and that's not sustainable.

They also get larger and larger amounts of money even when they _get kicked
out of the company for failing_. This doesn't make sense to me _at all_. And I
think the excuse that they need such amounts of money or otherwise they
wouldn't take the job or something is utter BS. I'd more likely believe the
board is giving them the money so the CEO doesn't sue the company, or better
yet because the CEO was the one writing their checks before that, or something
along those lines.

And this is just the corporate world. The US Congress seems to get crazier
every year and listening more and more to corporations and their interests,
and less and less to the people and solving real problems in the country
(healthcare, infrastructure, etc).

It's like the whole American society is on the brink of collapse, and everyone
just doesn't know it yet. Eventually, people will "suddenly" start to
violently riot because of all this stuff added together, and it won't be
pretty.

~~~
praha14
One thing I've never understood- in a fair society in which people are not
artificially limited, wouldn't we expect social mobility to _decrease_ over
time as successive generations "sort" themselves into the spots allowed by
their genetics?

Let's say we've got a feudal society with dumb nobility that rules over a
smart peasantry by force. If that society becomes free, we'll expect smart
peasants to move up and dumb noblemen to move down across the first few
generations... but once they've moved, they've moved. Ergo, declining social
mobility.

~~~
gowld
> "sort" themselves into the spots allowed by their genetics

There's an extreme amount of assumption baked into that.

1\. Genetics is the only factor that determines merit for wealth?

2\. Genetics merits extreme differences in income/wealth?

~~~
praha14
1\. No of course not, but if it's a factor _at all_ we'd expect to see the
pattern I described.

2\. We're talking about social mobility, not the level of inequality.

------
opportune
Wage inequality is just a labor aristocracy, divide the masses tactic. We
should also be looking at non-wage income i.e. dividends, interest, and
capital gains. The untold story: non-wage income in the US is increasing as a
share of total income, and the richest of the rich pay the lowest in taxes

~~~
Flavius
What do you mean by "the lowest"? Percentage wise? Because I'm sure they pay
millions or even billions in some cases. I agree that the rich might not pay
the same percentage that you pay, but that's not even the real problem.

The real problem is that we don't have equal opportunities. That gives the
rich people a huge advantage when it comes to earning more money. We don't
need to tax the rich more, that doesn't really help you when you're poor. We
need to wisely use the money that we already have to create more opportunities
for everyone.

~~~
opportune
As a percentage of their own income, of course. How does taxing the rich more
not help you when you're poor? Those taxes could go towards funding for
training and education, medical expenses, infrastructure, all of which would
work towards creating more equal opportunities

~~~
Flavius
It doesn't help you because the money don't go directly to you. They go to
companies own by other rich people, companies that have contracts with the
government. So you keep taxing the rich and they keep getting their money
back.

------
BadCookie
These stats are pretty ridiculous. Not all advanced degrees are more valuable
than a bachelor's. In my own company, we definitely have men with a BS in
computer science earning lots more than women with master's degrees in English
and education, but you can hardly blame the wage difference on their genders.

------
qwerty2020
Posted something along these lines a few months ago [1], but with a few more
stats.

[https://erikrood.com/Posts/consumer_expenditures.html](https://erikrood.com/Posts/consumer_expenditures.html)

------
d357r0y3r
What would you rather have? 1) Perfect income equality (1:1 poorest:richest),
but everyone is starving and most don't live out of childhood 2) Perfect
income inequality (1:~infinity poorest:richest)), but the poorest in the world
have a much higher standard of living and that standard is going up 3-5% a
year.

The point I'm driving at here is that income equality, by itself, isn't
automatically desirable if the cost is a worse standard of living for the
poor.

It makes perfect sense that income inequality would increase due to
globalization. The economic ramifications of "correct" business decisions are
amplified by orders of magnitude when compared to mercantilist economies a few
hundred years ago.

~~~
plandis
Is standard of living increasing? At least in terms of wage growth adjusted
for inflation that’s not true.

~~~
sokoloff
Do you believe that the 25th percentile of income today has a higher standard
of living than the 50th percentile person in "the golden age" of 1950? I do.

Today's 25th percentile person is likely to have air conditioning,
refrigeration, internet, a cell phone, a microwave oven, an HDTV, and a
reliable car that needs very little routine maintenance and has air bags and
antilock brakes.

Today's 50th percentile is beating 1950s 75th percentile adding easy,
affordable, safe, and reliable air transportation and living in a far larger
house than their 1950s half-again higher counterpart.

Today's 75th percentile is beating the 95th percentile in 1950.

All of them have better health care options, and a longer life expectancy.

Real wage growth may not have arrived for those who trade their hours for
wages, but the standard of living available from those wages has risen
dramatically.

------
mieses
utterly shocking that this story did not get instantly flagged.

------
dzonga
Those that are okay, with this are 'temporarily embarrassed millionaires' who
don't have millions yet. Fact, remains only people that love capitalism are
capitalists themselves. for the rest of us we're doomed, if we don't embrace
BI, Unions and a massive welfare state. Also full 100% inheritance tax.

~~~
akkat
I don't think I will ever be as rich as Bill Gates but I would still rather
live in a capitalist country as a middle class person than in a communist
country as a rich person.

~~~
mbrodersen
There are more than two alternatives. And there are many flavours of
capitalism. Some great. Some not so much.

