Separate but unequal

[celtic_crippler]

Wow... there are now 3 Threads on this here on MT (afraid I was responsible for one) but it appears this one was posted first. Sorry I missed it. DOHIt's a really hot topic over on yahoo, boy... And Bill, did you bother checking the sources plainly listed on the site with the charts? It's not "balony" as you put it. My original post and what scares me:It's HISTORICALLY INVEVITABLE what happens when the middle class disappears only to be left with an elite class and a poor class. You'd think the current administration would know this... yet they keep ignoring our current problems in favor of focusing more money and time on personal and party agendas that have little to no impact on things that matter to backbone of this country... or what's left of it. They won't drill domestically for oil though we have plenty of it. They won't cut the corporate tax (now the highest in the world I believe since Japan cut theirs by over 15% recently) to encourage business growth and job opportunity. They won't decrease the size and function of the central government (a black hole of waste)They won't endorse a fair, flat tax on income of all levels (that would really piss off the elite)They simply won't do anything constructive or conducive to the betterment and general welfare of this nation. You'd almost think they WANT to destroy us. These are simple, common sense solutions that would go a long way to actually contributing to hope and change. But then, I hear the only place you can find Common Sense these days is in the Smithsonian... next to the T-Rex display. ...my stomach hurts... Make whatever arguments you like. Draw your lines in the sand and point fingers blaming either the Democrats or Republicans, Liberals or Conservatives. The end result is always the same as proven time and time again throughout history. If the gap continues the only label you'll have is either Elite or Poor... and historically speaking, the Elite is an exclusive club with much fewer members.

 

[Empty Hands]

As for wages Im not sure how you figure 80% of the country has stagnant wages. Even minimum wage has gotten increase every few year.

I said "real wages", in other words wages adjusted for inflation. If you get a 2% raise this year, but inflation was 5% this year, you wages have gone down in real terms. The numbers are quite clear on this, real wages have been stagnant.

If you dispute the notion of real wages, then consider that someone who made $100,000 per year in 1805 would be very wealthy indeed while someone who made $100,000 per year now would be upper middle class. You can't really dispute the notion.

 

[Empty Hands]

If not through taxes that punish the wealthy, (and I'd say reward the poor, but they already pay no income taxes if they're that poor), then I'm not sure how one would go about addressing the presumed inequality.

There could be many ways. Protectionism to keep American products price competitive with products from countries with much lower standards of living, meaning American workers won't have to compete with the price of Cambodian or Chinese labor (even China is getting too expensive these days, manufacturing is going to hot new spots like Vietnam now). Encourage union formation rather than the last 30 years of government backed union busting, which helps grow worker wages. Make it more difficult for companies to outsource, or provide incentives for them not to. End the fiction that a company with a postal address in the Bahamas and operations all over the US is not a US company, and thus does not have to pay taxes as such. This would help convince companies to keep operations in the US. There are many ways to help foster industry and worker wages without redistribution. Such a period was from the end of WWII to the 1970's - perhaps we should figure out what worked so well then and see if we can replicate it.

 

[ballen0351]

I said "real wages", in other words wages adjusted for inflation. If you get a 2% raise this year, but inflation was 5% this year, you wages have gone down in real terms. The numbers are quite clear on this, real wages have been stagnant.

If you dispute the notion of real wages, then consider that someone who made $100,000 per year in 1805 would be very wealthy indeed while someone who made $100,000 per year now would be upper middle class. You can't really dispute the notion.

I agree with, that inflation is a serious issue we need to get a handle on it.

 

[crushing]

There could be many ways. Protectionism to keep American products price competitive with products from countries with much lower standards of living, meaning American workers won't have to compete with the price of Cambodian or Chinese labor (even China is getting too expensive these days, manufacturing is going to hot new spots like Vietnam now). Encourage union formation rather than the last 30 years of government backed union busting, which helps grow worker wages. Make it more difficult for companies to outsource, or provide incentives for them not to. End the fiction that a company with a postal address in the Bahamas and operations all over the US is not a US company, and thus does not have to pay taxes as such. This would help convince companies to keep operations in the US. There are many ways to help foster industry and worker wages without redistribution. Such a period was from the end of WWII to the 1970's - perhaps we should figure out what worked so well then and see if we can replicate it.

Do you mean encourage union formation in those countries that are now getting the jobs and where incomes have risen dramatically over the few decades, so that they may, like the US had done previously, push to maximize labor costs in those countries and make the US more appealing for future employement opportunities?

 

[Empty Hands]

Do you mean encourage union formation in those countries that are now getting the jobs and where incomes have risen dramatically over the few decades, so that they may, like the US had done previously, push to maximize labor costs in those countries and make the US more appealing for future employement opportunities?

I meant unions here, but I guess that works too. Assuming anyone here has any ability to influence labor union politics in India, China, Vietnam or Cambodia.

 

[Cryozombie]

There could be many ways. Protectionism to keep American products price competitive with products from countries with much lower standards of living, meaning American workers won't have to compete with the price of Cambodian or Chinese labor (even China is getting too expensive these days, manufacturing is going to hot new spots like Vietnam now).

I'm curious how you can support that opinion, while at the same time thinking that allowing illegal immigrants to come into the US to work while sending the largest majority of their money "home" is somehow different? Why is sending the work overseas bad, but allowing overseas workers to come here and do the work any different?

 

[Empty Hands]

I'm curious how you can support that opinion, while at the same time thinking that allowing illegal immigrants to come into the US to work while sending the largest majority of their money "home" is somehow different? Why is sending the work overseas bad, but allowing overseas workers to come here and do the work any different?

The standard of living in America is the standard of living, even for illegal immigrants. They may be willing to put up with lower wages in general, but even they cannot survive on the pennies or a dollar or two a day that Vietnamese or Cambodian workers can survive on inside their own countries. Besides, the prevailing wage for illegal and migrant workers alike for meatpacking and agricultural work, from what I understand, is about $10 per hour. They can earn in a day what some workers in other countries might earn in a year. Very different, much less depressive on American wages. Plus they spend money to live on here. Plus there just aren't that many of them, relatively speaking. Also, coming here to work does not do away with entire industries as free trade has done to some manufacturing or is threatening to do with other industries.

 

[ballen0351]

The standard of living in America is the standard of living, even for illegal immigrants. They may be willing to put up with lower wages in general, but even they cannot survive on the pennies or a dollar or two a day that Vietnamese or Cambodian workers can survive on inside their own countries. Besides, the prevailing wage for illegal and migrant workers alike for meatpacking and agricultural work, from what I understand, is about $10 per hour. They can earn in a day what some workers in other countries might earn in a year. Very different, much less depressive on American wages. Plus they spend money to live on here. Plus there just aren't that many of them, relatively speaking. Also, coming here to work does not do away with entire industries as free trade has done to some manufacturing or is threatening to do with other industries.

Actually its est, that over 126 Billion dollars a year are sent to other countries by illegals. You obviously have no idea how most of these illegal live. Most of the people that hire illegals also provide them with a place to live in take rent from the workers pay. Inside these houses Ive seen as many as 5 men living per bedroom. We raided a house the other day it was a 2 story house with 5 bedrooms I counted 32 people living in that house. They all split food and expenses of the residence and they always have large sums of cash on them or in there homes. Which also causes them to be preyed upon for robberies and burglaries. Most of the time they never report these crimes because they are afraid of the police.

 

[5-0 Kenpo]

It's not the gap per se that's the problem, it's the fact that the bottom 4 quintiles have seen no wage growth in real terms in more than 30 years. It's not such a big deal if the rising tide is in fact lifting all boats; it's more problematic if all the benefits are going to a small group.

And what, exactly is the problem? Especially if those same people are continuing to buy luxury items.

In that same 30 years however, labor productivity has also exploded. So in a fundamental economic disconnect, workers are not seeing any wage benefits even though they have become more and more effective and efficient workers.

I'm curious about this. Is it that the worker has become more efficient, or the workplace has become more effiecient, ie., through automation, computers, processes, etc? And those all take investment by the company, including providing the decision makers with more knowledge and technical skills in order to make the right decisions. They are then paid for their skills.

 

[Empty Hands]

And what, exactly is the problem? Especially if those same people are continuing to buy luxury items.

If the economy is growing well and productivity is increasing, it seems to me that all quintiles should be seeing growth. Especially with rising costs of living. Whether or not that bothers people seems to come down to a value judgment, but I do see it as a problem. It is becoming more and more difficult for even "middle class" people to gain access to the tools to success for their children - education costs are exploding. Housing, health and energy are also exploding. What this means in real terms is that the wages of the bottom 4 quintiles are not just stagnant, they are actually decreasing. The "American Dream" becomes more and more distant for 80% of the country, and that will have long term consequences. I don't consider it a great success if a worker can afford an iPod or a computer, but can't afford health insurance, a place to live, or college for their children.

I'm curious about this. Is it that the worker has become more efficient, or the workplace has become more effiecient, ie., through automation, computers, processes, etc? And those all take investment by the company, including providing the decision makers with more knowledge and technical skills in order to make the right decisions. They are then paid for their skills.

That is definitely part of it. Another part of the recent productivity surge in this recession is people working more hours and taking on responsibilities of lost coworkers in an attempt to keep their job. Skills and training is also a part of it, especially with younger workers.

 

[billc]

And now, from one of my favorite economists, Walter E. Williams, on wether the poor are getting poorer, and the rich getting richer.

http://www.creators.com/opinion/walter-williams/are-the-poor-getting-poorer.html

n 1971, only about 32 percent of all Americans enjoyed air conditioning in their homes. By 2001, 76 percent of poor people had air conditioning. In 1971, only 43 percent of Americans owned a color television; in 2001, 97 percent of poor people owned at least one. In 1971, 1 percent of American homes had a microwave oven; in 2001, 73 percent of poor people had one. Forty-six percent of poor households own their homes. Only about 6 percent of poor households are overcrowded. The average poor American has more living space than the average non-poor individual living in Paris, London, Vienna, Athens and other European cities.

Poverty is not static for people willing to work. A University of Michigan study shows that only 5 percent of those in the bottom fifth of the income distribution in 1975 remained there in 1991. What happened to them? They moved up to the top three-fifths of the income distribution — middle class or higher. Moreover, three out of 10 of the lowest income earners in 1975 moved all the way into the top fifth of income earners by 1991. Those who were poor in 1975 had an inflation-adjusted average income gain of $27,745 by 1991. Those workers who were in the top fifth of income earners in 1975 were better off in 1991 by an average of only $4,354. The bottom line is, the richer are getting richer and the poor are getting richer.

Poverty in the United States, in an absolute sense, has virtually disappeared. Today, there's nothing remotely resembling poverty of yesteryear. However, if poverty is defined in the relative sense, the lowest fifth of income-earners, "poverty" will always be with us. No matter how poverty is defined, if I were an unborn spirit, condemned to a life of poverty, but God allowed me to choose which nation I wanted to be poor in, I'd choose the United States. Our poor must be the envy of the world's poor.

 

[billc]

The internet is once again great. From Thomas Sowell, another of my favorite economists, takes on the idea of wages decreasing, rich and poor and so on...

These are not the only data that tell a diametrically opposite story from the usual political and media story that the rich are getting richer and the poor are getting poorer.

http://townhall.com/columnists/thomassowell/2006/02/08/myths_of_rich_and_poor

Actually a lot of the point-scoring rhetoric involves misleading statistics. Wages are only part of total compensation -- and increasing proportions of that total compensation is taken in the form of fringe benefits. Total compensation has been going up while average real wages have been going down.

Even the decline of real wages has to be taken with a grain of salt. Real wages are calculated by taking the money wages and adjusting for changes in the consumer price index. Only an economist can get excited by the consumer price index. Other people's eyes are more likely to glaze over when the term is mentioned. However, an inaccurate consumer price index is part of the reason for the appearance of declining real wages. When the consumer price index says that inflation is 3 percent a year, it may really be more like 2 percent or 1.5 percent. As anyone who has had to pay off a mortgage knows, a difference of a percentage point can add up to real money over a period of decades.

Economists' estimates of how much the consumer price index exaggerates inflation range from an estimate of one percentage point by former Federal Reserve chairman Alan Greenspan to an estimate of 1.5 percent by Michael Boskin, former chairman of the Council of Economic Advisers to the President.

Even if we take the lower estimate of one percentage point, over a period of 25 years, that under-estimates the real income of the average American by nearly $9,000. In other words, a working couple will have their real income under-estimated by nearly 18 grand, using the consumer price index to correct for inflation.

http://www.deseretnews.com/article/...the-statistics-about-widening-income-gap.html
The statistical categories in this case are income brackets. There is no question that incomes in the top income brackets have risen both absolutely and relative to the bottom income brackets.

The joker is that millions of people move from one income bracket to another.

The even bigger joker is that taxpayers whose incomes were in the bottom 20 percent in 1996 had a 91 percent increase in incomes by 2005.
Meanwhile, taxpayers in the top one-hundredth of 1 percent — "the rich" or "superrich" if you believe politicians and the media — had their incomes drop by 26 percent over those very same years.

Obviously, when millions of people's incomes nearly double in a decade, many of them move up out of the bottom income bracket. Similarly, when other people who were at the top see their income drop by about one-fourth, many of them drop out of that bracket.

When we talk about "the rich" and "the poor" we mean rich and poor human beings, not rich and poor statistical brackets. Yet politicians and the media treat people and statistical categories as if they were the same thing.Part of the reason is that data on statistical brackets are more numerous and easier to find, whether from Census Bureau statistics or from a variety of other sources.

Data based on following actual flesh-and-blood individuals over time are, however, also available. The statistics quoted above are from the Treasury Department, which has people's income tax returns, so it is no problem for them to follow the same people over the years.

You can check out the numbers for yourself in a Nov. 13, 2007, report from the Treasury Department titled "Income Mobility in the United States from 1996 to 2005." You can find a summary of the same data in a Wall Street Journal editorial that same day.


These are not the only data that tell a diametrically opposite story from the usual political and media story that the rich are getting richer and the poor are getting poorer.
A previous Treasury Department study showed similar patterns in individual income changes between 1979 and 1988.

Moreover, a study conducted at the University of Michigan, following the same individuals over an even longer span of time, likewise found most people moving from income bracket to income bracket over time — especially among those who began in the bottom 20 percent.