The link between middle-wage jobs, wage inequality, and worker welfare
voxeu.org
voxeu.org
To isolate what you might think of as income inequality due to structural economic factors, you’d want something like individual lifetime income adjusted by race, immigration status, and gender. I have yet to see anything that thoroughly adjusts for all of these confounding factors.
If you have any good reading to point to, please let me know. It's one of the things I'd love to have a good answer to, and that should be able to be answered to some extent, but isn't. Moreover I feel even many top economists routinely invoke extremely simplified single-variable perspectives (e.g. average wages per worker, or average household income) which indeed leaves out so many confounding factors that I've almost lost my expectation/hope that people even consider this kind of stuff... Only in academic papers which look to study something specific, are these confounders taken into account. But in general studies of economic growth or changes in or comparisons of economic wellbeing of various demographic subgroups, it seems the simple-perspective prevails. I get that many of these discussions are inherently political, thus susceptible to cherry-picking perspectives, but I'm still surprised there isn't some standard method so far that is more complex than charting 'household income for xyz'.
Any pointers to good literature is most welcome, and thanks for posting!
Indeed, that’s one of the key problems with retrospective analysis. Fieldwork studies are promising. I find John List exploring this area and think his work is interesting: http://www.fieldexperiments.com/papers/recent/
In terms of demographics, the baby boomers caused a big bulge in the distribution of the population.
As they age, their earnings and overall wealth grow as well (take a look at income versus age). What happens when you have a disproportionate chunk of the population get wealthy? Income inequality grows.
If this is indeed a factor, once baby boomers die off, we’d likely see a decrease in inequality.
In the late 19th century, Emil Durkheim, a sociologist, published (6) important observations. Durkheim found that suicide was primarily a function of social circumstances; he stated that people suicide when they are not supported by or well integrated into the society, and that mental disorder was relatively less important. The majority of his observations have been supported: for example, he found that marital breakdown frequently led to suicide, particularly among males, and this has been repeatedly demonstrated (7)." Source - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3431736/
"If you are ugly, and everyone love you, it don't matter!" I remember this...
https://www.amazon.com/Origins-Unhappiness-Understanding-Per...
My understanding of the general consensus of economists on Piketty is that his data collection efforts were great work, but his analysis and interpretation of that data was not particularly excellent. His theories have been substantially criticized by that group.
I’m not really in a position to evaluate the substance of the claims of either side but just want to point out that Piketty’s work isn’t by any means universally acclaimed and it isn’t just shills that have issues with it.
Everyone has limited capital. You get it to grow by buying stock and participating in the ownership class. Poor people instead tend to buy lottery tickets, which have a negative return on capital, meaning lottery tickets are a route to poverty. Stocks have a positive return. (On average, of course.)
> and limited time to research and limited knowledge of the stock market.
There's never been more information about stock investing that's for free and just a click away.
> Sure, he can own 0.00002% of a company, but in the end it doesn't really matter. He still doesn't have control over the means of production of which he puts his own labor into.
He gets paid for his labor, which he can use to buy ownership stock.
> He's still dependent on his salary
Buying stock with one's salary is a route to financial independence.
> which the true owner of the means of production can take away at any time.
You are a true owner if you own stock.
And if you're poor, you pay 0% taxes on capital gains. Zero taxes.
There's never been a better time for anyone to join the ownership class.
You have to pick winners and certainly not everybody can
There are many thousands to choose from, and on average they do. Or you can buy an index fund and choose them all.
The median net worth in the USA is $50,000, inclusive of real estate wealth which is a bit illiquid. Assuming the median citizen puts in $50,000 in 2008, that person would receive $3,250 in pre-tax wealth per year.
This is barely enough to put a low quality roof over family members' heads in Vietnam, let alone the USA. And we haven't talked about food, transport, or health insurance as well.
So then, I don't think it's sufficient to say that the median citizen can expect to gain very much from the products of asset ownership.
Pretty darn decent for doing literally nothing but being an owner.
I understand that the income is passive, but you do have to monitor the markets to make sure you don't get caught during a downturn. For me, I would rather invest my time into my career as that money is more safe in the form of cash income than it is in the form of a portfolio. Just my opinion :)
If you spend it, you're not investing it.
> and cash out at the correct time after 11 years.
You'd be making bank regardless of when you cashed out.
> to make sure you don't get caught during a downturn
I ride the downturns down, and back up the other side. That's how buy and hold, hold, hold, hold works. Timing is for fools.
> I would rather
If you would rather not invest in stocks, that's your choice, but it doesn't justify complaining about the "ownership class" that does.
Depends on which stock you bought.
> does not allow for control
One share equals one vote. The more shares you buy, the more you vote.
> The centralization of returns and control reinforce one another
With stocks you get the same returns and votes per share that anyone else does.
I believe founders have wised-up to that and now there are differently voting shares, the most prominent being Facebook, which is controlled by the Zuck & friends even though they only own 18% of the stock
https://www.cnbc.com/2018/03/20/shareholders-wont-force-zuck...
>> Mark Zuckerberg owns the majority of the voting rights to Facebook due to a dual class structure that weights certain shares over others.
>> Facebook’s Class B shares, controlled by Zuckerberg and a small group of insiders, has about 18 percent of the shares, but they also have 10 votes per share.
>> Surprisingly, it’s not that uncommon: 355 of the companies in the Russell 3000 (11.8 percent) have a dual voting-class structure.
I'm not pulling your leg at all. I've been holding individual stocks for 40 years, started buying since my first job. I spend very little time on it, I just buy and hold, and hold, and hold, and hold. I still have the stock I bought 40 years ago.
It's the constant trading based on emotion that'll eat you alive. Statistically, the most successful investors are dead people (while their estates are in probate) because they aren't trading.
I'll ride a stock all the way to zero (hello Enron), but most of the time it works out well.
If doing something to my advantage, also has a side effect that is also to my advantage seems like even more of a reason to do that something.
IMHO, there is no conspiratorial reason politicians pushed the program, it was common sense. H1B is a flawed half measure of a program because of upper middle class voters.
Your response is tangential to the original point.
OP asserts correctly that increasing supply of labor depresses wages, by lowering the negotiating leverage. Your response handwaves it away with "skilled immigration is better for the whole economy".
Sorry to burst your bubble - this is a thread about balancing the wages / profits split. OP is right; the higher the supply of labor, the lower the price of labor, thus leaving higher proportion of the surplus as profits. Aka the dreaded inequality.
It's fine to prefer profit over wages, if that's how you make your living. But let's not pretend we're for increasing wages while in fact for increasing profit.
It’s not obvious that skilled immigrants have the net effect of reducing the wages of non-immigrants with those same skills — tons of new firms are started by skilled immigrants and/or their kids, and the current SV economic expansion particularly so.
So, sure. If you already assume that the pie is of fixed size and a skilled immigrant reduces the work available to others, then you can draw the conclusions you do. But otherwise it’s a weak argument.
I’m not in favor of labor supply protections for any highly paid industry, they are not the segment of society that needs a helping hand.
Every community (local, regional, national) has a right to decide their future.
If some locality doesn't want to be New York or Hong Kong, that's fine, it's their choice.
There are vast, vast areas of the US that are not super high rent/income, or even totally under developed. Even around the Bay Area.
19th/20th century growth strategies are not consistent with sustainability in most ways.
Also - any policy which has the effect of displacing local workers for foreign workers primarily as a function of wage should be totally outlawed. A lot of H1B is not this obviously, but a lot of it is. H1B might need a more nuanced approach in order for it to be a real net-gain and not just a 'labour input cost' policy.
Not sure if you are implying otherwise, but the reduction in global inequality doesn't necessarily require growth in US inequality, although that's the form that this has taken.
Growth in US inequality is to an extent a policy choice: US GDP has grown a huge amount during the same period, but the same period the majority of those gains have gone to those in the top fractions of 1% of the wealth distribution.