Hacker News Reader

Comment by bilbo0s | Hacker News Reader

Is anyone able to explain this chart for me?

When they say that the 'Top Fifth' are all of the people in the labor force making over USD112541, does that mean that 20% of American workers make more than that?

That's pretty astounding to me, if it is indeed the case. At a labor force size of about 154 million people, that means that over 30 million people are making over USD112541. I know that a good number of people are making WELL over USD112541 actually, though I thought it was just because of my neighborhood and social group.

To see the aggregate numbers is staggering. Where is the money coming from to pay that many people that much? I have some inkling that this is what leverage and debt do for an economy, but ... wow.

Any econ profs, or grad students around to explain ho this is possible?

View on HN

These are household income quantiles, not personal income quantiles. It's not stated on the chart, but that lines up better with: http://en.wikipedia.org/wiki/Household_income_in_the_United_...

Yes -- many families have shifted from single to dual-earner in order to maintain the same standard of living, so the household income charts really understate the decline in individual wages over this period.

That is not true. They vastly overstate the decline in wages, due to the rise of more single person households. See: http://www.google.com/publicdata/explore?ds=a7jenngfc4um7_&#...

Individual wages have risen steadily since 1910, with no gaps. The household income chart is a misleading chart.

Does this take into account inflation? It could be that they are actually decreasing with inflation. I don't think it's like that but I'm just curious.

Either way, it shows the growth as steady, since inflation has not been particularly high in the last 20 years.

Note: That graph is personal income per capita, not personal income per worker or per hour worked.

Also see: http://visualizingeconomics.com/2007/11/04/has-middle-americ....

Incredibly stable since 1960.

http://www.google.com/publicdata/explore?ds=a7jenngfc4um7_&#...

This is a log-scale graph, which is what you want in order to compare rates of increase. You can see sort of an inflection point around the early 80s, but I'm not sure if it's significant.

This chart has nothing to do with individual wages.

This is a sum of all incomes from all possible sources devided by population.

That chart shows per capita income without adjusting for inflation. It's not very useful for drawing conclusions about real income.

And per capita is a simple average, while looking at medians or quintiles gives you a clearer picture. Per capita, a roomful of middle class workers all become billionaires if Bill Gates walks in.

Furthermore, running $1 trillion deficits helps.

$1 trillion / 153 million workforce = ~$6500 / worker = $13,000 per household

It's not too hard to imagine that somehow this money tends to flow moreso towards people in the upper quintile (straight wage-earners would miss out, whereas the investing class has many avenues to receive it), so it wouldn't surprise me at all that 1 household could end up with their "share" plus that of 2 others, so: $13,000 * 3 = $39,000 household income based on govt deficit spending $112,541 - $39,000 = $73,500 household, /2 = 36,500 per person in "real", non-deficit enhanced earnings required to make the top quintile.

Made up entirely, but I don't think it is an unrealistic scenario at all. The enormous deficits we are now running can go a long way in hiding the truth for a very long time. Meanwhile, the debt grows and grows, and the interest on that debt gets larger every year. I just don't see how debt is inconsequential, but the vast majority of people seem to act as if it is (at least those who are even aware of it).

Reply on news.ycombinator.com