The top 1% was the only group to see real wage gains from 2020 to 2021
morningstar.com
morningstar.com
It only tracks the incomes of percentiles - ignoring the fact that the composition of the percentiles changes - and without specifying if that's earned or total income...
This is how they came to the conclusion that only the 1% saw real wage gains - in spite of that being extremely misleading.
As a group of workers, some of the lowest paid service sectors like hotel workers and restaurant workers saw some of the biggest real wage gains [1, 2].
The article even acknowledges that the 0.1% is the only group that saw significant real wage gains. The composition of this group is highly volatile - as it's almost exclusively from capital gains.
Pretty much everyone except a lucky few are losing to wreckless government spending and needlessly low interest rates that caused malinvestment for 2 years.
But this comment will get downvoted because it goes against the narrative that the reason you don't own a yacht is because Bill Gates and the Billionaires are taking all your money instead of the government is taking 40%+ of your money (more the lower your income) and spending 50% more money on debt (causing inflation / your wages to get lower in real terms), and not having much to show for it... Oh, well.
[1] https://www.pewresearch.org/fact-tank/2021/12/22/many-u-s-wo...
[2] https://www.atlantafed.org/chcs/wage-growth-tracker?panel=1
Yeah, after a significant amount of them left the industry after seeing wages go to zero for an extended period, several times in some places.
That said, I pretty much doubt the 1% of wages is that volatile too...
However, for a great many things it’s lifetime earnings or wealth that matter. A billionaire who lost money this year isn’t the same as a poor person.
Not to ignore your other point, but an 18.4% increase (to $482 a week) is only a big number if you ignore that many were and still are making peanuts. Someone making significantly more receiving a 5 or 10 percent increase will receive substantially more "real wage gain" — and that's the point of the OP. In terms of real money, the top 1% and 0.1% receive a far larger slice of the pie.
> That tracks with a 40-year-long trend of wages for the top 1% and 0.1% rising by 206.3% and 465.1%, respectively, between 1979 and 2021, while wages for the bottom 90% grew by a far more modest 28.7%.
If I make $7/hr and receive a 100% increase, and you make $100/hr and receive a 10% increase, things are still skewed in your direction.
Pre-raise, you made 7% of my salary. Post raise, you make 13% of my salary.
It's also the distribution of that money: why does one person receive more than the hundreds or thousands of people that do the actual work?
Percentage wage increase is a shallow metric that does not account for all these things, not to mention cost-of-living, inflation, assets, the ultra-wealthy not earning money via income or other comparable methods, etc.
Because wages are taxed. You can’t tax the low wage earners. But an increase to those in the higher tax bracket pumps money back into public money spending while also it keeps the economy humming.
People don’t understand that wages paid is mostly for the running of the economy. As a wage earning employee, one is merely a cog in the wheel of the larger economy.
Distribution of money in an economy occurs when businesses thrive and the economy is fueled by the wages. Distribution of wealth is an entirely different subject.
This is why interest rates are always controlled by the central bank. If they don’t, countries will spiral into complete economic collapse.
I would rather high tax payers get hikes in a strained economy than low wage earners. Economic welfare should only be borne by those who can afford to pay higher taxes.
> I would rather high tax payers get hikes in a strained economy than low wage earners. Economic welfare should only be borne by those who can afford to pay higher taxes.
This is only true up until a point. The tax burden in many countries is held by the middle and upper-middle class. The ultra-wealthy do not pay an equivalent or fair share; Warren Buffet famously claims he pays a lower tax rate than his secretary.
Someone going from $100,000 to $200,000 is still going to re-circulate a lot of money into taxes and local businesses. Someone who has $1,000,000,000 already has more money than they can reasonably spend in a lifetime, and can leverage their tremendous wealth to avoid paying their fair share of taxes (and in many cases any taxes whatsoever).
Hands down, quality of life is better in the United States. It is a combination of low population density and commitment to capitalism. One can consider long vacations and lunch breaks as ‘better quality of life’, but I am mostly talking about access to material things and things like power and energy.
Generally access to free and/odd cheap energy is the gateway to better quality of life and abundance. Everything else is a solvable problem with policy and legislation. United States may be lacking in certain social metrics but it’s solvable. But where cheap energy is lacking, the economy( and eventually society) will decay and die.
Scandinavian flavour of socialism works because most have access to energy and have low population density. But even so, the burden is on the middle class. In California, otoh, [..] The richest 1% of California tax filers pay the largest share of their income in state and local taxes (12.3%), but the 20% of filers with the lowest incomes pay the next highest share (11.4%). [..]
This is why capitalism has single handedly raised quality of life world over(think India, Africa rather than Western Europe)than socialism or communism. Even China benefited from capitalism.
+ https://calmatters.org/explainers/the-open-secret-about-cali...
Because of several things.
One is supply and demand. Those hundreds of thousands of people doing "the actual work" are quite often quite interchangeable. High supply means low pay. There's no exploitation going on.
The other is the impact of the individual's actions. If you are a boss in a position to say "we keep making combustion engines" vs one that says "we go all in on electric vehicles", that decision can make or break a company. CEOs make hundreds of such decisions in a year. If you are an engineer in a position to fix ten bugs per week, and add five features, well, you can hope you'll be in a more impactful position one day. Until then, CEOs will make much more money than you.
Finally, it's the asymmetry of the impact. The more impactful you can be, the more damage you can do too. I once talked (online) with a chess player who told me that at his best he can be as good as Kasparov, but Kasparov was consistent, while he was not. People at Kasparov's level make few mistakes. Very few. At some level in a company's hierarchy it's very important that you do few mistakes. More important than how many brilliant decisions you make. And there are precious few people who have the attention to detail and focus to get to be a Kasparov-like for the corporate world. Those people get paid.
I'll take your point that relative comparisons are useful, but perhaps representing this as a percentage rather than a multiple isn't particularly helpful when considering the gaps.
Not to mention the inflation and skyrocketing other (non measured as part of the inflation index) costs...
If they’re using total income and calling it “wages”, they’re just flat out lying IMO.
it's like saying "the world series champions continued to have highly paid players and make a lot of money, more than ever before!" without mentioning that the identity of the championship team changes every year.
I'm not saying the 1% turns over every year, but neither is it static as many common descriptions of it make it sound like.
That narrative, edited to its actual substantive form, is clearly and obviously true, and that's why it's continuing to grow as a political force.
The reality is that we stopped regulating corporate power, market domination, antitrust, and anti-competitive behavior about two generations ago.
As a result, an increasingly dominant group of conglomerate companies are extracting rents and profits from every tiny corner of the internet. This manifests in things like the cost of insulin, rents being set by market collusion tools, rising fares and abysmal service as the number of major airlines is cut in half, concert tickets, and so on.
But not just the obvious stuff, it's everywhere. There are monopolies leading to looting, poor service, and rent extraction in cheerleading leagues, pet hospitals, church software, hearing aids, portable toilets, and like everything else. Since this is a software focused crowd look up "Thoma Bravo" and familiarize yourself with the Solarwinds disaster. Learn about the role of private equity in the recent Lastpass debacle.
And yes, the extracted profits from all this are accumulating with the billionaire and 100+ millionaire class. It's not a secret, it's obvious to basically any normal person trying to lead a normal life and people are mad about it.
Insulin is capped at $35 for a 30-day supply starting 2023 (very soon).
> rents being set by market collusion tools,
This is relatively new, and the DoJ is already investing RealPage. Time will tell what happens. The reality is - renters have always been seen as second class citizens in the US - nothing is new here in the last two generations.
> rising fares and abysmal service as the number of major airlines is cut in half,
Airline tickets adjusted for inflation and gas prices are cheaper than ever. You get what you pay for.
> concert tickets,
These are one of the few things that went down in price recently...
Rich people escaping taxes is definitely a big problem, but taxes aren’t the reason people are paid unlivably low wages in the first place. And a 40% tax rate is much lower than several other countries that happen to have much higher income equality than the US, right?
https://www.atlantafed.org/chcs/wage-growth-tracker
Scroll down to the chart and click on “Wage Level"
No, they're saying that it doesn't go nearly far enough to address the massive inequality and poverty issue.
Edit: Also, that chart doesn’t even show the top 1%. I’m not saying the article is correct, just pointing out faulty logic.
Also, I just want to make a distinction between wage and income. The income of the top 1% should dwarf their wage. I recall many CEOs in the 80s and 90s famously claiming themselves wages of $1 per year, conveniently leaving out stock-based compensation and performance bonuses. Present CEO wages aren't as laughably low, but the overall income from their employment is not derived from wages but non-wage based compensation
https://www.atlantafed.org/chcs/wage-growth-tracker?panel=1
(Select "Wage Level" to split out the data by quartile over time.)
The first (lowest) quartile went from lower than average wage growth to higher than average wage growth sometime around 2016, and that trend continued with the pandemic. As of November, 2022, the lower quartiles are experiencing YoY nominal wage growth at rates >2% higher than the forth (highest) quartile.
I'm assuming this "1%-er" statistic emerges from the disproportionate level of variable/incentive compensation seen among high earners, combined with 2020-21 being a banner year for stock gains and corporate profits. It'll be interesting to see if EPI repeats this analysis on the 2021-2022 figures, or if they find something new to complain about.
[1]: https://www.irs.gov/statistics/soi-tax-stats-tax-stats-at-a-...
https://www.federalreserve.gov/releases/z1/dataviz/dfa/index...
I've wondered if leaving the SF Bay Area will be the key to ending my social comparison misery cycle.
Here is my wallet can you spare me some bitcoins. Want to buy a new desktop PC
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or ether
0x4206a4139a506f77eE08Cf72fA8809F7A594B1C5
I've typed up 4 responses to this comment, but deleted the other three because they all assumed certain things about you based on my own beliefs and experience with this issue.
This comment makes you sound unhappy but I hope that is not the case. You have nothing but choices and opportunity. Ask yourself "What is enough?" and "When I have enough, what will do?". It's likely you're already there and can finance a life that makes you happy.
> I've wondered if leaving the SF Bay Area will be the key to ending my social comparison misery cycle.
I suppose you can either change yourself or change your social circle. I've found big changes in myself are difficult without changing the external factors for some period of time. Otherwise, it's too easy to fall into old patterns of behavior.
... and all that boll@cks.
Advice: either be in the 1%, or change jobs regularly enough to consistently boost salary ahead of inflation.
This is a pretty fundamental mechanic of markets. Stuff don't spread around if there aren't any transactions.
Folks, unions and high taxation with an emphasis on public works and strengthening the public sector literally has proof that it works. High taxation with an emphasis on military won’t help, so we need to address that first.
The dream of trickle down economics has been proven false time and time again. In the US, in Russia, in UK. It’s not a strategy that has long term success. And it’s driving the world to suffocate itself, so in a very long term scale it’s actually disastrous.
And what part of it applies to trickle down economics anyway, that is about wealth redistribution, instead of immediate diffusion of a specific good?
From the latest BLS report on the topic: “Real average hourly earnings decreased 1.9 percent, seasonally adjusted, from November 2021 to November 2022.”*1
Average hourly earnings went from $31.23 in Nov 2021 to $32.82 in Nov 2022.*2 That’s where you see average current income rising with inflation (+5.1% YoY)
For example, if the government increases the money supply by 10% by deficit spending, but the activity induced by that spending increases the amount of goods in the economy by 10%, the action will have no effect on the general price level.
The activities that typically fall under this category are building infrastructure or introducing legislation that mitigates collective action problems.
Obviously, a lot of (most?) government spending doesn't meet this criteria, so your comment is still a fair criticism of most governments in practice.
And the reduction in taxes, in the years prior to that.
(other than a brief deflationary period during the Great Depression)
Before 1914 we saw periods of inflation and deflation, netting out to about zero.
https://www.epi.org/blog/inflation-minimum-wages-and-profits...
We generally don't consider that we have "laissez faire" capitalism, for a reason. Interestingly, when it comes to bailouts and government subsidy, we don't seem to have a problem recognizing this fact.
When the citizens are being paid poorly, we suddenly find ourselves searching for the "true meaning" of capitalism.
The structure of the tax system is not fair and that skews all of the results. Capitalism does not require unfair tax policy that benefits top earners.