And QQQ rose 47% this year. This does not seem surprising at all. The entire market went up in 2023.
it was actually very cumbersome for me to find people that knew anything else, when I was younger everyone I was around only prided themselves in buying depreciating material things. I’m aware of how pervasive that mentality can be, could be considered a distinct culture.
Situation 1, Year 2: Rich person has 150, the one hundred poor people have 1.2
Situation 2, Year 1: Rich person has 100, the one hundred poor people have 1.
Situation 2, Year 2: Rich person has 150, the one hundred poor people have 0.8
Both situations show increasing wealth inequality, but only one shows wealth redistribution up the ladder.
I personally believe many of these dynasties do have some unfair and systematic advantages, but this article doesn’t have evidence to support that conclusion.
If you don't have money to put into an ETF, you don't have access to it. "Just invest your money" is not a helpful response to people who live paycheck to paycheck.
I wouldn't be surprised if wages in the parts of the global population that's currently industrializing (parts of China and India) went up by way more than 43% though.
One thing I've realized in recent years (thanks to silicon valley stock options): It's not that hard to get into a >99% income bracket for a year or two. You basically just need to participate in an IPO-style windfall, and maybe split it over two tax years. However, staying in that bracket is much harder; you need to have a windfall every year (so, be a successful VC) or be an executive.
For that reason, I'd be interested to see income percentile statistics broken out over a 10 year period vs. annually. Some people summarize this effect with the acronym HENRY (High Earner, Not Rich Yet).
Heh, most of the world would kill just to experience that for one year in their life.
I realize we're on HN, but... calling that not hard feels out of touch. By definition it's extremely rare.
I guess if you mean, an individual who's gotten into that rare position doesn't need to struggle particularly hard to see the fruits, the comment makes sense. Is that it?
I've been an early employee at two startups also, they just didn't pan out.
If I don't get that in one of the more well-paid professions, then I don't see how a teacher, or a janitor, or a waitress, etc, would ever get one.
Yeah I was entirely limiting the population discussed to SWE as well. Anybody who doesn't work in a core tech role has no chance whatsoever of such windfall, and that includes many people who do work in tech roles.
That's been increasingly the experience of friends and coworkers too. I think a fair number of people are either far better off than they think, or just don't see the huge middle class and below squeeze going on.
Or they bought a single-bedroom apartment as a condo for like the same price that most people used to pay for full-size homes back in the day.
And that was all pre-pandemic, when prices were like 70% of what they are now and mortgage rates were super low (that's when I bought mine also). I don't know of anyone who's bought a home my age since then (and I'm an older Millennial, it should be mostly us buying homes right now).
There's a huge Boomer generation also trying to downsize.
Back in 2021 the average homebuyer was 45 years old. This probably hasn't changed that much: https://www.businessinsider.com/typical-us-homebuyer-age-sal...
https://www.nar.realtor/sites/default/files/documents/2021-h...
- GenZ at 2%
- Older Millennials at 23 percent and Younger Millennials at 14 percent of the share of home buyers. Millennials have been the largest share of buyers since the 2014 report
- Buyers 41 to 55 (Gen Xers) consisted of 24 percent of recent home buyers.
- Buyers 56 to 65 consisted of 18 percent of recent buyers and buyers 66 to 74 consisted of 14 percent of recent buyers.
- Buyers 75 to 95 (The Silent Generation) represented the smallest share of buyers at five percent.
Not a unicorn. Just be an early member of a company that gets to IPO. You do have to risk more to attempt that, and maybe do it more than once, but it's a question of appetite for risk and a slightly lower work-life balance. It's definitely not unattainable.
So it's difficult and rare and less/not available to those without safety nets and unhealthy (and, therefore, less/not available to people with disabilities).
I did go ahead and interview at another early startup that reached out last job search and it was such a boring idea (a slight tweak on Blue Apron) and the CTO had such a massive ego (spent literally half the interview talking about all the things he expects from an engineer at the company and how many engineers he's passed on and how people think he's an asshole) I wasn't bothered when he passed on me too. Felt like I was in good company.
Maybe I'll give another one a chance next time I'm looking for a job.
Basically, for a 30 year period, if a grand total of 5% of the populace will earn a top 1% income in their life, you could have 0.5% earning a top 1% income for the majority of their lives (so using up half of the top 1% slots). Another 0.9% earning a top 1% income for an average of 10 years of their lives (using up an additional 30% of the top 1% slots). And in the 30 year period this would leave only 1/5th of the top 1% slots open to the remaining 3.6%, who would have an average of 1.6 years each of being a top 1% income earner. Any spare slots would go to lottery winners.
So, mathematically, the number must lie between 1% and 30% that will be in the top 1% over a 30 year career. The question that remains is where in that range, which gives a measure of economic mobility for a country.
https://taxfoundation.org/data/all/federal/summary-latest-fe...
> Income Split Point $548,336
By the same token, it's not hard for a person to be worth $1M+...steady long-term investment in a 401k over the course of your career can get you there.
But it's _unavailable_ to the average person. They'll get taxed brutally if they touch it, and when managed correctly, will be divvyd out over the course of their retirement...so having 1M doesn't mean it's liquid.
inherited money is not taxable income to the recipient (in the US).
There is a tax on the estate of the decedent if the estate is larger than the exclusion amount.
Not taxable until it is over $12M. The only difference is that I didn't state that it wasn't taxed as income (which it shouldn't be) - it should be taxed as inheritance if it should be taxed at all.
In the context of “an inheritance put me in the top 1% of income”, that’s obviously wrong, which was my point.
We may get two more, not near as sizable as the last one...and if we manage things right, my kids will get some, too.
It doesn't take hardly any money at all if you start early enough. $100 a month becomes $320k at retirement. (yes, handwavey tax implications, but still, 100 a month at 7% for 44 years is $320k)
"The average salary increase in India is likely to be 10% in 2023, up from an actual increase of 9.8% in 2022" [1]
China's was in the range 3.7 percent, with salaries now a double of what they were a decade ago [2].
[1] https://economictimes.indiatimes.com/jobs/mid-career/salarie...
[2] https://www.china-briefing.com/news/average-salaries-in-chin...
I found this mini-documentary by Polymatter[1] interesting. It asserts that Indian firms with ten or more employees are subject to inspections by the Indian labour inspectorate and a bunch of other requirements. For entirely unrelated reasons most Indian firms find 9 to be the optimum number of employees.
I would like to see stats on factory job worker wage growth. No way are they seeing 40% growth!
At the same time, YOY inflation in India is pretty high https://www.statista.com/statistics/271322/inflation-rate-in...
India keeps the majority of the population afloat by big socialist spending - government handouts or there would be riots on the streets!
I would need significantly more than a 43% raise for a single year for my wealth to increase by 43%.
Condos in Delhi regularly sell for half a million dollars and higher.
Meanwhile the government had to extend a free food scheme for 800M people by another 5 years and reduce the price of cooking fuel by 40% because the majority can’t afford to eat.
Even as someone who makes good money, increasingly starting to feel that any semblance of a "good life" is unaffordable here. The discourse among my friends - all well-paid mid-career professionals - was that it's often cheaper to fly out to a country like Thailand and stay in a good resort, than to have a holiday in India.
Wages would tend to be a fraction of wealth for those on middle incomes, say, who have been in work for more than a few years. They will have payed the majority of their wages for years into acquiring a place to live.
In the Uk my house would now cost 8x my wage, a wage increase of 43% (for one year) would increase my net worth by about a sixteenth (~6%).
Inflation is 10% (not 42%) and my employer capped wage maintenance at 8%.
In October, Indian government wage maintenance was 4% (https://www.reuters.com/world/india/india-raises-dearness-al...), do you think the private sector paid 10x more?
How much increase for the net worth minus stocks? Betting that any increase there was much more modest.
It's actually much easier than that: you just have to win the lottery. Easy! I mean, why doesn't everyone do that? Are they stupid?
That's a good point. When people talk about "the 1%" or "the wealthiest families", they take the group that would qualify to be in that ranking today, and compare them with a different group from the past. But they're not the same people. You really need to do a longitudinal study. Take the same people and see how their wealth has grown.
For instance, take the richest person from the 1980s
Yoshiaki Tsutsumi dominated the richest list in the 1980s thanks to his real estate empire. However, times soon changed for Tsutsumi when real estate values tanked in the 1990s and he was caught up in an accounting scandal in the early 2000s. As of 2006, he dropped off the list of the wealthiest people in the world.
Today he's worth 500 million.
To make it that wealthy you generally have to take highly concentrated risks or be extremely leveraged. And this rarely lasts.
https://www.celebritynetworth.com/richest-businessmen/busine...
Do you have any statistics for that claim? In Sweden the largest union negotiated salary increases of 7.4% over two years (https://www.unionen.se/opinion/ja-till-avtal-nu-har-vi-ett-m...) which is far below the rate of inflation. In other words most workers are experiencing pay cuts, not increases. It would be surprising if the situation was completely different in the US.
mostly unheard of?
I'd challenge anyone to show a union winning even a >25% pay raise for their employees, and even those would be unicorns.
The 99th percentile threshold for household income in 2023 was "only" $591,550.
A two-earner couple who sells a house beyond the exclusion amount (or is not eligible for the exclusion) would pretty readily brush into the 99th percentile for that year. (Many zero-earner couples would get there just from a house sale.)
I wouldn't be surprised if a lot of the "one year" 99th percentile folks were there just from a house sale and then someone else takes that spot in subsequent years.
Among the “got into the top 1% once” group, I think it’s possibly a majority of those cases.
Capital gains are roughly “net sales price minus basis”. Whatever the mortgage was has no bearing on it. (Someone who pays down their mortgage aggressively will not have more gains by that action, nor will someone who continually refi’s with cash-out have fewer gains.)
Edit: parent edited their comment to remove a question about how gains are calculated and how that interacted with mortgage payoff.
> Whatever the mortgage was has no bearing on it.
Yeah, I realized that and deleted my edit.
Editing a third time to point out that we're editing back and forth in real time. Your edit on the mortgage didn't exist at the time I deleted my edit about it. :)
Edit: And for those calculating all of this out to determine what percent of the population does fall into the top 1% from a home sale:
https://www.irs.gov/taxtopics/tc701
: If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse.
What an insanely out-of-touch take. HN-ers really are something else.
The richer are getting ever richer, with everyone else stagnating or regressing. Last time inegality was this high gave birth to the concept of a union, to the creation of communism, etc.
If you’re a capitalist who despises progressive ideals, you should be wary right now. The very rich are so rich they’re grabbing all the gains with nothing for anyone else.
There's a difference between wealth and income though. It's entirely possible 10% pay raises yield >43% increases in wealth, so long as most of the original wage wasn't able to go in to savings/investment.
This has got to be the hardest I've laughed at a Hacker News comment. Does dang put funny comments on the highlights section?
A wealth growth of 0->1 is infinite %.
People who are not levered into assets are worse off after an increase in money supply.
Deficit spending necessitates increasing M2, and in turn is a wealth transfer from the poor and middle class to the rich.
Not to mention the banksters who are charging interest on every dollar in existence
Would you be willing to articulate why wealth inequality is bad for society? I am fairly certain that wealth inequality globally is higher than it was in 2000. At the same time, well the poorest globally are doing much much better on average.
In my mindset as long as the median is improving and the poorest are improving, the ratio of rich to poor isn't important and isn't clearing a bad thing if the inequality is increasing. You seem to think otherwise, why?
The issues are broad and subtle with wealth inequality, too much for the scope of an HN comment, but I would posit that inequality issue are about more than access to goods.
I think pointing to wealth inequality as the reason there is increasing disconnection is a stretch. Yes it's a factor but I don't think it's the chief one.
Do you have a pointer to a resource that covers some of the more broad and subtle issues with wealth inequality?
I think it is the chief one. Every time I have seen it suggested that it is some other thing — you don't have to peel but a few layers and find money in fact behind that other thing.
Inequality gives rise to populism and extremism all the way up to civil unrest. If the middle class ignores the woes of poor it is swept by revolution aimed at rich.
With better outcomes for society: labor movement at the turn of century and in 30s.
More recently: Arab spring, Chile 2019
"Although the 18th century was a period of increasing prosperity, the benefits were distributed unevenly across regions and social groups. Those whose income derived from agriculture, rents, interest and trade in goods from France's slave colonies benefited most, while the living standards of wage labourers and farmers on rented land fell."
Same for Arab spring, it's like second sentence on the wiki. It's also heavily about corruption, but guess what, those two go hand in hand. Open maps for corruption and Gini index and you will see strong correlation.
Of course there are more reasons. Society is complex.
If the French revolution wasn't about income inequality then there has never been a conflict about inequality... Read the Rosseau and Voltaire of the period leading up to the crises. You can feel their passion when they talk about inequality.
Here's just one event from the time: https://en.wikipedia.org/wiki/Women%27s_March_on_Versailles
"The rioters had already availed themselves of the stores of the Hôtel de Ville, but they remained unsatisfied: they wanted not just one meal but the assurance that bread would once again be plentiful and cheap. Famine was a real and ever-present dread for the lower strata of the Third Estate, and rumors of an "aristocrats' plot" to starve the poor were rampant and readily believed.[2]"
Not about income equality per se, but you know, not wanting to starve in the streets. Lol what the fuck.
So like I say "inequality" doesn't even enter the broad collective mind. And the intellectuals that try to run "what's next" do talk about "égalité" but again that's not what they mean.
This is not what anyone means by "inequality" now. Not killing the economy with random wars, yes. Welfare, yes. Price controls even, sure. Better planning (because we are talking about famines here in this specific case - not even taxes.) Even when "Egalité" and "Fraternité" make it into foundational texts, soon after, this is not what they are about.
Paywall link Paywall link Makes a slight case but mostly just assumes inequality is bad.
Same story as in plantation times: Make the white servants feel superior to black slaves by virtue of skin color; manipulate poor whites into believing that any perceived gains by blacks had come at their expense.
Although the absolute wealth of poor might have improved since 1900, people can still be angry that someone is extracting disproportionate amount from the system while their situation is stagnating. See flatlined real wages since 1970s
Like many pointed out here, this "43%" was nothing special this year if, for example, you are mid-career and have moderately aggressive stock market participation. It's an example of headline entirely cooked up for agitation.
You are right, it's not the majority of the population. The fine article was trying to raise indignation at the wealth increase of "the 25 richest families in the world", using seemingly gross numbers that they militarized without even noticing that these numbers were completely unremarkable. Or perhaps in bad faith altogether.
Inequality makes possible our current situation, where the owning class encourage and exploit immigrant labour, only to disseminate "news" aimed at making the working class hate those immigrants.
Even if the poor fared a little better we cannot say if they would not have fared even better still had we less of a wealth divide.
Wealth inequality is an issue largely borne out within a particular society.
In the UK we've seen rising poverty and food insecurity at the same time as a rapid increase in the wealth of those at the top. That global poverty has improved means little to someone who is now struggling to put food on their table, or stay on top of their mortgage.
> In my mindset as long as the median is improving and the poorest are improving, the ratio of rich to poor isn't important and isn't clearing a bad thing if the inequality is increasing. You seem to think otherwise, why?
Wealth buys power. Allowing it to concentrate into a small group of people leads to issues.
Social cohesion seems to suffer as inequality rises.
I don't think there is any seems about it. I'm quite confident that social cohesion/solidarity is poorer in the UK now than it was fifty years ago and considerably worse than here in Norway where we have more compressed income and wealth ranges.
My opinion is that inequality destroys people's ability to relate to one another. My worries now are completely different to those I had growing up, and the people who have staff to run their lives increasingly show themselves to have no concept of what life is like for the rest of us.
It feels like there's a fairly dangerous game being played in the UK at the minute, with frustrations around inequality are being exploited and redirected as anger towards out-groups.
The issue is that leaving the EU and attacking immigrants doesn't actually solve the underlying issue. The people behind it still benefit in the meantime but eventually it's going to blow up in someone's face. My sincerest hope is that it's theirs.
I do not have evidence but there are lots of regulations, talking about Spain now, but also in Europe, that leave small players de-facto out by apparently good intentions and make big players almost monopolize markets. Banking system, energy are two examples in Spain but there are lots of small business that get smashed by the fact that by not being profitable enough, causing them economic damage makes them extinguish. Lots of small business have been shutting down in the last few years yet they keep increasing tax rates. Special mention to freelancers, the most mercilessly smashed group here, taking into account that you often cannot control what is coming in the next few months wealth-wise, since that is relatively irregular and self-sustained.
The system is built in harmful ways for most of us.
But making regulations is much easier if you’re very wealthy, so you advocate for regulations that keep you wealthy with a very expensive loud voice and that creates a pretty strong feedback cycle.
One way out (seems to me) is chopping the top off the wealth curve and redistributing - it might matter less that poorer folks are getting money and more that extremely wealthy folks have less insanely disproportionate power to make a world that suits only them.
Deregulation is what allows people to enter markets. Regulation is what puts barriers.
There are plenty of times where regulations are just plain absurd and what they contribute to is to kick out smaller players from the market without any real improvement. It also forces consumers to buy more expensive because the market is more monopolized. Safety is the typical excuse. Sometimes it could make some sense but sometimes is just plain cheating.
I would let people choose carefully and have ALL the information clear (must be really dilligent about this in laws) about what they are buying or not, contracting or not and let the market decide what those levels of quality for each service are and the value they have.
And if we're strictly speaking about the poorest - they also don't have a 401k or retirement savings, so they aren't benefiting from the increase in asset prices.
“Real” meaning “adjusted for inflation”.
https://libertystreeteconomics.newyorkfed.org/2023/01/inflat...
: As there are no official estimates of inflation by demographic and income groups
: In the first post of this series, we present disparities in inflation rates across racial and ethnic groups as well as across income groups between June 2019 and December 2022. We present evidence that during this period, Black, Hispanic, and middle-income households were most affected by rising inflation, experiencing steadily higher price increases relative to the overall average between early 2021 and June 2022. This pattern is largely because a greater share of these groups’ expenditures is devoted to transportation, particularly used cars and motor fuel, categories that led the 2021 inflationary episode. However, over the last five months, as transportation inflation has declined, these gaps have declined as well.
: It is likely the case that the same rate of inflation represents a greater welfare loss for lower-income than higher-income households because of the former’s lower capacity for substituting to less expensive goods, greater liquidity constraints, and larger marginal utility of real income.
That's what inflation adjustment is for.
> The poorest people in the US saw faster inflation-adjusted wage growth than any other income bracket: https://www.epi.org/publication/swa-wages-2022/
It doesn't. "Real wages" are adjusted to changes in CPI. It makes no assertions that everything inflates at the same pace, any more than the overall CPI figure does the same.
If your wages went up 20%, and the CPI went up by 10% (composed of, say, a 40% rise in rent and some commensurate declines in other goods and services), your real wages went up by 10%. Of course, how that impacts actual individuals is different based on their circumstances.
Pray tell, what has declined in price the past 5 years?
https://www.cbsnews.com/amp/news/economy-inflation-deflation...
So is this an actual reduction in price, or yet again just covid supply squeezes easing off? Does a 2.6% drop in price actually offset the price increases of the past 5 years?
Well yes - rent is driven up by more people being around, and groceries by wages and fuel going up. As for fast food jobs - if a fast food job can get you a place to live by yourself that's amazing, but surely that's going to be harder and harder to find as demand stays high and the number of 2-income families, who can just out-bid you easily, also is high.
We have rampant inflation - why would you not expect the NUMBER attached to the stock market to go up?
Do we? I could have sold wheat for $15 per bushel two years ago. Now I'm lucky if I can get $7. It looks more and more like a disinflationary/deflationary environment to me.
CPI continues to show inflation, but the CPI basket measures that which at the end of the supply chain (it is a consumer index, after all), which means that it always lags significantly behind what's going on in the rest of the world.