Absolutely not.
If corporate revenue increases, but wages stay the same, GDP per capita goes up, yet the workers aren't any better off. All that extra money is being absorbed by the ones at the top.
Median disposable household income is probably the best measure.
If I used to make $78k as a full time IT employee, but now have to work two jobs to make $78k, I still have same household income but I’m considerably worse than before.
A combination of hours worked, wages earned and household debt together would paint a much more accurate picture.
It's less common to report, but in the aftermath of the financial crisis I remember hearing more about it. You can construct a chart in FRED that covers it:
This would need data to contextualize.
(No comment on the current reality of medical debt, of course. Just a general principle.)
If you lose your job in a depression there will be plenty of people willing to buy assets at a discount. If you have equity in your home then your position will be net positive. About half of all mortgages have an outstanding balance less than 50% of the home's value.
But if you owned a house in Detroit from 2003-2010 it might have dropped 70-80%. Or, more on point for many on HN, if you own a house in the Bay Area worth $2-$3M with 25% equity, and the tech job market collapses, then you might get completely wiped out.
Or for some loan you need to pay monthly 5% of your income (for iphone or car), and other loan need you to pay 50% of your income (mortgages). You cannot count them in the same way...
Or for some loan you need to pay monthly 5% of your income (for iphone or car), and other loan need you to pay 50% of your income (mortgages). You cannot count them in the same way. And mortgage can have 1% interest rate or 6%...
There is a huge quantity of data about the US.
You need to consider multiple metrics. Any one metric by itself is going to have holes.
Folks at the bottom of the pile are perfect economic bellwethers.
Median disposable income won’t meaningfully capture OP’s case of losing a high-paying job and having it replaced by a low-paying one. For that you need to look at the distribution of household disposable income.
We have terrific economic metrics in America. It really should be part of a mandatory civics class to learn how to read them.
> Household income is adjusted for differences in the needs of households of different sizes with an equivalence scale that divides household income by the square root of household size. The adjusted income is then attributed to every person in the household.
https://www.oecd.org/en/publications/society-at-a-glance-202...
A healthy economy is one where money is made via wages, and spent via economic activity.
The more active a given dollar is in terms of circulation through the economy, the healthier the economy usually is.
Economies tend to stagnate when a small group of people hoard the vast majority of the money, and don't circulate it back into the economy.
I can set an argument about political influence that's gotten really strong lately but maybe that's better addressed by strengthening the politically system
If a very small percentage of the people own a large percentage of the wealth, it compounds. They literally cannot spend all of their income on consumption, except maybe by lighting piles of cash on fire, but that is not a route to doubling the real wealth of everyone in society.
That means that asset prices rise, and fewer people can afford property. Jobs concentrate near where rich people live, because they are the ones with disposable income to spend, making this worse. Transfer payments (rent) from ordinary people to the remaining property owners are high. Wages stagnate, because wealthy people spend most of their money on assets, not goods and services. Consumer demand decreases. Capital moves away from producing things that ordinary people need, because they can no longer afford them, and is instead allocated to producing luxury goods. Social mobility is low because low wages and high property prices make it impossible to work your way up.
The cycle is self-reinforcing, not self-correcting. Most of history throughout the world has consisted of a few very wealthy feudal lords and a large population of serfs.
Strengthening the political system might be nice, but post-Citizen's United, that does not seem to be the direction the US is headed, at least, nor is it in the interests of those who benefit most from the current system.
Not in terms of the ratio between you, which is the way we normally talk about wealth inequality : "he has X times more wealth than I do", or "she makes X times more than I do".
Anyway, this is not how wealth inequality has grown at all. It has happened by most people's real income barely rising at all over 40-50 years, while the rich have seen theirs rise by huge factors (hundreds to many thousands in some cases).
Meanwhile, real (aka inflation corrected) median household income has gone up: https://fred.stlouisfed.org/series/MEHOINUSA672N
If what you care about is standing real wages why talk about inequality? I'm concerned that it just functions better as rage bait and leads to unproductive policies.
2. real median household income stayed relatively flat between 1970 and 2012. Since then it has risen again in a significant way.
3. despite the gains in real median household income, the rise in the household income (and net worth) of various upper percentiles (20%, 10%, 5%, 1%, 0.1% ... take your pick) has been very, very much larger. consequently, the "double my income, double Musk's income" line is not a description of what has happened.
4. the percentage of GDP that accrues to capital rather than to labor have gone steadily up since 1980.
Look at the graphs of real wages vs productivity that start pre-1970. Yes, it's true that real wages have gone up some since that time, but they remain completely divorced from productivity in a way that's totally different from the time before Reagan.
Meanwhile, the income/wealth of the highest earners has gone up astronomically during the same time.
They are staggeringly wealthy because they have redirected the flow of money from us to them. This is a very clearly visible and uncontroversial fact. The controversy is simply over whether it is a good thing.
Mainstream media companies are owned by very wealthy people, who vote Republican, and put their thumbs on the scales over and over again.
You can see that in a myriad of different ways, but at no time in recent memory has it been more blatant than during the last election cycle, with events like Bezos forcing the Washington Post to issue no endorsement rather than endorsing Harris.
Like, you can agree or disagree with the politics of it, but it should take a monumental amount of motivated reasoning to deny the existence of this bias in our media.
There are also many emerging podcasts which either directly interview candidates or at least discuss the impacts of policy beyond the nonquestions presented by mainstream journalists. For example, how many times have journalists allowed Powell to say that he can't comment on proposed legislation like the BBB? Not once have we seen a follow up asking Powell why he has no comment on the bill considering his job is to offset its effects? His literal job is to comment on policy.
> events like Bezos forcing the Washington Post to issue no endorsement rather than endorsing Harris.
The Washington Post is independent media. It's just dependent on its owner like all media. I have no problem with Bezos' move concerning endorcements; he's maximizing his utility.
> The Washington Post is independent media.
You wanna run that by me again, chief?
Originally I used it to refer to non mainstream orgs. That was a mistake on my part.
If you consider WP to be independent, then which news organizations do you consider not independent? Because I think most people define independent as "not owned or controlled by a billionaire".
The US however have more millionaires per capita and SUBSTANTIALLY more people in poverty per capita.
Sweden’s Gini coefficient is 0.276 (2024), the US’ is 0.418 (2023). The US has a lot more income inequality.
At consumption money level at least inequality is also inefficient allocation of resources due to the diminishing marginal utility of money.
You forgot to mention, also the cost of everything doubles and maybe kicks off some good ole hyperinflation
Wealth inequality means all the investment and excess income goes to the top 0.0001%, rather than the average person. Whereas now this may support he average person's purchase of a home, or retirement, or similar, this now supports the billionaire's purchase of a million homes to rent to the common man, earn a fixed profit, to launch rocket ships with a head, two spheres at the base, and veins, where the billionaire with the biggest, longest, firmest rocketship is the winner! That, instead of people having houses and a retirement.
The issue with disparity is it's a reflection of the unfair conditions of compensation. Elon Musk's employees make him that money, not Elon. He could make all of his employees multi-millionaires overnight by granting more generous stock plans commensurate with the money they've made the company. Reasonable profit sharing plans basically ensure this, but since companies all collude to not grant them, we see them as relatively rare in the working world. The state should be requiring companies to grant profit sharing. Not gonna bike shed it here, but it needs to be done yesterday.
What's this universe that only contains you and Elon? Or do you think that everyone's real wealth has doubled?
> I can set an argument about political influence that's gotten really strong lately but maybe that's better addressed by strengthening the politically system
Citizens United has practically dismissed that possibility in the near term.
If GDP goes up and the velocity of money drops, it means that real economic gains are not being realized by those who actually spend the majority of their income versus saving it.
Not that there's anything wrong with saving money - it's just that the more money that is being spent regularly, the healthier the entire economy is. Generally.
If corporate revenue increases and is spent (as most revenue is), then the workers will be better off in the most bland "raising all boats" sense of the word - there will be more competition for their labor and more opportunities for them to jump ship.
GDP gets a bad rap but if I had to pick a single metric, that's the one I'd choose.
But it's still a waste of their talents and society as a whole will be worse off than if they did heart surgery. You can measure that because a waiter makes minimum wage and a heart surgeon does not - the heart surgeon contributes more to the GDP than a food service worker.
That's the meaning of that metric and that's why it's useful.
Your argument is the exact reason why the media focus on a single metric is bad - because some but-whataboutism will always pop up and use it as pretext to debate an unrelated issue not covered by the metric.
It's also the exact reason why we shouldn't measure economic health as a single metric at all - it's not that to whom value accrues doesn't matter, it's that it's a different metric than how much value is generated in the first place.
It also explains why there isn't a single best economic policy - the absence of a single metric means there is no strict ordering.
(You can easily construe a counter-argument why median disposable household income isn't the best metric, either: "Median wage is stagnant, everybody needs to take a second job so disposable income goes up". And you can do that for every single metric in isolation)
You're right that there is more nuance you'd wish to see, but it's harder to measure, and I don't know how much it's normally worth.
Median economic health strikes me as far more interesting than mean. I don't really care how well rich people are doing.
ahem "people of wealth"