Click for an interactive chart.

Source: Chartbook of Economic Inequality

Category: Economy, Wages & Income

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

22 Responses to “Discuss: Economic Inequality in the USA”

  1. RHB says:

    The imaginary people who are affected by imagined states of equality are too busy to comment because they are imagining what is like to have an Ipad. But if a real imbalance exists, nature will let us see it in hindsight. A Tibetan spiritual leader might ask what repercussions exist in ignoring imbalances amongst our humanity. Perhaps John Lennon was on to something.

    Thx for the opp. to comment.

    • willid3 says:

      i am sure there will eventually be a result, ala the French revolution. when the 99% decide they get no benefit from the economy at all.

      • rd says:

        It came close in 1932 with the Bonus Army and numerous other opportunties for insurrection. That is why I have been baffled by the full frontal assault on Social Security etc. It is the one bulwark between the 0.1% and the roiling masses. If the safety net is severed, then all bets are off for how much of society could react.

        http://www.eyewitnesstohistory.com/bonusarmy.htm

    • 873450 says:

      “I am he as you are he as you are me. And we are all together.
      See how they run like pigs from a gun. See how they fly.
      I’m crying.”
      I Am The Walrus by John Lennon

      The gun will be disenfranchised millennials occupying Wall Street.
      Elections did nothing for them.
      Captured government did nothing for them.
      Peaceful protests did nothing for them.
      Pitchforks will not be a surprise.

  2. CD4P says:

    How about the price of a gallon of gas vs. the minimum wage (over time)?

    Or, the minimum wage versus health care costs…

    Or, the minimum wage versus CEO compensation?

    Or, the minimum wage versus number of hours of TV watched.

    Or, the minimum wage versus the number of Americans claiming disability?

    Or, the minimum wage versus student loan debt?

    Or, the minimum wage versus Berkshire Hathaway dividend income reinvestment over time?

    Or, the minimum wage versus number of hours spent on a smartphone? (I wonder what a 200 student college lecture hall is like these days…)

  3. mbrmd says:

    Janet Yellen knows three people in one of those lines that are Someone Else. The newsies ate it up, and say she’s got them folk covered with that bond-buyin’ and interest rate thing. So what’s your point.

  4. trafficengineer says:

    Probabilities of various jobs that are likely to be automated in the next 20 years.
    http://goo.gl/mrCQda

  5. RW says:

    “Tyler Durden” provides a summary of the chart that is actually fairly reasonable but there are some conclusions I don’t think are warranted.

    For example, I don’t think any firm conclusions are possible regarding inherited wealth. Survey data are fairly recent and there is frankly no reason a plutocrat (or more likely his agent) would answer honestly. What little I know of corporate and trust law suggests that masking the real size of estates is quite possible and there is really no way to estimate them accurately.

    Most of the time series are post WWII and some have discontinuities and/or may not gathered/calculated the same over time so comparing trends with what came before could be misleading. The authors acknowledge some of these problems but that doesn’t make it any easier to estimate the validity or reliability of some of the series.

    Some series are redefined or re-calculated in non-standard ways by the author(s) of the chart; e.g., Gini coefficient is redefined as a mean difference and while this may facilitate placement on a % scale it is uncertain it can be interpreted normally or compared to other Gini series.

    I guess my real problem with this particular chart is that it is unclear to me what a longer-term historical context is supposed to demonstrate: That income inequality was worse before the New Deal? So, what, the 99% shouldn’t feel so bad about how much share they’ve lost the past 40 years? Is that it?

    • rd says:

      I think Americans don’t really care how much money Bill Gates, Steve Jobs, Sergei Brin, Charles Schwab etc. make. They are inventing things, creating and running companies etc. They created their wealth.

      Even passing their wealth on to spouses, who often participated in the process would generally be viewed as acceptable.

      I think the two classes where the trouble really starts is the next generation who simply won the genetic lottery and the renitiers who are gaming things like carried interest, Federal Reserve support, government guarantees in fortune.

      Many of these estates have huge embedded capital gains that have never been taxed. No estate tax means that a large amount of wealth would be passed down from generation to generation without taxation, even at the relatively low capital gains rates. This would be grossly inequitable. So there should be reasonable taxes at that transition point between generations. Their parents earned their way to great wealth, why can’t they?

      A simple solution to the trust account issue would be to largely treat them like a big inherited IRA – RMDs would apply and the distributions would be taxed as ordinary income.

      For the rentiers, items like carried interest exemption for fees on profits should simply disappear – fees would be taxed as ordinary income and they can re-invest the remainder just like any client at which time futture gains would be taxed as capital gains etc.

      If we save institutions for financial stability, the executives who participated in their imminent demise should be jettisoned and all termination packages revokked. There should have been a financial bloodbath for the individuals who caused the financial crisis – instead most of them have come out of that debacle with far greater wealth than they went in with unlike their typical customer.

  6. Mr.-Vix-It says:

    Although economic inequality in the U.S. is the topic du jour, the real outrage should be directed towards humanity’s shameful tragedy of economic inequality on Earth. That stat that came out a few weeks back where the 85 richest people had as much money as the poorest 3.5 billion people should be eye-opening but people choose to close their eyes. How any of these 85 people (let alone the rest of the world) can close their eyes at night and be able to sleep without feeling constantly nauseous is beyond me. And yet the greed infiltrates and takes over all sense of right and wrong.

    If you want to alleviate some of the egregious inequality in the U.S., it is not rocket science. Raise taxes so the rich are not getting away with highway robbery. It doesn’t take a genius to figure out that when taxes are raised, inequality goes down just like after the last time inequality was this bad in the 1920′s. But Washington won’t do it, it’s really curious how they cannot see that there is going to be civil unrest ahead of us because they refuse to raise taxes on the rich. But when food prices get just a little bit more out of reach for the masses, look out. Hunger starts a lot of revolts…

  7. slmasker says:

    Income inequality, and especially wealth inequality, is very good for those with large incomes and tremendous wealth. They have the power, they have the NSA, they have the money, they command the big guns. It is their America, or rather their world. I am not sure patriotism is particularly important to them. Most “middle class” people are busy trying to be more like them and less like the poor they are afraid of becoming.

    Do you see a realistic way to change this trend? My son asks me that when I get upset with the way things are going. If I am honest, none of the old lines about using the system to effect change ring true.
    The system is either fairly corrupt or very effective at producing what the wealthy want–depending on how you look at it. And the wealthy and well-connected own the system. As Buffet said, his class won.

    I hope someone does have ideas, maybe a plan. The deep state stuff is interesting? Start by untangling who THEY are and how THEY are connected to keep resources rolling uphill to themselves?

  8. VennData says:

    People want inequality. They voted for Presidents who put Supreme Court justices in power that through Citizens United allowed unlimited campaign spending, unlimited political advertising, and unlimited lobbying.

    People like it that superwealthy have such great power. They like bowing, dancing, and performing like monkeys for the Koch Borthers, Sheldon Adelson, and Rupert Murdoch.

    Dance monkey GOP voter. Dance for your massah!

    • rd says:

      At this time , many people think they are not in the cross-hairs of the 0.1% – somebody else is the problem. As a result, they buy into the propoganda from the 0.1%. A large precentage of the population still buys into the 1800s Manifest Destiny concept, not realizing that the land available then for homesteading is now owned and operated by gigantic corporate machines. Eventually, they will figure out that they are just as much a target as the other people. That is when the real unrest will begin.

      “In Germany they came first for the Communists, and I didn’t speak up because I wasn’t a Communist. Then they came for the Jews, and I didn’t speak up because I wasn’t a Jew. Then they came for the trade unionists, and I didn’t speak up because I wasn’t a trade unionist. Then they came for the Catholics, and I didn’t speak up because I was a Protestant. Then they came for me, and by that time no one was left to speak up.”

      – by Martin Niemöller, prominent German anti-Nazi theologian and Lutheran pastor, best known as the author of the poem First they came….

  9. DrSandman says:

    Meh. This would be concerning if there was a caste system in place and traveling between quintiles were prohibited.

    Professional athletes and movie starlets are ungodly rich for a while, then often become bankrupt. Hard workers live comfortably, but never extravagantly. Lottery winners go from trailer parks to silly mansions and back to trailer parks in a few years.

    Bono said it best… paraphrasing. (Google it yourself) “In Amurica, you see a mansion on the hill and think, `One day, with hard work, I could live in a house like that.’ In Eye-err-lan, we see a castle on the hill and think, `One day, I’m going to get that ba$-turd.’.”

    It’s unhealthy to keep obsessing about which party the Kardashia went to last night. Envy is such an unbecoming personal failure, or sin, if you’re so inclined. Let them live out their ecstacy-fueled slow-burn and bury the bodies when they crash.

  10. jhawkins90 says:

    Globalization (good force) + Aging population (neutral force) + Cronyism (bad force) = Picture Above

    In what proportions they are affecting the world now, I have no idea, but I think as we look higher and higher up the earners (the one percent of the one percent, and so on) and where their income is coming from, we might get a better sense of that.

    Good paper from Taleb that discusses the idea of people who benefit more from growing inequality than growing economies: http://www.fooledbyrandomness.com/Onepercent.pdf

  11. Sackerson2 says:

    I don’t understand RHB’s comment, though I do have a degree in English from Oxford. It has the flavour of what in the UK used be known as “Blow you, Jack, I’m all right.” Was the reference to (chippy Liverpudlian) John Lennon because he once invited the wealthier element of his audience to rattle their jewellery rather than applaud? Perhaps RHB is one of the Rolodex-and-Rolex set, in which case we must congratulate him on his good fortune.

    I look forward to a discussion on how increasing inequality in net worth and income leads to more spare cash going into investment and less on the kind of spending that stimulates demand, jobs and economic growth. Perhaps also something on the long-term (multi-generation) economic and social strains of increased structural unemployment.

    In addition, I’d be interested to know how the Founding Fathers would view the development of their freedom-loving Republic into a society of wealthy airs with aristocratic airs, sitting on top of a struggling and dwindling middle class who are kept in line by fear of falling into the pit of hopelessness beneath them. Maybe the revolt against George the Third was entirely unnecessary; after all, at one stage Washington’s fellows mooted making him king – would he then have been George I, or IV?

  12. ConcernedSkeptic says:

    I would strongly suggest that all readers of this blog check out Michael Pettis’ current essay on “Economic Consequences of Income Inequality.” Dr. Pettis combines an astute ability to combine both history and economics to reveal economic truths. Highly recommended read.

    http://blog.mpettis.com/2014/03/economic-consequences-of-income-inequality/

  13. constantnormal says:

    Why limit this to the USA? From what I can tell, economic inequality is a plague sweeping over the entire globe. I suppose that the USA, with its false veneer of “economic opportunity for all”, is where it stands out the most, but this is a fact of life in pretty much every nation.

    I think that some of it is due to the increasing pace of technology, the reduction of the value of human labor, and another significant contributor is the “one winner” nature of globalization, as polished by the internet, which grants access to all markets (and thus all economies, and all the various pools of labor, all priced differently (but rapidly coalescing into one )), and the rise of the multi-national corporation, which can easily work its way around the policies of the nations of the world, avoiding taxes and social responsibility, being both a participant of every nation and simultaneously having no responsibility to any nation.

    Perhaps a global Corporatocracy lies ahead, with fiefdoms of multinationals running the globe.

    People are fooling themselves if they believe that this is merely an “imbalance”, which will sooner or later be corrected back into the familiar and comfortable economic systems that they remember from the past.

    The Past is gone forever, a sunk cost that we either learned from, or did not. The Future lies ahead, and depending on how well we learned our lessons from the Past, and how diligently we work at shaping the future (which is probably futile, the shape of the future is largely determinedly now), we will either live comfortably within it, or have it roll over us like trucks across so many dead squirrels along the roadway of history.

  14. noncist says:

    Inequality in itself is not the problem. The standard of living for those at the bottom and stagnation in the welfare and mobility of everyone except those at the top are the problems here.

    I also agree that we should look at the Earth in its entirety and not just the US.

    I know more than a few people living below the poverty line in the US and for the most part they have the Internet, TV, food, housing, even entertainment, etc. Often times their problems are of their own making and more power/money would only enable them to make bigger mistakes. Yes, there are many people who are struggling with terrible challenges like mental disabilities, prejudice, and other abuse and among adult men especially homelessness is a major problem, but there are also many people in the US below the poverty line who are quite comfortable. Their main problems often seem to be that they eat very unhealthy food and struggle with transportation and logistics.

    Compare this to poverty in rural Africa (have you ever run into toddlers in the street begging for water near a river of untreated sewage in the US?) and it’s clear where we should spend our effort, but even in the US we should focus on improving the lot of those at the bottom and promoting more churn in wealth at all levels. The fact that a few people can get so far ahead of the game is beside the point.

  15. phillips49 says:

    On income equality, one must ask….. how much is societal? And how much is individual? In American society, everyone is equal regardless of race, color, religion or creed. In birth, we are all born equal only in the eyes of the creator. The circumstances into which we are born are different and not equal. The gene heritage with which we are born is all different. It is not equal. Does society have an obligation to level the playing field at birth for all people? My opinion is no. Throughout all human history there have always been “the haves and “the have nots”. It will always be that way because that is the nature of people and the nature of the world we live in.
    Does society have an obligation to provide minimum life sustaining care for the misfortunate? My opinion is yes. Does society have the obligation to provide opportunity for the less fortunate? I believe yes. Does society have the obligation to force wealth equality through wealth re-distribution. No, I think that is wrong. I see that as a disincentive to even try to better oneself. We already have seen this in our own society with generational welfare. You don’t have to do anything, but you get the same as those working hard to improve their lot in life. Scripturally it says “If a man won’t work, he shouldn’t eat”
    In my lifetime, I have watched penniless, but hopeful, immigrants, thankful for the opportunity America promises, come to this country and succeed. Multiple families living together in small flats, buying only what they need, saving their money, starting their own businesses, working whatever it takes to be successful. Their children go to our schools, they apply themselves. They study hard. They learn. They shun the social clicks. They don’t party. They don’t do drugs. They aren’t texting incessantly. They don’t indulge themselves in entertainment. Their job is to learn. They excel.
    In my work, I watch directors, GMs, and VPs and what they have to give up to succeed. They are powerful and well compensated. Their lives are their jobs 24/7. They do whatever it takes.
    So do I resent that these people have more than I do? Hell no, I’m not willing to go quite that far. Close, but not that far. Do I think I should have a portion of their compensation? Again, not no, but Hell no. So I don’t understand why others who are not willing to do whatever it takes, think that they should share in someone else labors.
    In one of my first jobs, I worked for small Jewish businessman. He owned a little luncheonette in New Jersey. One thing he taught me that stuck with me all my life. He told me “money goes to money, and you have to have money to make money”. That means self-discipline and being able to sort wants from needs and saving until to have some money to make money with. It means not going after the latest gadget or following the latest craze. It means applying oneself. It means doing what it takes in school to excel. It means going the extra mile. It means sorting wants from needs. It means living within your means. It means applying oneself in work, making yourself valuable, contributing to growth and profit. Finding a need and filling it.

  16. 4whatitsworth says:

    This is a very interesting topic. In my view inequality has always existed and many have climbed the socio economic ladder of inequality. The real issue is that no one asks those who have made it up the ladder what is required. Our politicians just want to have the “It’s not fair” argument or “what’s good for the top is good for the bottom” argument.

    In my view the first rung on the socio economic ladder is hard physical work and education. Unfortunately in today’s over regulated world these are the last jobs that are created. We first create finance jobs then administrative jobs then education jobs then finally a job that creates something and requires work. . Then the real work that gets created goes so slow because of all the bureaucracy that it is stifling so there is no virtuous cycle.

    I actually wonder if anyone remembers when America was great. Did you know that we built the empire state building in one year and 45 days? Ever see a picture of they guys sitting on a beam proud as can be knowing that they are taking their own risk and getting their reward? Today there is no such pride and it would take you years and several fortunes just to get through the bureaucracy to build something grand that is if it is even possible.