Posts filed under “Wages & Income”

Measuring Wealth by Assets, Not Income

Interesting discussion at Economix looking at the top economic strata:.

Instead of using income (as the Census does) to measure wealth, what if we looked at Assets instead (as the Federal Reserve’s Survey of Consumer Finances does)?. No surprise, the wealth gap as measured by net worth is much more extreme than that measured by income.

- Estimates for top 1% is a household income of about ~$380,000; ~7.5 times median household income.

-Net worth, top 1% = $8.4 million — 69 times median household’s net worth of $121,000.

-Wealthiest 1% received 16% percent of income — 8% of salaries and wages, but 36% self-employment income.

-1% controls a third of the nation’s financial assets (equities, private investments), and 28% of nonfinancial assets (RE, cars, jewelry, etc.).

-About 90% of the 1 percenters describe themselves as being in excellent or good health, vs 75% for the rest opf the country.

-Nearly half of the 1 percenters own two or more pieces of real estate vs just 5% for the rest of population.-1 in 5 of the wealthiest Americans say they have a boat, plane or helicopter, compared with 1 in 22 in other households.

-75% of wealthy spent less than they earned last year, vs 44% of everybody else.

Fascinating stuff . . .


Measuring the Top 1% by Wealth, Not Income
New York Times, January 17, 2012

Category: Wages & Income

The Merrill Lynch Cramdown

Last month, I noticed this WSJ article, Merrill’s 2012 Pay To Drive Advisers To Richer Clients. I didn’t think much about it over the holidays, but it started gnawing at me. Perhaps it was reading a draft of Josh Brown’s book, Backstage Wall Street over the weekend that started me thinking about that piece. This…Read More

Category: Bailouts, Corporate Management, Investing, Wages & Income


Exactly 5 years ago today, the WSJ published this post (Plutonomics) about a rather fascinating study on wealth inequality. It was written by of all folks, Citigroup global strategist Ajay Kapur. In 2005, Kapur’s research team “came up with the term ‘Plutonomy’ in 2005 to describe a country that is defined by massive income and…Read More

Category: Politics, Wages & Income

Decline of Deference, Disdain for Über-Rich

Interesting observation: “Disdain for the uber-rich was unthinkable until — “It wasn’t the crash of 2008 that led to their fall from grace, nor exposure of the greed and stupidity that required a massive public rescue. It was their graceless reaction to the bailouts: no apologies, remorse or gratitude — even faked; just more arrogance,…Read More

Category: Psychology, Wages & Income

Inside the 1% (Big Picture Conference)

All of the Big Picture conference videos are now available. Here is the latest video posted: The One Percent: Breaking Down US Wealth Distribution. ~~~ Watch all of the Big Picture Conference for $39.95 or choose just the speakers you want to see on

Category: Employment, Wages & Income

Inside the 1%

The One Percent: Breaking Down US Wealth Distribution from The Big Picture Conference on

Category: Employment, Video, Wages & Income

Invictus here. Interested parties were treated to a fascinating debate on the evening of November 14, as the Munk Debates assembled four estimable economic minds to debate the following resolution: Be it resolved North America faces a Japan-style era of high unemployment and slow growth Arguing the pro side of the resolution were David Rosenberg…Read More

Category: Current Affairs, Cycles, Data Analysis, Economy, Employment, Federal Reserve, Wages & Income

Meritocracy vs. Plutocracy

Invictus here, folks:

Occupy Wall Street has been the subject of debate with friends and colleagues. Some confusion and misconceptions are out there regarding the protesters’ message: I’ve heard that the OWS movement is anti-capitalist, anti-Semitic, Pro-Socialist, Pro-Marxist, or a combination thereof. Or that they’re just — as Atrios re-popularized the phrase long ago — Dirty F*ckin’ Hippies.

As Barry has described it, “there is an unfocused financial rage in the United States” — and you see it in both the Tea Party and the OWS movement. Rather than mischaracterize why so many Americans — on the Left and the Right — are unhappy, let’s go to the actual data to see what is underlying this negative general sentiment:

Gini Index

Let’s start with the Gini Index, “the degree of inequality in the distribution of family income in a country.” Here’s our place in the world:

Source: CIA Factbook

By way of comparison, Germany is #126 (of 136) with a Gini Index of 27, and Japan is #76 at 37.6.

Within the United States, this is what income inequality looks like from a Gini Index perspective:

Source:, Table H.4

Well, How’d the Gini Index Get So Out of Whack?

In brief (footnotes removed):

In recent decades, CEO pay has grown dramatically in the United States. Between the 1930s and the 1970s, CEOs of the largest companies received approximately $1 million in total annual compensation (adjusted for inflation in year 2000 dollars). During this period, the ratio of CEO-to-worker pay narrowed as workers’ wages grew and CEO pay rose modestly. By the 1990s CEO pay grew dramatically. Business Week estimated that CEO pay at the largest companies grew from 42 times the average worker’s pay in 1980 to 531 times the average worker’s pay in 2000. In 2010, large company CEOs received $11.4 million, or 343 times worker pay, according to calculations by the AFL-CIO’s Executive Paywatch website.

Here are some additional tables on how executive compensation has skyrocketed over the past few decades. Additionally, I’m sure Warren Buffett’s quote resonates with OWS (frankly, it should resonate with everyone — Tea Party included): “Too often, executive compensation in the U.S. is ridiculously out of line with performance. Getting fired can produce a particularly bountiful payday for a CEO. Indeed, he can “earn” more in that single day, while cleaning out his desk, than an American worker earns in a lifetime of cleaning toilets. Forget the old maxim about nothing succeeding like success: Today, in the executive suite, the all-too-prevalent rule is that nothing succeeds like failure.”

A $1MM reduction in a CEO’s pay could be used to fund 13 jobs at $75k/year; nothing too complex about that math. Here are other jobs that could be created if we addressed the disparity.

Meanwhile, while CEOs and other executives have feathered their nests — largely by exploiting overly-friendly relationships with all-too-compliant boards to negotiate outrageous compensation and severance packages — things have not been going quite as well for the rest of the country, as those at the top continue to rise while the remainder continue to drift:


Read More

Category: Economy, Employment, Politics, Wages & Income

Global Wealth Distribution

As we have discussed, from 1979 to 2007, inflation-adjusted incomes of the top 1 percent of households increased significantly versus the rest of the wage earners (i.e., the remaining 99%). Those even better off, the top 0.1 percent (the top one one-thousandth of households), saw their incomes grow 390%. In contrast, incomes for the bottom…Read More

Category: Employment, Wages & Income

Has America Become an Oligarchy?

Source: Has America Become an Oligarchy? Spiegel Online, October 28, 2011

Category: Employment, Politics, Wages & Income