Score card: 16% vs. 288%
From Edward Fullbrook
David Ruccio‘s post yesterday on the 34-year (and still continuing) period of radical income redistribution in the United States featured a graph from a new report from the Economic Policy Institute. Below, from the same EPI report, is a table no less shocking than yesterday’s graph.
Change in annual wages, by wage group, 1979–2011 (2011 dollars)
|
Average annual wages (2011 dollars) |
Change |
||||||||
|
Wage group |
1979 |
2004 |
2007 |
2011 |
1979– 2004 |
1979– 2011 |
|||
|
Bottom 90% |
$27,110 | $31,344 | $31,626 | $31,050 | 16% | 15% | |||
|
Bottom fifth |
6,569 | 7,471 | – | – | 14 | – | |||
|
Second fifth |
16,369 | 18,192 | – | – | 11 | – | |||
|
Middle fifth |
27,236 | 30,787 | – | – | 13 | – | |||
|
Fourth fifth |
42,173 | 48,234 | – | – | 14 | – | |||
|
Next tenth |
59,293 | 72,724 | – | – | 23 | – | |||
|
90th to 99th percentile |
$88,670 | $123,588 | $128,857 | $130,473 | 39% | 47% | |||
|
90–95 |
75,191 | 98,319 | 100,801 | 102,429 | 31 | 36 | |||
|
95–99 |
105,519 | 155,175 | 163,927 | 165,527 | 47 | 57 | |||
|
Top 1.0% |
$255,760 | $580,976 | $655,171 | $598,570 | 127% | 134% | |||
|
99.0–99.5 |
179,591 | 299,742 | – | – | 67 | – | |||
|
99.5–99.9 |
272,532 | 525,903 | – | – | 93 | – | |||
|
99.9–100 (Top 0.1%) |
569,521 | 2,207,437 | 2,633,800 | 2,158,892 | 288 | 279 | |||
Source: Authors’ analysis of Kopczuk, Saez, and Song (2010) and Social Security Administration wage statistics
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—– look inside —– $5.94 / $20.00
—– look inside —– $4.90 / $8.00
—– look inside —– $15.99
—– look inside —– $5.99 / 12.99
—– look inside —– $5.93 / $12.99
—– look inside —– $4.97 / $9.90
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Gerson Lima / Maria Alejandra Madi
Edward Fullbrook and Jamie Morgan
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Real-World Economics Review Blog 
Are there similar tables / statistics for other ‘developed’ countries?
This should not be a surprise to anyone with a basic economics education. At the heart of our system of property and tax laws is a fundamental redistribution of wealth from producers to non-producers. This is in the form of the claims on production by landed interests as recipients of rents (imputed and as charges to lessees). Economics and economists as a group have largely ignored the moral question of whether societally-created rents need to be publicly collected as the logical source of revenue to pay for necessary public goods and services. The privatization of rents (which is unearned income to individuals and entities) has meant the taxation of legitimately earned income flows, capital goods and other assets as well as commerce, imposing heavy debt weight losses on the economy.
Silly Ed, even Real-World economists don’t get land.
This chart being about “wages”, are enrichment via profits, interest and property rents even taken into account? On rents, curious how rents in all these forms continue to go up even as the number of people who can afford to pay them goes down: surely an example of market failure which government ought to be correcting, regulating and making good by developing a more reasonable method of distributing income (hopefully one less “privatised” than some people paying others wages).
The one effective solution is societal collection of rents via taxation. Regulation affects the rental value a potential user of land will pay to control some aspect of nature. For example, banning clear-cutting by timber companies imposes higher costs of timber extraction, which would lower the ground rent the company would bid for access to land. The community would yield less rent via taxation but would also have much lower costs of environmental remediation. As a probable positive side-effect, the rental value of adjacent lands with a different highest, best use (e.g., residential) would increase because the surrounding forests would remain intact, greatly reducing the potential for destruction due to soil runoff during heavy rains, etc.
And some people claim America doesn’t have an inequality problem . . . .
Important to remember the role of feminism in any wage growth from the 70’s onwards. Mens wages have been basically stagnant in that period, so any (even modest) increase in the wages of ordinary people is probably a rise in women’s wages, which have increased as a result of political conflict not market forces.
From a working class man’s point of view the situation is even starker than the table indicates.
The struggle by women for equal treatment in the workforce continues, but women have acquired the education and training to be compete for all manner of jobs. The entry of women into the workforce is not a cause of stagnant wages for men. The cause is a failed economic system to provide sufficient employment opportunities for everyone who needs to and desires to offer their labor. Unfortunately, neither our policymakers nor very many economists have grasped the fundamental reason being the concentrated ownership and control over land and natural resource values that enables these interests to enjoy monopoly returns as rent-seekers.
Hi Edward,
I think you may have mis-read me. I wasn’t arguing that women entering the workforce lowered men’s wages. Simply that feminism had raised women’s wages. My point was to emphasize the importance of popular struggle in raising wages. I’ve argued it in a little more detail in this vlog here called “unions and feminism are good for the economy”: http://www.youtube.com/watch?v=ptiEyWxzEhM
Regarding your comments on our failed and highly unequal economic system, I agree entirely.
Peace.