Top 20% households made out like bandits, bottom 40% got crushed.
The median earnings of men working full time year-round in 2018 ticked up to $55,291. Adjusted for inflation, this was below the amount they earned in 1973, according to the annual data trove released by the Census Bureau today. In other words, there has been a “real” income decline for men over the past four-plus decades!
Women have seen a lot of progress in their real earnings, but they started out much lower, and they still haven’t caught up with men – whose earnings are sitting ducks. The median earnings of women working full-time year-round in 2018 ticked up to $45,097, a new record. Since 1973, women’s earnings adjusted for inflation have surged by 40%. The female-to-male earnings ratio hit a record in 2018 of 81.6%, up from 56.6% in 1973:
“Median earnings” means half earn more, and half earn less. Even though the Census Bureau publishes the earnings history of men and women for all to see, in the media you will not readily find this history – that the real earnings of men in 2018 were below where they’d been over 45 years ago.
It’s a very uncomfortable topic: Women deserve every penny in earnings increases, and there should have never been such a gap between men’s and women’s earnings in the first place. But men’s real earnings are a fiasco.
What you will find in the media instead is “household income,” total, all forms of income combined by all members of the household – which is politically a lot more correct.
Household income, adjusted for inflation but before taxes, doesn’t look that hot either. But soothingly, in 2018 it set a new record of $63,179. This was up 19% from 1973, roughly the average of the 40% surge for women and the slight decline for men:
“Earnings” in this data are the fruits of labor – wages, salaries, and the like (first chart).
“Household income” (second chart) includes “earnings” and other “money income” from all household members, from these income sources:
- Earnings from work
- Unemployment compensation
- Workers’ compensation
- Social security
- Supplemental security income
- Public assistance
- Veterans’ payments
- Survivor benefits
- Disability benefits
- Pension or retirement income
- Interest
- Dividends
- Rents, royalties, and estates and trusts
- Educational assistance
- Alimony
- Child support
- Financial assistance from outside of the household
- Other income
“Household income” is measured on a pretax basis. But it does not include noncash benefits, such as food stamps, subsidized housing benefits, or healthcare benefits — a biggie for executives at big companies. And it does not include capital gains, a biggie among the top income groups.
The income from investments (items 10, 11, 12, and 13 in the list above) play a critical role at the upper end of the distribution of household income.
And this is how the median household income, pretax and adjusted for inflation, has changed since 1967, by income segment (quintiles) and for the top 5% (red line):
Since 1967, the inflation-adjusted household income of the top 5% has soared by 125%, or by $231,224, to $416,520 in 2018 (not including capital gains).
But at the lowest quintile, household income ticked up only by $3,228 over the same period to just $13,775 and for the second quintile, it rose only by $8,072 to $37,293.
In 1967, the top 5% of households made 17.6 times more money than the lowest quintile. In 2018, the top 5% made 30 times more – not including the huge capital gains in recent years.
In terms of a more recent time frame: Over the 12 years since 2006 – so just before the Financial Crisis – the median household income, adjusted for inflation, at the lowest quintile fell by $398 to $13,775, while for the top 5%, it soared by $45,216 to a glorious $416,520:
And among men… Given that the median earnings adjusted for inflation have declined over the past four decades, even as earnings at the top have zoomed higher, the earnings at the lower end for men have seen substantial shrinkage.
This real-wage repression has occurred as a result of inflation, an insidious process whereby nominal wages inch up, but not quite enough to keep up with the Fed-engineered loss of purchasing power of the dollar that labor is denominated in.
And it gets a lot worse: “Inflation” as measured by CPI and “cost of living increases” are entirely different animals.
Many goods and services, including new cars and trucks, have seen very little or no “inflation” over the past 20 years as measured by CPI, though their actual prices have risen by a lot. As these products or services have gotten a better (in cars, it’s safety features, performance, additional equipment, and the like), you have to pay more. But because you get more, those increases in price that are related to quality increases are not considered “inflation,” though they raise the “costs of living” (here’s my story on how this works, including a chart about new vehicles inflation). And it makes sense to distinguish the two.
But the result is that the real earnings of men can no longer buy what they used to be able to buy, and their standard of living has sagged.
If you want to know why so many men are seething, it’s because the incomes of men in the lower half of the income spectrum gotten crushed by real-wage repression over the past decades, while incomes at the upper echelons have skyrocketed. For those whose incomes have skyrocketed, the surge in costs, such as housing costs, is no problem; but for those at the lower echelons, it’s an existential crisis.
OK, I’m going to wade into this debate — but with my boots on. Read… THE WOLF STREET REPORT: What to Do About the Student-Loan Fiasco?
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”there should have never been such a gap between men’s and women’s earnings in the first place”
Not necessarily. Remember that this gap was engineered by labor activists in the early days of the industrial revolution, when capital preferred hiring women and children for factory work because they’re generally more compliant.
So this gap is only unjust if you think
a) a woman’s life has no value except insofar as she is adding shareholder value in a corporate setting
b) the family is not the basic unit of society, we are all just atomized individuals in contract with each other.
Funny, the numbers I’ve seen show that in the early days of the Industrial Revolution, female and child employees were always paid much less than male employees. I should also note that “compliant” workers don’t ask for salary increases, and so get paid less.
Don’t try to blame society’s ills on folks that you don’t like, merely because you don’t like them. I have no doubt that in a sexist society, such as that of the Industrial Revolution, both factory owners and labor activists would not have considered equal pay for equal work. The issue would never arise – women weren’t allowed to work the same jobs that men worked.
To blame the norms of a sexist society on “labor activists” implies that factory owners were forced by labor activists to pay women less than men. That’s simply not true.
That whole comment is untrue.
Ook,
please do some research on the history of wage labor and the quest for a “living wage”
This one is a good start:
https://www.amazon.com/Living-Wage-American-Workers-Consumer/dp/0801486149
And your opinion on “family” roles shouldn’t play a part in wages and income.
Why not? Do you really think the topic of roles is forbidden territory?
Face it. The supply\demand\price relationship is an operational aspect of the labor market as it is for any other. When women stepped out of traditional roles, supply of labor went up. The existing status quo, namely a male dominated workforce, was impacted, and the price of labor dropped.
If you (generally speaking) couldn’t be nimble enough to move to higher value added occupations, then you got crushed…
Often by a woman.
No skin off my nose, though. Even though I make significantly more than the male average cited by Wolf, my wife makes more than double what I make. She also enjoys better advancement opportunities, as do virtually all the women at The Extremely Large Financial Institution I work for. And if you think for one second that women aren’t getting preferred treatment in the large corporate environment than you are either intentionally uninformed or insufferably stupid.
By the way, my totally anti-feminist (your definition below is total BS) wife would also tell you to take your pontificating admonition as to what obviously salient related issues should and shouldn’t “play a part” in the discussion and pound sand with same.
Cheers.
That’s not “my” definition of feminism, it’s the dictionary’s. So, I guess take up the BS-ness with them???
I’m glad your anti-feminist wife has a high-paying job. I just don’t want to begrudge that opportunity to other women…and as you can see from the links and data Wolf provides in this thread, and despite the advancement in select corporate institutions, the pay-gap still exists.
As an aside, I’m glad I can make arguments online without devolving to ad hominem attacks. I’m either intentionally uninformed or insufferably stupid? No amount of me typing on a keyboard will convince you otherwise, so go ahead and just assume “insufferably stupid”. I’m sure that fits your narrative of “feminism” better than the truth.
“In contract with each other” interesting typo? In the Dystopian future you will buy family values, like intimacy. This apparently is what high income men purchase when they pay women for sexual services. In the movie Soylent Green they called them “furniture girls”
Years and years ago I read a brilliant little article about how the family is essentially Socialism. People sharing a house, doing work “each according to their ability” and getting things “each according to their needs”, how Capitalism hates things like this.
Ambrose you hit it right on the head.
The context of the point bearing that all skill sets being equal, there’s no reason to pay a woman less for the same job. It’s about as cut and dry as it gets.
Where are women getting paid less than men for the same job these days? Mostly corporate office work?
Feminism an utter failure. No good for women. No good for the family unit. Just sad
definition of feminism: the advocacy of women’s rights on the basis of the equality of the sexes.
So, if you think it is “no good” for women to be considered equal (and not a de facto second sex), then you may as well jump into a time machine to another century. I’ll gladly stay here where intersectional feminism gives me a fighting chance at equality.
I don’t know about that one. I think feminism has done a lot for women, and I for one think more needs to be done in terms of evening up the wage disparity between the sexes. It is fair.
Now, of course, the corporate suits would look at that comment and say, well, the logical course is to drop the amount we pay to men even more, so that parity can be achieved faster. But that wouldn’t surprise me one bit. I think as a society, we need to be careful about how we phrase what we want. The worst part is getting it in the most unexpected ways.
Having said all that, what was it that Colonel Nathan Jessup said about a superior female officer? (sorry, that’s the sexist part of me talking, and yes, I know it’s wrong)
Thank you. We need this information.
Stats for the US are falling behind the competition in practically every category; highest poverty rate in OECD, one of the lowest post-secondary graduation rates, stagnant wages, skyrocketing debts, even life expectancy is decreasing (thanks to opioids)…
For comparison, Canada surpassed the US in median household income in around 2011. As others have said, if you’re rich, the US can be a great country, for everyone else, many other countries do it better.
Yep best thing you can do is get out, especially if you’re young. If you’re in your 20s you can probably go somewhere even illegally and put in the time, and get naturalized.
“life expectancy is decreasing (thanks to opioids)”
True about opioids but it’s not just that, and frankly opioids are second fiddle, a symptom compared to the larger, real cause.
The real cause is the insistence of the ruling class of protecting the parasitical insurance industry who’s interests is not our health but corporate profit. Insurance is not healthcare and insurance has entirely different motives that healthcare and IT is the more fundamental reason for our falling life expectancy.
After all, the U.S. was lagging in life expectancy vs those with socialized medicine long before the opioid crisis…and at TWICE the cost.
Twice the cost, far less the product. For decades. That’s not because opioid crisis.
If we had a national health service like Canada or UK, the impact of opioids would have been lessened as well has possibly prevented altogether. At the very least it would have been mitigated by people having access to healthcare unlike our current system.
So let’s be clear on this incontrivertable fact:
American are dying sooner while paying twice the price, because are healthcare system is inferior to the rest of the world.
The opioid epidemic is concentrated in mostly red states. Death rates by drugs and suicide are twice as high. The politics of resentment was displaced by the politics of desperation. Their economics are capped by global pressures, and their cultural and social situation is desperate. The most toxic job in America is agricultural worker. Farmers now plant GMO crops for livestock feed, instead of food for market. Women in these economies are not getting those pay raises, and the blowback probably isn’t worth it. It becomes further ammunition in resentment against the deep state. If there isn’t some sort of Marshall plan for the Midwest, Trump will probably be president for life.
“If there isn’t some sort of Marshall plan for the Midwest, Trump will probably be president for life.”
While this comment is very cynical , I have to admit it might turn very real!
The urgency in overhauling this society which is afflicted by so much malaise cannot be underestimated.
Spending a TRILLION dollars on the US’s debt can’t continue to be sustained.
It’s high time to think the whole aspects of the policies that brought us Globalization, wars, and fractured nations and societies.
Take Africa as an example, decades of European exploitation have only exacerbated the poverty, political unrest, wars, and refugee crisis, which in turn is flooding the European heartland and ultimately robbing the Europe of its stability and cohesion.
The same can be applied across Latin America, central and south Asian and Middle East and North Africa.
Yes you can obtain oil from torn Nations like Libya , Syria and Iraq, but the End result will NOT be worthwhile.
Nations should Trade with each other ( preferably equitably),
When nations stop trading they go to war.
The single income that used to sustain a family in the fifties America is a distant memory,
Now we are flooded with stories of dilapidated infrastructure, Brocken human spirit and a sustained MSM drumming stupidity and feeding the populace the tools that’s hollowing the brain of the next generation and robbing them of clear and critical thinking process.
Everything around us is failing, this is a clear message that our system has run its course and is dead and buried.
Back to Ambrose message above , it’ll spell a disaster to turn American society to hard core hardened nucleus of resentment that will turn these divisions into real boundaries between ( warring states).
The good news is that salaries for doctors and nurses have tripled, in real terms, since 1960. So at least they are doing well.
According to the Mercatus Center: https://www.mercatus.org/publications/healthcare/why-are-prices-so-damn-high
Gee, I wonder why?
“In general, union organization is not an easy thing in the United States, relative to what happens in other rich countries. Twenty two states, mainly in the south and in the middle of the country have right-to-work laws. In some states, state employees have much less power to form unions relative to what exists in the private sector. ”
“In Canada, labor law is much more conducive to union formation and power. For example, most (if not all) Canadian provinces do not allow the hiring of permanent replacement workers during a strike, and some will not permit the hiring of temporary replacement workers.”
and: “The difference in labor laws in Canada and the US is reflected in unionization rates. The US has a unionization rate of only 7% in the private sector, and 29% in the public sector. In Canada, the comparable statistics are 16% in the private sector and 71% in the public sector.”
It’s funny/interesting how the right to work states are generally poorer, have lower wages, and are Republican.
I remember working years ago with a guy who kept spouting off about, “We used to need Unions, but not anymore….not these days”. I politely asked him where he thought our 40 hour work week came from; benefits, holidays, and recourse from being unjustly fired, etc. I have also worked just as much in non-union environments, particularly in aviation and construction. In every case the business was no more efficient than union companies, but if the boss was a ‘good guy’ the job was good. Same for union companies, if the boss or supe was decent, so was the workplace. The main difference was process, wages, and respect.
For all the talk about ‘free enterprise’ and ‘free markets’, my observation is that the modern US economy is becoming more and more feudal in nature. Formal work relationships seem to be more vassal and serf, as opposed to a respectful exchange of labour for some of the profits. A good worker is one who keeps his head down and his mouth shut. Where was it where the V dub plant was ‘afraid’ to unionize?
“Volkswagen says that in 2018, the average assembly worker at Chattanooga earned nearly $55,000 while skilled workers made more than $78,000. That compares with $95,000 for assembly workers and $123,000 for skilled work, on average, for U.S.-based GM, including overtime and profit-sharing bonuses.”
“The company ran a brutal campaign of fear and misinformation,” Romero said in a statement Friday. “Fear of the loss of the plant; fear of their participation in the union effort; fear through misinformation about the UAW; fear about current benefits in contract negotiations. Over a period of nine weeks – an unprecedented length of time due to legal gamesmanship – Volkswagen was able to break the will of enough workers to destroy their majority.”
From Tennessee Ernie Ford:
“You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don’t you call me ’cause I can’t go
I owe my soul to the company store”
Last line could be changed to: “I owe my soul to the Company Pol”
“The union also called on Congress to amend “broken” U.S. labor laws. UAW spokesman Brian Rothenberg says current law “caters to clever [company] lawyers who are able to manipulate the NLRB process.”
https://www.autonews.com/manufacturing/vw-workers-tenn-plant-reject-second-uaw-organizing-bid
Well, in some sectors, the unions are non-existent, and in others, the unions are way too strong. This is essentially what we get when this country moves to segments where most states are divided into segments of one party rule.
On the one side, you have the west coast states and Hawaii where the elephants are non-existent. (in a few cases for good reasons). And on the other side, there is a segment of the south that the jackasses are struggling in no matter what.
This is the very definition of crazy. This is where we give thanks to the Rove strategy of divide and conquer, and while we might thank Karl for initiating this insanity, it seems that both sides are more than happy to pick up this stupidity for their own short term power grab.
The AMA is a good, strong union that has tripled its members’ real pay since 1960.
All it takes is political will.
https://www.mercatus.org/publications/healthcare/why-are-prices-so-damn-high
The AMA is not a union.
No Jack, it is far far more powerful than any union, and I would also say far more easily corrupted by the drug and medical device companies.
I think Canada was a big winner from the NAFTA agreement. Retail price differences between the US and Canada have narrowed considerably since 1970 when I left Canada. Salary differences between the two countries also appeared to have narrowed. But GNI per capita on a purchasing power parity basis still remained significantly in favor of the US (world ranking #12) vs. Canada (#22) as of 2016. Read here: http://www.worldatlas.com/articles/countries-by-gni-per-capita.html
But we rank high in confidence!
based on purchasing power parity, the US is ~20% ahead in terms of income. Also, after tax is important, and I am guessing Canada taxes are higher (don’t know for sure.
Too cold for me too.
You might have missed an underlying point of Wolf’s article – the inequality in the U.S. US is ahead of Canada – on average – but if you take out the billionaires, Canada is ahead.
Perhaps you are a billionaire, and thus better off in the U.S., but perhaps not…
The US is a great place if you’re in the top 10%, otherwise you’re either treading water or sinking.
Ok, I’m going to put it this way, there are always people who complain about how bad the US is. How much it sucks compared to this country or that. Yet oddly, immigrants want to keep coming here. In my daily life, I encounter people from all over the world, and none of them seem in a rush to leave. I wonder why. I doubt if it is because they are stupid. I wonder what they see in this country that a lot of the people who wants to leave don’t see.
And seriously, if everyone who threatened to leave the country after each election cycle where someone they don’t like got into office actually had the balls to do it instead of just bleating about it on social media, then I think a lot of the problems that we as a nation face might get solved because someone would actually consider working on them instead of whining about it.
Nicko2, don’t take offense, this is not aimed at you in particular, but it’s just that hearing all the negativity that is associated with this country daily would make you think we’re all living in some shithole that is about to fall apart immediately or something.
MCH – all I have to do is look out the window….
Immigrants are operating off of information that’s decades old, the idea of the US as a place where you can make it. The US, in turn, does little to dispel this, because ideally the US takes in immigrants all raised and ready to work and educated on their country of origin’s dime, uses ’em up until they reach age 50 or so, when they return to their country of origin tired, used-up, and now just wanting to not die in the street as our many homeless so often do.
One big reason why the US has this crazy opioid epidemic has nothing to do with the healthcare system and a lot to do with which drugs are approved for use.
In Europe, two drugs are used used as first-line treatment for post-procedure pain: Dynastat and Dipyrone whereas here in the ‘states we instead load patients up with gargantuan quantities of opioids after the smallest procedure. As a result many become addicted who would otherwise would have never have touched those drugs.
Dipyrone (Novalgin/Analgin/Metamizole) was banned in the US and many countries in the 1970s due to a potential deadly side effect. However, many claim the stated risk at the time can be managed and was greatly exaggerated. In fact, in those countries where it is still available freely without a prescription (e.g., Spain, Hungary, Russia, Israel, Brazil, etc.) it is usually the most commonly-used analgesic by the population, and in the countries where it is available by prescription only (e.g., Germany and Austria) it is one of the most commonly prescribed medicines there are.
As for Dynastat (Rofecoxib)… the reason it was rejected for approval in the US is a closely guarded secret and the FDA refuses to reveal why. In the meantime, it has been widely used in Europe for almost two decades with very good results.
I’m not quite sure what Wolf’s point is with this. Ultimately it is pay rates for the same type of work that really matter in terms of the gender pay inequality debate, and a aggregate graph like this doesn’t give any useful information regarding this. The graph of rising incomes for women likely just reflects that more of them are doing higher skilled jobs now, which is quite obvious to anyone who has been around for a while.
As for the general trend of declining real wages, well, I would hazard a guess that if you looked at the median wages of women adjusted for job mix type, then you would also see a similar decline. I don’t think our rentier overlords are particularly picky about who they extract their ever increasing portion of GDP from.
Hello Wolf,
I enjoy reading your wonderful articles and comments. You have created something unique.
Do you have any interest in exploring further the theories of where we are right now as an economy? Albert Edwards has his theory ‘The Ice Age’, John Hussman has his work on 10 – 12 year future returns, David Stockman has his thoughts on Fed’s ‘dishonest money’ and Ray Dalio has his ‘Economic Machine’ theory.
They all say the current system has run out of gas, but all have different theories and thoughts on solutions and how investors should be positioned.
Let me try. The correct question to ask is NOT where we are in the economy. The correct question is “when will they allow the money losing business to die”. The answer to that is NEVER. We will NOT going back to free market any more. Therefore economy is NOT market based but political based. Those who analyzed “economic” theory will likely be proven wrong. Those who analyzed political games or has ties with DC might have an edge to front run everybody else in this wealth transfer game. Regardless who is good at this, the US is turning into centralized control economy/market and everybody, including corporations will be zombified. Translation -> you are alive but you don’t feel like a alive. You are a corporation but you do NOT make money. But everybody stay afloat and the show must go on.
I have high respect for all the gents you mentioned except Ray Dalio. His economic machine basically says “human nature”, there is no need to put any discipline. When fed was doing QE, he called that “beautiful deleveraging”. When FED stopped QE, he said the “end of an era of beautiful delveraging” while the FED balance sheet goes up 5X.
Maybe there is hope that we seemed to be maxed out on monetary and fiscal stimulus and so there will not be anymore medicine to be applied in the next downturn. We might can do helicopter money, but I suspect people will lose confidence in Treasury’s ability to payback bondholders in good dollars if that is the case. Central banks will always have a nutty idea, but they are there to make sure government can spend more than they should and maybe that ship has sailed.
What ever they do, they will MOT allow market to work, until zombie revolution.
Are you saying they are afraid of “confidence” of the paper?
Are you saying they will some how pull back before the pitch forks, sorry, 300 million guns come out on street?
They will zombiefy, they will pull in wars, they will set up fake enemies and they will cast spells and they will EV,AI, Mars, but they will NEVER allow market to work in the economy, until they have to.
Beautiful collection of fallacies. Let me take up one.
“In 1967, the top 5% of households made 17.6 times more money than the lowest quintile. In 2018, the top 5% made 30 times more – not including the huge capital gains in recent years.”
That ‘top 5% of households’ are not the same in 1967 and 2018. They are most definitely different set of families. You are comparing statistical brackets and ignoring upward and downward economic mobility of people over time.
Furthermore on the same topic, household income considers total income of that household and not per capita income. A household of 4 earning $50k each has higher income than a household of 2 earning $80k each.
Capital gains count towards income in the year it is realized even though it took several years to get thete. Profit made by buying Amazon stock in 2010 and selling in 2019 only gets added in 2019.
A household that’s usually not in too 20% suddenly gets promoted to that bracket due to capital gains, inheritance and such.
I’m sure when Wolf wakes up he will correct your… unique interpretation of the data.
GP,
You make an excellent point about household incomes. Now with millennials living at home until they are pushing 30, their meager salaries are pushing household incomes up by 20 or 30K, which looks like a big increase but isn’t. As the millennials leave home and their parents retire, you might get a staggering decrease in household incomes across the board. I think this scenario is more likely than not.
Very well might be. I want to know too. An interesting chart of US household composition – seems less than half are married households (down from more than 80%). https://www.census.gov/library/visualizations/time-series/demo/households-historical-time-series.html
That statistic just says ‘household income’ without controlling for size, type, average age, education level, geographic location etc.
GP,
Capital gains are EXCLUDED from household income, as I specifically pointed out in the report.
A household of 4 making 50K?
The kids are making 50K and still at home?
GP – Looking at my relatives, the numbers would hold. Same people, making about that ratio, in the late 60s and now. These days you get paid money for having money. You get offers of jobs where you do less actual work and make tons more pay because you’ve stepped onto the escalator and almost all who have stepped on, stay on. Frankly once you’re on it takes more effort to step off than on.
GP,
No, it’s not a fallacy, but the rule of how aggregate data works.
“That ‘top 5% of households’ are not the same in 1967 and 2018. They are most definitely different set of families.”
Exactly. This is the case with ALL income data and every time series about people you look at. This is aggregate data. The people who worked in 1973 are likely RETIRED today. This data compares the median income of those working full-time in each year, including 1962, to the median income of those working full-time in 2018. By definition, they’re different individuals.
Wolf, thanks for all these excellent analyses. I’m a fan. It would be fascinating to see the distribution of wealth (not just income). I bet that the concentration is getting worse, and also that it is passed on from generation to generation. Which is an even bigger problem than wage inequality on the role big money plays in our politics and society.
Correct. It’s the implicit interpretation that I am raising the flag against. Comparison of statistical brackets rather that real individuals lead to statements like “rich are getting richer and poor are getting poorer”.
@Nicko2: Why wait for someone else to say how you should think? Do own research.
@nick kelly: Here is the composition of US households from Census Bureau: https://www.census.gov/data/tables/time-series/demo/families/households.html. Especially the table HH-4.
Yeah. No economic dynasties exist in this land of equal opportunity for all, everyone is always moving up and down in wealth. Is that your point, GP?
The statistics don’t care if the same people are in the top 5%. Why would that be important?
Yes.
However these studies are also flawed in terms of the whole distribution. IF you take into account transfer payments (govt support), people are not doing as bad as this looks. Having said that, govt support vs having a job offering the same income is not the same in terms of total value to the person receiving said income: a job is always better.
The macro economists often say “economy is great”! However, the micro-economists see the more detailed picture and can easily find a lot of problems in today’s economy vs. past decades.
For ~ half the people, the economy is just fair to poor. For the other half it’s good to excellent.
This is not a good economic situation.
The data also excludes capital gains and stock-based compensation, such as stock options, which are lavished on the top 5% and amount to trillions of dollars in the US every year. If you really want to look at reality income inequality, you need to include capital gains — and then you have a real shocker on your hands. Food stamps are a rounding error compared to capital gains.
We can get hung up on what is fair. I just read that women control 51% of the wealth in the US surpassing men with the trend to keep growing. Longer life expectancies is part of the reason I suppose.
Also the social security system treats life expectancy the same so it favors white women and really disadvantages black men. This really is unfair in my opinion (I am white male) and would be a better avenue to explore than reparations. But politicians do things in their own way and call it insurance without it fitting the definition of private sector insurance based on actuary data.
My own view is that in a lot of these things, class is what matters far, far more than race. If you sort for class, you’ll find plenty of white people with as short, miserable lives as the most miserable in our social-Darwinist wonderland.
Social Security has, apparently, always been set up as a reward for slogging along long enough to collect it. Poor white or poor black, you’re probably not not getting it. It’s a class issue not a racial one.
That gap between men and women is not the consequence of their gender, but with the economic value they produce.
Income inequality between men and women is a myth, because the free market would never allow it.
This graph shows a median but there is no distinction between the jobs. It is way to general.
jeroen,
That’s nonsense. I know it from my own decision making. Decades ago, I hired competent women whose potential I saw, and paid them quite a bit LESS than equally competent men. Why? Because I could. The labor market allowed me to and encouraged me to.
Every hiring manager knew this. I’m guilty of it. I did promote the women, and gave them a career, but they were cheaper doing the same job as men. In fact, they did a superb job!
Back in the day, the jobs that paid men and women on the same scale were commission-based jobs, where everyone got paid a percentage of what they produced.
But thankfully, today, much of this has changed and is changing. But that doesn’t mean that there aren’t a lot of other and new issues out there now, that we didn’t have before.
When controlled for education, title, years experience, hours worked and actual variables, in the manner befitting modern science as opposed to third grade science fair bs, the gap disappears to a degree that statistical relevance is lost.
You admit that every hiring manager knew women were dramatically cheaper to hire, and yet we saw no one exclusively hiring women, which they would have done if performance and other variables besides cost were the same. You disprove your own point by talking.
We sure hired exclusively women where we could. No problem there. The whole entire office was staffed by women. Payroll, everything. We didn’t even consider men for these jobs.
Wolf, isn’t that projecting? Assumption that if I have done that, everyone else must have done that?
As Timthetiny pointed out, when controlled for education, title, years experience, hours worked and actual variables there isn’t statistically significant difference.
P.S.: Nice of you that you identify and feel guilty about gender discrimination. It wasn’t just paying women less. It was also not hiring men.
I notice when one delves into the measurable empirical variables of the modern, sexually integrated, military where the girls get the same pay as the boys for time in grade, the girls are still grossly under-represented, and the boys still do over ninety nine percent of the dying in action. (Ditto for the para military civilian police) In the new expensive volunteer military, there is no pay gap for the girls, but their sure is a death gap. I suspect the proclivity for shorter life spans among males probably explains why males pay higher premiums for life insurance in the civilian “free market” than the females. And unlike the half century efforts to end the so called sexist “pay gap,” I see no concerted effort, eg, an affirmative action draft to achieve numerical gender equality in the ranks, to end the ongoing female military death gap, probably ’cause the girls, fewer in number, are already getting equal pay for time in grade.
@GP
So, Wolf is talking strictly about economic decision points. It’s not about how he feels or other esoteric considerations. As a certain Minnesotan rep says: “It’s all about the Benjamins, baby.” He and most other business people aren’t in the business of coddling to the social justice types. They’re in it to make a profit, and when it is logical and reasonable, he optimizes those profits based on various considerations, including the fact that if he paid qualified women less, they might up and leave, and thus forcing him to expend valuable resources to fill in the gap.
If the market allows you to hire equivalent capabilities for less, wouldn’t you? It is a very logical decision. Why do you think there is a bunch of contractor organizations around whose only job is to find lower cost contractors to supplement regular workers?
@MCH,
I don’t want to speculate on the reason. Could be for helping out women, could be for saving up money for the company. Whatever the reason, specifically looking for and hiring women was in violation of 1964 equal employment opportunity act.
This btw nicely segues to another issue raised in the post – non-existent real wage increase in decades past.
Legal or not, lot of employers do look for cheap labor – as you said contractors instead of employees, temporary visa workers, illegal immigrants, moving manufacturing to other countries etc. This has put a lot of downward pressure on wage growth.
@GP
Fundamentally, there is discrimination all around. It is not wrong when people start talking about sensitive subjects like affirmative action, even the most blind can see that it is a form of government sanctioned discrimination. Whether this is right or not depends on one’s point of view, and a historical perspective.
As I said earlier, one must be careful what one wishes for, equality can be defined differently by different people. Equal pay for women can mean either increasing their pay to match that of men, or decreasing the men’s pay until it matches that of the women.
I think the two issues need to be looked at in tandem, both pay equity and the reason why real wage growth are so slow. One could argue that one of this is due to the effect of a larger labor force, the end to gender discrimination also has the potential for negative impacts. After all, why hire a man for an accounting position, when one can hire an equally qualified woman for 80% of the man’s wage. Hence, the impact on the wages for men.
It seems that you’re demonstrating that fact that women weren’t very competent in negotiating salary for some unknown reason and consistently undervalued themselves. Women are more amenable to taking back office jobs and are often more agreeable. They accept their salary offer without much fight and can afford to because they’re often not the primary breadwinner.
I think the point that people are trying to make is the that gender pay gap isn’t real and that there is no widespread discrimination against women in the workplace.
John,
It’s a heck of a lot more complicated.
Women WERE systematically and legally being discriminated against — what jobs they could even apply for, etc. Heck, not all that long ago, women couldn’t even vote.
In terms of the working world, the situation began to change gradually in the 1970s, which you can see in the chart (green line), with more opportunities opening up to women.
In the 1980s, women were still being systematically discriminated against on a daily basis, in all manner of ways, from steering them into specific careers and jobs, to blocking promotions after a certain point (the glass ceiling). My industry was nearly entirely run by men. It’s not that women didn’t want the jobs – they were being blocked from moving up. I was one of the trailblazers to put women in jobs that had been held only by men. I caught some ridicule for it too. But it worked out well.
Things have continued to change. From what I see, I don’t think that women are still being systematically discriminated against.
But now there is another issue in play – and that’s where the real complexity sets in. Now, men are being discriminated against. If you want to fill a CEO slot or a board slot, and the decision is made to bring diversity to it, and hire a woman, well, great, and so they’re only seriously looking at women, and men are out of luck.
I have noticed this system at play at a federal government agency that I had a lot of contact with in 2000 – 2010. They were moving up women at lightning speed, though the vast majority of the employees were men, and soon women were bypassing men and getting into top positions.
A friend of mine, before she passed away of cancer, established a nonprofit mentorship program that would pay stipends to young women in her industry and mentor them so they could move up the corporate ladders more quickly. There was a lot of fund-raising going on, and they had some serious money for these stipends. Men were not allowed to apply.
This is now going on everywhere, even in schools and universities. If you tried to run these kinds of programs allowing only young men into the door, you’d get thrown out.
So the pendulum is swinging in the other direction. I have very complex feelings about this. On one hand, I’m glad these young and not so young women get a real shot; and it’s good for the companies and the economy.
On the other hand, as a man I have been on the receiving end of this pendulum swinging back, and I have seen other men in the same position. I get that we men “had it so good for hundreds of years” or whatever, and now it needs to change, but it is discrimination, and it is causing a lot of upheaval, and it feels terrible when you get hit by it.
Ageism has been a long-established issue that also feels bad, but you’re prepared for it more or less when you get hit by it. From what I see, this new direction of the pendulum is a lot more confusing.
Thanks for mentioning this reverse discrimination Wolff, it’s absolutely true. I’m in commercial construction (currently tile) working in estimating/assistant project manager role. It’s very typical for a construction office today to be run by aging white males at the top with almost exclusively female managers below and mostly males at the bottom.
There’s not much to do about the current economic situation except be thankful you have a job and cut the big expenses to the core (housing & autos). As a 40 year old in LA I’ve given up on marriage & kids, I’ve moved a lot and been a total boomerang kid (my parents home has always been my home of record), and many of my friends live with their parents today. I don’t have much stuff but I’ll travel, snowboard, hit the beach, see live bands, and just try to enjoy what’s available. I do love to bitch a bit about the greedy self-absorbed boomers though, especially now that they’re mostly retired except for politics (fingers crossed that’ll happen sooner rather than later) :-)
Sorry- this has been debunked several times in the past 40 years. Those reactionaries (/sarc) at Harvard did it again recently:
https://fee.org/articles/harvard-study-gender-pay-gap-explained-entirely-by-work-choices-of-men-and-women/
“Bonus pay, retirement match contributions, and Social Security benefits are not fully taken into account in existing pay equity calculations.”
https://www.forbes.com/sites/shaharziv/2019/07/11/gender-pay-gap-bigger-than-you-thnk/#704820677d8a
wkevinw,
OMG, “Harvard” in the title and suddenly it has weight. But what you linked was NOT a Harvard study. It was an opinion piece by FEE, a libertarian think-tank and lobbying group.
Only about 1/3 of the article was reporting on the Harvard study. And so I checked out this Harvard study and it used “administrative data on bus and train operators from the Massachusetts Bay Transportation Authority” to come up with a set of interesting but very narrow set of conclusions.
Here is the actual Harvard study, titled, “Why Do Women Earn Less Than Men? Evidence from Bus and Train Operators”
https://scholar.harvard.edu/files/bolotnyy/files/be_gendergap.pdf
OK. I will go find the two important studies on the matter. They are notoriously difficult to find due to the the myth that is so bought into. (internet search engine bias makes it very tedious to do this kind of search- I am brutal at it though). The last study was done about five years ago and was coauthored by a woman feminist! She was astounded but honest about her findings.
A similar study was done ~1980-1990 and found the same thing. Men and women are about equally paid.
Many variables have to be controlled for:
1. time in the job
2. marital status
3. child rearing status
4. education
5. there are more
Most of these studies just look at the difference between the sexes and make a “common sense” and anecdotal conclusion which happens to be wrong. (result of academic/intellectual laziness).
I know one particular company (top 50 in the world) and found women to be paid 1% less than men in the same job families. (1st hand experience).- within the margin of study error.
Having said all of that, in the top jobs, which are very subjective and political in how they are filled, there is a gap.
I will post when I find the two main studies.
Men work more hours than women (both in full time jobs): 8.2hrs vs 7.9 hrs. There’s a few % of the disparity for hourly workers.
There’s more.
https://www.bls.gov/news.release/pdf/atus.pdf
“childless, single young women tend to have more education and qualify for higher paying jobs.”
https://www.politifact.com/punditfact/statements/2014/apr/09/genevieve-wood/what-pay-gap-young-women-out-earn-men-cities-gop-p/
A thorough study that could account for all but 4.8-7.1% of the discrepancy and suggested that the databases were too flawed/incomplete to allow complete conclusions
https://www.shrm.org/hr-today/public-policy/hr-public-policy-issues/Documents/Gender%20Wage%20Gap%20Final%20Report.pdf
“Income inequality between men and women is a myth, because the free market would never allow it.”
What does this even mean? That a free market eliminates prejudices and misogyny and sexism? That a “free” society (founded on the backs of slaves) can’t make mistakes?
There are different theories on pay. Some jobs tend to have rigid requirements and pay scales. A fifth grade teacher in public school for example.
Some are based on financial returns. If an athlete makes $100 million you can feel pretty sure someone has done the calculation that he can probably generate more than $100 million of income for the franchise.
I remember reading in a market economy you are always going to have some very high pay for the very best talent. I never made it, but I got paid about what I was worth as far as generating revenue and profits for the companies.
The US is turning into Latin America in terms of wealth distribution: truly, going South’……
Agreed. And, in fact, these Latin American countries have less wealth inequality than the U.S., according to the Gini index:
(The Gini coefficient is in parentheses. A higher number means less inequality. The U.S. is at 45.)
Argentina (41.7)
Uruguay (41.6)
Venezuela! (39)
El Salvador (36)
Jamaica (35)
For perspective, the UK is at 32.4 and Canada is at 32.1.
I took this 2019 data from this article:
http://worldpopulationreview.com/countries/gini-coefficient-by-country/
There are two grievous things wrong with our tax system. 1. Carried interest 2. Avoiding taxes by charitable endowments.
The US is not the only developed nation with this issue.
In many developed nations two full-time wages are essential to maintain the standard of living that we had 40 years ago on 1 full time wage, unless one is in the to echelon of income.
In the last 40 Years shareholder value and the exporting of jobs from western nations (to increase shareholder value) have returned any but the FEW in western nations effectively to the positions they were in pre Victoria.
My Stepfather told us all in the early 70’s this is what globalization (then referred to as free trade), shareholder value, and trade with ccp china would do
I think about 20 years ago in NC the most common employment among men was working in the manufacturing sector and for women it was public school employment. Illegal immigration has suppressed wages in manufacturing, but it has boosted school enrollment. I see it all around me. A lot of men just retired early and their wife works a few years longer because they took a few years off to raise kids and need to hot the retirement years of service.
We all have to adjust to the world as it is, not as we want it to be.
The US is one of the worst developed countries to have a baby/raise a child. How many weeks of paid leave does a typical women get in the US? Zero…Around 12 weeks (unpaid)….. contrast to Canada, it’s now up to 63 weeks (paid) – covering both mother or father. A society that values its children provides the best quality of life for everyone.
Amounts of paid leave = how good a place is to raise a child?
Try to take off your big government rose colored glasses
Study after study shows longer maternity leaves results in happier and more productive workers. 25% of women have to go back to work 2 weeks postpartum. If you know anything about establishing a breastfeeding supply and schedule (which WHO organization and AAP recommend BFing for the first 2 years of life as a public health initiative to decrease illness and childhood obesity), then you’d laugh at a 2 week leave. Research is very clear on this…longer leave is better for the family AND for society. Canada is a great example on how this can work.
“A positive association was shown between the length of maternity leave and mother’s mental health and duration of breastfeeding. Extended maternity leaves were also associated with LOWER perinatal, neonatal and post-neonatal MORTALITY RATES as well as lower child mortality” (my emphasis)
https://www.ncbi.nlm.nih.gov/pubmed/18030952
“Having paid leave makes economic and health sense,” said Ariane Hegewisch, a study director for the Institute for Women’s Policy Research” https://www.cnn.com/2015/10/29/health/paid-leave-benefits-to-children-research/index.html
In China a woman gets 5 months off with full pay and health insurance benefits.
In Finland, it’s 105 days for mothers AND 54 days for fathers.
I’m confused by your statement. Does it take one day to go from a fetus to a child or nine months?
63 weeks is way too much.
Let me guess, people opt to have kids, take multiple years off of their careers at massive subsidy, and then bitch when they don’t climb the ladder as fast as their peers.
Timthetiny,
“Let me guess, people opt to have kids, take multiple years off of their careers at massive subsidy, and then bitch when they don’t climb the ladder as fast as their peers.”
You guessed wrong. The birth rate in Canada (1.6 children per woman) is lower than in the US (1.8 children per woman). This is also the case in China, Germany, Scandinavia, and other countries. This assumption that women pop out babies to benefit from generous maternity leave are patently wrong.
Nicko2 – Paid leave isn’t even the main reason. The cost of childcare is astronomically expensive and bad housing zoning policy creates massive disparities in the quality of public schools. If you don’t spend a fortune on a single family house, your kids will be sent to a public school that performs comparable to a third world country.
Other countries have free childcare or at least pre-k education. The school boundaries are dictated by parental income. Everyone gets equal educational opportunities and therefore upward mobility is much higher.
There is definitely an assault on public education in America with the goal of complete privatization. There is an abundance of cheap housing in bad school districts and a shortage of housing in expensive good school districts. We are probably near a breaking point where it actually becomes more economical to go private rather than pay the premium for a house in a “good” school district.
When people merely get on with things and adapt, as they must to survive, it merely helps their masters to grind them further down into the dust.
And yet I see so many comments (not necessarily here) from those telling us “we” can’t afford to raise the minimum wage to an insulting $15.
What they should be saying is we can’t afford the wages of the top 5%/10%/20% which are costing “us” far more than the minimum wagers ever will.
So yes, keep on opposing the minimum wage and keep Mark Zuckerburg in mental perplexity as to where he should put those hundreds of billions of Treasuries he has laying around because he doesn’t know what to do with them.
So, is this caused by taxes being too high, or too much federal regulation of industry? Maybe labor unions?
Once you normalize women’s wages for time off for raising children (voluntarily), less time at work/overtime (voluntarily) and career choices (again, voluntarily)…
The wage gap nearly disappears. And in some categories like younger single females, they actually make more than thier male counterparts.
“It’s a very uncomfortable topic: Women deserve every penny in earnings increases, and there should have never been such a gap between men’s and women’s earnings in the first place.”
https://www.cbsnews.com/news/the-gender-pay-gap-is-a-complete-myth/
Your comment doesn’t ring true to me in any way. I have been out of the work force for a long time, but while I was working, I never made as much on average as my male colleagues. With a degree in Computer Science and Economics, which is more than many of my colleagues had, I made on average up to 50% less money.
One of the advantages of being female and underpaid is that you are a more attractive candidate to employers. I always found it easy to get another job because I cost less. This is the only advantage I had as a woman in the workplace.
P.S.
One of the ways companies suppress the wages of women is by creating lessor categories of work. These lessor titles still require the workload of the higher titles but carry little to no pay increase. This happened to me more than once.
In one company, I was given the project management responsibility but called a project coordinator. It was not a promotion but an assignment of responsibility for which I received no pay increase.
In another company, I was encouraged to hire on in a lower pay grade because I would be paid overtime. The higher pay grade was management with a bonus structure.
These are just two of the ways they suppress the wages of women in the workplace. I could list more.
“These are just two of the ways they suppress the wages of women in the workplace. I could list more.”
Exactly. And that’s exactly why those lame “gender pay gap is a myth” opinion pieces don’t work.
“With a degree in Computer Science and Economics, which is more than many of my colleagues had, I made on average up to 50% less money.”
I doubt you made 50% less. How do you know how much everyone else made? Other than in govt, salaries aren’t public knowledge. And in govt everyone makes the same. So I’m really skeptical of your claim.
But even if it’s true, your problem is you are a bad negotiator. And that is true of women in general, you are poor negotiators vs men. That’s not my opinion, that’s based on studies.
As an independent contractor I negotiate for my “job” all the time. I ask for the moon and usually get it. If I don’t, I go somewhere else. If you have value to provide and employer, they will pay you, but you have to ask for it. I’ve had multiple conversations that go like this
Me: I want $X
Employer: We can only offer $X -20%
Me: OK Thanks. Nice meeting you good luck.
Employer: Errr well you know, let me look and see if I can find some more money. Hey what do you know, here is a bucket of cash, you can have $X.
But you have to be willing to walk to make that happen. And too many people aren’t willing to do that.
Just Some Random Guy,
Oh I LOVE this – blaming WOMEN for getting paid less … it’s THEIR fault: “But even if it’s true, your problem is you are a bad negotiator.”
Today, salary negotiation might occasionally work the way you describe. Back in the day — which is what Petunia is talking about — an employer could get rid of the women who demanded to be paid more. There were a lot of women out there looking for work, or who were in jobs that paid even less, that you could hire.
When I worked on Wall Street I knew what my colleagues made with bonuses, because I asked them. When my collegues found out how little I made, they told me what they made with bonuses. My base was not too much lower, but my bonus was minuscule. When I asked for a raise at Bear Stearns, my then managing director, told me I was already in the top 2% of women earners in the world.
At $75K, I was in the top 2% of women earners in the world. Think about that for awhile, this includes rich women too. My male colleagues with similar or less experience made at least $150K. Even some of the ones with less experience then me made more with bonuses.
I will bet you, you will find the same thing right now in any high tech company, any financial firm, any large corporation.
2banana,
Glad you found some opinion piece from 2011 to prove your point.
For someone so “data driven” you certainly allow your emotions to overcome rational thought on certain subjects.
There is plenty of data and studies to review showing the voluntarily decisions of a female employee makes and creates the mythical wage gap.
Most of these decisions comes down to family and children.
Generally speaking, a mother, if given the option, would rather work less and spend more time with thier kids. Especially younger children.
A father wants to provide for his family. And if that means working overtime or putting in extra hours, he is more likely to choose that. Especially if it means his wife can spend more time with their children.
The data and evidence shows no nefarious and sinister forces. Just men and women making rational decisions about thier lives and families.
But that doesn’t fit the narrative…
“Generally speaking, a mother, if given the option, would rather work less and spend more time with thier kids. Especially younger children.”
Go to an office at 7pm and count how many women are there vs how many men are there. Mom is at little Dakota’s dance recital, dad is working late. It’s one of those “uncomfortable” topics I guess.
If I had $1 for every time a female co-worker had to leave early to pick a kid from school or take them to a doctor or a soccer game or whatever, I’d have a good chunk of change. Men who do that…I’d have about $5.
Biologically women have to do more – they get pregnant, they go through child labor, feed the infants, they go through drastic physical, physiological and hormonal changes. Men definitely have it easy biologically.
Men don’t need to take maternity leave. They don’t have to choose to do less hours. They don’t have to forgo studying for that additional degree. They don’t have to settle for a job role that pays less in exchange for more flexibility.
If we measure solely based on current income, without regards to time off from work, stream and level of education, number of hours worked etc., men (as a huge statistical group) make more money. But if we are to draw conclusions off of any statistic then we need to control it for variables. And when that’s done, picture is very different: https://www.payscale.com/data/gender-pay-gap.
I am not saying whether it’s fair or not. Just pointing out the statistic. I do acknowledge personal experiences of Petunia and Wolf.
As Jon pointed out, there is a recent push to ‘fix’ the historic injustices. Two wrongs never make it right.
GP
In addition to the differences you highlighted, there is a well-known phenomenon called “double-duty” in which working women are by far more likely to come home and do the workload demanded via raising a family. Women do the laundry, do the shopping, help with kids’ homework, etc much more than men do. This gap is improving, but it is still present in research (and especially noteworthy are the number of women that feel obligated to leave work and stay home with a sick kid or take them to medical appointments).
I can’t even with most of these comments Wolf. Who knew something as obvious and well-documented as the gender-gap would be disputed by flaming right wingers????
Yes, we know.
Only big government can solve all problems. With, of course, bigger and bigger government.
Canada is a paradise and should be an example for America to follow.
And anyone who disagrees with you and the narrative, no matter if backed up by reams of data/studies, are nazis.
These are all important first world problems that we fight over. There are only about 70 million good paying jobs in the US where you can be a true breadwinner for your family on one income. If you have one, be thankful that the glass is half full. If your family has two you are truly fortunate.
So you want to “normalize” a statistic reflecting women’s wages by adding in imaginary income that would have been earned by women working imaginary hours? What about calculating in all that income men aren’t earning because they’re (voluntarily) sleeping eight hours a day?
Simple answer to the problem is “monetary inflation of the currency”. The media and politicians have lied for decades as quality gets crushed for producing and maintaining cheaply made products.
Canada got rid of the pennies as inflation made producing them more expensive than their worth.
Companies have adjusted in vastly different ways to keep their costs down at the sake of quality.
Media being paid by companies rejoice at our suffering and expense as numbers are manipulated…
But you can still look back at what you paid 40 years ago to today.
Don’t confuse the cost of coinage (e.g. pennies) with the cost of currency where the Federal government is concerned. This leads to all sorts of nonsensical conclusions.
Women are paid less on average because they have less experience on the job then men do.
Tell that to some of the new actresses who are expecting the same pay as a veteran highly demanded actor and will seek the media’s attention to complain.
Why are you upset that she is exercising her right to negotiate a contract? Do you get upset about other people who exercise their rights?
I may not agree with this
I am 45 years old Male non white working in hitech one of the faang companies..
I can tell you from the trenches that it is an awesome time to be a woman in tech companies
Tech companies are looking for women to promote to bigger titles usually at the expense of men
If a man and woman interviews for a position and they are equally qualified I can tell you for sure a woman would be hired…
Current time with social media .. it pays to be politically and socially correct
Wow, this blog is getting more popular I guess, and bringing out the trolls.
In russia, they have to pay for this level of dedication to trolling. In the us, the talent works for free because they actually believe the precanned ideology cooked up by think tanks with “conservative values” between 1960s and 1980s. They show up all of the internet to provide their side of the story without fail.
There’s a 19th-century protestant hymn “Bringing in the Sheaves”.
A modern version of the libretto for our irreligious, cynical age might be “Bringing out the Trolls”.
Art reflects life …
Mildly related. Just read Hussman article which included the math on withdrawal rate for a 36 year retirement horizon. It’s down to 3.2% per year. That’s going to be part of the income equation. I think the stimulus of the last 10 years has hidden the problems in pensions and if he is right pension assumptions of 7% return will be more like 2% the next 15 years or so.
Pensions will begin to blow during the next five years I believe.
… and savings of the prudent continue “to blow”.
I don’t see any financial relief for us “deplorables”.
Our president tweeted overnight that the Fed is nuts for not taking interest rates down – maybe below zero.
Excuse me – I wouldn’t want to misrepresent what our president said.
He didn’t say the Fed was nuts. He called them “boneheads”.
It’s a problem with our system. It’s always in a politician’s interest to sacrifice the long term, for the short term. Do that too many times and you have what we have today.
I would even say that it might even be illegal to tell the truth. The foundation of the current system is confidence, but actually the confidence is undeserved. I think the math does not work and so we will have the Minsky moment when the treasury secretary, speaker of the house and leader of the Senate speak the truth and say the country is broke and we must add a VAT tax or a national sales tax. It’s for the children
These low wages are mostly the result of trying
to negotiate wages on your own rather than part
of a team.Your boss and you are pulling the towel in
opposing direction but he is hooked on to a bulldozer
and you are hooked on to thin air.
Wages are rarely negotiable for vast majority of workers. The only a normal worker can get a real wage increase is by switching jobs. Every should be doing this every 2-3 years unless they are on a real career path… If you wonder if you are not a career path, you are not. People who are know it from the beginning and it is largely determined when you are hired or shortly thereafter. Working hard is for suckers most of the time.
chillbro – lol, just told my coworker the exact same thing. 2-3 years max is how long you should stay at a job if you haven’t been promoted or given a 5%+ raise.
many people are unknowingly being paid below market because employers are looking for people to exploit. Job hopping will help bring your salary up to the market rate and also has the benefit of giving you more marketable skills.
After the second 2.5% standard cost of living pay increase, resumes should be sent out to test the market.
Most people I saw near the top were definitely more talented than me but they didn’t work harder I don’t think and probably didn’t lose any more sleep.
I was trained to do applied engineering and that was about all I had any chance at succeeding at. Not management or thinking about things different than what I was trained.
I did hear that engineers are the second most likely group to become millionaires as the analytical skills and maybe generally prudent behavior leads to good spending and investment habits.
Hmm…If your 401(k) plan exempts your contributions from federal income tax withholding, then your contributions are not part of your gross income.
Changes in household/family sizes and 401k contributions complicate my feeble attempt to compare things from 40+ years ago to now. Not only that, my anecdotal memory of one is very fuzzy and getting more so. But on a personal level, I do feel richer.
“If your 401(k) plan exempts your contributions from federal income tax withholding, then your contributions are not part of your gross income.”
That is not true.
Check your 1099. I did.
“If your 401(k) plan exempts your contributions from federal income tax withholding, then your contributions are not part of your gross income.”
100% wrong. 401k is a deduction, from taxes, not a nullification of income. No different than a mortgage interest deduction.
Just a random followup question. I am going to be required to take a 401k RMD (distribution) in a couple years from savings. On the SIPP census question/interview that money should not be part of my gross income since I’ve already counted it once.
Your RMD distributions will definitely be part of your Federal taxable income and it may well have a significant impact on your Medicare premiums. If your 401k (did you mean IRA balance?) is large, consider making withdrawals before the RMDs kick in. I started at age 60 and my only regret is not taking out more each year than I did. Do the math and decide for yourself.
Judging by how much I am paying in Medicare premium surcharges each year (and I am expecting them to go up significantly in 2020), I am doing OK. Of course, I don’t own an airplane or have to make alimony payments or need to subsidize adult children. My biggest “luxury” was dropping out of the labor force over a decade ago after I was forced into early retirement. I am confident that I made the right choice.
Yep. I dropped out at 50. In economic terms it is probably the right decision for many. We have a progressive tax structure and once retired you can have 90% of the good things in life and have your time back.
I have used a lot of on-line programs (IRP I think it’s called was the best) to level load withdrawals and play with different scenarios.
I just was never much of a consumer. Once my kids were through college I was done.
cesqy ,
The income data here is based on pretax gross earnings, before withholdings, not after-tax earnings, as you imply. So 401k tax benefits do not impact this data.
Census survey questions and IRS data comparisons always confuse me, and I’ve filled out both forms for decades….probably inconsistently.
There is an estimated $7 trillion in delayed income in IRAs and 401ks that started in the 1980s. That income will start being taken out as the baby boomers reach required minimum distribution age of 70+.
cesqy – How about efficiencies gained and quality of life improvements from globalization and technological advances? Most people in America own an impossibly cheap smart phone that can do things that would be unimaginable 40 years ago. We have access to any information we want within seconds and can shop for any good on the global marketplace on a tiny computer that fits in our pocket.
In addition, interest rates are much, much lower which dramatically reduces borrowing costs to start a business or purchase a house. Wages may be lower, but the overall quality of living in much higher for the average worker in my opinion.
And for the fortunate top 20% of the population, life is WAAAYYY better than it used to be.
“Let women work so we can pay men less” is worked just as planned.
At this rate double income is needed just to pay the bills.
raxadian – How about doubling the productivity by incorporating twice as many people into the labor pool. Not to mention the fact that women are at least equally competent if not more so in many job roles.
I am not making this up. }Having “both the husband and housewife” work so we can pay men less] is one of the justifications that was used to allow women to work after WWII. While during WWII it was “because we need soldiers for the war and women aren’t soldiers”.
Funny how things change, uh?
Every school in the land encourages girls to go into STEM. Everything is all about grrrrrl power. What do you think happens to boys when year after year they are told they’re worthless members of society? This is what happens. An entire generation of men that society has discarded to the edges.
My daughter is 12 and my son is 11. My son notices from time to time that there is a disparity between the encouragement that girls get and the encouragement that boys get (most recent example – we did a 5k family run and at the end there were booths for various organizations and there was a “Girls Who Run” booth where girls could line up for special prizes and stuff. There was no “Boys Who Run” booth. My son noticed.)
But then again my daughter also notices that there sometimes really is blatant sexism against females, mostly from older generations – my dad in particular can say some mysogynystic things that can really get my daughter’s ire up.
Does it all balance out? Who knows. I don’t personally care because my kids are grounded enough that my daughter doesn’t really need the extra encouragement and my son isn’t really harmed by not having it.
“but it does not include noncash benefits, such as food stamps, subsidized housing benefits, or healthcare benefits”
Which is why the number is a joke. Add in all the welfare and America’s so-called poor people are anything but. Health care alone via Medicaid is worth $15K a year minimum to a family. Add in food stamps, another $5K. So the sob story family only earning $32K or whatever, is actually earning $52K.
Just Some Random Guy,
You cherry-picked what fits your twisted agenda: the data also excludes CAPITAL GAINS. That means it also excludes stock-based compensation plans, such as stock options or stock grants. They’re in the trillions of dollars a year. They are far, far larger than any food stamp amounts. Capital gains accrue to the people with capital — which excludes to bottom 50% of households. And they accrue the most to people that have the most capital, namely the top 5%.
Also, if you know anyone on Medicaid (or the state equivalent of it), they will tell you that it is minimal coverage that most doctors don’t even accept, and it’s not the equivalent to a $15,000 a year insurance plan.
The independent doctor that may not accept Medicaid is virtually extinct. Every doctor these days is part of a group like Wellstar, Providence, Trinity, etc. And every medical group accepts Medicaid.
And yes it’s worth $15K minimum. I pay $13K a year for insurance and have a $5K deductible with all sorts of co-pays. Medicaid’s deductible? $0. Medicaid’s co-pay? $0. Medicaid out of pocket? $0. And still people on Medicaid complain that’s it’s not enough. Give me a break.
Your first paragraph is patently false. I work in health care and I see it all the time that MANY family practice doctors, specialists, medical groups and others don’t accept medicaid patients.
I’ve learned that it’s futile to enter a debate with people who won’t see what’s in front of them.
Some people seem to have a chicken-like need to attack the already-bloodied. They can’t help it. They are impervious to facts and data. (Unless it’s what I call “refrigerator data” where they’ll take the fact that everyone with a house has a refrigerator these days and use it as “proof” that there are no poor people living in houses.)
https://tinyurl.com/y3zmkjpq
About 70% of all office-based physicians accept new Medicaid patients, including two-thirds of primary care physicians and close to three-quarters (72%) of specialists.
Now let’s talk about fridges some more….
Just Some Random Guy,
From the CDC report that the article linked, just an example:
“The percentage of physicians who accepted new Medicaid patients was significantly lower than the national average of 68.9% in five states: California (54.2%)…
So that’s just over half. In expensive places like San Francisco, it’s a lot lower than half.
The report covers 2013 data. Here is the original:
https://www.cdc.gov/nchs/products/databriefs/db195.htm
There are general differences between men and women. If you are married for long you most likely know this.
I have read that for investing men are generally too confident in their abilities and take excessive risk and generally women are not confident enough and don’t take enough risk. If this is true, it may apply to employment as well.
31years in the retail grocery industry. Those who are/were covered by organized labor contracts: women’s pay scale=”Equal work, equal pay”. And they were paid same scale as the men.
The pointed objective of crushing organized labor in the US since the 1970’s has led to most of the “inequality” we have today.
The conspiracy of so many of the organized labor internationals with our overt/covert foreign policies since WW2 has made it that much more difficult for the domestic arm of organized labor to function in the interests of the common laborers.
The more we subvert organized labor the more we will sink into “3rd world” (I really hate that term!) status.
My wifes income and my income over the last 35 years have swapped ,sometimes dramatically, as in $0 for one of us. She did not focus on what was “fair” and neither did I. Instead of saving for retirement I wanted to blow up and down lakes at 60mph in a $30,000 bass boat pulled with a $40,000 truck . I thought that was “fair” . To stay married I settled for a 10yr old truck to be used for work also ( $3,500) and a used 1973 walk through windshield tri-hull that with a bass seat on the bow and electric trolling motor that I fitted myself ($3,000). She saw little value for herself and the kid to be blowing down the lake at 60 mph, without a windshield ,30 mph, with a windshield,was just fine . I am still married and I still have the boat and it is in good condition , rebuilt the 65 hp 3cyl evinrude myself and I am on the 3rd used truck. The point is, screw the gaps of income . The word “fair” should only be used for baseball and weather. We are an economic unit of two and behave as such . I would be in sorry state of economic health if I had not been in an economic union.
You got that right. Spouses tend to keep each other honest, when it comes to finances. My wife and I made many job changes for considerations other than wage. Sometimes we wanted more free time and didn’t want to work for a sweatshop. Sometimes we turned down higher salary offers to stay with an employer we liked. When the kids came, we did what was necessary to make sure we had sufficient time to raise children adequately.
I’ll bet the experiences you had in your clunker of a boat and car were equally as satisfying (and more likely than not, *more* satisfying) than you would have had in the expensive versions.
I think that I am reading between the lines of your post that you know that; and if so, good for you.
Zanetetsu : I lost nothing , and the memory of it all is a golden gain.
Says it like it is for long married. Kudos and two thumbs up.
Holy Crap, Wolf! This is the kind of trends that revolutions are made out of. This makes my pessimistic view look almost optimistic.
Old Engineer – Have you talked to a household in the bottom 80%? As long as they make enough money to eat at Ruby Tuesday’s once a week and watch NFL on Sunday’s they are totally happy. The quality of life isn’t low enough for any type of revolution.
Holy cow. Batman! Where do all these generalizations come from?
I’m on the bottom rung in terms of MONEY income (by design), don’t eat at Ruby Tuesdays and don’t watch NFL games, but I’m “totally happy” anyway!
So silly. Large scale immigration has depressed wages for the entire 40% of workers.
The returns to capital are now dead, and populism will shut off immigration, just like it did last century in America.
The real crime is the medical system, and the impossible growth rate.
It will change, but at what cost? LoL
So many argue their position in the society, not realizing how bleak it is for the bottom half.
Every time it is the same as well
I believe that just looking at real earnings over time underplays the extent to which large swaths of the American public are suffering. I’m saying the obvious here, but I’m surprised that it wasn’t mentioned yet.
Worse than the stagnant wages are the skyrocketing costs of healthcare, housing, and education. Additionally, when households could afford to have one person be a homemaker, the family saved on childcare and eating-out expenses. When you add all of these factors together, many American families are in a desperate economic state.
It’s no wonder that many Americans voted for the “populist” Trump and that many now are considering quite progressive candidates for 2020.
I don’t buy that the Trump victory was primarily about racism; as has been usually the case in history, it’s about people’s pocketbooks.
People are pissed as hell that in this land of great prosperity, many have to live with daily anxiety about how to survive economically.
Wealth inequality is the worst problem that the United States faces in 2019, in my opinion. We need to stop being too proud to adopt European methodologies that yes, put some drag on the overall efficiency of the market, but also, and more importantly, profoundly reduce wealth disparity.
Citizen AllenM – large scale immigration is the only thing that keeps our economy chugging along. The gov’t is forced to bring in immigrants to A) do the dirty work that no American wants to do. and B) keep the population and consumption growing so major corporation can continue to post growing profits.
There are many awful jobs (high paying ones included) that nobody wants to do. Think many Americans want to move to NYC to make $100K doing accounting or computer programming? Absolutely not.
Household income increases can be misleading. If over some time frame household income rises by 20% but it takes twice as many household members to earn it, that looks to me like a decline in living standards.
If women were truly underpaid – all else being equal – then no man would ever get hired. If I can get the same work out of Sally as John but pay Sally 25% less, why on earth would I NOT hire Sally?
The entire argument is ridiculous. And it’s because the way the “statistic” is calculated it takes every man and every woman and comes up with the average or median income for both. What it doesn’t account for is there are virtually no women working on oil platforms that pay $100K while there are a ton of women who work as social workers than pays $30K. Or the fact that despite what some may think, only women can have kids. Which means only women will take time off from work to have kids and (usually) stay home with kids for several years, which impacts earnings long term.
But if you take a man and a woman, same job, same education, same age, same experience, same everything, the 75 cents on the dollar evaporates.
Just Some Random Guy,
“If women were truly underpaid – all else being equal – then no man would ever get hired. If I can get the same work out of Sally as John but pay Sally 25% less, why on earth would I NOT hire Sally?”
Discrimination is never logical. It’s counterproductive. That’s why companies and economies work better when discrimination gets minimized. However illogical discrimination may be, it’s very powerful and deep-seated.
Since the beginning of time women were relegated to the “home”, women were dismissed as the lesser (second) sex and along with that prejudicial fallacies surrounding intelligence levels and inability to work/manage proliferated. Men were hired over women for the same reason Blacks were counted as 3/5 of a citizen. Discrimination and oppression work hand-in-hand. Employers were men. They benefit from the status quo. They keep their power and their pay. Why introduce a whole other class of people that might threaten their place in society? If you could eliminate competition for your pay from half of the country, why not?
I lost a friend when this data when it started showing up a few years ago. My position was that women in lower-income households that include men were just as negatively affected. In fact, it was a specific statement by my daughter (who shares my opinion) that upper class women were equalizing things for themselves and pulling up the ladder behind them.
This set my friend off. He ignored her tying the issue to the class war, and said it was a good thing men got crushed; that they deserve it for their bad behavior all those years. I agreed that boomers and silent gen very much did this, but to make millennial men pay for their parents’ sins was a ludicrous idea.
My daughter pointed out that he fancied himself a temporarily embarrassed millionaire and thus viewed the issue as though he was already rich and male, enjoying all the protections and perks that go with such a position — including the continued fabulous pay increases. In effect, she re-directed the conversation back to class, implying that his schadenfreude was more toward “loser” men than men in general.
That’s when the fat lady sang.
Any chart that goes from 50 to 400 should be done in log scale to measure percent changes not nominal changes.
Log scales hide more than they reveal.
Log scales are pretty good for some things, say compounding of stock returns. It allows you to see if growth rate is changing over time easier, but I get the point.
Somewhere I had a teacher that said never ever do a graph unless origin is 0,0. I sure see that rule violated a lot.
Yeah that’s one of my biggest pet peeves. Graphs that don’t start the Y scale at 0 are more or less useless. I can make a 1% change look identical to a 100% change if I get to pick my Y range, and most charts do just that. So annoying.
Wolf is pretty good about this; better than most. But still not perfect …
Old-School,
Your “teacher” didn’t know what he or she was talking about.
All charts are designed to illustrate. That is their only function. They’re a visual illustration of a data set. When you start charts at Adam and Eve, and at zero on the Y-axis, though Adam and Eve and zero are irrelevant for the current time frame, you get something that doesn’t illustrate anything.
Charts are designed to get the meaning of a complex data set in one glance.
The median real income was NEVER-EVER “zero.” Zero is irrelevant, when it comes to real median incomes. Why put zero on a chart? Starting a median real-income chart at zero causes the illustration to lose value as an illustration.
I think about this very carefully at every chart I post. There are always trade-offs, but if the illustration loses meaning in the current time frame, the chart becomes worthless.
Starting every Y-axis at zero is nuts. In many charts, you’ll just see a straight line, and you have no idea what’s going on. In other charts, starting the Y-axis at zero is the perfect solution.
When was the last time you looked at a 2-year S&P 500 chart where the Y-axis starts at zero? So these are choices we make, and the solution is different for each chart.
Here’s a look at exploding income, per capita related to GDP:
https://fred.stlouisfed.org/graph/?g=oPQt
a narrow demonstration of labor competition.. good place to start this worthwhile study.
My cousin is a nurse practitioner who makes about 100K/year, but about 20-30% less than physician’s assistants. While there are some legal (not truly medical) differences between the two, the only reason I could come up for the pay discrepancy was that NPs are comprised of about 90% women, while PAs are 50/50.
BLS Data 2017
Average salary:
NP: $107,480
PA: $104,760,
Try again.
I can bring up several examples where PA’s make less than NP’s in the same organization doing the same work. In many of those cases it is because the nursing union is very strong.
These classifications with minor differences can be found all over the place and almost never benefit women workers. Even in hair salons you will find “Master Stylists” who charge more and are almost always men. The higher rates they charge translate into more income for them while the women “Hair Stylists” make less.
I read an article a few years back that said male owners of vetenary clinics made a lot more money than female owners of vet clinics. If I remember correctly the article talked about why men felt more comfortable about charging for their services. It has probably tightened up some since I read article, but I think there is a little difference in the sexes on what they desire to get out of business.
Old-school,
My former dentist, a woman, begs to disagree. She ripped me off for years with little stuff — though I had my suspicions, I let her because what do I know? — until she tried the Big One with scare tactics ($8,000), and I got a second opinion. That’s when I changed dentists and saved $8,000.
If I could afford to go to barber college, yes, male barbers make 2X (at least) what female ones do. I go and get my cheap cuts from the Vietnamese place that’s between the pinata shop and the storefront church, just down from the panaderia, because I can pay $10 for the cut and if I’ve not been in for a while, will tip another $5. A cut from a guy would cost me $30.
As for vets/vet clinics, this lines up with what I’ve seen too. Male vets are respected; female ones are often working for the non-profits that do things like low-cost spay/neutering.
As for dentists, I lost a crown and shopped around and ended up going with the most expensive dentist, a lady who I think really gave me my money’s worth (not only re-installed the crown but trimmed it and corrected my bite; a problem that had been there from the beginning when the crown was put in by a male dentist).
Many tennis fans including myself like to watch females play much more than we like to watch the males. I have no idea what overall preferences are, but if my opinion was prevalent among large numbers of fans, then a case could be made for paying women tennis players more than men. Currently there is equal pay in tennis.
Admittedly, tennis is a complicated example. There are many other professions where women should be paid more than men.
Could it be that we live in a modern world where there is no value in the inability to think? We have robots for repetitive tasks and therefore don’t need expensive men putting bumpers on cars. AND we are not going back, so society needs to deal with the reality that we have TOO MANY PEOPLE. How about society start by STOPPING the importation of immigrants with no skills, no education, and no cultural assimilation (high cost). AND how about we stop the importation of immigrant families with the same issues. We need people who can think. Yes there will always be a place for a logger, miner, HVAC, carpenter (maybe Paulo), etc. but it will grow to be less and less a component of society going forward.
Informative information Mr. Richter. It would be interesting to factor in capital gains, options etc. into the top income quintile.