8 Responses to “The Median Wage Problem”

1. kranky kritter Says:
   December 17th, 2008 at 8:02 am

   For some time now I’ve ben saying that providing a good answer to the following question is the biggest challenge our country faces:

   In the 21st century, where will the good jobs for comparatively unskilled workers come from?

   Personally, I’m not convinced that this leads directly to a challenge of the efficacy of “trickle-down” economics, as your one-off suggests. I’ll happily acknowledge that we’ve seen an undesirable deterioration of the economic pyramid of household incomes. High-demand skills have been increasingly rewarded, and median demand skills have not seen compensation growth. Meanwhile, workers at skill levels for which the supply is very high have seen compensation decline.

   Is this simply the result of tax policy? I’m between agnostic and skeptical on that one.

   So let’s take the time to notice that progressives worldwide have been lobbying longly and loudly for notions which I’ll loosely call economic equity. In other words, poorer folks from 3rd world nations deserve a much fairer share of global prosperity. I won’t argue with that. Instead, I’ll move on to begging everyone to ask themselves “how will this be achieved?” If we use the pie analogy, then economic equity says that all humans deserve at least a reasonable slice of the pie[or even equal-sized slices].

   This can happen, generally speaking, in only one of two ways. Either the pie grows big enough to give everyone a reasonably sized (subsistence plus what, he wonders) slice, or else the existing slices of other folks must be reduced.

   Many Americans are eager to believe that the pie can provide reasonably-sized slices for all only by reducing the slice size for “fat cats,” without reducing the slice size for so-called average Americans, many of whom have things like 3 bedroom houses, 2 cars, 4 cell phones, one or more $800+ televisions, several personal computers, indoor plumbing, a refrigerator, electricity, heat, trash service, a public school system, and comparatively trustworthy police and fire protection.

   And so on. You get the idea. In other words, most Americans are accustomed to believing that we are all entitled to the standard of living we have been fortunate to enjoy since the mid to late 20th century. Selfishly, I’d be delighted to believe that America can fix the economic problems it faces by adjusting our internal tax and other economic policies. But my gut says its bigger than that. The rest of the world is catching up to us, and more quickly than we find comfortable.

   I am strongly leaning towards the notion that this current situation is the concrete manifestation that will be looked back on as the end of an era. The trends have been obvious for some time, so marking the actual end is bit of a symbolic thing. What am I talking about? This:

   The days when a comparatively unskilled American could expect to find and keep a job that provides the standard of living loosely known as the American Dream are over.
   

   This is not the say that the American dream is over. But the less skilled you are, the harder you’ll have to work, and the luckier and wiser you’ll need to be. No more quitting school and getting a job at that place in town that’ll pay you $15 or $20 or $25 per hour and all you have to do is show up and work about as hard as the other folks already there.

   Again, it’s comforting to focus on the failure of the economic policies of just-ousted political party. But the dynamics I’ve outlined above are operating at a mcuh higher level and on a much greater scale. Can America afford to keep blithely assuming that, as usual, it’s all about us?

2. Jimmy the Dhimmi Says:
   December 17th, 2008 at 8:14 am

   Median income per earner has increased proportionately throughout all quintiles at least over the past 15 years. According to the U.S. census bureau, The median income of the penultimate 20% of wage earners has grown 3.6% annually, while the median income of the poorest 20% has grown by approximately 3.9%

   That says to me that the poor of this country have increased their wages at a faster rate than the upper middle class. Since 3.9% > 3.6% although not by much and perhaps within margin of error.

   Drum is probably talking median income per household, and on average, households in the lowest quintile have 1.5 fewer income earners living there than the highest 20%. Makes sense to me.

   Why do we get to simply recite platitudes that somehow “the rich” are fleecing everybody, or that the poor are oppressed ect… without citing any data to show it? Show me the money JG! give me some numerical data on the growth of wages per earner that would prove the U.S. census bureau wrong.

3. kranky kritter Says:
   December 17th, 2008 at 12:15 pm

   Oopsie, Jimmi! Looks like you forgot to adjust for inflation.

   Adjusted for inflation, median household income dropped by $1,175 between 2000 and 2007, said Elizabeth Warren, professor at Harvard Law School, in written testimony before the Joint Economic Committee.

   I dunno how close this woman is, but given that raw data from the census is household income and not individual earner income, and factoring in inflation, which doesn’t include volatiles which have been higher lately, the stagnation argument is pretty solid.

   Especially when you compare median household income figures to GDP growth. Most of the income growth has flowed to higher wage earners. Why try to obscure this, Jimmi? Once adjusted for inflation, the number are if not flat, virtually flat. The impression of most folks that they aren’t getting ahead is largely on the mark.

4. Jimmy the Dhimmi Says:
   December 17th, 2008 at 3:53 pm

   INCOME PER EARNER!!!!!!!!!

5. TerenceC Says:
   December 17th, 2008 at 6:56 pm

   Dhummi – you take one side of an issue and spin it like it’s the truth. The census study you sighted is completely massaged. It doesn’t take any of the other factors into account during that time such as the Tech Bubble, the Real Estate Bubble, the large immigrant population, unaffordable healthcare, and increasing expenses in multiple areas (food, gas, housing, healthcare,education). In addition, the median income was higher in 1999 than it is today – if you want to make that point. Income per earner is one matrix of a very vast calculation. If it’s your contention that individual wage earners make more money today than they did 14 yrears ago – that premise is correct. However, that contention has no significance unless you need to believe that financially things are getting better despite what all the other data suggests. What good is an increasing wage at any level when costs rise even faster? At the rate the poor are gaining on the wealthy -as you suggest – they’ll be at parity in only 134 years. The rich hang on to more of their money through investments, tax breaks, etc – and these items are not figured into the Census numbers as “yearly growth of estate”. The poor spend all of their money – not because they want to but because they have to – and those numbers are figured into the census numbers. Think!

6. Jim S Says:
   December 17th, 2008 at 9:59 pm

   If someone wants to quote something from the census, get it from the census, not the blog of an ideologue who plays games with the data.

7. Jimmy the Dhimmi Says:
   December 18th, 2008 at 9:01 am

   However, that contention has no significance unless you need to believe that financially things are getting better despite what all the other data suggests. What good is an increasing wage at any level when costs rise even faster?

   Well, not very good. But don’t worry because costs haven’t risen even faster. According to a blog of an ideologue who plays games with data from the census, the median household income has risen parallel to the consumer price index over the same amount of time, which means the median income per earner must have risen even faster. The cost of living has not outpaced median income by either measure, and the CPI doesn’t take into account technological advances that improve the quality of life from that of the past, like cell phones, internet access and new medicines. For example, the price of the best medical care available in 1980 (which was really expensive at that time) is so cheap today that you could practically give it away, but nobody wants outdated medical care so it is not counted.

   Don’t worry Terrence, your fears have not materialized.

8. kranky kritter Says:
   December 18th, 2008 at 11:28 am

   the median household income has risen parallel to the consumer price index over the same amount of time, which means the median income per earner must have risen even faster

   Bzzzzzzzzzt! Nope. Wrong. .Not if we are talking about percent rates, which we invariably are if inflation is being cited.

   Time for today’s math lesson:
   •Suppose we’re talking about a 2-income household.
   •Suppose inflation rises by let’s say 2%.
   •Then assume that this household “kept pace” with inflation as Jimmi described.
   •This would mean that total household income rose by 2% as well.
   •For this to have happened, both household incomes would have to rise by the same 2% (or one by more and the other by less).

   So individual incomes most probably are NOT rising “even faster.” They are probably not rising at all, not in comparison to inflation.

   If you are comparing rates, then it doesn’t matter whether you’re looking at data per earner or per household. If household income keeps up with inflation, that can only happen if both incomes keep pace, or if one picks up the slack for another, or if a new income is added to make up for an existing income which didn’t keep pace.

   Household income measures do confuse some things for the sake of clarifying others. But household income does not seem to conceal some hidden income growth on the part of median wage earners.

   I’ll admit that something may be getting hidden or confused due to the fact that we are talking about median (or “middle number”) incomes, and then applying rates to those. But in general, if individual incomes are rising faster than inflation, then the numbers for median household income could be expected to rise faster than inflation. Unless there was some sort of trend in which the make-up of household incomes was changing. For example, if households were largely keeping pace by diminishing 2nd incomes in response to growth in the other income.

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