Forum Post: Income Inequality
Posted 11 years ago on Aug. 19, 2012, 3:22 p.m. EST by jrhirsch
(4714)
from Sun City, CA
This content is user submitted and not an official statement
This graph shows the income of the given percentiles from 1947 to 2010 in 2010 dollars. The 2 columns of numbers in the right margin are the cumulative growth 1970-2010 and the annual growth rate over that period. The vertical scale is logarithmic, which makes constant percentage growth appear as a straight line. From 1947 to 1970, all percentiles grew at essentially the same rate; the light, straight lines for the different percentiles for those years all have the same slope. Since then, there has been substantial divergence, with different percentiles of the income distribution growing at different rates. For the median American family, this gap is $39,000 per year (just over $100 per day): If the economic growth during this period had been broadly shared as it was from 1947 to 1970, the median household income would have been $39,000 per year higher than it was in 2010. This plot was created by combining data from the US Census Bureau[41] and the US Internal Revenue Service[42]. There are systematic differences between these two sources, but the differences are small relative to the scale of this plot.
Translation: The median American family making $51,000 a year now, would instead be making $90,000 a year if the increase in wealth was shared as it was during the 40's, 50's, and 60's.
Outsourcing and other reasons attempt to explain the decline or stagnation in wages, but in reality the overwhelming increase going to the top 1% is coming at the loss of the lower 99%.
http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States going to the top few percent.
From Stephen King - the novelist :
ad iudicium ...
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I had to look up "persiflage" !!!
'SK' ends with : "Scrooge changed his tune after the ghosts visited him. Marie Antoinette, on the other hand, lost her head. Think about it.!" Also :
http://occupywallst.org/forum/what-if-the-greedy-rich-paid-their-share-8-things-/ &
http://occupywallst.org/forum/oligarchy-in-the-usa-the-wealth-defence-industry-p/ .
fiat justitia ruat caelum ...
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Chortles, chuckles and giggles are the necessary adjunct of Every Revolution !!!
ab origine ; ad infinitum ...
Even the top 1% saw a decrease in growth rate. It is really only the top 0.01% that have seen an increase in growth rate. Cool graph.
Yep!! 0.01% = the Oligarchs.
Occupy the Oligarchs!!!
So what caused the decline for the lower incomes beginning in the 70's? The only reasonable evidence I've seen is the concurrent decline in union membership during the same time frame. Lack of bargaining power equals a lack in income growth.
http://philebersole.wordpress.com/2012/06/12/the-decline-of-american-labor-unions/
I have not been commenting for some time, but found this Interesting data. I would like to see the graph broken into equal lengths of time (20 yr segments). As for reasons, there are likely many factors, but one important one would be the fall of manufacturing jobs and the rise of the service industry that started about that time, which impacted the middle class wage rates (union decline was a by product of mfg job loss). It would be also recommended to research what other external factors that occurred, such oil price rise, inflation, trade deficit, etc. one other comment is that the business cycle started to change a bit during the 70s and 80s with stagflation. The graph also shows the much higher risk of the top 20% vs the 80% as far as investment income and stock market. It takes money to make money and when the growth occurred, so did the wealth at a much higher rate. The growth periods were more sustained, therefore more wealth generated for anyone who had invested. The lower 20% has never had much for investment and it shows visually here. Inflation flattened wage gains, but not investment income. I am not sure of the tax rates during the last 60 yrs of the data, but that should also be overlaid. Graphs can be very informative, but am aware of the intent of the data arrangement within the graph to push a point of view. Even still, a fascinating snapshot. Is the data readily available that was the source of this graph? Would be interesting to graph it with correlation effects of other factors.
The source of the graph is linked at the bottom of the post. The data for the graphs usually comes from Census, Social Security, and Bureau of Labor statistics, but many other sources are used.
Interesting that you see the top 20% making gains by investments. I see the top 20% making gains at the lower 80%'s loss. During this 40 year period productivity per worker grew by 80%. Equal to what the top 1% gained.
The irony is that even the well educated, those with masters and doctorates, who helped produce the gains in productivity, did not share in them. They invested years in their education, but their return on investment was taken by the top tenth%.
The vertical scale is logarithmic so large increases look relatively flat. A normal scale would show the increase at a much steeper angle.
I did a fast scan of the article and will take more time later to fully read it, but one can quickly see that the effect of the tax rate decrease plus capital gains rates decrease was a major factor for the wealth growth for those that could invest. Would be interesting to see break out of wage and investment income (not sure if that was in the article). But understand your point, but not sure if agree entirely yet. Have some doubts on the 20 gain vs 80 loss but will read further. While productivity increased for a variety of reasons, technological productivity increase is not something that is a gain in wage necessarily for the worker but rather the owner / shareholder. In my opinion, Personal productivity Is usually rewarded in merit increase for exempt workers. Union hourly worker does not reap that benefit (no incentive by either side), and the non-union worker has sometimes a better opportunity if individual effort is recognized (generally). One other thing occurred over the last 30 years: long term strategy was replaced by "quarterly result" strategy, both in investing and business models.
One more nice graph with just income from investments, salary, and business for just the upper .1%
http://desertbeacon.wordpress.com/2012/07/24/my-country-tis-all-about-me-the-romney-tax-plan-who-in-nevada-would-benefit/
Trying to understand just a few of the many ascending and descending variables and how they affect the economy is a challenge. Here is a good graph of various tax rates over many decades. It opens up very large if you click on it.
http://visualizingeconomics.com/2011/04/14/top-marginal-tax-rates-1916-2010/#.UDHMt6AsFGg
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Apologies for the wrong word choice, have edited above. Goes back 35 yrs and was trying to remember the word used back then. But is there a comment, as I am sure you understand my meaning?
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through the 70's looks like things were down across the broad then around 80 we busted the unions and almost all growth started going to the top, up slope for bottom group under Clinton looks a lot like it did in 50's 60's but it's clear that the top did the best during all the good times outweighing any extra downside they had .
Great post !!! In corroboration of which, I append :
"Some Outrageous Facts about US Inequality",
by Paul Buchheit.
Studying inequality in America reveals some facts that are truly hard to believe. Amidst all the absurdity a few stand out.
1. U.S. companies in total pay a smaller percentage of taxes than the lowest-income 20% of Americans.
Total corporate profits for 2011 were $1.97 trillion. Corporations paid $181 billion in federal taxes (9%) and $40 billion in state taxes (2%), for a total tax burden of 11%. The poorest 20% of American citizens pay 17.4% in federal, state, and local taxes.
2. The high-profit, tax-avoiding tech industry was built on publicly-funded research.
The technology sector has been more dependent on government research and development than any other industry. The U.S. government provided about half of the funding for basic research in technology and communications well into the 1980s. Even today, federal grants support about 60 percent of research performed at universities.
IBM was founded in 1911, Hewlett-Packard in 1947, Intel in 1968, Microsoft in 1975, Apple and Oracle in 1977, Cisco in 1984. All relied on government and military innovations. The more recently incorporated Google, which started in 1996, grew out of the Defense Department's ARPANET system and the National Science Foundation's Digital Library Initiative.
The combined 2011 federal tax payment for the eight companies was just 10.6%.
3. The sales tax on a quadrillion dollars of financial sales is ZERO.
The Bank for International Settlements reported in 2008 that total annual derivatives trades were $1.14 quadrillion. The same year, the Chicago Mercantile Exchange reported a trading volume of $1.2 quadrillion.
A quadrillion dollars is the entire world economy, 12 times over. It's enough to give 3 million dollars to every person in the United States. But in a sense it's not real money. Most of it is high-volume nanosecond computer trading, the type that almost crashed our economy. So it's a good candidate for a tiny sales tax. But there is no sales tax.
Go out and buy shoes or an iPhone and you pay up to a 10% sales tax. But walk over to Wall Street and buy a million dollar high-risk credit default swap and pay 0%.
4. Many Americans get just a penny on the dollar.
For every dollar of NON-HOME wealth owned by white families, people of color have only one cent.
For every dollar the richest .1% earned in 1980, they've added three more dollars. The poorest 90% have added one cent.
For every dollar of financial securities (e.g., bonds) in the U.S., the bottom 90% of Americans have a penny and a half's worth.
For every dollar of 2008-2010 profits from Boeing, DuPont, Wells Fargo, Verizon, General Electric, and Dow Chemicals, the American public got a penny in taxes.
5. Our society allows one man or one family to possess enough money to feed EVERY hungry person on earth.
The United Nations estimates that $30 billion per year is needed to eradicate hunger. Several individuals have more than this amount in personal wealth.
There are 925 million people in the world with insufficient food. According to the World Food Program, it takes about $100 a year to feed a human being. That's $92 billion, about equal to the fortune of the six Wal-Mart heirs.
One Final Outrage ...
In 2007 a hedge fund manager (John Paulson) conspired with a financial company (Goldman Sachs) to create packages of risky subprime mortgages, so that in anticipation of a housing crash he could use other people's money to bet against his personally designed sure-to-fail financial instruments. His successful gamble paid him $3.7 billion. Three years later he made another $5 billion, which in the real world would have been enough to pay the salaries of 100,000 health care workers.
As an added insult to middle-class taxpayers, the tax rate on most of Paulson's income was just 15%. As a double insult, he may have paid no tax at all, since hedge fund profits can be deferred indefinitely. As a triple insult, some of his payoff came from the middle-class taxpayers themselves, who bailed out the company (AIG) that had to pay off his bets.
And the people we elect to protect our interests are unable or unwilling to do anything about it.
~
radix omnium malorum est cupiditas ...
~
Paul Buchheit is a college teacher, an active member of US Uncut Chicago, founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org.
[Article copied verbatim under "Fair Use" from : http://www.commondreams.org/view/2012/07/02-0 and please use this link in order to access the numerous embedded corroborative links.]
This Obama administration has been the worst for working people. I find it said that I am educated and haven't been able to find a job anywhere while uneducated family have jobs and income from the government...are they trying to get rid of the middle class or what?
You really can't blame Obama for unemployment. He inherited an economy in deep trouble.
You're caught in an economic condition caused by a few who would ruin the entire world for the sake of their own profit. They don't care about any class, just dollars.
And then they help fund Obama and Romney's campaigns.
Problems in this country could be solved. Neither of these men are willing to take a stand and speak the truth to their countrymen.
Neither of these men are going to stop the Neocon wars and Neoliberal economic agenda.
So yes they are part of the problem.
You said "You're caught in an economic condition caused by a few who would ruin the entire world for the sake of their own profit. They don't care about any class, just dollars." - that is 100% correct
It's going to take a lot of re-educating to reverse the brainwashing we've been fed the last 40 years. It's up to all of us in Occupy to keep the message front and center, in the streets and on the tweets.
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are you just now noticing this?
What is your degree in if you don't mind me asking?
Maybe just you.?
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