The White House believes American workers have seldom had it so good. And lots of prestigious economists agree. But the voters aren’t buying. Maybe they know something?
[P]erhaps the voters are sensible and the economists are obtuse. And perhaps the indicators on which economists rely no longer mean what economists suppose them to mean.
The metrics are better, but the situation is worse. We’re also at an inflection point where things are starting to improve, but it still feels shitty overall.
Because Biden has been stabilizing things, but no one has attacked the problem of income inequity which has been rolling for decades. We’ve just gotten to the point that the inequity is truly affecting a ton of people.
Income inequality is actually improving in fairly unprecedented ways right now. That’s one of the metrics that the OP article for some reason feels it’s really important that we don’t look at.
The actual inflation-adjusted real wage growth at the bottom has been very strong, about 7 percent between January 2020 and November of this year. Compare that to the last 50 years, you’ll be hard-pressed to find that type of leveling up.
Income != wages. Income inequality is still increasing.
The ultra-rich don’t get most of their obscene wealth growth from wages, they get it from investments and assets, and the fall in average household savings shows that the increased wages at the bottom isn’t translating to more financial security, it’s getting eaten up by increasing prices in many different sectors.
Source? Mine is here and here although I’m happy to delve into more detailed statistical tables if you want to do that.
The ultra-rich don’t get most of their obscene wealth growth from wages, they get it from investments and assets
Agreed. I was careful to phrase it as “wage earners” when I was talking about wage earners at the 90th percentile losing ground; I’m sure at the 99.9th percentile it’s still going up yes, which is a problem.
the fall in average household savings shows that the increased wages at the bottom isn’t translating to more financial security
Can you explain a little more what you mean by this?
it’s getting eaten up by increasing prices in many different sectors.
What’s your source? I sent a couple already which specifically show wages growing outpacing inflation, at the bottom end of the scale. So we have historic levels of inflation because of a couple of different reasons, and the wage growth at the bottom is still beating inflation by about 7%, which means in absolute terms it’s quite a bit larger than that.
Wage: A regular payment, usually on an hourly, daily, or weekly basis, made by an employer to an employee, especially for manual or unskilled work.
Income: The amount of money or its equivalent received during a period of time in exchange for labor or services (note: this is wages), from the sale of goods or property, or as profit from financial investments (these last 2 are not wages).
Wages are a subset of income, and for the rich, not the primary source of income. Saying that the wage disparity has decreased by a single-digit percentage compared against inflation, is not the same as saying that income disparity has decreased, because other income sources than wages (primarily investment income) are where the top-earners have seen most of their wealth growth.
Source?
Both of those articles are about wages, not income. Also, your Politico source is from May 2023, and notes:
Now, however, those gains are in jeopardy, as the government moves to end bipartisan pandemic-era spending that injected trillions of dollars into the economy, spurred consumer spending and put workers in ultra-high demand.
That did in fact play out over the past year. Also, huge rounds of layoffs across the country at the tail end of 2023 and beginning of 2024 have been forcing people to cut into savings during their ensuing job hunts.
Here’s one from Reuters about wealth inequality still increasing, as of Feb 2024, though this one is especially breaking down the inequality by race:
While all groups saw gains in net worth through the worst of the pandemic in 2020 and 2021, when federal fiscal programs offered expansive unemployment and other benefits, subsequent declines amid rising inflation and sagging financial markets hit Black families the hardest and pushed their net worth back below the 2019 level.
This remarkable surge, amounting to a staggering $2 trillion increase in just three months, underscores the growing concentration of wealth among the wealthiest individuals in the country. The driving force behind this surge? A year-end rally in the stock market, which propelled the value of investment portfolios held by the top echelon of society.
The surge in wealth for the top 1% has been primarily fueled by gains in corporate equities and mutual fund shares, which saw their combined value soar to $19.7 trillion in the fourth quarter, marking a significant uptick from the previous quarter.
This surge in wealth for the top 1% is not an isolated event but rather part of a broader trend that began in 2020 amidst the market upswing triggered by the Covid-19 pandemic. Since then, the wealth of this elite segment of society has ballooned by nearly $15 trillion, representing an astonishing 49% increase.
So while wages saw a 7%-over-inflation growth for the bottom-earners, investment incomes for top-earners propelled their wealth 49% higher.
I was careful to phrase it as “wage earners”
You specifically said “income inequality”, not “wage inequality”, as the first 2 words of your comment I replied to.
I sent a couple already which specifically show wages growing outpacing inflation
Yes, because inflation is an overall metric that defines the general growth of prices. It’s not uniform. It’s a mean. So if the price of goods in one sector goes down or stays static, it can mask the increased prices of other sectors. That people have more buying power because wage increases (which, keep in mind, is also an average, and doesn’t actually apply to everyone equally) have outpaced overall inflation, is not an assertion that can be made only with those statistics.
We’re seeing that because of the pandemic and post pandemic pressures, but income inequity has been growing for decades. A couple of years in the positive direction isn’t fixing it. And we’re already seeing businesses clawing that back with layoffs.
Pandemic pressure would naturally produce a historic rise in wages for low-income workers? Can you explain a little more?
A couple of years in the positive direction isn’t fixing it.
So we’re moving the goalposts from “things are getting worse” to “okay things are getting better in recently-unprecedented ways, but that’s not important right now”?
I mean, I do agree with you that a couple of years of good progress isn’t going to mean issues with the American economy are “fixed,” but I didn’t think that’s what we were talking about.
I’m saying the last couple of years is an illusion. As soon as things get back to normal economically, the inequity will continue its march.
And yes, mid to post pandemic saw rising wages. 1 million+ died, 3.5-4 million retired. When the restrictions loosened up, what was the big problem? “No one wants to work!!!” Because a lot of people took those relief checks and retrained themselves. When the low wage jobs could go back to normal, most of those former low wage workers had already found other, higher paying jobs. Eventually even the most stubborn restaurants or retail jobs raised wages to compete. Remember everyone complaining that low skilled McDonald’s workers making $15/hr? Or did you conveniently forget the last 4 years to argue with an idiot on the internet?
I’m saying the last couple of years is an illusion. As soon as things get back to normal economically, the inequity will continue its march.
And yes, mid to post pandemic saw rising wages. 1 million+ died, 3.5-4 million retired. When the restrictions loosened up, what was the big problem? “No one wants to work!!!” Because a lot of people took those relief checks and retrained themselves.
So… things will get back to inequality again, as soon as all those people un-retrain themselves, un-retire, and come back to life?
I’m mean, I’m partly kidding; I actually do think people straight-up dying or becoming disabled had a big unrecognized impact in wage growth, yes. But also, supply chain inflation and companies that went bust during the pandemic and didn’t come back, put some weight on the scale on the other side.
Biden’s policies created 700,000 new manufacturing jobs so far. We raised corporate taxes significantly and then put hundreds of billions of dollars back into domestic industry in a way that was specifically designed to create jobs. It would be weird if the impact of that was 0.
Let me ask this – if your assertion is that wages rising is just a natural response after Covid killed all these people and made the market tighter (if I’ve understood you right) – why hasn’t it happened that way in any other first world country within the same time frame? Pretty much all of them except the US have seen wages falling (or, have seen inflation rising fast enough to overpower the slight rise in wage growth).
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The metrics are better, but the situation is worse. We’re also at an inflection point where things are starting to improve, but it still feels shitty overall.
Because Biden has been stabilizing things, but no one has attacked the problem of income inequity which has been rolling for decades. We’ve just gotten to the point that the inequity is truly affecting a ton of people.
Income inequality is actually improving in fairly unprecedented ways right now. That’s one of the metrics that the OP article for some reason feels it’s really important that we don’t look at.
Yeah. The numbers are moving historically faster, but that is because, in part, history has been so shitty.
I bet that these numbers would do better under Biden than Trump. It just happens to be that a decent size of the population doesn’t have the patience.
Income != wages. Income inequality is still increasing.
The ultra-rich don’t get most of their obscene wealth growth from wages, they get it from investments and assets, and the fall in average household savings shows that the increased wages at the bottom isn’t translating to more financial security, it’s getting eaten up by increasing prices in many different sectors.
What do you mean by this?
Source? Mine is here and here although I’m happy to delve into more detailed statistical tables if you want to do that.
Agreed. I was careful to phrase it as “wage earners” when I was talking about wage earners at the 90th percentile losing ground; I’m sure at the 99.9th percentile it’s still going up yes, which is a problem.
Can you explain a little more what you mean by this?
What’s your source? I sent a couple already which specifically show wages growing outpacing inflation, at the bottom end of the scale. So we have historic levels of inflation because of a couple of different reasons, and the wage growth at the bottom is still beating inflation by about 7%, which means in absolute terms it’s quite a bit larger than that.
I mean what I said.
Wages are a subset of income, and for the rich, not the primary source of income. Saying that the wage disparity has decreased by a single-digit percentage compared against inflation, is not the same as saying that income disparity has decreased, because other income sources than wages (primarily investment income) are where the top-earners have seen most of their wealth growth.
Both of those articles are about wages, not income. Also, your Politico source is from May 2023, and notes:
That did in fact play out over the past year. Also, huge rounds of layoffs across the country at the tail end of 2023 and beginning of 2024 have been forcing people to cut into savings during their ensuing job hunts.
Here’s one from Reuters about wealth inequality still increasing, as of Feb 2024, though this one is especially breaking down the inequality by race:
Here is MSN on wealth disparity increasing, from 11 hours ago:
So while wages saw a 7%-over-inflation growth for the bottom-earners, investment incomes for top-earners propelled their wealth 49% higher.
You specifically said “income inequality”, not “wage inequality”, as the first 2 words of your comment I replied to.
Yes, because inflation is an overall metric that defines the general growth of prices. It’s not uniform. It’s a mean. So if the price of goods in one sector goes down or stays static, it can mask the increased prices of other sectors. That people have more buying power because wage increases (which, keep in mind, is also an average, and doesn’t actually apply to everyone equally) have outpaced overall inflation, is not an assertion that can be made only with those statistics.
We’re seeing that because of the pandemic and post pandemic pressures, but income inequity has been growing for decades. A couple of years in the positive direction isn’t fixing it. And we’re already seeing businesses clawing that back with layoffs.
Pandemic pressure would naturally produce a historic rise in wages for low-income workers? Can you explain a little more?
So we’re moving the goalposts from “things are getting worse” to “okay things are getting better in recently-unprecedented ways, but that’s not important right now”?
I mean, I do agree with you that a couple of years of good progress isn’t going to mean issues with the American economy are “fixed,” but I didn’t think that’s what we were talking about.
I’m saying the last couple of years is an illusion. As soon as things get back to normal economically, the inequity will continue its march.
And yes, mid to post pandemic saw rising wages. 1 million+ died, 3.5-4 million retired. When the restrictions loosened up, what was the big problem? “No one wants to work!!!” Because a lot of people took those relief checks and retrained themselves. When the low wage jobs could go back to normal, most of those former low wage workers had already found other, higher paying jobs. Eventually even the most stubborn restaurants or retail jobs raised wages to compete. Remember everyone complaining that low skilled McDonald’s workers making $15/hr? Or did you conveniently forget the last 4 years to argue with an idiot on the internet?
So… things will get back to inequality again, as soon as all those people un-retrain themselves, un-retire, and come back to life?
I’m mean, I’m partly kidding; I actually do think people straight-up dying or becoming disabled had a big unrecognized impact in wage growth, yes. But also, supply chain inflation and companies that went bust during the pandemic and didn’t come back, put some weight on the scale on the other side.
Biden’s policies created 700,000 new manufacturing jobs so far. We raised corporate taxes significantly and then put hundreds of billions of dollars back into domestic industry in a way that was specifically designed to create jobs. It would be weird if the impact of that was 0.
Let me ask this – if your assertion is that wages rising is just a natural response after Covid killed all these people and made the market tighter (if I’ve understood you right) – why hasn’t it happened that way in any other first world country within the same time frame? Pretty much all of them except the US have seen wages falling (or, have seen inflation rising fast enough to overpower the slight rise in wage growth).