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Median Household Wages
Posted by: Jon Henke on Tuesday, December 12, 2006

A New York Sun column by economist Diana Furchtgott-Roth has enormous implications on the current debate over inequality.
But the truth is that median wages haven't been stagnating for decades. They've been rising. Not only is the median American family — the one right in the middle of the income distribution — doing better than ever, but poor families are doing better also.
[...]
[O]ver the past 25 years, more families have moved to upper-income brackets. In 2004, the latest year for which we have comparable information, 34% of families made over $75,000. But in 1979, only 21% did so, after adjusting for inflation. And we now have fewer families in lower-income brackets. Only 46% of families made less than $50,000 in 2004, compared with 54% of families in 1979. The stagnant real median family income that is supposedly the reason for last month's Democratic victory is not so sluggish after all. Real median family income was $54,000 in 2004. After inflation, that's 11% higher than in 1994, 18% higher than in 1984, 25% higher than in 1974, and 59% higher than in 1964.
[...]
Adjusting for decreasing family size, real median family income is 13% higher than in 1994, 22% higher than in 1984, 37% higher than in 1974, and 88% higher than in 1964. That's a significant increase.
In fact, when taxes and benefits are taken into account, "real median household income adjusted for household size...has risen by 34% over the past 20 years." For the visual learners, here's an illustration of the data from Willisms:



[NYSun link via the Club for Growth blog, where I'm guest-blogging this week)
 
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Previous Comments to this Post 

Comments
Jon, this is a misleading argument. For starters, you’re making comparisons over a 30-year time span, when most of the criticism about stagnating real wages is specified to the previous six years. It’s commonly acknowledge that some genuine upward mobility occured during the Clinton Administration.

Real median family income was $54,000 in 2004. After inflation, that’s 11% higher than in 1994,

That’s nice. How’s in done since 2000?

http://www.epi.org/content.cfm/webfeatures_econindicators_income20060829

Between 2000 and 2005, the real median income of households headed by someone under 65 is down 5.4%, twice that of the overall household median, which is down 2.7% over the past five years.


 
Written By: glasnost
URL: http://
In fact, when taxes and benefits are taken into account, "real median household income adjusted for household size...has risen by 34% over the past 20 years."

You could fill a bucket with the caveats here. Adjusted for household size? Does that mean that larger households from the 70’s see their total income adjusted downward to compensate for their elderly and children that weren’t collecting income anyway?
 
Written By: glasnost
URL: http://
Oh boy, yay for statistics! Fast and loose percentages are one thing. Actual figures are another.

When rents go from $200 a month in 1979 to $1200 a month in 2005, when a 10# bag of charcoal is replaced by a slightly more expensive 9# bag, when a 12 inch tall bag of chips, which used to contain 30% product and 70% air, and how has 20%-80% ratio and cost the same, when gasoline costs more per gallon than a tank full did in 1974, WHEN STAY AT HOME MOMS BECOME EXTINCT, BEING REPLACED BY BOTH ADULTS WORKING, I fail to see how a ’percentage change’ tells any REAL difference.

Percentages never tell the whole story.
They merely provide a warm/fuzzystatistic; in this case, for the better off to blow raspberries at the not-so-better off.

Talk to us about real buying power, and its cost to society on raising children with absent working parents. Lets not talk percentages, it means nothing in a world of indoctrinated consumption, except you can now qualify for more expensive car.
 
Written By: Rick Day
URL: http://goplobby.org
I think Rick has a good point about the change in stay at home moms in the last 30 some odd years. Without a doubt this has had a dramatic effect on household income. Not to say i think a womans place is in teh home or something, but its just something to account for a change other than people moving up the financial ladder.
 
Written By: josh b
URL: http://
For starters, you’re making comparisons over a 30-year time span, when most of the criticism about stagnating real wages is specified to the previous six years.
No it’s not. 1973 is the standard "wages were higher in" starting point.
Adjusted for household size? Does that mean that larger households from the 70’s see their total income adjusted downward to compensate for their elderly and children that weren’t collecting income anyway?
Yes, adjusted for household size. Households have gotten smaller over the years. We have more single-parent households today, leading to lower "household" wages. Comparing the household incomes of a two-parent household with the household income of a one parent household leads to the misallocation of blame for declines in household wages.
When rents go from $200 a month in 1979 to $1200 a month in 2005 [etc]
That’s why we’re talking about real wages and real compensation. Those changes have been accounted for. Real wages/compensation are real buying power.
 
Written By: Jon Henke
URL: http://QandO.net
Do these household income figures mainly reflect the fact that women have entered the workforce in large numbers (more two-income households)? What are the equivalent figures for, say, median "head-of-household" income?
 
Written By: Mithras
URL: http://mithrastheprophet.blogspot.com
Do these figures take into account the fact that George Bush and Ronald Reagan stole all the poor people’s money and gave it to the rich, eh, Jon? I’m waiting for your answer.....And the homeless dothese figures take into account the value of the Housing stolen from them over the last 26 years by thieving Republicans, leaving them only card board boxes?
 
Written By: Joe
URL: http://
Good one, Joe :)

You are joking, right?
 
Written By: Greg
URL: http://
"It’s commonly acknowledge that some genuine upward mobility occured during the Clinton Administration."
It’s commonly acknowledged that we all farted rose petals and everyone bought everyone else a Coke during the Clinton years too. But that was the golden age.
 
Written By: Unknown
URL: http://
It’s commonly acknowledge that some genuine upward mobility occured during the Clinton Administration.
It appears that genuine upward mobility has occured since, oh, about 1964.

What exactly did Clinton do to create "genuine upward mobility"?

Fail at passing Hillery Care?

Sign the assault weapon ban?

Sign Republican legislation?

Bomb Kosovo?
That’s nice. How’s in done since 2000?
Well, the linked article did say: "And average hourly earnings increased by 4.1% over the past year, well above inflation."

But more generally speaking, your partisan garbage stinks. If "real median family income is 13% higher than in 1994", a solid portion of that happened post-2000, else we would have been in recession. Which we are not, and have not been since the mild recession that began when Clinton was still in office.
 
Written By: Don
URL: http://
The pessimstic economist presents a statistical analysis of data ’proving’ that everything is going to hell because of human greed. The optimistic economist presents a statistical analysis of the SAME data ’proving’ that things are actually much better because of human generosity.

Our economics and our politics—-and how we present interpreted data—-are grounded in these two opposing perceptions of the nature of human nature: Optimism and Pessimism. Once a people have achieved their freedom, their politics—-and economics—-split into these two agonistic camps, because of their respective underlying psychologies.

’Be free.’
 
Written By: a Duoist
URL: http://www.duoism.org
71% of households have 2 adults or more working full time compared with 20% 40 years ago, so with zero real growth, household income should have increased by 50%. On top of that, inflation numbers are skewed by the deflation of consumer goods manufactured by slaves around the world, and while it’s nice that a family can buy a chainsaw for 12 bucks, this doesn’t help much when the price of milk, gas, heating oil, education, housing, and insurance have increased dramatically. Oh yes, and don’t forget child care.

More people in the household are working more hours and the household is earning more than it did when less people were working less hours, but real income per hour of labor per individual has gone down.

A number, sufficiently tortured, will admit to anything.

Cap
 
Written By: CaptinSarcastic
URL: http://
the nature of human nature
WOAH....thats just too too deep.
 
Written By: josh b
URL: http://
Greg, I might be I might NOT be....sometimes the Progressive side is real easy to argue...and don’t EVEN get me started on Lesbians, Gays, the Transgendered, the Poor and People of Colour.....or a Phalli-centric Mechano-Capitalistic System, either!

As to the commonly acknowledged...I don’t think anyone would dispute that, folks, what IS in dispute is the idea bruited about that ONLY in Clinton’s era did the real wage increase and that under Heartless, Stink’n Neo-Fascistic Republican Extremists the Rich got Richer and the Poor got a Kick in the Teeth-and were thankful for it!

Real wages HAVE increased....I will say I remember folks writing that under Clinton income INEQUALITY increased, i.e., the Rich got MORE Rich than the Poor got Richer, but that has less to do with Bill and more to do with the Dot.Com Bubble.
 
Written By: Joe
URL: http://
"71% of households have 2 adults or more working full time compared with 20% 40 years ago, so with zero real growth, household income should have increased by 50%"
Let’s see the math and the underlying assumptions.

 
Written By: Unknown
URL: http://
by slaves around the world,
Slaves, is it? You mean those 3rd Worlders making $2 per day making Nike’s when they could be making $1 per day as subsistence farmers? Yeah...slavery.


and while it’s nice that a family can buy a chainsaw for 12 bucks, this doesn’t help much when the price of:
milk-Dropped, gas: was previously at 1974 inflation adjusted level and fuel costs represented a smaller portion of used income now than in 1974. , heating oil: Ditto, education: The DEMAND for education has increased, so yes the cost increases too. Plus the Educational system is badly skewed, make some market-driven changes and watch those rates slow,, housing: The SIZE of houses has gotten bigger, yes housing costs more, square footage per resident has INCREASED, ergo it OUGHT to cost more, and insurance: Indeed, we need to cap liability, move to "Loser Pays" and more closely tie health care costs with the end-user, rather than having some anonymous "insurance company pays", in short insurance increases are driven by the system we operate in, change the system they’ll flatten. have increased dramatically.
Oh yes, and don’t forget child care.
 
Written By: Joe
URL: http://
But more generally speaking, your partisan garbage stinks. If "real median family income is 13% higher than in 1994", a solid portion of that happened post-2000, else we would have been in recession. Which we are not, and have not been since the mild recession that began when Clinton was still in office.

Hey, Don, I suggest you read, you know, the actual link to the actual data on real median income between 2000 and 2005 that I put in my comment before you make sh*t up because you think it sounds logical.

On the bright side, at other times in your illustrious history of talking to me, you’ve bothered to use facts. I don’t know if you’ve ever before faced a moment to admit you’re completely incorrect. Here it is...
 
Written By: glasnost
URL: http://
Our economics and our politics—-and how we present interpreted data—-are grounded in these two opposing perceptions of the nature of human nature: Optimism and Pessimism. Once a people have achieved their freedom, their politics—-and economics—-split into these two agonistic camps, because of their respective underlying psychologies.
Does this preclude a recognition of empirical truth?
 
Written By: CaptinSarcastic
URL: http://
Do these household income figures mainly reflect the fact that women have entered the workforce in large numbers (more two-income households)?

71% of households have 2 adults or more working full time compared with 20% 40 years ago, so with zero real growth, household income should have increased by 50%.
Yes, more women have entered the workforce, leading to more two-income households. (though, in fairness, this has also reduced the bargaining power of the existing labor force) However, the Census Bureau has also observed that "stagnation in median household income may, in fact, be largely a reflection of changes in the size and composition of households rather than a reflection of a stagnating economy". More women may be working, but they’re not necessarily doing so in two-income households.

As for personal wages:
Over the past 30 years, real average hourly compensation, a measure that includes wages and benefits, has risen by 41%. And real income per person has increased by 62%. This cannot be described as tepid growth.
 
Written By: Jon Henke
URL: http://QandO.net
Over the past 30 years, real average hourly compensation, a measure that includes wages and benefits, has risen by 41%. And real income per person has increased by 62%. This cannot be described as tepid growth.
It would really depend on where in that 30 years the growth occurred.

We know that real income has dropped for the last 6 years, and we know that real income increased briskly during the 90’s, but the key is that if the number gets smaller as the length of time you go back is reduced, it is not a good story.

Global terrorism related deaths have decreased by 80% since 2001. Sounds good.

Global terrorism related deaths have increased by 75% since 2002. Not so good.

Cap
 
Written By: CaptinSarcastic
URL: http://
"71% of households have 2 adults or more working full time compared with 20% 40 years ago, so with zero real growth, household income should have increased by 50%"
Uh, that does not follow Cap. Not at all.

If one had a time machine and could visit an average family household in 1973 and do the same today and argue that our living standards are anywhere close. We are vastly better off. Take a look at a show like the "Wonder Years" and look at the house and living standard of the family featured in it. That family would have been in the top 5% in income in that era, he was the classic upper middle manager. That living standard would be below the median now.

For starters, you’re making comparisons over a 30-year time span, when most of the criticism about stagnating real wages is specified to the previous six years.
Not true at all. The criticism not only covers more years now, it has pretty much been a refrain from "the left" (to speak broadly, granted) every year since, well, the early 1800’s at least. Every year we hear the rich are getting richer and the poor are getting poorer, and the middle class is disappearing. Somehow, every decade (except for the 1930’s) we are obviously wealthier, the poor seem to have not actually been any worse off, etc.

Every decade we hear how it is really true this time, but it never is. In many ways the official statistics understate the difference.

 
Written By: Lance
URL: http://asecondhandconjecture.com
Lance,

Spot-on. When looking at inflation over a long period of time, people often overlook substantive differences that technology brings about. An average car today is just not an average car 30 years ago. Detroit could make a car with 1970 technology for about a third the price of an average car today. Turns out, when you mandate airbags and fancy emissions equipment, the middle class still ends up paying for them. Similarly, almost all the houses you see built today have things like A/C and central heat. It’s apples and oranges to some (not insignificant) extent.
 
Written By: Sean
URL: http://www.myelectionanalysis.com
Sean beat me to the comment I make in every single thread involving inflation. Inflation has always, inherently, been poor at taking account of new technology (and other quantitative changes) new products especially, and, of course, substitution effects. The problem is bad and getting worse, particularly with accelerating technological progress and globalization of trade.

There are a number of things, furthermore, that are simply not counted. What’s it worth to you that you can now log onto the internet, go to Google (or Lexis-Nexis), and scoop up information on anything? The information may be close to free in cash terms, but it’s quite valuable (for personal enrichment, for education, for all kinds of things), and the value of this service is not really tracked at all.

We’re rich and getting richer. Anyone with internet access should know that they are far richer than a person with "equivalent real income" in the years before widespread internet access.
 
Written By: OrneryWP
URL: http://
Just as another point of comparison, average expenditures on food, clothing, and housing went from 57.4% of household spending in the 70s to 50.1% in 2002-2003. Housing went up slightly, from 30.8% to 32.8%, but food and clothing continued their long secular price slide. (Back in the idyllic 50s, food cost nearly a third of a household’s income; at present, it’s less than a fifth, despite greater consumption and increased restaurant and prepared food use.) Source: 100 Years of U.S. Consumer Spending: Data for the Nation, New York City, and Boston, Bureau of Labor Statistics.
 
Written By: Mike S.
URL: http://
Similarly, almost all the houses you see built today have things like A/C and central heat. It’s apples and oranges to some (not insignificant) extent.
Sean is on to something. Cars last about three times longer than the 1970’s rustbuckets, and are far safer. Houses are much, much bigger, on average. Our choices when shopping for food, for example are truly fantastic. When I was growing up my grocery stores did not carry things like caviar, salmon, mangoes, pomegranites, and thousands of other luxury items. And if they had, they would have been too expensive to eat.

The Truth is that we are as a nation, fabulously wealthy, wealthy almost beyond the imaginings of Kings and Princes of a previous era. And it has made up spoiled, fractuous, angry, slothful, and petty. (well mostly the democrats, but, you know what I mean.)
 
Written By: kyle N
URL: http://impudent.blognation.us/blog
wealthy almost beyond the imaginings of Kings and Princes of a previous era
Unlike Louis XIV, the famously, fabulously wealthy Sun King, Americans today don’t have to lose half their jaw to a toothache.

We can travel faster and farther than they ever dreamed, we have access to more (and more accurate) knowledge than those who owned incredible libraries, and there are hundreds of millions of people with this capability instead of a handful. I could go on, but it’s all obvious stuff. Just look around: we are incredibly rich compared to more than 99% of all the people who have ever lived.
And it has made up spoiled, fractuous, angry, slothful, and petty.
We didn’t invent fractiousness, anger, sloth, or pettiness. But yes, we’re certainly spoiled. As we should be.
 
Written By: OrneryWP
URL: http://
For the record, guys, CPI (which is not an actual measure of inflation, but it’s the best available proxy) does account for the changing composition of consumer purchases to some degree and it does account for improvements in products over time. However, it does so very imperfectly, and — equally as bad — it doesn’t always catch the entry of new items on the market. Cellphones, for example, weren’t included in the consumer basket of goods until they’d been on the market for some time and declined significantly in price.

The degree of bias has been studied and estimated, though. It was estimated at 1.1 percentage points of upward bias per year in 95-96 and for some time prior to that. The BLS made some of the recommended corrections — chopping off an estimated .4-.5 percentage points of the upward bias — but that left some. More recent research indicates the upward bias may still be around .8-.9 percentage points per year.

The upward bias is a widely accepted state of affairs, with economists including Krugman, DeLong and Greenspan acknowledging it. Needless to say, if we recognized it politically, it would revolutionize a number of major policy debates.

Of possible interest, the BLS also produces a "research series" of the CPI. If I recall correctly, it’s called the "CPI-U-RS" or something similar.
 
Written By: Jon Henke
URL: http://QandO.net
Jon, how does it work (accounting for improvements or substitutes in products over time)? Is there a site you can point me to? I’d like to understand, for example, how a cellphone is accounted for vs. the basic simple phone available 40 or so years ago. How do they measure the increased value for a substitute product that does so much more? It has to be subjective, no?
 
Written By: Unknown
URL: http://
Hey, Don, I suggest you read, you know, the actual link to the actual data on real median income between 2000 and 2005 that I put in my comment before you make sh*t up because you think it sounds logical.
If you make your links hot, someone might follow them.

I went to census data and CPI-U-RS data to analyze the information provided by your link (but I didn’t research CPI-U-RS to figure out how it was calculated, although I figure it involves some sausage making).

You are correct, for median wages adjusted based upon CPI-U-RS. The increase in unadjusted median wage in 2000 was the lowest since ’94, and on top of that increase in CPI-U-RS was sharp. In 2001 and 2002, the increase in unadjusted median wage was lower each year. The increase in CPI-U-RS in 2001 was almost as sharp as in 2000, but in 2002 it showed a more normal increase.

For 2003-2005, the increase in unadjusted median wage was greater each year, but the rise in CPI-U-RS was again sharp.

Basically, in 2000 and 2005, the problem is primarly CPI-U-RS, in 2002 it is primarly wages, and in the other years it is a combination of wages and CPI-U-RS.

The low wage increases of 2000-2002 are probably due to the recession; I’m not sure what the poor CPI-U-RS numbers (increase) of 2000-2001 are due to.

The wage increases in 2003-2005 show a quick rise, but are undercut by CPI-U-RS. This no doubt is largely due to the housing bubble (is housing prices part of CPI-U-RS calculations?), oil prices, copper prices, etc.
On the bright side, at other times in your illustrious history of talking to me, you’ve bothered to use facts. I don’t know if you’ve ever before faced a moment to admit you’re completely incorrect. Here it is...
I’ve never been incorrect before. Sometimes it is good to loose to let the other guy fell good.
 
Written By: Don
URL: http://
We’re rich and getting richer. Anyone with internet access should know that they are far richer than a person with "equivalent real income" in the years before widespread internet access.

This is an oversimplification. Just because the price of a particular subset of goods happens to fall over thirty years, isn’t a firm basis to say, "well, life is generally easier, the poor aren’t getting poorer, economic distress is just a big joke." Just because internet access is now a priori available to the world in general doesn’t mean that everyone has equivalent access, or access at all.

A college education, for a great example, is even more important than it was thirty years ago, whatever changes in efficiency that may have occurred are not relevant to quality of life, and the price of said education has skyrocketed, way past inflation, thus making it ever harder to get a college education with a median income.

Ta da. Therefore, life is now harder and the non-rich of us are not getting richer. The conclusion is no more absolutely true or false than yours, but the basis it of is hard to disagree with.

For that matter, economic decline - the act of losing that which you had - is just as painful now as it ever was - or if someone wants to quibble with that, let’s just say it has not lost its relevance as a terrifically unpleasant experience. Whether it happens to an individual, a community, or a population decile.


 
Written By: glasnost
URL: http://
For the record, Don, I often fail to click on attached links as well. I’m sure you’ll have plenty of chances for revenge.
 
Written By: glasnost
URL: http://
Jon,

Your caveats to the argument are certainly accurate. One way of looking at it is if one only looks at the things a person in 1973 would have considered as normal consumption items the difference is vast. Forget qualitative differences, substitution effects or any of that. Limit yourself to just what was available at the time. Houses are lager and more of us are in and own houses. For those in an apartment, they are larger and we have far more living space per person. more of us have televisions, and we have more of them. More of us have stereos (or the modern equivalents, which for me is an ipod and a portable speaker set.) the same is true for A/C, central heat, washing machines, vacuums, telephones, etc. We have more food and it takes a much smaller share of income. We eat out more, see more movies and we do this even though we work fewer hours. We consume more health care, we have more cars. It doesn’t matter what we are talking about, we have more period and by large amounts.

Then if you throw in all the things we have that we didn’t have before and the qualitative components the difference grows larger still. If the statistics do not reflect that then the statistics are the problem, not our living standards. This holds true by the way at every income quintile (though income quintiles are very misleading.) We live longer, we suffer far fewer injuries, especially work related. Our jobs are more pleasant. Studies have also shown that in addition to more time off and fewer work hours, we actually work less while on the job (that time is often now spent reading and commenting at places like QandO, but it is true in other ways as well.)

We travel more, we spend more when we do, ok this is getting old, but all of this stuff is real and can be statistically compiled if one were so inclined.

The real question is not whether we are better off, but why we cannot seem to demonstrate it in our official statistics as clearly as we should.

glasnost,

Actually a college education is not more important than ever before, it is just that higher income opportunities are more prevalent than ever before (and those require certain skills, whether from college or otherwise.) If one wants only the standard of living of someone who lived in 1973 one need not get a college education, one can just get a low skill job. You are confusing a good thing with a bad thing.

What is interesting about the world we live in is that the mundane (though a person in 1973 would not consider many of those things we consume now as mundane) things in life are cheap and getting cheaper. Luxuries and goods not exposed to significant international competition are getting more expensive. It is more expensive to be rich now than ever, it has never been less expensive to be poor.

Simple monetary theory explains why. Overall price levels are determined by the amount of goods and services being chased by the existing money supply. Sectors of the economy (food, appliances, consumer goods in general) are under constant deflationary competitive pressure. They take a smaller and smaller proportion of our budgets. Higher end luxury goods and services however are not nearly as exposed, and with more money available (and prices being set at the margin) they get more and more expensive (though qualitatively they are better and better.)

Education is an example of just that phenomenon, as is health care and a number of other things. Exclusive beach front property? Through the roof. Meals that would at one time be considered a fine experience are now denigrated as chain meals from places such as the Olive Garden and cost a fraction of what oit would have 50 years ago, though we have far more mom and pop restaurants as well. An evening at a hot restaurant in the high rent districts of London? Wow have they gone up.

We have more unique services and products available than ever before, and those talented enough to provide them command premium rewards, but the money is there to drive up the price of these ever increasing options because it isn’t being spent on everything else which is becoming less and less expensive at an astounding rate in any kind of historical context. To use your example:

and the price of said education has skyrocketed, way past inflation, thus making it ever harder to get a college education with a median income
Except more and more of us are actually doing it. Which means it is more affordable because we are not spending money on other things, along with a few other factors. If that wasn’t true the consumption of education would be falling, but in fact it is growing.
 
Written By: Lance
URL: www.asecondhandconjecture.com
glasnost -
We’re rich and getting richer. Anyone with internet access should know that they are far richer than a person with "equivalent real income" in the years before widespread internet access.
This is an oversimplification. Just because the price of a particular subset of goods happens to fall over thirty years, isn’t a firm basis to say, "well, life is generally easier, the poor aren’t getting poorer, economic distress is just a big joke." Just because internet access is now a priori available to the world in general doesn’t mean that everyone has equivalent access, or access at all.
Well, I didn’t *just* use the falling price of information as evidence for my claim that life is generally easier. I also discussed several aspects of the inflation statistic as it is currently collected.

The poor aren’t getting poorer. If you go by actual households instead of quintiles, first of all, you see that while the rich get richer, the poor get richer faster (one small example here, yes it’s the Clinton years, but it holds true much more widely too, if you’d like me to dig up the data). If you furthermore take into account that inflation is over-reported, you see that people are even better off, particularly those who spend the greatest percentage of their income on consumption goods. And if you go even further and take into account that total compensation isn’t just income but also benefits, and that non-income compensation has been growing, you’ll see that people are actually getting much better compensation for their work than before.

I never said economic distress is just a big joke, by the way. You’re trying to make a caricature of my position and argue against that, when what I really said is that looking back at history, we’re obscenely rich. We really are.
A college education, for a great example, is even more important than it was thirty years ago, [...] and the price of said education has skyrocketed, way past inflation, thus making it ever harder to get a college education with a median income.
You threw in a claim about efficiency in the middle of that paragraph that seems out of place, so I’ll put an ellipsis in its place and answer to that below.

Now I’ve made a claim about income versus the costs of goods across the board, as well as claims about accelerating technological progress. You came back by saying that education is more expensive. Well, regardless of how much more important it may be, people seem to be pulling in higher incomes and affording more, higher-quality goods and services anyway. I could leave it at that and carry the point, but I’ll take it further.

Here are a few points that should be considered:
* Out-of-high-school college admissions are more competitive than ever, though there are more colleges, including more community colleges. That means more people are going to college now; presumably, they think it’s worth the cost. Getting into a university right out of high school requires that you’ve taken much more advanced courses than kids of yesteryear took. My Algebra II teacher in high school got into UCLA without ever taking Algebra II, and now you’re in a small minority if you haven’t taken it before senior year of high school. God help you if you try to get into UCLA out of high school without getting some Calculus in there somewhere.

* Anybody who thinks it’s hard to get into some college and get a nice big chunk of financial aid hasn’t really tried. Community colleges are the perfect back door into the university system; two and a half years of community college, full-time, in California won’t run you more than a few thousand dollars in tuition and fees, and it’s practically impossible *not* to get in. From there, if you keep a good GPA and attract a couple professors’ attention, you can get into all but ivy league universities without ever taking the SAT or ACT. And when you arrive at those schools, don’t be surprised to get tens of thousands of dollars of grants on top of your subsidized loans.

* Campus housing and classrooms are better furnished now than ever before. My university has bought up a couple hotels and converted them to dorms, and is opening up a new dorm this year. It also built a new business school, which I can personally attest is quite a comfortable place. The whole place is hooked up with wireless internet access, the seating is cushy, there’re multiple projectors per room, I could go on. My friend just got accepted into another college across the country that’s built a business school that sounds exactly the same.

* People who go to college make so much more over the course of their lifetimes that the cost of college isn’t that bad a problem... unless you’re going to law school or med school, in which case you’ve really got nothing to complain about, Doctor.
* If you’re just looking to learn, and not to be accredited, you can always get a library card and take a growing range of MIT’s classes’ curricula at MIT OpenCourseWare. There are ways to learn all kinds of software without leaving home or paying for much more than the cost of your computer and an internet connection.

* College is actually less important than ever for becoming educated about a wide number of things, art being my favorite example. It used to be, for example, that only film students who were paying a good chunk of change could really enjoy a broad range of movies and be able to speak about film with any authority; nowadays, your pizza delivery boy’s probably seen more movies than George Lucas saw before he made Star Wars. And realize, with this explosion in the number of "amateurs," we’ve never had so many people actively producing their own content. People want to contribute, and they do, often charging nothing at all. Entertainment is cheap as hell today as a result (unless you’re buying the overpriced concessions at a movie theatre, but that’s a luxury you could have skipped by waiting 6 months for the DVD or sneaking in a soda and candy in your jacket pocket).
Same exact thing goes for music and still art (e.g. digital art, photography).
whatever changes in efficiency that may have occurred are not relevant to quality of life
Except that yes, they certainly are.
Ta da. Therefore, life is now harder and the non-rich of us are not getting richer. The conclusion is no more absolutely true or false than yours, but the basis it of is hard to disagree with.
As I already pointed out, the income of the non-rich is rising even faster than the income of the rich. Your conclusion is based on faulty reasoning, so it’s actually quite easy to disagree with.
For that matter, economic decline - the act of losing that which you had - is just as painful now as it ever was - or if someone wants to quibble with that, let’s just say it has not lost its relevance as a terrifically unpleasant experience. Whether it happens to an individual, a community, or a population decile.
What, so life isn’t easy? It takes hard work? It means sometimes having to bounce back when you fall down?
In any case, people are gaining much more than they’re losing. That should ease the pain a bit, eh?
 
Written By: OrneryWP
URL: http://
Is there any wonder why people are coming here in droves??

http://www.heritage.org/Research/Welfare/bg1713.cfm
For most Americans, the word "poverty" suggests destitution: an inability to provide a family with nutritious food, clothing, and reasonable shelter. But only a small number of the 35 million persons classified as "poor" by the Census Bureau fit that description. While real material hardship certainly does occur, it is limited in scope and severity. Most of America’s "poor" live in material conditions that would be judged as comfortable or well-off just a few generations ago. Today, the expenditures per person of the lowest-income one-fifth (or quintile) of households equal those of the median American household in the early 1970s, after adjusting for inflation.1

The following are facts about persons defined as "poor" by the Census Bureau, taken from various government reports:

* Forty-six percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.
* Seventy-six percent of poor households have air conditioning. By contrast, 30 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning.
* Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
* The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)
* Nearly three-quarters of poor households own a car; 30 percent own two or more cars.
* Ninety-seven percent of poor households have a color television; over half own two or more color televisions.
* Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception.
* Seventy-three percent own microwave ovens, more than half have a stereo, and a third have an automatic dishwasher.
 
Written By: Keith_Indy
URL: http://inactivist.org/blog/keith_indy
"Anyone with internet access should know that they are far richer than a person with "equivalent real income" in the years before widespread internet access."

I do not know about far richer, but my savings in library fines alone more than pays for my internet access costs. Adding in the savings of time, magazine and book costs, I come out way ahead. Why, I save enough on porn alone to make a car payment.(only a small car, I ain’t no prevert).

********************************

"The real question is not whether we are better off, but why we cannot seem to demonstrate it in our official statistics as clearly as we should."

Using money income is not the best method for determining how well off the poor, or anyone for that matter, is. Since some of the poor have zero income, and always will, the statistics are distorted. If I recall correctly, this zero value would be an outlier in the statistical distribution, and should be eliminated. A better measure would be how much stuff is possessed by people(see Keith_Indy’s post), but measuring money is so much easier.

****************************

"For that matter, economic decline - the act of losing that which you had - is just as painful now as it ever was -"

No sh*t? Wow, there’s a real insight. And it always will be.

****************************
"Forty-six percent of all poor households actually own their own homes."

Not for long. I am sure some developers are even now preparing to develop these blighted properties via eminent domain.

"Only 6 percent of poor households are overcrowded."

That is because of the single-parent household component. No inlaws. Poverty does have its up side.



 
Written By: timactual
URL: http://
Thanks Keith, I am glad you looked that up for me;^)It does help to have a little data to back up your assertions, no matter how obvious they should be.
 
Written By: Lance
URL: http://asecondhandconjecture.com
So, Lou Dobbs and the Democrats are full of sh*t when they say there’s a war on the middle class. Plus I would be curious as to a definition of middle class.

As some of the atrocities of this war on the middle class are better healthcare than most of the world, more educational opportunities, a higher standard of living, and more opportunities to better yourself than most of the world. Some war.
 
Written By: Kevin
URL: http://www.thelibertypapers.org
As some of the atrocities of this war on the middle class are better healthcare than most of the world, more educational opportunities, a higher standard of living, and more opportunities to better yourself than most of the world.
Yeah, but think how well the side that’s winning is doing!
 
Written By: steverino
URL: http://steverino.journalspace.com/
when what I really said is that looking back at history, we’re obscenely rich. We really are.

Well, sure, as an average experience, sure. (It holds true for most of the world as well, including countries that try a lot harder to support economically disadvantaged people as well.) You won’t find me denying progress in human history.

What I don’t like is the use of this observation as a crowbar to dismiss objective bad news about the relative decline in fortune of certain economic sectors, happening right now. I may have shaped your speech a little more crudely, Ornery, but that’s the implication of your argument. Declining real incomes for poor people? So what, we’re all richer than we were 1000 years ago!, you say. Now you may claim that I added the "so what?" onto your sentence, but that’s the implication I take from you providing the assertions you provide in this context.

 
Written By: glasnost
URL: http://
As some of the atrocities of this war on the middle class are better healthcare than most of the world, more educational opportunities, a higher standard of living, and more opportunities to better yourself than most of the world. Some war.
most of the world
Isn’t it delightful that we compare favorably to the Third and Fourth World.

When compared to the rest of the Industrialized Nations, we are behind or dropping in healthcare, education, standard of living.

This is all true, but I understand how the above, and many comments have made it seem worse than it is. The Industrialized World has it pretty good, so being anywhere on that list isn’t awful, some us just think that being the wealthiest nation on earth we should not be at the bottom of the list for things like infant mortality and education.

Consider education, the big battle in America is to localize and personalize educational opportunities, as if this would make it better, but if you look at the rest of the Industrialized World, those that are having better educational results, they make it a national priority. My personal leanings make me a bit fearful of a national centralized education plan, but I still would like to see it moved up as a priority.

All this aside, I am not saying that it’s terrible here, just that it should be better.

Take unemployment as another example. We don’t know what our unemployment rate really is, since we remove people from the statistics after 18 months, not to mention the 2 million we always have in prison, meaning that this 2% of the workforce is perpetually unemployed.

My larger point is that I think the statistics are skewed to paint a rosier picture than actually exists, and there is very little information to piece together the actual facts, except deductive reasoning indicates that over the last 40 to 50 years, American workers are workers more hours, are more productive, have fewer vacation days, pay higher payroll taxes, pay higher income taxes, pay higher property taxes, pay higher sales taxes, have greater healthcare costs, have greater child care expenses, have greater education expenses, all in real terms. So it may be that the "middle class" has more stuff, but it seems that to exist in "middle class" in America today, people have to pay ALL of their income to do it, borrowing more and more, as compared to their counterparts, who could exist in "middle class" AND save money too.

Cap
 
Written By: CaptinSarcastic
URL: http://
Take unemployment as another example. We don’t know what our unemployment rate really is, since we remove people from the statistics after 18 months, not to mention the 2 million we always have in prison, meaning that this 2% of the workforce is perpetually unemployed.
You really need to take a look at the BLS data before you make statements like this. Long-term unemployed people may be removed from one statistic, but they’re put into another category that the BLS reports. So, it’s just not right to say that we don’t know what our unemployment rate really is.

I don’t know why you’re including the prison population in unemployment statistics, and I won’t even try to guess. However, I don’t think it’s an honest figure to add to unemployment stats.
My larger point is that I think the statistics are skewed to paint a rosier picture than actually exists
Reality proves you wrong. Tell me this: would you rather be a middle-class working stiff today, or a middle-class working stiff in the 1950s? I know waht I’d choose. Life today is so much better than it was 50 years ago, despite paying higher taxes, et alia. Heck, life today is better than it was in the 1970s, and I’m old enough to remember what life was really like in the 1970s.



One thing that isn’t being discussed by anyone here is economic mobility. The people who comprised the bottom quintile in the 1970s are not the same people who comprise the bottom quintile today. They are spread out among all quintiles, due to the economic mobility in our society.
 
Written By: steverino
URL: http://steverino.journalspace.com/
Taxes:

Actually, the bottom income tax bracket has declined considerably from the 1950s, and you have to earn a lot more to wind up in the next higher income tax bracket. This is not to mention EITC, and other tax code fixes which make the tax system more progressive.

http://www.clevelandfed.org/Research/Et2002/0102/briefhist.pdf
 
Written By: Sean
URL: http://www.myelectionanalysis.com
Declining real incomes for poor people? So what, we’re all richer than we were 1000 years ago!, you say.
Two problems:

1. Not just 1000 years ago. My post clearly indicates that we are constantly getting richer, and that actually this process is accelerating.
2. I also claimed several times that poor people’s real incomes and total compensation are not declining at all. Please re-read my above posts and try to take in the whole argument. There’s no occasion for me to say, "So what?" because there’s not much bad news to shrug off in the first place, while there’s a glut of progress to report.
What I don’t like is the use of this observation as a crowbar to dismiss objective bad news about the relative decline in fortune of certain economic sectors, happening right now.
When no economic sectors are in danger, I’m going to start getting very worried. There are some sectors that aren’t in danger that I think should be.
-=-=-=-=-
As for long-term unemployment, it’s much, much worse in Europe than it is here. What do you expect when people have much longer-lasting unemployment benefits to catch them? They have less incentive to get out there and get a job, quickly.
 
Written By: OrneryWP
URL: http://
Consider education, the big battle in America is to localize and personalize educational opportunities, as if this would make it better, but if you look at the rest of the Industrialized World, those that are having better educational results, they make it a national priority. My personal leanings make me a bit fearful of a national centralized education plan, but I still would like to see it moved up as a priority.
And how many of those industrialized nations have nearly 76 MILLION students, with 53,095,435 being in K-12??
All this aside, I am not saying that it’s terrible here, just that it should be better.
And the Federal Government making it a priority, and trying to do something, would make it better?

How about we make sure money given to schools are actually spent educating the students. Of course, that takes local control.
 
Written By: Keith_Indy
URL: http://inactivist.org/blog/keith_indy
I think it was Captain Sarcastic who referred to EMPIRICAL TRUTH,
When it comes to statistical reports, there is no such thing. There are only empirical incividual data, which the reporter strings together to paint an overall picture. How truthful that picture is depends a lot on which data he uses, which he ignores, and how he strings everything together.

I noticed two things about this report.
-The ’real wages’ cited are traditionally adjusted only for across the board inflation. That does not speak to the question of what proportion of income is spent on housing, health care, etc.
-This is only about wages. It does not address thr job insecurity factor at all. Nor does it address the sudden changes in income families experience as jobs are lost and new jobs are found (or not).
—I could go on, but...

Those who tout the benefits of the Internet, do so justifiably, But they falsely equate more information with better understanding. The Internet is loaded with false information, biased information and outright lies, not to mention scam artists. It takes a lot of time to research and cross-evalutate before you can even come close to true knowledge and understanding.

Those with deep preconceptions will find their way to Internet sources that speak their way and feel reassured, while ignoring and poo-pooing sources with contradictory information. In that case, real knowledge and understanding is actually decreased.

One ’benefit’ tecnology has brought is that we talk and debate with strangers in the solitary space of our computers instead of sitting outside and talking with our neighbors on hot summer nights. Perhaps our culture wars derive, at least partially, from this isolating factor.

No benefit comes without a price tag.

 
Written By: Laime
URL: http://
Laime -
-The ’real wages’ cited are traditionally adjusted only for across the board inflation. That does not speak to the question of what proportion of income is spent on housing, health care, etc.
Why should they be? Proportion of income spent on one thing or another is based on preferences. If I spend 30% of my income on housing because I want a bigger house, while my coworker who earns the same as me spends 25% on his smaller or less conveniently located housing, who’s poorer?

As for "true knowledge and understanding," that’s an inappropriately high standard, wouldn’t you say? I don’t need complete information to make a decision, nor could I afford or mentally process that much information. All I need are enough sources of information to make sufficiently informed decisions, with "sufficiency" determined by the job I’m doing. And the internet delivers on that, to any reasonably informed searcher.
 
Written By: OrneryWP
URL: http://
not to mention the 2 million we always have in prison, meaning that this 2% of the workforce is perpetually unemployed.
Come on Cap... what’s next, you gonna count the dead bodies in the graveyards? It just doesn’t make any sense to say those people are not part of the unemployed.
 
Written By: meagain
URL: http://
Declining real incomes for poor people?

That is false. The poor consume more goods than ever before.
The ’real wages’ cited are traditionally adjusted only for across the board inflation. That does not speak to the question of what proportion of income is spent on housing, health care, etc.
Except as pointed out above we spend less on the fundamental goods and services than ever before.
When compared to the rest of the Industrialized Nations, we are behind or dropping in healthcare, education, standard of living.
I won’t argue with you on education, but on healthcare it is a mixed record, overall standard of living it is just false. In terms of the ability to purchase goods and services the gap is growing, not shrinking. The exception to that is economies that were far behind and have significantly liberalized such as Ireland. The gap is shrinking rapidly in that case.

Of course even if that were not true it doesn’t mean we are worse off even if the rest of the world is doing better. Personally I welcome other countries closing the gap, don’t you?
 
Written By: Lance
URL: http://asecondhandconjecture.com
not to mention the 2 million we always have in prison, meaning that this 2% of the workforce is perpetually unemployed.
US population is over 300 million. 2 million is less than .67% of the population.
 
Written By: OrneryWP
URL: http://
".Proportion of income spent on one thing or another is based on preferences’
—————
That would be true only for the wealthy. Most folks see housing as a must, not a preference. Some years ago, the rule of thumb for affordable housing was 1 week’s wages. Now, for the same space, one would need to spend 3 weeks’ wages. It’s a valid consideration when assessing one’s financial health.
In addition, it cramps people’s sense of personal freedom, as increasingly larger areas get priced out of the range of workers or retirees with moderate incomes. Every time a run-down area is ’rehabilitated’, more middle-income people get pushed out altogether.

As for the goods and services argument, I haven’t seen any studies on how many people would choose to skimp on those in return for decent, but more addordable housing. In my personal experience, the answer would be - many, very many.




 
Written By: Laime
URL: http://
I’ve been out of town all day, but I see I need to correct unemployment rate myths again. The unemployment rate is not calculated by morons. Everybody who is looking for work is counted, and anybody who is not looking for work will show up in a category indicating that, too. Unemployment benefits have absolutely nothing to do with the UR.
 
Written By: Jon Henke
URL: http://QandO.net
".Proportion of income spent on one thing or another is based on preferences’
That would be true only for the wealthy. Most folks see housing as a must, not a preference. Some years ago, the rule of thumb for affordable housing was 1 week’s wages. Now, for the same space, one would need to spend 3 weeks’ wages.
Same space, same yardspace? Same amenities, same convenience of location? And measured by family or per-individual, as opposed to average home size versus average wages?

I find that impossible to believe. I’d like a source.

And again, we run into the same problem with income versus total compensation.
In addition, it cramps people’s sense of personal freedom, as increasingly larger areas get priced out of the range of workers or retirees with moderate incomes. Every time a run-down area is ’rehabilitated’, more middle-income people get pushed out altogether.
They "get priced"? How’s that work? Somebody somewhere tents their fingers, laughs and pushes a button marked "Screw over the workers and retirees"?
 
Written By: OrneryWP
URL: http://
"Some years ago, the rule of thumb for affordable housing was 1 week’s wages. Now, for the same space, one would need to spend 3 weeks’ wages."

That’s ridiculous. Where, San Francisco?
 
Written By: Unknown
URL: http://
That would be true only for the wealthy. Most folks see housing as a must, not a preference. Some years ago, the rule of thumb for affordable housing was 1 week’s wages. Now, for the same space, one would need to spend 3 weeks’ wages. It’s a valid consideration when assessing one’s financial health.
That is ridiculous. Have you followed the comments? More people own houses. Housing takes up a smaller proportion of our income, not more, and that smaller proportion provides more living space. Note: the average poor person has more square footage of housing than the average person in Europe. The idea that we are suffering relative to the past or the rest of the world for adequate housing is preposterous.
 
Written By: Lance
URL: www.asecondhandconjecture.com
"Isn’t it delightful that we compare favorably to the Third and Fourth World."

Yes. Having seen a little of it, I give thanks every day that I am here, not there. And now, not 100 or even 20 years ago.


"When compared to the rest of the Industrialized Nations, we are behind or dropping in healthcare, education, standard of living"

Having seen some of that, also(although not lately), I rather doubt it.


"those that are having better educational results, they make it a national priority."

"You can lead a horse to water, but you can’t make him drink". Improving educational results is not going to be a matter of more money and/or more government. Sociology and culture matter more than economics and government.

****************************
"I don’t know why you’re including the prison population in unemployment statistics,"

Maybe because they are unemployed? *sheesh*. Of course, they are not actively seeking work, but I suppose an active appeal could be considered to be seeking work, if not gainful employment. Inmates in mental institutions are also unemployed, except for those who think they are God(who is, of course, always gainfully employed). Those who think they are Santa or the Easter Bunny are only seasonal workers, which is another category, I think.

******************************

"What I don’t like is the use of this observation as a crowbar to dismiss objective bad news about the relative decline in fortune of certain economic sectors"

Pity about the buggy whip sector, eh? Bought a new typewriter lately?
Nothing new there. Joseph Schumpeter called it "creative destruction".
********************************

"That does not speak to the question of what proportion of income is spent on housing, health care, etc."

There are figures available for that, too.

************************************
"The Internet is loaded with false information, biased information and outright lies, not to mention scam artists. It takes a lot of time to research and cross-evalutate before you can even come close to true knowledge and understanding."

Sort of like all the book stores and magazine stands I have ever been in. Or life.

"Those with deep preconceptions will find their way to Internet sources that speak their way and feel reassured, while ignoring and poo-pooing sources with contradictory information. In that case, real knowledge and understanding is actually decreased."

See above. Repeat as needed. And add colleges and universities.

"One ’benefit’ tecnology has brought is that we talk and debate with strangers in the solitary space of our computers instead of sitting outside and talking with our neighbors on hot summer nights"

I am NOT giving up my air conditioning!! Obviously you live in a bug and mosquito free area.
*****************************

"I’ve been out of town all day, but I see I need to correct..."

Yeah, I thought it sounded familiar.
 
Written By: timactual
URL: http://
Wow. Did I do all that? Ah, well, a little Pepto-Bismol will cure the flatulence.
 
Written By: timactual
URL: http://
It’s turning into quite the rout, isn’t it, tim? Like Whack-a-Mole with several friends helping out.
 
Written By: OrneryWP
URL: http://
It seems, according to this, that everyone may not be comparing apples to apples. Not only has the economy changed, the tax laws have changed over the years, shifting the way people report their income.

http://www.poorandstupid.com/2006_12_10_chronArchive.asp#116607459685359584
As many others have done, Virginia’s Democratic Senator-elect Jim Webb recently complained on this page of an "ever-widening divide" in America, claiming "the top 1% now takes in an astounding 16% of national income, up from 8% in 1980." Those same figures have been repeatedly echoed in all major newspapers, including this one. Yet the statement is clearly false. The top 1% of households never received anything remotely approaching 16% of personal income (national income includes corporate profits). The top 1% of tax returns accounted for 10.6% of personal income in 2004. But that number too is problematic.

The architects of these estimates, Thomas Piketty of École Normale Supérieure in Paris and Emmanuel Saez of the University of California at Berkeley, did not refer to shares of total income but to shares of income reported on individual income tax returns — a very different thing. They estimate that the top 1% (1.3 million) of taxpayers accounted for 16.1% of reported income in 2004. But they explicitly exclude Social Security and other transfer payments, which make up a large and growing share of total income: 14.7% of personal income in 2004, up from 9.3% in 1980. Besides, not everyone files a tax return, not all income is taxable (e.g., municipal bonds), and not every taxpayer tells the complete truth about his or her income.

For such reasons, personal income in 2004 was $3.3 trillion, or 34.4%, larger than the amount included in the denominator of the Piketty-Saez ratio of top incomes to total incomes. Because that gap has widened from 30.5% in 1988, the increasingly gigantic understatement of total income contributes to an illusory increase in the top 1%’s exaggerated share.

...

As was well-documented years ago by economists Roger Gordon and Joel Slemrod, a great deal of the apparent increase in reported high incomes has been due to "tax shifting." That is, lower individual tax rates induced thousands of businesses to shift from filing under the corporate tax system to filing under the individual tax system, often as limited liability companies or Subchapter S corporations.

IRS economist Kelly Luttrell explained that, "The long-term growth of S-corporation returns was encouraged by four legislative acts: the Tax Reform Act of 1986, the Revenue Reconciliation Act of 1990, the Revenue Reconciliation Act of 1993, and the Small Business Protection Act of 1996. Filings of S-corporation returns have increased at an annual rate of nearly 9.0% since the enactment of the Tax Reform Act of 1986."
 
Written By: Keith_Indy
URL: http://inactivist.org/blog/keith_indy
And when I say "shifting the way people report their income" that is mostly at the top tiers of income earners, those who used to report their income through their business, who may now be reporting it as personal income.
 
Written By: Keith_Indy
URL: http://inactivist.org/blog/keith_indy
I don’t know why you’re including the prison population in unemployment statistics, and I won’t even try to guess. However, I don’t think it’s an honest figure to add to unemployment stats.
US population is over 300 million. 2 million is less than .67% of the population.
The reason I mention incarceration is that in the US, incarceration is many times higher than our industrialized peers, and it affects the unemployment rate, that’s all. I am not the first person to note this, nor will I be the last. Funny though, I would think that libertarians would pay more attention to this particular aspect of our society. Y’all rail about taxes but is there ANYTHING more anti-libertarian than depriving a person of their freedom if they have not deprived another of their rights or property?


Typically, employment and the labor force include only work done for monetary gain. Hence, a homemaker is neither part of the labor force nor unemployed. Nor are full-time students nor prisoners considered to be part of the labor force or unemployment. The latter can be important. In 1999, economists Lawrence F. Katz and Alan B. Krueger estimated that increased incarceration lowered measured unemployment in the United States by 0.17 %age points between 1985 and the late 1990s. In particular, as of 2005, roughly 0.7% of the US population is incarcerated (1.5% of the available working population).
The unemployment rate is not calculated by morons. Everybody who is looking for work is counted, and anybody who is not looking for work will show up in a category indicating that, too. Unemployment benefits have absolutely nothing to do with the UR.
The accuracy of unemployment statistics
The unemployment rate may be different from the impact of the economy on people. First, the unemployment figures indicate how many are not working for pay but seeking employment for pay. It is only indirectly connected with the number of people who are actually not working at all or working without pay. Second, in the United States those who work as little as one hour a week for payment are considered employed (15 hours in Germany until 03/2005), even if they wish to work more. Therefore, critics believe that current methods of measuring unemployment are inaccurate in terms of the impact of unemployment on people as these methods do not take into account:

The 1.5% of the available working population incarcerated in U.S. prisons...
Those who have lost their jobs and have become discouraged over time from actively looking for work.
Those who are self-employed or wish to become self-employed, such as tradesmen or building contractors or IT consultants.
Those who have retired before the official retirement age but would still like to work.
Those on disability pensions who, while not possessing full health, still wish to work in occupations suitable for their medical conditions.
Those who work for payment for as little as one hour per week but would like to work full-time. These people are "involuntary part-time" workers.
Those who are underemployed, e.g., a computer programmer who is working in a retail store until he can find a permanent job.
On the other hand, the measures of employment and unemployment may be "too high." In some countries, the availability of unemployment benefits can inflate statistics since they give an incentive to register as unemployed. Homemakers and other people who do not really seek work may choose to declare themselves unemployed so as to get benefits; people with undeclared paid occupations may try to get unemployment benefits in addition to the money they earn from their work. Conversely, the absence of any tangible benefit for registering as unemployed discourages people from registering.

Due to these deficiencies, many labor market economists prefer to look at a range of economic statistics such as:

Labor market participation rate (the percentage of people aged between 15 and 64 who are currently employed or searching for employment)
The total number of full-time jobs in an economy
The number of people seeking work as a raw number and not a percentage
The total number of person-hours worked in a month compared to the total number of person-hours people would like to work


Let’s look at the numbers. Here are the IRS income statistics for INDIVIDUALS.
Table P-5. Regions of People
by Median Income and Sex: 1953 to 2005

(People 15 years old and over begining with March 1980, and people
14 years old and over as of March of the following year for previous
years. Income in current and 2005 CPI-U-RS adjusted dollars 28/)
________________________________________________________________________
Male Female
_____________________________ _____________________________
Number Median income Number Median income
with ___________________ with ___________________
Region income Current 2005 income Current 2005
and year (thous.) dollars dollars (thous.) dollars dollars
________________________________________________________________________
UNITED STATES
2005 102,986 $31,275 $31,275 104,245 $18,576 $18,576
2004 35/ 101,772 30,516 31,537 103,384 17,667 18,258
2003 100,769 29,931 31,763 102,713 17,259 18,316
2002 99,788 29,238 31,739 102,487 16,812 18,250
2001 98,873 29,101 32,092 101,941 16,614 18,322
2000 30/ 98,504 28,343 32,129 101,704 16,063 18,209
1999 29/ 97,063 27,293 31,971 101,036 15,304 17,927
1998 94,948 26,492 31,686 98,694 14,430 17,259
1997 94,168 25,212 30,579 97,447 13,703 16,620
1996 93,439 23,834 29,525 96,558 12,815 15,875
1995 25/ 92,066 22,562 28,700 96,007 12,130 15,430
1994 24/ 91,254 21,720 28,300 95,147 11,466 14,939
1993 23/ 90,194 21,102 28,073 94,417 11,046 14,695
1992 22/ 90,175 20,455 27,891 93,517 10,714 14,609
1991 88,653 20,469 28,610 92,569 10,476 14,643
1990 88,220 20,293 29,390 92,245 10,070 14,584
1989 87,454 19,893 30,244 91,399 9,624 14,632
1988 86,584 18,908 29,981 90,593 8,884 14,087
1987 21/ 85,713 17,786 29,229 89,661 8,295 13,632
1986 84,471 17,114 29,083 87,822 7,610 12,932
1985 20/ 83,631 16,311 28,224 86,531 7,217 12,488
1984 19/ 82,183 15,600 27,894 85,555 6,868 12,280
1983 80,909 14,631 27,205 83,830 6,319 11,749
1982 79,722 13,950 27,016 82,505 5,887 11,401
1981 79,688 13,473 27,636 82,139 5,458 11,196
1980 78,661 12,530 28,116 80,826 4,920 11,040
1979 18/ 78,129 11,779 29,349 79,921 4,352 10,844
1978 75,609 10,935 29,807 71,864 4,068 11,089
1977 74,015 10,123 28,780 65,407 3,941 11,204
1976 17/ 72,775 9,426 28,509 63,170 3,576 10,815
1975 16/ 71,234 8,853 28,312 60,807 3,385 10,825
1974 16/15/ 70,863 8,452 29,268 59,642 3,082 10,673
1973 69,387 8,056 30,660 57,029 2,796 10,641
1972 14/ 67,474 7,450 30,129 54,487 2,599 10,511
1971 13/ 66,486 6,903 28,776 52,603 2,408 10,038
1970 65,008 6,670 29,040 51,647 2,237 9,739
1969 63,882 6,429 29,338 50,224 2,132 9,729
1968 62,501 5,980 28,478 48,544 2,019 9,615
1967 12/ 61,444 5,553 27,504 46,843 1,801 8,920
1966 11/ 60,085 5,306 27,083 44,065 1,638 8,361
1965 10/ 59,157 5,023 26,348 42,160 1,521 7,978
1964 58,533 4,647 24,787 41,704 1,449 7,729
1963 57,686 4,511 24,382 40,364 1,372 7,416
1962 9/ 56,624 4,372 23,949 38,988 1,342 7,351
1961 8/ 55,839 4,189 23,170 38,076 1,279 7,074
1960 55,172 4,080 22,789 36,526 1,261 7,043
1959 54,285 3,997 22,727 34,380 1,223 6,954
1958 53,543 3,743 21,411 33,340 1,176 6,727
1957 52,877 3,677 21,643 32,702 1,200 7,063
1956 52,016 3,601 21,875 31,823 1,149 6,980
1955 51,446 3,358 20,709 29,791 1,120 6,907
1954 49,712 3,193 19,606 27,715 1,160 7,123
1953 49,667 3,221 19,951 27,379 1,166 7,222


Now, according to these results, individual pre-tax income, adjusted for inflation, has increased by 56.75% since 1953. Now in 1953, total federal taxes on the median family was in the 5% range, and today it is closer to 24% (including payroll taxes). So let’s remove the difference from the net pay.

1953 $19,951 - 5% = $18,953
2005 $31,275 - 24%= $23,769

Now we have a real increase of 25.4%

State and Local taxes have increased from 5.9% of national income to a 16.2%, so let’s build that in....

1953 $19,951 x 5.9% = $1,107 —— $18953 - $1177 = $17775
2005 $31,275 x 16.2% = $5066.55 —— $23,769 - $5065 = $18702

Now we have a real increase of 5.2%

Now I know that the following are theoretically voluntary expenses, but consider the following expenses that did not exist, or did not exist as a considered necessity in the 1950’s...

Child Care
Cell phones
Cable
Internet access
Mandatory auto insurance
Healthcare

When you put all of this stuff together, what you end up with are people who have much greater access and much more technologically advanced opportunities and access to information, but they are also trying to pay for the access to this more open world with virtually the same dollars they had in 1955.

To pay for new stuff with the same money saving rates plummet, debt increases.

All while the number of hours worked has increased significantly and the number of days off has decreased and productivity is higher than ever.

The end result is simply a lower quality of life for American workers, while the production of wealth as a nation overall has been enormous, making the greatest promise of America, that your children will have it better than you, a stretch. I think those of us that think about quality of life see the possibilities for a genuinely better quality of life if the growth we have seen as a nation were more evenly distributed between labor and capital. And finally, I believe that POLICY is responsible for this shift that amounts to a redistribution of wealth from the bottom up.

It’s turning into quite the rout, isn’t it, tim? Like Whack-a-Mole with several friends helping out.


The winners of the class war would be proud of you.


Cap
 
Written By: CaptinSarcastic
URL: http://
So just come out and say it, you want to steal from the rich and give to the poor...
 
Written By: Keith_Indy
URL: http://inactivist.org/blog/keith_indy
So just come out and say it, you want to steal from the rich and give to the poor...
Is that what you got out of that?

Actually, I want to stop the policies that are redistributing wealth upwards, though that may have been hard to understand from my statement, " I believe that POLICY is responsible for this shift that amounts to a redistribution of wealth from the bottom up."

It’s possible that the evolution of our economy is responsible for the concentration wealth, I will not refuse to consider that, but whatever the cause, wealth has been moving rapidly to the top, moreso than ever before.

We have surpassed the wealth concentration that existed at the height of the Robber Baron era, when wealth concentration reached unprecedented levels of nearly 40% of all private wealth in the hands of 1% of Americans, we are now passing 44%.

Is this inherently unfair? No, it’s not. If it continues, can our society survive. No, it can’t, we will certainly reach a breaking point.

Take a little, leave a little, and don’t break up the game.

Cap
 
Written By: CaptinSarcastic
URL: http://
Now in 1953, total federal taxes on the median family was in the 5% range, and today it is closer to 24% (including payroll taxes). . .State and Local taxes have increased from 5.9% of national income to a 16.2%, so let’s build that in....
Citations please.

Because according to this source, the effective tax rate on the median household was 15.1% in 2003 and 17.8% in 1980. And their taxes include: "Federal and state personal income taxes, federal retirement or FICA payroll taxes, and property taxes on own home", which means to get up to your 40% effective tax rate on the median household, sales taxes would be around 25%.

And according to this source, the total effective federal tax rate for the middle household income quintile was 13.6% in 2003 - a far cry from your 24%.

And according to this source, the total effective federal tax rate for the middle household income quintile was 16.1% in 2004 - still a far cry from your 24% and not much different than the 15.9% in 1960. I guess Ike really hammered the middle class.

As for State and Local Taxes increasing - first, given the above refutation on Federal, I don’t believe your numbers. Second, you’re mixing averages and medians here.
 
Written By: m.jed
URL: http://
Funny though, I would think that libertarians would pay more attention to this particular aspect of our society. Y’all rail about taxes but is there ANYTHING more anti-libertarian than depriving a person of their freedom if they have not deprived another of their rights or property?
How many people in prison have not violated another person’s rights? That’s how many people libertarians would just as soon release from prison, so we can lock up and concentrate on those who do commit crimes with actual victims.

Got any figures on approximately how much of the prison population is locked up due to the drug war? We might be able to reach an agreement here.

But we won’t just count the entire prison population in as "unemployed." The alternative to them being unemployed is... what?
-=-=-=-=-
As for unemployment versus underemployment, how should we measure it so that we have an objective, clear view of the situation? Ask people how many hours they would work if they had their way? I can see some methodological problems with that, not least of which is the diminishing marginal returns to their labor. Say I’m working 18 hours a week and want to work 20, but my last two hours wouldn’t be as productive on average as my first 18. My employer wouldn’t want to pay me the same for the next two as for the first 18, but I’m telling the BLS over the phone that I’d like to work another two hours based on the assumption that I’d be getting my usual level of compensation for those two hours.

And that all assumes that I can readily quantify how much more I’d like to be working. Ask someone today whether he’d rather work 33 or 34 hours next week, and he may not give you an accurate answer, because most people can’t give you a ready, quantifiable answer to that kind of question unless their employers are keeping them from working a specific number of hours for something like full-time wages. Most people, though, might generally want to work a bit more, but they can only guess at how much more they’d like to work until they reach that decision-making time.
Now in 1953, total federal taxes on the median family was in the 5% range, and today it is closer to 24% (including payroll taxes). So let’s remove the difference from the net pay.
Why? Even assuming your numbers are correct (citation please), those taxes are redistributed in millions of different forms, from increased security to infrastructure improvements to direct payments. It may not be efficient, but it’s not like the money’s just disappearing. It’s controlled by someone else, but it’s still spending.
Now I know that the following are theoretically voluntary expenses, but consider the following expenses that did not exist, or did not exist as a considered necessity in the 1950’s...

Child Care
Cell phones
Cable
Internet access
Mandatory auto insurance
Healthcare
They are all voluntary expenses. It’s not just theory.
The opportunity costs you face if you forgo those expenditures may be high, but that’s an indication that other opportunities have increased.

More later; busy at the moment.
 
Written By: OrneryWP
URL: http://
Funny though, I would think that libertarians would pay more attention to this particular aspect of our society. Y’all rail about taxes but is there ANYTHING more anti-libertarian than depriving a person of their freedom if they have not deprived another of their rights or property?
You may not have noticed, but libertarians are fairly vocal in their opposition to the drug war and other ’vice wars’.
When you put all of this stuff together, what you end up with are people who have much greater access and much more technologically advanced opportunities and access to information, but they are also trying to pay for the access to this more open world with virtually the same dollars they had in 1955.
I’m always amused and/or frustrated when people try to argue that, when adjusted for inflation, wages haven’t increased by as much as we may think. And then follow that up by pointing out ’plus, what about higher prices!
The end result is simply a lower quality of life for American workers
I’d only note that no less a figure than Paul Krugman has observed that there’s absolutely no excuse for making the argument you’re making.
 
Written By: Jon Henke
URL: http://QandO.net
I’m always amused and/or frustrated when people try to argue that, when adjusted for inflation, wages haven’t increased by as much as we may think. And then follow that up by pointing out ’plus, what about higher prices!’
Read it again, that is not the argument I am making...

When you put all of this stuff together, what you end up with are people who have much greater access and much more technologically advanced opportunities and access to information, but they are also trying to pay for the access to this more open world with virtually the same dollars they had in 1955.


 
Written By: Captin Sarcastic
URL: http://
People DO have bigger houses, and people do have more stuff, and people do have more access to more cool technology, but they are TRYING to pay for them without more money.

Look at savings and debt, and don’t tell me people are saving in their houses, because the houses are mortgaged to the hilt.

All I am saying, and it is a very easy to understand assertion, is that profitability of the businesses that make up our economy is the result of the American workforce getting a smaller portion of the results of their production, and it leads us to where we are now.

I can’t say I know the answer. In the past, labor unions did a good job of negotiating better deals, and this kind of negotiation is generally a free market instrument (though both sides broke the rules of honest trade at times).

I don’t want or expect the government to make pay more equitable.


 
Written By: Captin Sarcastic
URL: http://
My favorite solution is a revision of payroll taxes, making them a straight up welfare program rather than this insurance policy/ponzi scheme. This would allow a middle class tax cut without a corresponding tax hike for anyone else, except that the caps would be removed.

Another solution is a middle class tax cut, but you know I always consider revenue neutral solutions, so the cut would have to be replaced somewhere.

These measures would not solve it, but it would least give people who spend ALL of their money, a chance to save a buck or two and maybe pay down that 4th mortgage.

As you know, my purpose is not egalitarian, it is sustainability. This is one of the problems with Libertopian thought, Libertopia would work like a giant no-limit p0ker game, when you have a lot of chips, you can lose them, but eventually someone amasses so many chips that they can take everyone else’s chips without even requiring the luck of a coin toss. In other words, eventually some tiny group will own everything, and the rest of players will turn over the table and sh*ot him, take his chips, and start the game over.

This isn’t going to happen tomorrow, but it’s out there, and it’s more serious than SS shortfalls, Medicare deficits, and global warming.

I hope that one day you don’t have to look back and say, darn, that Sarcastic goofball was right, AGAIN. (Remember Iraq)

Cap
 
Written By: Captin Sarcastic
URL: http://
Sorry to break up the post, took me a while to figure out that P0ker is a blacklisted term.

Cap
 
Written By: Captin Sarcastic
URL: http://
When you put all of this stuff together, what you end up with are people who have much greater access and much more technologically advanced opportunities and access to information, but they are also trying to pay for the access to this more open world with virtually the same dollars they had in 1955.
I’m not sure why you think CPI doesn’t account for these "new" things, but that’s simply not the case. CPI measures an ever-evolving basket of goods, and when new technologies, goods and services are incorporated, it measures that, too. What it does not measure is the cost of living. That’s why CPI is not a true measure of inflation, and (in part) why CPI overstates inflation and has done so for decades, putting real wages even farther ahead.

And then there’s the other arguments about real compensation, consumption, etc.

If you want to live at the same utility level as a 1973 person, you can do so for far less real money today than you could in 1973. People may still be spending all of their money today, but they get far more utility out of it.
 
Written By: Jon Henke
URL: http://QandO.net
Look at savings and debt, and don’t tell me people are saving in their houses, because the houses are mortgaged to the hilt.
Yes, Cap, I suggest you do look at them, because so far, your credibility on economic data is shall we say sub-par. Still awaiting those citations.

In 2004, looking at only the middle family income quintile, 72% owned their own home, worth $177k, and had average total asset holdings of $253k. 48% didn’t have a mortgage. 45% had zero credit card debt. Of those who did have a mortgage, the average loan outstanding was $87k and of those who did have credit card debt, the average balance was $5,200. The mean value of debt outstanding for this quintile is $70k.

Just as there’s income inequality, there’s also debt inequality:. Household Debt and Income Inequality, 1963-2003 by Matteo Iacoviello, argues that the observed rise in household debt relative to income over the past 30 years is attributable to rising income inequality. Iacoviello’s model predicts that consumption inequality grows less than proportionally as income inequality grows, while wealth inequality grows more than proportionally.

 
Written By: m.jed
URL: http://
Cap,
All while the number of hours worked has increased significantly and the number of days off has decreased
Uh, that isn’t true and we have more enjoyable jobs to boot.

Your tax figures are wrong as well from what I can see.

in addition, you cannot argue that the reduction in savings (about which there is a lot of confusion) accounts for the huge difference in living standards. It also is irrelevant. If real income is the amount of things the economy provides for us, then the savings rate doesn’t effect that, just the distribution of it. We could all save more but we would be buying the same (okay, approximate) basket of goods. Overall living standards would be about the same either way. The only adjustment to be made is that theoretically a higher savings rate might have led to more growth over the long term, but slightly lower consumption of consumer goods in the short term. An issue, but it isn’t as if our economy is starved for investment capital at the moment in aggregate.

The same is true for your wealth inequality argument. The amount of money going to the wealthy doesn’t matter much to the living standards of the rest of us. Paris Hilton can certainly consume a lot of clothes and expensive booze, but in the end the rich just can’t consume that much more of the economy’s resources than you and I can. If we are so much more productive (and I agree) the lions share does not go to the wealthy. It has to be consumed by the rest of us. That of course goes back to the monetary argument I made above. Money flowing to the rich drives up the price of a small portion of our economy and drives down the price of everything else.

What money flowing to the capitalist class does do is give them more to invest and drive up our productivity even further. It is almost a free lunch for us, most of what we buy declines in price while the capitalist class invests in our economy and produces even more and better goods at lower prices which we get to enjoy.

It should also be noted that the IRS tax statistics are invalid because a lot of income, especially for the middle class goes unreported, legally. IRA’s, 401k’s etc. are excluded to give just one example of unreported income that goes into vehicles which did not use to exist. One then has to adjust for pensions and a host of other factors.
Now I know that the following are theoretically voluntary expenses, but consider the following expenses that did not exist, or did not exist as a considered necessity in the 1950’s...

Child Care
Cell phones
Cable
Internet access
Mandatory auto insurance
Healthcare
Healthcare wasn’t an expense?

Look, we now purchase large amounts of these things (especially healthcare) because we can afford to, we couldn’t in the past. You still haven’t addressed the fact that to get the same lifestyle one did in 1973 it would require a lot smaller portion of your paycheck than it did then and the goods and services would be better to boot. Saying we have decided all kinds of new things are important doesn’t change that. 100 years from now I could say the same things. We will be wealthier, we will consider all kinds of things that are expensive necessities, and much of what is the core of our budget now will be considered a given, such as a decent house and food. The method you are using to justify your argument is one that will be perpetually true.

Jon,
If you want to live at the same utility level as a 1973 person, you can do so for far less real money today than you could in 1973. People may still be spending all of their money today, but they get far more utility out of it.
That is the crux of it, and all arguments that do not address that show more about the one arguing than our standard of living.
 
Written By: Lance
URL: http://asecondhandconjecture.com
Cap,
We have surpassed the wealth concentration that existed at the height of the Robber Baron era, when wealth concentration reached unprecedented levels of nearly 40% of all private wealth in the hands of 1% of Americans, we are now passing 44%.


I suggest this paper:

http://elsa.berkeley.edu/~saez/estateshort.pdf

Even our pals at Berkeley deny that the share of national wealth going to the top has increased or is anywhere close to what it was in the 1920’s. The trend has not been up recently, though they add helpfully for the future of your argument in their closing summary that it might happen in the future.

It is over 40 pages long so if it bores you just skip down to all the graphs.
 
Written By: Lance
URL: http://asecondhandconjecture.com
For those who don’t want to bother the top 1% figure is around 21% and the figure peaked at over 40% in the 1920’s. Wealth is actually at one of its lower levels of concentration in the top 1% historically. The only period when it was lower was in the 1970’s. So I guess the solution would be negative real interest rates with high inflation and several severe recessions. The resulting crash in asset values would reduce wealth inequality markedly.
 
Written By: Lance
URL: http://asecondhandconjecture.com
Anyone who tries to convince me that we are worse off than we used to be is going to have to explain to me why getting an adequate number of parking spaces for students, that is students, at our public high schools is a problem.
 
Written By: timactual
URL: http://
tim - The kids are exploiting their parents. Duh.
 
Written By: OrneryWP
URL: http://
I am up in the Rockies enjoying some snowboarding with my son, but I wanted to take a moment and mention that I got my ass kicked on this thread and that you guys may be right, actually, barring new information, you are right.

Thanks!

Ok, this was slightly painful for my ego, but being wrong on this is good news for workers in America. There are still a ton of problems, but I was wrong on this.

Cap
 
Written By: CaptinSarcastic
URL: http://
"but I wanted to take a moment and mention that I got my ass kicked on this thread and that you guys may be right, actually, barring new information, you are right.

Thanks!"

"Thanks"?? Geez, a masochist. Now I am going to feel all slimey if I disagree with you. Nice move.
 
Written By: timactual
URL: http://
"Thanks"?? Geez, a masochist. Now I am going to feel all slimey if I disagree with you. Nice move.
yeah, yeah

The point is that I appreciate a well presented argumented, and when you are apreciative of something, it’s polite to say "Thanks".

It’s not like you had anything to do with it, Hell, if I knew you were perusing this thread, I’d have argued it after I knew I was wrong ;-)

Cap

 
Written By: CaptinSarcastic
URL: http://
Hitting the eggnog, I see. You make good points, but I think the real argument is over ’inequality’ and "status", not "the poor getting poorer". (and I’d take great exception to an inequality or status construct, too)

In a free market — or something approaching a free market — I don’t think you can reasonably (barring massive economic foul-ups or disaster) see large groups of people getting "poorer" over long periods of time despite massive generalized improvements. The reason the wealthy get richer is precisely because they (i.e., their investments and the productivity that arises therefrom) are making the lives of other people better. If new products weren’t improving lives, people would still buy the old products at the old prices.

People might feel poorer in relation to their neighbors, but I sincerely hope we don’t want our government in the business of protecting our feelings.
 
Written By: Jon Henke
URL: http://QandO.net
" I’d have argued it after I knew I was wrong ;-)"

But you already do that.
And, I am everywhere.
******************

"The reason the wealthy get richer is precisely because they (i.e., their investments and the productivity that arises therefrom) are making the lives of other people better"

Does that include folks like Eminem? Britany Spears makes lives better? You have made me very depressed.

 
Written By: timactual
URL: http://

 
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