I've done the back of the envelope calculations that prove a universal basic income will be affordable. The subject will never pass through the gauntlet of the left-right schism, nor penetrate the popular consciousness, even though we keep moving that direction. We'll never admit it. America's political economy is ruined. Inter-generational civil war is coming by 2030.
More ways of saying the same thing: Our economy has shifted from producing goods to producing services. We have cheapened the cost of raw material extraction and goods production to the point where we overconsume them and endanger the earth.
At the same time, in the services industries, we drastically lowered the cost of acquiring and transmitting raw data, while the price of new ideas and innovation has skyrocketed. Thus, the rewards go to those with new ideas and the ability to harness new technology.
Finally, in the finance sector, we are giving larger and larger rewards to those who gamble, while socializing the costs of many of the resulting failures. The market rises and a few benefit; the market crashes and the rest of us bail out the few.
We have known that empirically, our form capitalism tends toward increasing inequality. We may debate just how much inequality is acceptable, but we have known for a long time how to reduce the portion which we find unacceptable. We just don't want to implement those solutions. A steeply rising graduated income tax, with low rates below median income, and rapidly rising rates above median income, approaching the 70% to 90% rates that existed in the 1950's. A raising of the maximum income above which no Social Security tax is taken. Universal, national health care. Greater socialization of the costs of public education, and a reduction in the degree to which the quality of education varies with income. We can fix these problems.
With that many hills and valleys, seems like a good spot for hydro electric. Take some NASA engineers, make them look down, instead of up, and solve the coal ash environmental hazard, and other coal hazards.
Let's not leave West Virginia with a "mine shaft gap."
By all accounts I should have been sorted into the lower wage category. I grew up lower middle class, my degree is in education, and I got spat out of school in 1975 in the rust belt. After a year or so of food service jobs I graduated to secretarial work, and in my second job I learned to use a Wang Word Processor. I then moved to California and clawed my way to a job with Wang as a "customer support representative". I had a 40 year career in technology, couldn't have coded my way out of a paper bag - but I had the soft skills to train the low wage workers, and worked up to sell "the vision" of software to executives who could sign a check. I made a decent living the whole time, but the last half of my career put me into the top 10% of earners by any measure.
I know how blessed I am, now retired and with sufficient investments (I'm a very safe investor and lived below my means during all those years of 6 figure income) to pursue my volunteer passions. I know there are others like me, and good soft/communication skills will always be in demand. But this is THE worst economy I've seen since I graduated in Northwestern PA in 1975. And its not just the economy. Its the world. God bless.
3
There is selection bias happening to drive high income inequality in large cities. I also wonder how this chart looks when split by age cohort.
People who want quality of life and to raise a family do not want to do so in a large city. Many earning $80K-$200K choose to leave large cities (NYC, SF, LA, etc.) when they hit their mid-30s, in order to raise a family.
The ones left living in the large cities, disproportionately, are the rich who choose to stay and the poor who cannot leave.
1
@Jack Many, many people of all incomes choose to raise families in the city.
1
I believe the greatest source of inequality is ironically because o the tech world, which has created wonderful devices, and has also automatized many jobs that were previously done by hand. In the 60's and 70's, workers could, with a high-school education, buy a house, a car and maybe even an r.v or summer place and be able to afford their lives and send their kids to college. Also, unions were prevalent and protected their workers with higher wages and benefits. Now, in some areas of the midwest and south, such as Indiana and parts of Ohio, Chinese owned factories are moving into town, and treating workers as if they could easily be replaced. We have stopped valuing workers, and this money has been transferred to the top 1%; our society is more unequal than it ever has been.
3
Andrew Yang 2020
1
How many times, how many ways have people been offered socialism, communism, democratic socialism, social democracy in this country? And how many times have they rejected it. There's a horrible right-wing saying that poor people are poor because they want to be poor. Yet in some very broad political sense, that seems to be the case here.
The Chileans, the French, the Iraquis, take the streets. Here in the USA, Bernie can seem to break 20% with DEMOCRATS for chrissake. Because "who will pay for medicare for all"... while the Bezos, Zucks, Scalliffes, Kochs, don't know what to do with all the zillions they have. I reckon that Americans just like inequality. (I'll be delighted if 2020 proves that I'm full of it.)
3
The income inequality may be reduced in Binghamton and it is possible that has kept housing more affordable for many, but the inequality still exists in our nation and world. This means that the rich still have a greater influence on the policies that impact these cities at the state and national level. When the rich decimate environmental regulations, it has an impact on small cities. Decisions or the rich and powerful not to improve or restore roads and bridges impact these small cities. The inequality is still felt there.
2
I'm sure the extra 20 million or so unskilled workers living in the United States illegally since 1980 is not helping with real wage growth for the unskilled labor market. Ignoring this is akin to sticking your head in the sand.
3
Illegal immigrants work jobs Americans normally reject. I seriously doubt cabbage pickers are the cause of low wage growth, that’s the job of greedy corporate executives.
4
@Matt a lot of 20 million people who are without the legal documentation to work here are highly skilled craftsmen who have the skills and work ethic that are in short supply in the United States. The shortage of masons, plumbers, and carpenters would be far greater without those who came here to ply a trade and work hard. They are the true entrepreneurs in our economy, taking financial and personal risks to provide needed services and receive just compensation.
In Maine the upper crust of the economy is taxpayer subsidized by a plethora of corporate welfare benefits. The State rewards companies that provide "quality jobs" defined as jobs paying higher than average wages and benefits (also defined in large part by the State) with an assortment of tax exemptions, refundable tax credits, free worker training,and so forth. One has to wonder if it isn't more profitable for a corporation to hire more workers than it needs on the State's terms and get the freebies, than it is to hire the number of employees it needs and not qualify for corporate welfare.
Such a system will obviously result in wealth inequality since the rest of the economy has to subsidize the top, and since hiring more workers than needed will create inflation, a hidden tax on the whole economy.
It is hard to conceive that there exist any large corporations not on welfare in the American economy, Where are the highest paying jobs? In the largest corporations, Who pays for their welfare? The rest of the economy. A perfect recipe for wealth inequality.
1
A few questions. First, the economy in 1980 was in terrible shape with double-digit inflation and double-digit unemployment. That was not the case in 2015. How much does that affect the analysis?
Second, to what extent does the analysis account for cost-of-living disparity in these different cities? I know from my own experience living not far from Binghamton and checking out opportunities in both the Boston and NYC areas that the cost of living in those cities is vastly more in at least some of the smaller cities. As much as a 30% wage increase only barely covers the difference, in my experience. Realizing higher COL doesn't help the low-wage workers, either, but does that skew the inequality results in the studies at all?
3
@Todd Nielson To fix a typo, and to perhaps state the obvious, the COL in Boston and NYC is much more than in a smaller city like Binghamton.
1
Here is an amazing statistic. In 1970 the median home price in San Francisco was 24% higher than Detroit's median. Both cities are Democrat strongholds. Today's median home price in San Francisco is 38 times as high as Detroit's median.
In the 1970s Metro-Detroit was the fastest-growing major urban area in America but a 180-degree change in US trade policy badly-damaged Detroit's manufacturing economy while greatly benefiting ocean coastal cities with major port facilities.
In 2000 Detroit's median household income was $53,400. Today it is only $28,900. Imagine how far that would go in NYC or San Francisco? You couldn't even afford to live on the street for that little.
The economy in America used to be fairly evenly distributed across the entire country. Now only 15-20 hot urban areas are doing well, half the nation is just muddling along, and a quarter of the nation has been in a permanent recession ever since US trade policy changed in 1993-94 and allowed unfair trade with 3rd world nations.
That same change in trade policy is tearing the Democrat Party right in half. Why would coastal Democrats want to stomp heartland Democrats into the ground if they wanted to keep winning elections?
4
@Mark Richardson Another stat: In 1970, GM, Chrysler and Ford had revenues of $250 billion (in 2015 dollars) while employing 1.3 million people. In 2015, Facebook, Google and Apple generated similar revenues while employing just 140,000
5
The thing that stood out was when it was mentioned that the forces which are driving economic growth are also partly to blame with inequality. This statement is going against the theory that economic growth will improve the overall well-being in an economy.
3
So we now find that meritocracy increased inequality. When combined with our uniquely American view that society is nothing more than a collection of individuals striving to best each other, our current situation seems natural and inevitable.
It is however unstable. Our current lurch toward authoritarianism is also natural and inevitable. Our lowly paid academics can tell you how this will end.
4
@Charles Tiege We don't have a meritocracy any more, other than one measured by dollars only. We have a wealth redistribution economy with the government picking winners and losers via wealth redistribution. That is not a free market economy, which is the meritocracy.
2
The data you presented shows that the diversity of options has grown enormously over the last four decades. This is a good thing. In America you have the freedom to choose where you want to live. You can choose to live in a high-inequality vibrant metropolis like New York City or a low-inequality quiet town like Binghamton. Why is this a bad thing? Would you rather every city in America be like Binghamton just so that you may reduce inequality across the board?
The data also shows that the vibrancy of a city is highly correlated with the degree of inequality. I suspect there’s a casual relationship too: If you forcefully reduce wealth inequality in New York City, perhaps a consequence is that it just becomes another Binghamton.
If you don’t like inequality or high housing prices, just move yourself to Binghamton, why do you have to make New York City into another Binghamton?
2
@Louis
"...vibrant metropolis like New York City..."
This inequality, the 90th percentile, is the top 16 million workers, i.e. government workers.
Is there really anything vibrant about NYC? They are losing population.
Their government is one of only a handful which impose an income tax on their residents.
Now that the feds no longer subsidize their parasitism, they and NY state are in a world of hurt.
2
“ vibrant” ? For who? !!!
I lived in New York City in 2001. As much as I love the city it’s dirty and run down. Look at public transit and the overall infrastructure. Old highways, run down subways and low quality of life ( living in a city where having a washer and dryer in unit is considered “luxury” is lame) . And things have worsen.
1
it used to be that a high school diploma was enough to enter the workforce. nowadays you can't even be an intern without some college, but the problem is that college isn't free. if we care about social mobility, we should make more community college and trade / vocational school programs free, especially in fields where we need people the most, like nursing. this will allow people to participate in the new economy.
4
Fairfield CT is part of the N.Y. metro area, not some made up Fairfield-Bridgeport metro area...
1
The present economy is not functioning for the benefit of most of the residents of the nation. The predecessor construction of our economy was destroyed by our leadership who flat out lied to us about what we would gain.
9
Another facet of how this affects us: if you live in a high inequality city, even having worked in professional "skilled" jobs, if you want to retire and be able to live reasonably well (I mean, decent housing, nearby medical care...NOT fancy vacations, luxury assisted living communities...just a decent life) you HAVE to move to one of those more equal, if stagnant cities. Otherwise you will have to work until you drop dead, scrambling to try to keep up with the increasing costs with stagnant wages; not my version of the American dream.
8
I think that in an ideal situation, those earning below $50k would pay nothing, those up to $150k would pay about 25%, and anything above would be taxed at 45%.
To those who complain about the 1% paying all of the taxes - yes, you’re right. You do. Those who make the most pay the most, surprise surprise.
That said, we do not have free and independent legislative or judicial branches of government anymore so I have checked out of politics due to an onslaught of unrelenting bad news that only suggests we are living in a democracy in decline. Unfortunately, and sadly, I am resigned to the fact that the GOP - one half of the government - puts party before anything else whatsoever.
7
@Alex said threshold numbers would really need to be adjusted based upon local cost of living. 150k in NYC or SF or Seattle is vastly different than it is even in Chicago or Austin, nevermind in Atlanta or Phoenix or St Louis. That the catch as always.
Of course many of the biggest cities already have the highest tax load to support their quality of life (for good reason).
3
Three words. Franklin Delano Roosevelt. Go back to FDR policies, not only redistribute but also invest in lagging communities to create better healthcare, infrastructure and an educated workforce. Then, at least some companies will move to under served areas.
11
The problem is simple: too many people to fill too few jobs. With increased automation, the problem will only get worse. These displaced people need something productive and satisfying to do...and that should be sponsored by the companies and people that are doing the displacing.
6
@obee Not true. Read 'How a Strong Job Market Has Proved the Experts Wrong' Dec 6. The unemployment rate is the lowest it has been since 1969.
1
Although I applaud true journalism outlets like NYT, WaPo, and NPR, they all do promulgate some intellectual dishonesty that, tangentially, serves to energize Trump's base and encourage shouts of "fake news:" what America needs are more highly-educated workers like engineers, all immigration is equal, etc. American software engineers have been laid off en masse due to abuse of the H1-B system. Wall Street quarterly thinking guts long-term investments like R&D and rewards short-sighted cost-cutting. There's been an overall dumbing down of American business once someone decided that CEO's didn't need a background in the businesses they head - worked out SUPER for Boeing, didn't it? And illegal immigration, and aforementioned abuse of the H1-B visa program, are often justified via the lie that there are some jobs American workers won't do. Ask anyone who's worked inside a septic tank or tarred a road or flat roof in August: there is no job an American won't do, provided it's at a living wage.
10
@Mikey American software engineers have been laid off en masse? What odd universe do you pull these strange stats from?
2
@Mikey Where do you get your facts? I work at a local university and the engineering and computer sciecne students are all but guarateed jobs after they graduate. No mass layoffs here.
2
This article is a harmful narrative that should have been more critical of the term “high-skilled” than merely noting at the end that “this economy values an engineer so much more than a line cook.” Dig into this more. What exactly makes an engineer, who can design an app that tracks your friends’ current locations, and who works for a company who then sells that location data, “high-skilled?”
4
Isn't time we rediscovered Henry George's Progress and Poverty (1879) and his proposed remedy!
1
@John David Kromkowski Had never heard of this so did a quick online search. The Wikipedia synopsis: "Progress and Poverty seeks to explain why poverty exists notwithstanding widespread advances in technology and even where there is a concentration of great wealth such as in cities." Published 1879!
So wealth concentrating in cities isn't something new. Perhaps the more widely-shared wealth of the post-WWII economy was the admirable aberration*. What forces and policies created that? I suspect the more progressive policies of FDR - will look further.
Thank you for posting your comment. Interesting that the book was extremely influential, yet not one mention of it in any of my economics of history classes. Hmmm.
(*Admirable but marred by widespread racist practices and policy that limited the wealth to mostly white folks. If progressive policies gain ascendancy again, we can and should do better!)
2
The problem with statistics is that the averages hide a lot of variations. Most reports report at state level. This hides the big difference at the top vs bottom WITHIN cities (MSAs) and BETWEEN cities vs smaller towns / rural areas.
At the state level, the lower costs and inflation of non-urban areas mask the seriousness of the problem by averaging out the extreme differences between top and bottom.
2
"This economy" is not a fact, it is a description of choices we make, rules we choose , knowingly or not. Is a strong economy in metropolitan areas good or bad? It depends. Are you a winner or a loser? If it destroys the tattered remnants of our social fabric, and is bad for the massive numbers of "low skill" (average) workers (human beings), and leads to an epidemic of despair - suicide and drug abuse to bend the curhen it will end badly. The wretchedly excessive worship of wealth, at the price of social cohesion, will eventually destroy the rich, likely at the hands of the poor. We have the power to decide if we will continue to plunder the planet until we are all dead. Like wise, we have the power to decide if we will shrug our shoulders, moronically ignorant of the connection between the rise of "high skill prosperity", our addiction to technology, and the decay of our democracy. We could change the rules of how, and how much, people make for a living any time we want. We can choose to use, or not, any technology we invent. Unless we learn to cooperate with one another, to give everyone a place at the table, those left without a place, will destroy not only the table, but those who have chosen to impoverish them because they have a few less IQ points than others. Average people can destroy the tyranny of a few smart people, who would destroy the civil in civilization.
6
@riverrunner
"...bad for the massive number of...average...workers"
The bottom quartile received the largest pay increase of any quartile in 2018, the largest pay increase since 2005 and that same effect is still at work as pay increases have stayed higher than Obama's economy for all 35 months of the Trump economy.
1
This is the tyranny of trump’s America.
@Fred Reread the article: This is a trend that has been going on over four decades - through Clinton, Bush and Obama.
3
@Jack
"...trend has been going on over four decades..."
Nope.
From 1981 to 2000, the real median personal income increased 41%.
Only 3.8% from 2000 to 2016.
Now, it is back on the march with pay adjustments running higher than Obama's for all 35 months of Trump.
2
@John Huppenthal please see the chart in Fig 4, that 41% is for high earners only, do you really think that is relevant? https://www.epi.org/publication/charting-wage-stagnation/
1
Why do these articles never mention the importation of millions of low wage workers? The illegal importation might I add.
I noticed locally when Obama really started cracking down I saw college kids working landscaping in the summers, retired guys were starting to buy little trailers and mowing lawns. Fast food started hiring at three or four dollars over minimum, as did Walmart and Amazon.
The 10% loves inequality. Inequality cleans their houses and mows their lawns. Inequality supplies their beautiful labor intensive fruits and vegetables.
We have a shrinking population who knows how to wrench on a car or dig a ditch or build a house. Heck people don't even know how to care for their own kids. Yet an endless supply of cheap and illegal labor drives wages down. Remember, IQ does not equal education, people do vote in their best economic interest, and right now that means Trump. Or maybe Sanders.
3
Lost in this 'research' is the leadership in these cities, Democrats run all of these cities w/little to no regard for the working poor. They serve their political interests but that's where the caring stops.
3
The inequality gaps in “hub” cities are caused and widened by housing costs. In San Francisco, and New York and others, living in the city is unaffordable for a middle income individual or family.
Two people working at two jobs each might be able to pay for a shoebox flat. So people in “middle class” jobs must try to find shared accommodation with multiple others – the way people lived a century ago – or give up their city jobs and try to compete for others in smaller cities where jobs are already scarce.
Rampant real estate speculation is destroying cities and societies at the same pace as income inequality.
12
I'd like to see an inequality chart where the incomes are based on income received less taxes paid plus transfer payments received.
4
@John And adjusted for cost of living....
1
The the modern economy can be compared in some respects to the caste system in India.
The focus on the market alone herds people into higher and lower castes.
Why not change how we look at jobs. The essential jobs of caregiving, cleaning, cooking etc. could be given as much respect as a high tech position and be paid fair wages so as to be able to live at least modestly in the city. Cities cannot survive without these essential jobs. The many problems stem from how we look at these jobs and pay for them. It affects the quality of our schools, hospitals environments, day care, water and every part of life.
8
The inequality focus seems misplaced to me. I do not care if Taylor Swift and Lebron James make 100 million per year. They positively impact my life and, pay a ton of taxes to boot. I do care if people at the bottom do not have enough to live. I do not like sloppy research that only looks at income and ignores transfer payments. That information is needed to understand how to actually help those in need.
6
It would be interesting to see one more dimension on this chart in, perhaps indicated in dot color - inflation adjusted 10% income. This data is also important to see if "a rising tide lifts all boats", albeit unequally. Plus it also gives a better indication of relative attractiveness of a location. Even if some living expenses are higher in larger city with greater inequality, a higher 10% income might still be a greater attraction.
1
“Inequality has been rising nationally since the 1980s." Much of it has been a consequence of Reagan era tax-cuts. Tax-cuts for the affluent has become an article of faith in the Republican party. But this mantra has been only since 1981, preceded by California's proposition 13. During the Eisenhower administration the top rate was 91%. When JFK wanted to cut the rate to 65%, conservatives of both parties rebelled. Finally LBJ managed to cut it but the top rate came down only to 70%. Even that was opposed by Barry Goldwater, the arch conservative who apparently wanted to keep the rate at 91%.
There is a lot of misunderstanding about taxation. Far too many feel if the federal income taxes are cut ALL would pay less. Some 45% pay no federal income tax. If the federal income taxes are cut only the top 2-3% taxpayers would benefit to any significant extent. The rest would be hurt either directly or indirectly with cuts in social spending or from higher local taxes to compensate for cuts in federal subsidies.
The income taxes on the rich must go up. The top rate should at least be 50% but only on very high incomes, say on over $10million in taxable incomes for joint filers. There should be a couple of rates in between, say 40% on >$1M & 45% on >$5M. All incomes over $1M or so ought to be taxed at the wage income level.
5
Funny how NYC's new educational priorities seek to continue this wealth inequity by NOT concentrating on superior curriculums (with which NYC kids can compete & will succeed), but on so-called fair curriculums providing mediocre educations with which NYC kids will be unqualified & unable to compete for the future good jobs. Terrible injustice to NYC kids... PJS
10
Articles like these are specifically intended to be divisive and manipulative. There is important information within this data but they highlight the one data point because it gets attention. It leaves a ton of questions.
The comments jump to blaming something or somebody. I'm 58 and working hard. All of any savings I had went toward making sure my kids had a good education and a plan for what they wanted to do. A good public education followed by good public universities - now good jobs in a medium-sized city where that income goes a long way. That comes from hard work and good decisions, no because something or somebody "did" things to me. Choices.
9
What's kind of amusing about the explosion of tech jobs, tightly concentrated in large cities, is that the Internet was touted as abolishing "space" in favour of "cyberspace"; if you read Wired Magazine from the 90s, then by now we should have been distributed out into sylvan glades in the forests and gardens of America, tapping in to our jobs via Skype.
Well, we got Skype, and people still all want their employees in one office, and they want that office near the largest supply of university graduates, and so Amazon was not looking in Cedar Rapids or Gary or even Detroit for its new office, in spite of the rock-bottom real estate values.
There's not even a breath of claims about 5G abolishing "space"; 5G will be implemented by firms with offices in the largest coastal cities, of course.
So much for tech claims.
7
@roy brander Actually a bit of a shortcoming in the article. Virtual workspaces and video conference capabilities are enabling rebirths in smaller cities like your Charlestons and Santa Fes. Quality of life and cost of living combined with jobs un-tethered to a geographic location are stimulating growth in many communities.
4
I agree, we were all supposed to be teleworking on our dial-up modems. But a boy-king needs physical presence to give a “subordinate” the full LBJ treatment, or to harass the secretary pool.
1
The big picture that is reflected in this article was a shift in the economic strategy of the US in the 1980s. It was instantiated through a shift in tax policy, and economists proposing high salaries correlated to high performance. Piketty debunked the association and demonstrated the tax shift of public wealth to private wealth. But the strategy was adopted across party.
The leverage of wealth has concentrated power in the major nodes (cities) of the US economy, which leverage investment, and act as platforms for additional innovation.
The disconnected, and smaller nodes gain less or lose. It is false logic to conclude, without looking at the history, that inequality is invigorating and should be defended.
Concentrating power typically generates problems eventually: control more attractive than innovation, funds flow on whims of the powerful or get trapped, the economy hollows out as the middle collapses; resulting in fights among the powerful as a few get more wealthy and other elites begin to struggle
3
great graphic work. thanks!
Wrong metric, folks. If Binghamton lost most of its high-paying jobs, the ratio (90th percentile)/(10th percentile) certainly drops.
If all the upward-bound people and opportunities go to the big cities, the smaller places are closer to equally poor.
4
The biggest difference is the percentage of high-income people in thriving cities. Back in 1980 and until recently, there were rich neighborhoods in a city or a rich suburb or two, and alternatives existed to live in the thriving city or a a suburb close to the thriving city without being the high-income earner. Today thriving cities are being devoured by gentrification and middle and low income folks wind up living further from work, commuting longer and paying more for commuting. Grocery stores get harder to find locally and instead we're told there's plenty of places to buy food and those places are all restaurants! Public transit is mostly inadequate and when you're a middle/lower income earner, you don't always get paid for time you've missed because the train broke down. Its all a quality of life issue and for many Americans, it has gone down since 1980 and no one knows how to fix it.
11
@Mrs. Cat
I believe we can start fixing it by taxing the wealthy in a way that does not straddle the dying middle class with paying for infrastructure. Trump’s tax policy encourages bigger inequality. In Portland, OR, for example, there is a surge of wealthy real estate buyers wiping out affordable housing in favor of development for the rich. The Ritz Carlton is moving in. At the same time, the evening news tells of a retired couple, hardworking truck driver and Jantzen seamstress, living on $20,000 retirement income and where do you think they found housing? In their car. This is America today. I am ashamed of our greedy president and his followers!
4
Because economies have been increasingly focused on the financial industry and Wall St, it matters little if the average person doesn't have money to go shopping, pay rent or purchase a home. I am on strike against buying stuff that I don't need and I hope others will join me.
11
@Suzanne Wheat
You can bet, I am in. No more supporting the greed of Jeff Bezos and luxury hotels owned by the likes of Gordon Sondland!
If manufacturing jobs are no longer present in a certain area, why don't these folks see the writing on the wall and retrain/reimagine/move?
I don't understand the passivity.
2
@Britt Moving is far from low-cost. If you're struggling, how can you gather the required cash for first-last month's rent, etc.
More importantly, most rentals require the 2-3 most recent pay stubs, which you won't have for the new location and its higher income requirements.
Moving sounds easy. For those not already making large wages in an expensive region, it's far from it.
16
@Yvonne. I am not only suggesting moving, I am suggesting a reimagining of your life, ie., perhaps attending local community college for a more relevant occupation or trade. Every adult needs to try to figure out how best to support themselves.
I am flourishing in the very expensive Bay Area but I had to work very hard by buying run-down homes as a young, single woman and slowly selling and buying.
There were many 12-hr days but there was a goal in mind.
I think we take away agency of others when we constantly feel sorry for perfectly capable adults who might be experiencing some rough patches.
@Britt I understand what you are trying to say, but if you have kids and bills and family demands, it can be hard to move, let alone re-imagine yourself. Also, if you are barely making ends meet, how can you afford to go to school?
2
How protean were we to achieve what we've achieved? How protean must we become to survive, let alone thrive? Who will show us how it's done? Definitely not the one we now have.
2
Come on. 40+ years ago, wages for low skilled workers or those with useless college degrees, stopped growing in the U.S.
In the developing world though, wages for those workers began to rise. Worldwide, the standard of living has improved significantly.
In the U.S. the signs were there - manufacturing jobs moved out, unions eroded. No longer could you get $30/hr and retire with a decent pension for slapping bumpers on an assembly line all day. Skilled workers like plumbers, welders, craftsmen carpenters could still make (and still can) a good living, but that took effort to go from apprentice to journeyman to master.
Instead college was the answer. And college is a great discriminator. If one gets the right degree in business, sciences, engineering, health services, etc. But today we still have 25% of college students getting degrees that employers have no interest. 100,000+ a year graduate with Psychology degrees. Really? Whose fault is that? So they start off with big debts and the only jobs they can get don't pay much.
Yes there is inequality. There are many that do deserve compassion and taxpayer support. Those in our armed forces as well as public school teachers should be paid wages that prevent them from having to use food pantries. But many are where they are by choice. Their own or their parents. This column seems to absolve any personal responsibility.
16
Let me get this straight.
The guy down the street that studied hard and didn’t fail out of college during a bad semester (I did) because I went to school to have fun. He went on to be quite successful. It took me a bit to get going hence not making the best decisions along the way. Am I now somehow entitled to what he worked so hard for? I don’t think so and I’m really tired of this narrative progressives keep pushing. Yes there’s income inequality because curing cancer is more valuable then walking dogs.
21
Why do Liberals never mention the inequality that occurs when their favorite politicians become multimillionaires simply by being a continually re-elected low-paid politician?
7
@Dr John, isn’t Warren worth a small fortune? Funny I’ve never heard her mention that either. Guessing maybe she and Bernie gave it all back.
4
@Dr. John What? Surely you can do better than that if your aim is to blame only liberals for inequality. It is a societal problem.
11
This article shares the flaw of not including transfers to low wage earners when representing their "income". That is also overlooked by those who imagine that a "living wage" is $15/hr at that putting one in place will solve all social ills. Transfers to low income families income families in these successful, largely/entirely liberal governed, cities can add up to thousands of dollars a month. That income will not be replaced by a few dollars an hour.
3
Millions of Americans (and undocumented immigrants) deal with their needs for income by working the midnight shift, by working more than one job, and by cutting their expenses where possible.
These same hardworking people never think they are unequal, or that a CEO, surgeon or software developer owe them money.
2
Several leading Democratic Presidential candidates have pledged living wages for even those who refuse to work.
Is that suggested by the authors of this column?
3
Just look at Trump's 2017 tax cut, that gives 83% of the benefits to the 1%. Before that, inequality has been rising for decades. There hasn't been equality since the '60s. No wonder that there is divisiveness in our society.
Also, what is not said here, is that our federal legislators, ie Congress and the Senate, the bulk of which are already wealthy. And the rest become wealthy within a few years from campaign contributions.
This needs to be remediated, which will never happen. In fact things continue with the status quo!
6
@Quandry
See previous Upshot data.
https://www.nytimes.com/2019/04/14/business/economy/income-tax-cut.html
Is this about the vector of cities, or is this about the consequences of tax policies? If this is a measure of wealth, then it seems to me that roots of inequality are the same whether we are examining tony urban centers or gentrified rural retreats, and either way the long-term vectors that are being measured in this simple, perhaps simplistic graph match up very well with the fate of the top marginal income tax bracket, which began to decline in the 1960s but then fell off a cliff starting in the late 1970s. I would have preferred to see what that scatter graph would look like, and when the wealth disparities actually began, had the data reflected the same locations in the 1960s or 1950s as well. This seems to me merely an urban emphasis on a broader, rather well known trend.
4
How about a value added assessment? Imagine your community without trash collection; business without copywrite protections, our roads without repair, etc.
How long would we as a community survive without trash collection v. a CEO who is paid 3000 more?
7
Please explain how the very high wages and benefits of unions 25 years ago kept those manufacturing jobs in America.
1
But the unionized industrial jobs did provide high wage no skill jobs till the unions bankrupted these employers ( steel autos, etc). Our economy has now migrated to high skill and no skill jobs. This article like other half baked attempts points only toward taking away from the high skill workers rather than the more difficult task of training & educating the unskilled. This latter task is undermined by motivation of the folks needing the retraining in a much different social milieu.
8
Inequality? What a ridiculous focus. There is no inherent social benefit to each individual having an equal income. Further, if each individual was given equal resources it wouldn't stay that way. And why should it?
Get rid of your "inequality" focus, please.
11
@Nancy Sculerati MD "There is no inherent social benefit to each individual having an equal income".
Agreed. However, this does not address the root cause of the sense of unfairness in our present society, namely that the rise in income inequality is tightly coupled with a rise in inequality of *opportunity* (for a good education, health care, connections to influential individuals, etc.). It is the tilted playing field that is objectionable and makes playing the "game" of life unfair.
10
@Nancy Sculerati MD
Equality isn't the goal, less inequality is!
9
The super wealthy must be real comfortable being in such close proximity to a growing underclass. Louis XVI felt very safe with the Garde du Corps surrounding him, today's relentlessly greedy swine are content with a couple of bodyguards. Night night, sleep tight.
6
@E de Jong
Are suggesting certain actions against those who have more than others? What exactly are you suggesting?
1
Louis didn’t have a well paid modern military with drone strike capabilities. France would be a lot different today if he did.
His people were begging for bread; they would’ve loved $15/hr and fully stocked supermarkets.
1
@Remarque True, at least for those who would actually make $15/hr. However, your comment does not address the root cause of the sense of unfairness in our present society, namely that the rise in income inequality is tightly coupled with a rise in inequality of *opportunity* (for a good education, health care, connections to influential individuals, etc.). It is the tilted playing field that is objectionable and makes playing the "game" of life unfair.
7
Articles like this are important but almost all share the same fatal flaw. Here is the tell:
“Policies that tax high earners more to fund housing or education for the poor would redistribute some of the uneven gains of the modern economy.”
Indeed they would but they article ignores the degree to which they already are. This article needs to show consumption, including support payments and services for the poor, not wages, if it want to show the uneven gains. Means-tested entitlements have grown faster than wages. How are earnings redistributed now? Suppose the government gave handouts to allow everyone top-decile consumption? Would that be enough? Well, that would not change the facts presented in this article (some might argue it would worsen them), allowing the author to argue for more transfers.
7
@Art https://www.wsj.com/articles/the-truth-about-income-inequality-11572813786
Wealth is not static: inequality would be a problem if it was, but if wealth increases, and it results in less poverty and a better standard of living for everyone, inequality is not an issue. The concern should be eliminating poverty (which has dropped dramatically while inequality has increased), not fomenting envy because a few people have it more than X times better.
2
If you work hard at a "low level" but necessary job (cleaning, child care, cooking, phones at a call center) you should be able to earn enough to cover the basics of living (housing, healthcare, education, transportation, food, clothing). Bernie and Elizabeth say this. We have a right to a living wage. How to get there is the issue. Raising the minimum wage and taxing the rich are two ways to get there.
24
@Dennis Maher
How much is this living wage you are entitled to if you choose to live in NYC, Chicago or San Fran?
4
Unions came into existence because the workers were being exploited by industrialists. Over the years, Public unions have gained rediculous pay and benefits (even when compared to public workers in Europe) and Private unions have been destroyed by globalization and Reagan economics.
It’s time for us as a society to support the concept of a living wage again. This also means that we need to accept higher prices as consumers. Perhaps even some kind of tariffs on imports. Additionally, tax benefits for mega firms like Amazon and rich developers need to be structured so as to provide help for underdeveloped areas and not to give more value to the rich owners.
14
Most of these cities are, and have long been, governed by which party?
13
Maybe someone can explain why income inequality is a bad thing. No data has ever been presented that shows societal ill.
People with valuable skills get paid more. Obvious. Why does your plumber get paid more than your grass cutter? Same dynamic. I view this bromide like I do another bromide- diversity makes us stronger. Evidence please?
6
@bill walker The reason is that the plumber is still valuable but allowed to be dismissed so that wages remain stagnant while cost of living due to inflation rises making the plumber less and less paid. This is even more true for lower level workers who still have value but whose jobs have been remade into what is now deemed menial, for instance customer service workers now when inflation and cost of living are taken into account paid less than what used to be minimum wage.
On the other hand, highly paid workers today are not really worth their compensation that has been slid from the above mentioned workers for their relative productivity. For instance, C-suite and upper management now earn 300 times more than they earned 40 years ago.
This has allowed the concentration of wealth into the hands of a very few who have not performed the value of that wealth to continue to further concentrate wealth into fewer and fewer hands.
The result is less competition by corporations, corruption, and for the bottom fifth of all workers, death.
Even the better paid need to call when their phone is busted, they need their medications, etc. They need to pay for the service they get from others that right now, they're not.
15
@bill walker One might ask, what's so bad about an increase in body temperature? Well, nothing in and of itself, until you consider the wider context. An increase in body temperature is a symptom that can cause the various systems in the body to fail, and *that* is what is bad. By the same token, a rise in income inequality in itself is not bad, but is a symptom that has ill effects on the "body" of society. In particular I'm thinking of opportunity (for good education, health care, connections to influential individuals, etc.). At some point the gap in opportunities becomes so large that life becomes hopeless for those in the lower tier, who are (rightly) angered by the unfairness of their situation.
8
@bill walker Suggest you read the times article about the 100,000 homeless students attending NYC public schools:
https://www.nytimes.com/2017/08/15/nyregion/report-says-elementary-students-homeless-new-york.html
When the inequality is so skewed that significant portions of Americans are homeless, without healthcare, and living in poverty, these are reasons income inequality is "a bad thing", but again - the bottom should be lifted. I don't give a hoot what the top makes as long as they contribute to lifting the bottom...
9
It's not that some animals are more equal than others; it's HOW MUCH MORE equal they are. This, as noted, is a direct expression of the schism in our own values.
1
Organic humans are a product of nature and nature uses evolution to find the best configurations of biochemicals that fit the ever changing universe. Nature annihilates species that stagnate (stop evolving). Forcing equality of any kind violates evolution and as such will trigger the annihilation of the human species. Humans will improve their chances of surviving by cooperating with nature rather than fighting against nature. Inequality is natural!
2
@Sage View Human inequality is not a natural process. It is a socio-political structure maintained by those who are gaming the system. Tell me again why Amazon paid zero Federal taxes last year. Is this a situation which is a natural evolutionary condition?
10
The mechanism nature uses to evolve is natural selection, but close enough. It’s not just biological individuals that evolve, but systems, cultures, etc. While I don’t agree with this article much, things in this country do have to change. You put all the pressure on humans to adapt or die and ignore that the same argument could be made for societies. Things that don’t evolve or adapt fast enough to changing conditions will indeed perish. Or at least look pretty ill-adapted and funky. It’s worth discussing our shared future, rather than just leaving it to gladiatorial combat.
1
It's not a new reality that incomes rise when there is demand for new, valuable skills to meet changing economic dynamics. And it is not new to see social disruption when the inevitable changes occur. What is different is the culture war about identity, lifestyle, race and gender mixed into the political/economic conversations. Additionally, we have the internet driven cacophony of voices, criticisms, ideas, opinions and occasionally facts. Thus there is an unprecedented stratification and division in the country that threatens traditional institutions and exacerbates inequality and social disruption. And then there are the scoundrel politicians like Trump, Mitch McConnell, Lindsey Graham and Jim Jordan -- opportunists interested only in power, who line their pockets and serve only themselves and their outsized egos. These are troubling times.
5
@HPower
The first half of your post is accurate. The second a matter of opinion.
4
The Democrat run States and cities have the greatest income disparities yet proclaim they are the better choice for the people who suffer most from those disparities .... and those people keep electing the same leaders.
Interesting. That sociological phenomenon might be worth understanding better.
8
@Si Seulement Voltaire Or maybe it is just that the majority of people in more densely populated cities (yes, the ones with greater inequality) choose to elect politicians who will work to make life better and more fair for those at the bottom. What vision for a better life does the GOP offer for someone not in the higher levels of pay and power?
12
Welcome to capitalism, baby!
4
You give everyone a phone with internet/google access and expect life to go on as usual, not. Humans are seeing how other people live, eat, and work, and are realizing that there truly is a better existence out yonder. But if their lives were better where they are at why would they ever want to leave, this is what the internet has brought us a time of unrest.
4
The article does not even mention the word "immigration." All other things being equal, adding more people to the labor supply will depress wages and increase inequality. Adding more desperate people for whom even $5 an hour is significant has meant a race to the bottom for American workers. This is as true of IT as it is about manufacturing, meat-packing and services.
The only jobs that are paying well are ones that cannot be outsourced to Indian or Chinese workers. Or, ones that have a lock on the employment market (like the American Medical Association). Everyone else is suffering -- most especially the so-called high-tech high-skill sector. In IT, if you are not a US citizen, it is your biggest selling point.
13
As the world becomes more complex, the more highly educated and innovative people will continue to amass an increasingly larger piece of the income pie. Because a large and growing percentage of the population will not be able to compete, some form of income/wealth distribution is necessary to prevent a return to feudalism where the peasants slave away to satisfy the appetitive desires of the economic elites.
9
The biggest metropolitan areas are also all run by Democrats. Once again proving that while they talk about equality, the Democrats drive division and inequality with their failed policies. When the rubber hits the road, liberals policies are bad for everyone except the wealthy.
13
@JGaltTX
That isn't what the data shows. The data shows strong economic growth for liberal cities that mostly goes to the rich. In conservative controlled areas no one is getting rich poverty is shared by everyone.
10
@JGaltTX -You jumped to an arbitrary conclusion. Reread the article.
3
@JGaltTX - Just read this in another article:"blue areas getting more productive, richer and better educate." Plus, people in blue states are living longer. Time to rethink those horrible "lib policies?"
2
Surprise! Surprise! The GOP ‘enrich the rich’ “Trickledown” economy initiated by Reagan has not trickled down to the middle class and the poor.
6
@Wordy
The GOP doesn't run the urban areas this study was about. Maybe the ‘enrich the rich’ “Trickledown” economy can be attributed to Democrats?
6
Since when did city councils gain the ability to set federal tax policy and create fee trade agreements? The decrease in manufacturing and the union jobs that went along with it are at the center of the inequality issue set forth in this article. Those declines have little to nothing to do with municipal governance and a heck of a lot more to do with 40 years of federal policies designed to further line the pockets of the already wealthy at the expense of the middle class.
9
As Elizabeth Warren says, "Break them up."
4
So, though it would not solve inequality, bringing the bottom up is a worthwhile goal.
6
Striking article for omitting the obvious:
Federal tax policy redistributing in favor of the wealthy since 1980 and heartless conservative policies stigmatizing and spitting on the poor and middle class.
From Reagan to Trump and here we are.
What else do you need to know - and why be surprised?
16
Yeah, sane people would say that you should expend extra social resources to lift the bottom percentiles so that inequality becomes less. This is the idea behind a welfare state, and indeed humanity and kindness. The extra resources should come from those fortunate enough to be members of the priviledged percentiles. The broad shoulders carry the biggest burdens. This is what the Scandinavian model is all about. One of the great equalizers is education. The Republican party, starting with Ronald Reagan has systematically gutted programs that have made higher education affordable for the broad middle class, perhaps intentionally. Simultaneously, what has become of primary and secondary public education in the States? Just ask the teachers that have to use their own salaries to buy supplies. Uneducated people are at a distinct disadvantage in a knowledge economy. In addition, many poorly educated people that have no access and/or desire to get their news from reputable sources either on the left or right are easily duped. This works to the advantages of all demagogues, on the right or left, though the plurality is clearly on the right. One could posit the somewhat paranoid theory that the dumming down of the American populace is exactly what the Koch brothers & co. want. Feed the masses fairy tale stories of religion, lies often enough to make them believe them and presto, you have a Donald Trump idiocracy...
9
@Kenneth
Realpolitik remains the essence of powerful economies. Their leaders understand that dividing and conquering their domestic opponents is their first priority. Identifying and scapegoating an internal population (by controlling media and information) is almost always the favored means. Historically, it appears to be effective. Thus far.
3
@Kenneth
you are exactly right.
Over the past few decades we've destroyed public education thru the simple process of cutting taxes on the rich : Taxes pay for public education. Public education creates more professionals. Simple, no?
But that's not enough; Trump wants to cut medicare. I guess all this hi tech industry doesn't even need as many uneducated, unskilled workers as we have, so let them die off due to lack of medical attention.
Sounds like mideavel Europe.
But at least our serfs can watch 'the apprentice' on tv, eating deadly fast food slumped in a couch which they can't pay off ...
3
The US has free k-12 education and we make student loans for college incredibly easy to get. The problem may lie with the schools, yet poor districts get more money per student than rich ones. The facts don’t lend themselves to common progressive narratives.
1
My biggest problem is that this high income inequality in metro areas leads to enormous price differences, that have zero link with cost of goods, but are purely based on willingness-to-pay by locals, making it impossible for low-income people to live in cities, while they travel an hour or two a day to get to the center and do the jobs, local don't want to do.
They should link minimum wage to some locally defined price index...
2
@Florian
Better functioning countries do not have a "national" minimum wage for exactly those reasons.
In most EU countries, the national minimum wage keeps wages downs to close to the poverty level.
In Norway, Denmark, Sweden, Switzerland, Austria minimum wages are determined by collective agreements by sector because the many unions work with (not against) business and government to set rules. Reasoned cooperation and negotiations work best.
National minimum wages have have one major counterproductive effect: they allow employers to avoid having to pay more for better employees or relative to cost of living.
2
@Florian Some cities have adopted their own minimum wage laws, Seattle, San Francisco, Oakland are three that I know of.
Whether a city has the legal right to do this depends on the laws of the state. It would be interesting to look at which states permit this.
I rather question your opening premise. You're claiming there's no low price competition in metro areas. That a retail business couldn't increase its sales volume with lower prices. That's really hard to believe.
Consider another explanation: it's more expensive to operate a retail business in a high cost area. Rent, labor costs, taxes, insurance are all higher. So if one tries to increase market share with lower prices one may end up losing money. I've been there, I've done that.
3
@Florian
It will be hard to make the minimum wage $35 to $50/hr. EITC and other supports, or a Yang like minimum income are more effective options.
In 1980, Reagan and Thatcher began selling off public sector entities to the private sector : railroads, postal service etc.These private investors were protected on the down side by the federal government. On the up side, they cashed in profits. This began the sell off of our Social Democracy: things that we all need. Remember Thatcher saying that there was no such thing as society- only individual families. We can learn the value of a Social Democracy from Emperor penguins who, I’m minus 40 F weather huddle together and rotate to the middle: they receive warmth and give warmth to the flock.Thatcher and Reagan would advise wealthy penguins to buy expensive coats.
7
Working class wages should provide people with food, water, electricity, affordable housing and affordable health care...with some savings. For more than that mobility is important. Living wage shouldn't be about upper class living with cars, pools, vacations, etc. Americans have forgotten what is modest appropriate living wage. There is depravation on one side and demand for non essentials on the other.
12
In a Wall Street Journal opinion piece today credible perspective was offered opining that the direct and indirect costs of healthcare in our current system are arguably the largest driver of disparity of disposable income.
The oft repeated cliche “ To those given much...much is expected “ is operational.
A return to the tradition of community funded and staffed voluntary organizations such as the old Jane Adams Hull House model is a social concept worth re visiting.
2
Working class wages should provide people with food, water, electricity, affordable housing and affordable health care...with some savings. For more than that mobility is important. Living wage shouldn't be about upper class living with cars, pools, vacations, etc. Americans have forgotten what is modest appropriate living wage. There is depravation on one side and demand for non essentials on the other.
3
So the highest income inequality is in places run by Democrats, but people should trust the Democrats to reduce inequality. Interesting.
15
So the rural south is crippled by opioid addiction, infrastructure literally crumbling, and lack of education. Ignorance and hopelessness runs amok. Pockets of the country are neglected and forgotten. I know this first hand. It’s where I was born, raised and spent the first part of my adult life. I didn’t realize how tragic it truly was until I moved away and came home and noticed the drastic contrast. Yet they still widely elect republican politicians that literally punch them in face. Interesting.
9
@Michael Livingston’s And the lowest overall economic level is in places run by Republicans but people should trust Republicans to run the economy.
See how easy you made that for me?
Now how's about we have an actual conversation about the problems our country faces?
I for one don't want to increase income equality by lowering incomes. Is there another way?
The article mentions the role that anti-trust laws had in ensuring that there were regional sized companies that didn't all have headquarters in a handful of very big cities.
Would you support doing something like that? My own city has established its own minimum wage which is currently higher than the state minimum wage. Would you support that in certain cities?
Do you have any ideas of your own?
7
@J
Of course you would interpret this story 'your' way.
I refer you to this post by Chris:
"The war on labor unions by big business and conservatives, the $7.25 minimum wage, the decline of public funding for higher ed, and the lack of Medicare for all -- all reasons for the 99 percent. And the 1 percent got huge tax breaks, and more and more of the fruits of everyone else's labor. That's pretty much it."
2
The article is incorrect to say that "automation, globalization and the decline of manufacturing have decimated well paying jobs that once required no more than a high school diploma"
What those things did was to enable selfish and greedy interests to decimate those jobs.
It was not inevitable.
9
@bob Well I don't know about that. Trying to maintain a big economic gap between different countries when there's no real basis for it may well be impossible.
Once upon a time China couldn't make decent steel. Now they can. That's just one example. How can we maintain a much higher standard of living than most of the world?
American corporations have been avidly seeking foreign markets for well over a century. Some part of our prosperity comes from exporting to those markets. But now many of those countries can make goods that Americans want. We can keep those goods out with tariffs but naturally other countries will retaliate.
Then what?
Seems to me that the only truly viable long-term solution is to bring everybody up to a decent economic level. But that will be a very big task indeed.
2
In other words, the big cities in states governed by Democrats are the most unequal.
So why does anyone think that electing Democrats is going to somehow reduce inequality?
13
@Paul
Typical; blur & simplify information in order to get the 'result' you want.
I refer you to this post by Chris:
"The war on labor unions by big business and conservatives, the $7.25 minimum wage, the decline of public funding for higher ed, and the lack of Medicare for all -- all reasons for the 99 percent. And the 1 percent got huge tax breaks, and more and more of the fruits of everyone else's labor. That's pretty much it."
1
@Paul Oh boy! Just what we need, partisanship! Did you actually fail to notice the flip side? The Republican governed areas have lower overall economic levels. Should that be our goal?
Perhaps national policies have something to do with inequality. The article mentions lack of enforcement of anti-trust laws.
Other than having a lower overall standard of living what are your suggestions?
2
Capitalism, followed through to its theoretical end point, is the movement of wealth from the many to the few. Our government, as I understand it, is meant to set appropriate policies that work to mitigate the harshest of these inclinations.
Tracking changes around inequality provides a way for us to understand the impact these policies are having on Americans up and down the economic spectrum. While this data doesn't show us anything about particular policies, it does clue us in on the fact that something is moving in a disastrous direction.
Now that the tax policies of the 1980s have fully gestated, it might be prudent to consider how we alter course in a way that, to quote the Constitution's preamble: "...establish(es) Justice, insure(es) domestic Tranquility, provide(s) for the common defense, promote(s) the general Welfare, and secure(s) the Blessings of Liberty to ourselves and our Posterity..."
This is not about being a lawyer or a bus driver, a teacher or a doctor. We all understand that this world values professions differently. That's a discussion for another time. This is about bringing into better alignment policies that help us thrive, not as individuals, but as nation.
19
There might also be a correlation between wage inequalities and the swift advancements in technology along with the advantages it provides those most able to recognize and exploit unprecedented opportunities.
Whether it is in scientific applications, legal case preparation, research in the humanities, etc., those most able to relate their work to these almost-magical technological advancements usually benefit in ways seldom seen in our history. For example, to those with sufficient skills and available technology, a visit to the library to turn pages in an encyclopedia can be a thing of the past or a grudging task that befalls the “have-nots.”
If we don’t meaningfully attach this wonder-inspiring technology to the education of ALL children in our country, the socioeconomic gaps will only widen—to our national shame.
4
Inequality is the subject of the Economist this week and it takes a closer look for those who are interested in a more in depth analysis. In a nutshell, there is a huge caveat with the science of determining income inequality, the big brains of Economics sharing very little consensus (mobility in the top percentile, how to count subsidized health care, etc.). It’s very complex and like much of Economics, in my opinion, is highly theoretical and (sorry) voodoo science at times. One thing is for sure, Piketty’s (the leftist French economist that brought this topic front and center) conclusions have had an oversized impact for those looking to make this a part of their political agenda in the US.
3
The bigger problem is not wage inequality. It is that passive income is taxed at much more favorable rates than earned income.
Capital gains, dividends, and other passive income should be taxed at the same rates as earned income from a job. (And yes, I own stocks, bonds, and mutual funds.)
19
@MidtownATL ALL income should be taxed equally, including the free stuff.
The article makes a profound point that is apparently lost on progressives and socialists: the focus on income inequality should really be on income upward mobility. The wealthy professionals in Fairfield, CT can support a broad service economy of builders, electricians, plumbers, decorators, restaurateurs, landscapers, mechanics.... Can the astute Elizabeth Warren figure this out?
2
@Joel Sanders
Of course you would interpret this story 'your' way.
I refer you to this post by Chris:
"The war on labor unions by big business and conservatives, the $7.25 minimum wage, the decline of public funding for higher ed, and the lack of Medicare for all -- all reasons for the 99 percent. And the 1 percent got huge tax breaks, and more and more of the fruits of everyone else's labor. That's pretty much it."
1
So basically what you’re saying is a person would make more money if they possessed specialized knowledge in a field or specialty and could find employment in that field or if they had a desirable skill or physical skill in a trade of some kind that someone would be willing to pay them for? Why can’t I be a janitor and make the same salary as a cardio thoracic surgeon? Equality is what’s most important no? Amazing.
9
@Bahn Mi A janitor does not need 15 years of expensive training. If you did that, you would have no surgeons..
2
@claude3098 exactly my point. I was being sarcastic. If everyone in the US had free healthcare then doctors would all be paid less. You would have no “specialists” and no incentive to become a doctor and quality of healthcare would suffer.
I often say that my lifelong attempt to make the world a better, fairer place was shaped by growing up in Bridgeport. These charts show me why I was so aware of class status and inequality early in life. What's sad is that the world has become more like Fairfield County, not less, since I was a kid there in the 1980s.
6
Let me just suggest that an engineer has gone through high school and at least 4 grueling years of college. Most likely, the most successful engineers have also completed post graduate work and have incurred substantial debt in attaining their degrees. A line cook, while a difficult and taxing job, just does not need the academic background and training that an engineer does. While I may enjoy a delicious and good meal, I don’t want a line cook determining the aerodynamics of the plane that I am flying. There is no equivalence between the two professions. We, as a society, value the aerodynamicist and the astronaut more and thus, they get paid more. That one chooses to be an engineer or a line cook is up to them. Choices have consequences, one of which is how much income you will make. I wouldn’t call it inequity. I would call it your choice to make your life whatever you want it to be.
23
@Retired Hard Worker Sorry, the left does not see it that way. There should be very little difference between a line cook should and an engineer. We will hold hands and sing songs together too.
6
@Retired Hard Worker This may be true in a more equitable society. Unfortunately many people do not have access to the same opportunities because of systemic racism and other forms of oppression. So the choice to become a chef or an engineer isn't really a choice for many.
11
@Retired Hard Worker Gee, I didn't realize that teachers were so ill valued. Most of them work a second job.
A healthy society shouldn't require everyone to be an engineer to live comfortably and raise children. And now college has gotten to out of reach for the average person that the debt load incurred for a college degree will likely burden students with lifetime debt with high interest rates. And hope you don't get sick & accumulate even more debt with the cost of premiums & deductibles.
There are things we can do to make life affordable for people again.
7
The war on labor unions by big business and conservatives, the $7.25 minimum wage, the decline of public funding for higher ed, and the lack of Medicare for all -- all reasons for the 99 percent. And the 1 percent got huge tax breaks, and more and more of the fruits of everyone else's labor. That's pretty much it.
12
@Chris ,
Yes. Like Warren Buffet said, "we are waging class warfare and we are winning". No surprise given the resources of the wealthy.
But after a certain level, I don't see the motivation for
actively taking control of the system, when you've
already got more money than you can possibly spend.
Why "wage class warfare", of all activities, when you could have an excellent mai tai by the pool? After all, it may become self-limiting when taken to the point that the torches and pitchforks come out.
Why are some/many super-rich people so passionate
about further gaming the system, and then lying/pretending that they are not - e.g. "trickle-down theory", middle class "tax cut and jobs act", etc... -
and numerous other obviously malarky cover stories
that get promulgated in faux earnest (aka the old
college try?)
They basically lie like Putin, knowing that, when called on an obvious lie, they can just lie again and deny it,
end of story.
The article claims that "within the most prosperous regions, inequality is widening to new extremes" and suggests that the cities where growth was highest are the ones where equality is growing the most. This could be, but it is not what the graphic shows, which is how city size correlated then and now with a measure of income inequality. And yes, maybe it's the big cities that have grown the most (as your anecdote about Binghamton vs NYC suggests), but again, the plot does not show this.
What you need to plot to test your idea is growth in inequality on the y-axis vs. growth on the x-axis. That would show whether the cities that grew the fastest became the most unequal.
7
@James Ferrell ,
Yeah the graph isn't good at all. I couldn't get anything from it visually.
I would have liked to have seen how correlated are inequality and size of city (y axis), plotted against year (x-axis). That would show, or not, the hypothesis that big cities have gotten more unequal than their smaller counterparts.
1
Note that MSP ( Minneapolis- St Paul) went from 3.8 to 1... to... 5 to 1. So (in a relative sense) its bucking this trend.
That could be explained thus: MSP was never a heavy manufacturing center, and always more of a knowledge center. Yet it does show that the huge shifts in inequality are not inevitable.
Also the trend line toward big cities is fairly weak. Most cities are clustered together.
2
"Should New Yorkers be O.K. with growing inequality in New York if it’s driven by rising wages for high-skilled workers, and not falling wages for low-skilled ones?"
Are you kidding? Is this really a question to even be considered? How many people under 30 can afford to buy a house in the New York area or San Fransisco?
In the period ending with the 1980 baseline used in this article, the US had already declined from the most prosperous time in our history, when real wage inequality was at its lowest - the 50s and 60s.
Inequality hurts the overall economy, because so few people can afford what we once considered basic obtainables; houses, cars, vacations and the luxury of a family member who didn't have to work outside the home. The concentration of capital is a trend that has a 400-year history, as researched by Dr. Piketty.
16
This is the main reason a centrist Democrat is not appealing. Would be another decade of negligible change instead of the SYSTEMIC change needed to combat this absurd inequality. The right candidate will make this case to the people. Instead of scaring voters off because they're falsely called a socialist, they will articulate this point to appeal to the disenfranchised voters that choose Trump because they're sick of the status quo (rich people helping rich people get richer).
12
If this trend continues, then revolution is inevitable. Throw the effects of global warming into the mix, and the future looks bleak enough to make Dickens' London or Paris look quaint by comparison.
This whole thing is fixable. We had better start now......before mansions are nothing more than kindling. History is full of fallen empires. Have we learned nothing?
20
@Wiley Cousins I am picturing the situation more like the "Hunger Games" - the American masses fighting over scraps while at the same time entertaining the top 1%. In a way, we already have that right now, just not as extreme yet.
2
@Wiley Cousins - Anyone that studies history can see that America is on the back side of its Empire days. Two hundred Spaniards on horses overthrew 1 million Incas. Why? Because when the Spaniards first showed up they found that the Incas were already divided against each other just as we are today.
Republicans say they would rather be Russian communists than liberals. And liberals don't speak so kindly of conservatives. It won't take 200 horsemen to destroy us, we are doing that all on our own.
When was the last time the U.S. won a war. Grenada? Some mighty empire. More and more our major cities are looking like New Dehli did 70 years ago. And we can't count on Mother Theresa to help us much at this point.
1
Are the commenters so blind and naive to talk about getting the training, or skills that make yourself so valuable that you will join the 1%. Few have the intellect of a computer engineer, a systems analyst, thoracic surgeon and on and on. In years past all of those earned a far higher than average wage and the very best of them became the top earners in those and many other highly paid professions. But, these were and are highly intelligent people, who were compensated accordingly because they were able to use their innate intellect and go into fields that even at entry paid well above average. But, we created a social contract, recognizing that the luck of the DNA draw, does not mean that the rest of the populace must go without.
The depression taught us, that anyone could fall from economic grace and thank you, FDR and Frances Perkins for Social Security, thank you, Samuel Gompers, John L. Lewis, A. Philip Randolph, and the rest, who taught us that everyone deserves to live a healthy, prosperous life. That the super rich could be super rich, but that the man or woman cleaning their toilets could live in a decent home, have a good education for themselves and their children, could appreciate the arts, not have to beg for healthcare or handouts. LBJ, (Vietnam, no withstanding) tried to build on FDR's policies, with the "Great Society."
But 1980 brought us Ronald Reagan and with a C.B. DeMille salesmanship and DEVILISH smile brought us to where we are now.
52
@eugene1670
"Few have the intellect of a computer engineer, a systems analyst, thoracic surgeon and on and on."
Nature or nurture? Do few have the innate intellect, or do few have parents pushing for academic excellence from their children and their schools? Are too many too busy clamoring for lower taxes to see the need to invest in the education of our youth? Does pushing back against demanding standards in schools leave too little time to advocate for our students to be prepared for a world full of automation?
I've seen children in k-5 schools held back by parents afraid of homework they didn't understand and a teacher that argued that 1/2 + 1/2 = 2/4 (arguing against students that thought they knew better until a teacher yelled that they were wrong).
Is the issue raw intellect, or is it culture? Are we asking for too much, or too little?
...Andrew
7
@A. Gideon
It's both. There are many very smart children born to poor families who will never have the opportunity for an education that matches their potential. It's also true that by definition not everyone can have above average intelligence. When you also consider learning disabilities, it should be immediately apparent that even some relatively well-off kids aren't gonna make it through med school.
4
If the graph was intended to show increasing inequality, it fails spectacularly. The graph seems to show more wealth being generated across nearly all of the data points. Of course, presenting no labels on the xy axis doesn’t help either.
Somebody needs a Stats 101 course.
8
@Reality Check it's a graph of ratios of 90th to 10th percentile wages, how many multiples of the 10th percentile wage the 90th is. What it shows is widening gap, often a profoundly widening gap.
In fact, that could happen if 10th percentile wages shrank precipitously while 90th percentile wages remained steady. It therefore tells you nothing at all about wealth generation.
That concludes this reality check.
5
@KM
"In fact, that could happen if 10th percentile wages shrank precipitously while 90th percentile wages remained steady. "
It could also happen if all incomes were expanding, but with those at the top expanding more quickly. Is that necessarily a bad thing? I imagine we'd need also to consider factors like buying power, or perhaps less direct measures like health, to know.
...Andrew
2
@KM
Ratios of incomes between two extreme populations do not necessarily correlate to the obviously nebulous (perhaps intentional) term “income inequality”. This “statistic” can easily be debunked just like Piketty’s claims.
What should really be addressed is the unceasing march towards more and more prosperity and wealth with each subsequent generation. This is the overarching argument about the benefits of Western Civilization that has spread throughout the globe. An argument supporting the nebulous PC lexicon of “income inequality” pales in comparison.
1
In other news, water is wet.
"Knowledge work" is concentrated in the cites, mostly coastal ones, near universities that churn out fresh faced knowledge workers, and where the knowledge workers want to live. There are less of these jobs than there were in the old manufacturing based glory days but there is still high demand that pushes up wages and perks. Bio tech, tech tech, finance, heath care, education... Meanwhile, wages have not moved much in no skill service industries. Mid to high skill trade work still pays very well for those willing to work with their hands and their brains.
11
@Daphne While there really is no so such thing as a no-skill job, your point is still accurate. But the reason low-skill jobs are paid poorly is a result of supply and demand being out of kilter, with uncontrolled immigration greatly increasing the supply of low-skill labor. The rich want their lawns mowed and would be willing to pay a good deal more, if low-skill labor were not in over-supply.
Speaking as a lawyer, I believe there is major inequality within the profession itself, which is not a monolith.
At the top you have some elite, name-brand law firms, but their culture tends to be so oppressive that even today, only a small minority of women survive, much less thrive. Then you have some plaintiffs' trial lawyers (overwhelmingly male) whose educational background would be looked down upon by the elite firms, but who can hit some very big jackpots. And then you have lawyers who work in-house in the financial, real-estate, energy or tech sectors, which can be very lucrative.
Everybody else -- the lawyers working for various levels of government, or slogging through hellish family-dispute cases, or defending DWIs or drug or juvenile offenses, or working for insurance companies defending tort cases, or doing residential closings, or drafting basic estate plans -- are mostly making what is now barely a middle-class living. The kind of living where you worry whether you can pay your student loans and still take an occasional vacation and save for retirement and send your kids to college.
I have no statistics on what percentage of lawyers fall into the latter category, but my guesstimate is at least 80%.
20
When we encourage undocumented immigrants to enter our country and to live in our large cities, we are driving down wages for lower skilled Americans, and thus creating these inequalities.
18
@Dr. John ,
1) Everybody wants cheap fruit.
2) Nobody wants to pick fruit for the wages that make it cheap.
3) Everybody ignores that undocumented workers are used to allow 1) and 2) to co-exist
4) Republicans make a big show about immigration but it's all show, what with 3) being a given. The show is designed to appeal to white fear, in order to get elected.
5) The show has real consequences of human suffering, family separation etc...
1
@togldeblox
I take it you use fruit metaphorically? Everyone want everything to be cheap. Even you I venture.
The key to reducing inequality is not some magic untested formula, it is a political decision: a higher minimum
wage and fiscal redistribution where you supplement income to a certain extent for low income people, as well as providing a monthly stipend over and above food stamps to people who no longer qualify for unemployment insurance and cannot collect disability. Yes, a few of those will never seek work but it is a small price to pay for helping the more 'deserving' other ones.
1
@winteca
That would be the Civilized thing to do but of course we have 2 parties to contend with.
With link.
In other news, water is wet.
"Knowledge work" is concentrated in the cites, mostly coastal ones, near universities that churn out fresh faced knowledge workers, and where the knowledge workers want to live. There are less of these jobs than there were in the old manufacturing based glory days but there is still high demand that pushes up wages and perks. Bio tech, tech tech, finance, heath care, education...
https://www.builtinboston.com/companies/best-paying-companies-boston-2019
Meanwhile, wages have not moved much in no skill service industries. Mid to high skill trade work still pays very well for those willing to work with their hands and their brains.
2
@Daphne Nor have wages in the sector that produces knowledge producers, the state universities. State College PA has a very low multiplier.
@Daphne Define knowledge work. State College, PA, has one of the lowest multiples, despite being home to a significant research university.
One thing that doesn't help the disparity of income that we had a cup of coffee over a year or more ago then abandoned, is how local corporations will play one community against another for the bigger tax break, and that's been going of for decades. Said community depended for revenue then suddenly finds itself strapped to pay for local services. Its doubtful the business extorting their break wouldn't or couldn't hire otherwise. Its more likely that bonuses and shareholder equity simply increased. The suburb I live in floated another huge property tax levy after The Cleveland Clinic was given a tax exemption ….RETROACTIVE. Now we owe it 2 Million Dollars. Most probably leading to the property tax levy. Retroactive? The Cleveland Clinic must be suffering what with all the artwork on its walls and providing for the Cavliers practice facility. Wealth disparity? Because our representation has been seduced out of their public service by any of who know what strategy. That's how the rich get richer. See "The Vulture Chart."
5
@Ratza Fratza
did I say "disparity of income" I meant wealth of course. Can't edit??
This article analytical basis fails because the marginal rate of income taxation was much higher in 1980 than it is now. Relatively low-level professionals faced marginal tax rates of 50% while earning less than $49,000.00 in 1982 dollars. Consequently firms found incentives in-kind were more effective motivating employees than dollars because, at the highest marginal rate for every dollar given to a high-income workers they received after tax only 23 cents. This explains: stock options and purchases at less than market prices, company expense accounts, lucrative pensions, company cars, paid vacations, and a variety of non-cash benefits. Similarly employees had greater incentives to spend less time earning taxable income and more time on non-taxable activities. With the 1980s tax changes payments in cash became more rewarding and less troublesome than payments in kind, and employees responded to higher after tax incomes.
The same thing happened in the 1920s when the highest marginal rate declined from 77% in 1920 to 25% in 1927. The IRS data are fallacious because they only measure TAXABLE income. Unsophisticated economists (Pikety) use IRS data to show a skewing of income in favor of the rich in the 20s. These data are artifacts of the tax system and are of no use in measuring inequality over time. IRS data cannot be used as prima facie evidence of income being distributed more (less) unequally over time without consideration of the changing tax laws and compliance.
8
@qazmun No, it doesn't fail. The issue is the gap in wages, not whether or not it was a conscious government policy to increase the split.
2
I live in a medium-sized town in a rural area and I think it’s great. Real estate is affordable, the schools are good, there is no traffic and little crime. And most people I encounter are friendly & kind. Combining the affordable, low-stress, pleasant lifestyle with the increasing ability of people to work remotely makes me wonder if the demographic tide may be starting to shift back in the direction of rural America.
17
@Charles Woods
You'll have to increase the population from just yourself in that demographic for it to be valid.
The only employees who can work remotely are those whose work for the most part involves computer processing.
These aren’t the individuals under consideration here.
While I have not yet decided on my vote for our next president, this article did echo a primary theme that Bernie Sanders has set as the foundation of his public service for many years. I think it may be time to listen to his message more closely.
11
The Republican abandonment of the American People in favor of the rich and corporations is absolutely devastating to the country.
The rich are being absolved of any responsibility to the country and being elevated to the ruling class.
The level of insecurity among the American People is growing all of the time, a trend made popular by Reagan and supported by Republicans ever since.
We are in a new gilded age for the 1% while infrastructure crumbles and more Americans struggle to get by.
20
@Grove
Has anyone considered that the reason for Republicans' existence is for the next time they can get close to our treasury to launder tax breaks for the Boomerang Effect it has on campaign donations from fat cats? How many times now?? Notice republicans are having a hard time winning Presidential Elections by other than SCOTUS and Electoral College and not popular vote? The List some of us are aware of they resort to that only includes gerrymandering. Lets also debunk the Supply Side scheme for its strategy of funneling to investing w/o tending to Demand first; don't hold your breath for any raises. Targeting Demand side tax breaks would be the honest way to lubricate the Economy or so say Nobel Prize winning economists. It would simply be a Natural Evolution that republicans' extinction would come about as they're already obsolete, like the tails we used to have.
1
I graduated law school (along with my wife) in 1980. I just retired after 39 years, at 63. My wife continues to practice because she wants to. We went to a state university, and the in-state law school we attended was good, but in no way prestigious.
We live in Wichita, a city of 390,00 (51st in population) in a "Combined statistical area" of 672,000 (74th in population in the U.S.).
Charles Koch, a multi-billionaire, lives here and Wichita is the headquarters of Koch Industries, which not only provides thousands of very well-paying jobs for locals but also contributes to many charitable projects in a significant way.
Because of our combined income (as well as business travel), my wife and I have been able to go abroad to many of the countries and cities of the world. We have been able to host college students from France and Spain, and befriend their families. We live a very comfortable life in what is obviously a small city, compared to San Francisco and NYC.
In my travels to large American cities (including NYC and San Francisco, where I have friends), I have observed a lot of highly-visible poverty. My friends who live in large cities may make more, but not that much more and particularly when one takes into account the significantly higher cost of everything in larger cities. My dogs play in their own large fenced yard.
I love visiting NYC, but it would take literally millions of dollars of income to provide the kind of life I have here in my home state.
33
@Duane Coyle
What is the point of all this? It's not even humble-bragging.
10
We are so relieved to hear that the Koch brothers are humanity's benefactors. Seriousky now, how biased can one possibly be? Do not praise the rich for making charitable donations (to dubious ultra-conservative causes in their case), praise them if they pay their fair share of taxes.
4
@Lanier Y Chapman That the Koch Brothers are kind and gentle community members who "give" back?
We live in Fairfield county, and yes it is incredibly unequal here. Driving from Fairfield to Bridgeport is one of the starkest differences you will ever see between absolute wealth and absolute poverty.
20
@Ken
I grew up in that area in a small town unknown outside the region that had a variety of income levels back then. When I left, and then had to describe to people where I was from I'd tell them that my town was either "near Bridgeport" or "near Westport" depending on my audience and how I wanted to present myself. This was a barely conscious choice on my part. I did it reflexively.
2
Urbanization, capitalism and inequality have always gone hand-in-hand. All have significant downsides for both society as a whole and the environment. In a democracy, it's government's job to represent the people equally by limiting the downsides and protecting the people from the damage caused by all three. It can and must be done.
10
The graph says "Seattle" but it cannot be just the city given the population size. This is the Seattle-Tacoma-Everett metro area. Seattle itself is still under 1 million. Looking at the study, I wonder if they are mixing two datasets incorrectly or if it is only wrong on this graph.
5
The only way out of this is to upgrade our K-12 education system for the 21st century. There are plenty of jobs that need to be filled, however, our disgraceful education system to a the economy of productive citizens.
America doesn’t value education. It’s culture is focused on entertainment and social policy disagreements.
Someone will take this future and thrive.
22
Agreed! One only has to look at the successes of the K-12 school system in Korea to see how a strong system of education is an investment in the future. As an English teacher in Seoul for the past two years, I’ve witnessed the consistent efforts of parents and educators toward that end—and, of course, the extraordinary efforts of the students.
Even with its inherent costs—both financial and emotional—Korea is wholly and entirely focused (sometimes to a fault, I’ll admit—but, hey, there’s a price to be paid for everything...) on playing the long-game in terms of having an educated population. And, it has paid off handsomely, imho.
The U.S. could benefit from a lesson or two (or more!) from Korea.
7
Ever wonder how Korea funds its school system? Well performing systems are centrally funded by what amounts to income redistribution so all schools get more or less equal funding according to size. Unlike in the US where schools are funded locally, resulting in poor schools getting insufficient funding and thus low results. Open your eyes and stop blaming the poor scores on inept parents, teachers and students !
4
@winteca
And the result of a system in which the children of the rich get a better education is that, instead of shared upward mobility, we are creating a permanent two tiered system.
And those rich kids who went to good schools because of their parents grew up to serve the country. Two stunning examples; George Bush 2 and our present genius, D. Trump.
Now think about this - some 20 million baby boomers, many of whom do not live in one of the high income metropolitan areas, will be needing to sell their primary asset - their home, in order to afford retirement. Given that most of the decent paying jobs in many of these areas are now gone and the Millennials living in many of the areas are already burdened with health issues (expensive, health care costs, opioid addiction and even increasing HIV as just reported by NYT), student and personal loans - how will these two megatrends impact each other.
8
I know that facts like gravity have a liberal bias, but the 3 richest Americans hold more wealth than the bottom 50% Of The Country. For the modern GOP and Russia, this is how it should be.
21
@Son Of Liberty They are also better equipped to manage that wealth than the bottom 50%.
2
@Jack Please tell me you were being ironic.
1
@Jack Wow, now THAT was a classic GOP answer!
We have begun the shift from the Industrial Age to the Digital Age. Given the advances of technology we can now have call centers in India and other Global Workforce disruption unseen before everywhere effecting just about everything. Those that have vision here will make unseen amounts of money like the robber barons of the past.
Social media allows information to flow freer and faster (not necessarily more accurately) and outside the filter of the MSM and “news” organizations are now 24 by 7 and it’s a blood sport.
It’s a different world. Comparing NYC to Binghamton of the 80’s is absurd. The 80’s no longer exist.
We live in a new globally competitive world.
Adapt or perish.
12
Conspicuously absent from your list of “major metropolitan” areas but clearly noted in your graph is Chicago, the third largest metro area in the US. The point of the article as to income inequality being exacerbated by metropolitan area size is well taken but the way it is written, and this omission of Chicago, points to another contributing factor in at least the perception of inequality: coastal bias. Time after time the Midwest and Middle-west appear as an afterthought.
11
Fascinating article that requires all of us to question our assumptions and policy preferences. Thank you.
2
If equality is per se good, then ponder those African nations which have the lowest GINI indices (least inequality). Everybody top to bottom has little, and there's equality in that scant spread of income. This is good?
10
They also have the lowest carbon emissions too.
Productivity and innovation drives wealth creation.
3
@Practical Thoughts , given the growing proliferation of coal burning stoves in Africa, I am not sure how long that will remain true.
4
@Tom Powell, is our current inequality "good"? Are these really our only two options?
Not my fault people didn’t study better in school....the good jobs are for the taking in NYC, stop complaining and make it happen for yourself instead of asking for the government to solve your problems.
20
@AR
Hey AR, where you from, what’d your parents do? Who’s you know? Where’d you go to school? Do you suffer from anxiety? What’s your race? Are you gay? Get real.
28
@Jill single mom, elementary teacher, had 1-2 extra jobs to make ends meet, knew no one, state school, yes anxiety, white, nope
Doing very well in NYC, thank you
Inherited wealth and contacts exists, but is not responsible for a vast number of the high skilled workers
3
@AR: “....the good jobs are for the taking in NYC, stop complaining and make it happen for yourself instead of asking for the government to solve your problems.”
You said it! Trump should be saying that to everyone in rural areas and in cities that have lost a lot of manufacturing jobs. Stop complaining! Make it happen for yourself! Don’t look to me for help. Become an in-demand software developer by watching videos for free on YouTube and then go get one of those good jobs in NYC!
4
The interpretation of this data is terrible. For example:
In effect, something we often think of as undesirable (high inequality) has been a signal of something positive in big cities (a strong economy).... These patterns are hard to reconcile with appeals today for reducing inequality, both within big cities and across the country.
Absolutely wrong. There are no comparative measures here of economic strength (per capita or absolute) between cities. And even IF such measures positively covaried with inequality no CAUSATION is demonstrated. The conclusion here is irresponsible. It's probably fair to use this data to support the idea that high wage earners are becoming concentrated in metropolitan areas and that population size may partly determine/cause this. The few cases of significant decreases in inequality all seem to have significant reductions in population size, also rare events. It's quite possible that the highly skilled and/or high wage earners are leaving small cities for larger ones, i.e a population size effect. This could explain much of the correlation seen between city size and income inequality WITHOUT invoking the explanation that income inequality somehow improves the economy which draws in high wage earners or vice versa, i.e. it draws in high wage earners which then improve the economy. Either way, this data does NOT argue for increasing inequality in our cities and across the country. This is nuts!
8
@carl bumba
Relying on outdated economic indicators to explain the health of the economy just doesn’t cut it. When the person who makes your latte has to commute an hour to serve you, your economy is failing working people.
12
@NW
Yes! And then they'll use the argument that the robot replacing this worker doesn't have this terrible commute, so it's great for the environment! (A pleasing thought for those in the drive-thru with their engines running... waiting on a latte.)
Reagan was the Master of Distraction. He got the middle class to focus on race, abortion, guns and big government as evil. All the while he worked to destroy strong labor unions, health and pension benefits and hourly wage rates. He replaced growing middle class incomes with cheap largely available debt (credit card explosion). He gave tax cuts to the rich and spread the fairy tale of "trickle down economics". The Republicans have followed his blueprint ever since.
So today we have had stagnant wages, a minimum wage that is about a third of what we need it to be, no pensions and workers paying a higher portion of health care costs. The rich now control 90% of the nations wealth and we are still waiting for the trickle down. Bernie is right, we need a revolution.
58
@Steve
Be careful what you wish for; you may find a worse set of conditions.
@Steve
Why haven't the dispossessed seen through this shell game. Somehow Reagan is viewed as untouchable while all the time he was the main architect that set their living standard on a race to the bottom. How long do we have to shout that Reagan did it before we are believed?
Not everyone can live in New York City or San Francisco.
Somehow, companies need to branch out into other cities throughout the country -- Topeka, Albuquerque, East Moline, Des Moines, Little Rock, Lincoln, Salt Lake City.
Maybe corporate responsibility includes extending the prosperity from the coast inward to the rest of the country.
25
@Barbara T
So where are your teachers, baristas, bus drivers, students, and other employees essential to your quality of life going to win? Guessing you are the stereotypical “pull yourself up by the bootstraps” Boomer.
2
It isn't quite as simple as the binary choice between inequality and strong economies.
As other studies have shown, the _size_ of the gap between the highest and lowest incomes has increased at a remarkable rate. The cities with strong economies seem to be places where the good paying jobs pay even more than elsewhere, which in turn leads to astounding increases in the costs of housing and more.
Here in Silicon Valley we have gone beyond just providing lots of good jobs with decent incomes... to providing lots of good jobs with absurdly high pay scales. Starting pay (!) for first-timers just out of college can be in the 6-figure range. Frankly, there's no need for that, and there's plenty of damage that comes from it.
24
@Dan Mitchell who are you to tell others what they should do with their (as in, not yours) money?
4
What the article, as well as most of the Commenters aren’t addressing, is the basic economic reason for unequal salaries (other than CEO pay which is a mystery and way out of line). And it’s not the value that a job has (which would have teachers and doctors near the top of the scale); the skill needed to do it or, necessarily, the uniqueness of the position. The sole cause of highly paid jobs is due to the amount of income the job generates. That’s all, nothing more complicated than that.
So, to debate the merits of one job versus another is an exercise in futility. The reason Wall Street types like private equity firms, hedge fund managers and some, though really a small minority, of lawyers are some of the highest paid workers in the economy is that they generate vast amounts of income. It’s not because they’re great people or do anything worthwhile. Whether it’s traders creating vast profits; lawyers billing huge amounts of hours or hedge fund managers returning lots of income, this is what drives their salaries. And,the highest paid people are not even professionals but entertainers, social media stars and sports stars who few would argue are doing “G-d’s work.” But they are putting people in the seats and selling tons of merchandise. So, they are paid handsomely for this income generation. Some have unique skills, especially athletes, but this is not why they are paid princely sums. Generating income is all that matters any more. It’s a sad state of capitalism now.
61
@D Voice of Reason so, how do you explain the ridiculously padded golden parachutes and compensation given to the executives who drive their companies into the ground? That doesn’t generate more income at all. Well, unless you count the absurdly compensated executives. It generates a ton of income for them.
11
Barbara Grober, if you read my Comment, I had a parenthetical at the beginning about CEO pay. It applies to executive pay too. And the explanation for those Execs is that there is a belief (which I don’t buy) that due to experience, skill, etc (or what I think is mostly luck and longevity), they are responsible for guiding the financial success of the corporation. So, as a result they should be well compensated. But, it is a very small number of people who are paid extremely well in most corporations.
5
@D Voice of Reason why is that wrong? You're making a value judgement with no explanation.
1
I caution not to read causes and effects into this nifty moving chart.
It is a correlation. It just shows that there is a positive relationship between city size and income range, which is not surprising. With a larger population there is a bigger pool and therefore larger range, so to some extent it is a sampling effect. Also, bigger cities have more resources, more and bigger museums, galleries, operas, stores and restaurants -- more to attract the wealthy. And as the economy has grown, so has the disparity.
Coincidentally, I lived in Binghamton from 1980 to 1983, and have worked in NYC since 1986. Binghamton was a sad town then, and it's even worse. All they could talk about were the IBM days. New York is better than in the past, except for the rampant, unchecked development and loss of iconic stores. It's cleaner and much safer, but it's losing its soul to big business and real estate.
14
@David
Yes. They seem to prefer nifty graphics over nifty graphs. Strange that they don't seem to have a statistician anywhere in the building. I guess they've gotten accustomed to saying things without empirical bases.
“Policies that tax high earners more to fund housing or education for the poor would redistribute some of the uneven gains of the modern economy. But they would not alter the fact that this economy values an engineer so much more than a line cook.” Our values are misplaced. Really. What about teachers and social workers and police officers who are not in the gig economy? We are devaluing a lot of areas that maintain a striving and growing economy and a healthy and prosperous country. We need to invest in all our citizens not just the affluent. This is hat made this country great.
16
At one time higher paying jobs were held by an oligarchy. Even skilled employees particularly those from minorities could not break through the ceiling. The top tier was a good old boys club. I know. As an Italian, I was a minority according to the definitions of the time, and the blue bloods were never going to let me into their board room.
The situation has changed dramatically. Today, more and more people are acquiring highly paid skills. That’s a good thing, because the inequality is driven by the opportunity which is available to everyone. The inequality does not provide less. It provides more to those who seek to achieve it. Binghamton is an excellent example of how equality as a goal unto itself has unintended consequences. No one benefits from equality there.
As long as inequality exists because we have the opportunity to excel and be rewarded, give me inequality any time . At least I have the chance to achieve the higher end. Do not penalize self achievers for their success.
19
@Gino G
I just about choked when I read Gino's last paragraph..."As long as inequality exists because we have the opportunity to excel and be rewarded, give me inequality any time."""
The gimme-gimme, greed-is-good thinking will always exist in self individuals as Gino G displays. There will also be greedy Ginos in the world. Greed is really bad when it drives excessive inequality. As noted in the Economist Magazine of 6/7/18, countries with the highest rates of violent crimes, armed robbery, theft, murder have the highest rates of inequality; leading the list is Venzuela, Brazil, South America in general and Mexico.
Countries with very low rates of inequality have very low rates of violent crime.
Gino has embarrasingly chosen the South America model for the US
18
@Gino G, if opportunity has increased why has social mobility gone down in the US?
3
@Leonard please, support your statement.
The moment any article or commercial starts using the terms "highly skilled" or "top talent", I tune out. What they are actually referring to is networking and credibility stock. Without being a disruptor, I don't see any way a normal person can gain either. Which is probably why we are seeing a lot of disruptors.
7
This is an incorrect, rather silly comment. While the high earners may well not work any harder than a line cook, they have education and highly marketable, sought after skills. It isn’t easy to become a doctor, an engineer, a software designer or yes, even someone with math skills to work at Goldman (finance takes some serious math chops). It’s way more than mere networking. Life isn’t fair
10
@Semper Liberi Montani, networking is more important than you imply for many professions. I wouldn't say "mere" anyway. And wealthier families not only have more resources, but also better connections to take advantage of.
Life isn't fair, but we as a society have some say in how much we let that influence outcomes. The American Dream is supposed to be more social mobility, but that's been going down for decades-- has life become less "fair" or are our policies to blame?
5
"What are Americans supposed to make of the fact that more high-paying jobs by definition widen inequality? Should New Yorkers be O.K. with growing inequality in New York if it’s driven by rising wages for high-skilled workers, and not falling wages for low-skilled ones?"
Simple:
Make the tax code much more progressive. See Thomas Piketty.
Boom. Done. Mic drop.
28
@Nathan Hansard Thankfully, the economy is global now. We can just leave. I personally would save 100k+ year just by moving to Florida. Singapore would be even better. Just too busy and lazy at the moment. Several of my friends / colleagues have already moved for tax reasons.
3
@Nathan Hansard Please be sure to sweep the floor before you leave.
1
The article seems to say that it is the highly skilled worker - executive etc, with money from income that is living in NYC - that is not most of the story.
The people living in NYC are also people with huge amounts of capital - not income from work - people from all over the world owning a place in NYC they don't necessarily live in.
And to live well in NYC you do need more than a good sized pay check - you need investment income and to have most of your income come from Capital Gains.
The author makes it seem like the wealthy are the highly skilled - the true wealthy are not living on income from work.
61
This article is so funny.
The article isn't claiming that there are poor people who do the same work others do but are paid less.
If people are doing different jobs that take very different levels of skill than you can't compare the income they provide to the worker.
Lawyers should get paid much more than the person who cleans the office for example.
That's not the whole story.
In New York only the best lawyers for example get hired.
The ones who went to Harvard Law School for example.
They will make more than lawyers who work in Detroit for example and they deserve it.
The article even tells us that this difference in income is driven not because of any inequality in the system but by the fact there are more jobs being created that pay more because of the type of jobs they are and the skills needed to do them well.
10
@Paul wow, your faith in the Harvard Law School brand is impressive. It may well start with the law students who have the highest pre-law and LSAT grades. There is not much evidence it churns out the best lawyers, nor that it provides the best legal education. I’m not a lawyer, but I do hire - and pay - them when required. Your comment ignores the other reasons for the income gap. Some relate to costs of living. Others relate to wholly indefensible overpayment. There are lawyers in Detroit every bit as good as the best in New York, doing work every bit as vital. Some even went to HLS, or better schools. They will still make a smaller multiple of the people who make it possible for them to perform their work than will those in NYC.
18
@Ralph "Overpayment" is a value judgement. You can assert a professional athlete is overpaid, but the market disagrees. Market forces ultimately determine wage and salary rates, apart from when government steps in and mandates a rate.
12
@Paul, the problem is even the best lawyers still need their office cleaned, but they don't want to pay the cleaner enough to live on, considering the greater cost of living in the city.
5
One of the other pressures creating the income gap is that the folks at the top have been left to manipulate the wage scales as they see fit since the federal government, aka Ronnie Reagan decided the 'government is the enemy' and threw the . keys to the vault to the money guys.
Restore unions, create a rational federal minimum wage and rearm those agencies with the government that oversee greed, graft, scams, banking, insurance, and A & M.
Sanity would at the very least tilt the playing field a bit back towards workers and away from money movers.
27
Yes, there are lots of jobs in metro areas. But the problems with the metro areas are affordable housing, decent schools, traffic, high taxes, and crowded living conditions even if you make enough money.
This country made some exceedingly bad decisions when it elected Ronald Reagan president. Voters swallowed the rhetoric about government at all levels being a problem. Yes, it's a problem when one level of government disregards laws (its own or those at a higher level). Yes, government is a nuisance when it insists upon fairness. And yes, as we've been seeing with the Trump administration, an incompetent government is worse than no government at all.
Inequality is not a problem when everyone has access to decent affordable housing, enough food to keep hunger away, good schools, good medical care, etc. All of us ought to know that while we have the same rights, when it comes to many things, we are not created equal. That fact does not negate our needs for decent lives. It doesn't mean that all of us need to live in mansions or have BMWs. It means that while there is inequality that inequality shouldn't mean the rest of us go without to the point of starvation, homelessness, etc.
212
Thank you for pointing out the impact of the Reagan years!!
19
@hen3ry The amount of misery in the US has never been lower (see Nicholas Kristof's article "Why 2018 Was the Best Year in Human History!" at https://www.nytimes.com/2019/01/05/opinion/sunday/2018-progress-poverty-health.html#commentsContainer). It was freedom of the market without government interference that has produced the largess that leaves Americans among the richest people in the world, and by far the richest if you exclude the petroleum exporting companies. It's unfortunately true that capitalism provides unequal outcomes, while socialism produces equal misery
10
@Dr B, nobody is asking for socialism. I think you have the wrong definition of "misery".
15
And yet it seems they're not being snowflakes and complaining and voting for people who'll break government. They're all willing to pursue the American dream despite knowing that the odds stacked against them. Whereas our rural areas have given up...
6
They are trying to realize the American dream but see it slipping away to high housing costs, higher taxes (on the middle class) and crushing debt. That may be why they have been voting Democratic since 2017 through 2019.
5
@RamS
The rural areas didn’t give up. They voted for trump. That’s the point.
3
Inequality of income is the least impressive metric. This is nothing but jealousy of the rich. All that matters is how you are doing, not how much someone else makes. And we are in very good economic times. Enjoy. Put petty green envy aside.
12
The relative matters when it makes housing unaffordable. To give the most obvious example of why it is not about envy, among many others I can easily think of.
10
Says the sailor from Bethesda.
5
@Dryland Sailor "everything is fine, nothing to see here!" he says as diabetics ration insulin, millennials carry student debt into their 40s and 50s, tens of millions are uninsured and face food insecurity, and rising.
14
I notice Chicago was ignored despite being the third-largest metro (MSA) according to the U.S. Census Bureau. How about that - there is inequality in inequality.
9
Build infrastructure.
10
This is for the editors of this story - the moving format of the charts makes it impossible to look at them closely and study the differences for the reader. Is that what you want? Your people did all that research and to have some flashy motion you interfere with readers' concentration on the data?
Could there not be at least a choice for the reader to hold the chart still until they have seen what it means?
36
@copyeditorperson click on it and it should stop. clikc again and it toggles to the other time period. At least it did that for me.
2
@copyeditorperson If you click the graph, it stops moving automatically, advancing on the next click.
2
Thank you , Ronald Reagan.
7
When you live in Fairfield :0
1
One tile I tried to drive from Fairfield to the Trumbull mall through Bridgeport. I only made that mistake once. Yeah it’s really really unequal.
1
Y'all go! I cannot make heads or tails of the graph after about 5 min. of looking at it. I think graphs should tell their stories pretty easily and this doesn't do that for me. I always tested quite highly on getting information from graphs, have generated them myself any number of times.
18
@Kathy Bankston i was just about to say the same thing as Kathy...(except without the y'all)...these graphs make no sense.....I am color blind and so maybe that is my problem
5
Curiously this essay omitted the city of Chicago which is surrounded (and for a very long time) both north and southwest with affluent suburbs. In some cases these suburban townships have gated - protective security.
The income gap between the city bungalows, apartments, condos is many circumstances more than inequitable.
The "West Side" 'slums' are absolutely off limits to anyone but their supposed criminal, gang, drug addicted populace.
Mayors and politicians have thrown money. social workers, and every possible cure imaginable at the inequity, yet it persists as does all the correlative damage.
Turning these unequal circumstances inside out will not solve or ameliorate anything.
Chicago and America needs not just a Green New Deal - but an economic New Deal - change the name - but create a new Domestic Policy.
12
Let's do a thought experiment: suppose every single American gets some kind of advanced training. Are there enough well-paying jobs to support all of them? Will they abandon small towns in even greater numbers? Will the large cities be able to house them at prices that won't devour the bulk of their income?
10
@Larry The short answer is "no", but it's because there are global forces changing the economic landscape. A good book on the subject is "The Global Auction". I don't remotely agree with the authors' proposed solutions, but they do a good job of identifying and presenting the issues.
2
The graph perfectly explains why investment income should be taxed at rates higher than wage earners - exactly opposite of how it works today and the number one reason why there is no funding for infrastructure, education or healthcare.
33
@Deirdre - "Recommended," but with an asterisk*.
* I would like to see capital gains taxed at least as much as income earned by fixing cars, teaching kids to read, or dentistry, but only if they are indexed for inflation, so that investments held for the long run aren't taxed on gains that aren't really gains, because of inflation.
11
@Davy_G Why do you arbitrarily pick the inflation rate as the rate below which you choose not to tax gains?
@Deirdre Investment will simply move elsewhere as investors seek higher after-tax returns. China and India would love to see the U.S. embrace the policy you suggest.
5
Just before the financial crisis, we had an info session with our company HR executive, she pointed out that GE has a low attrition rate, and it was the gold standard for retention.
I didn't want to point out that most GE engineering facilities were in isolated areas, and that employees had limited job alternatives. Great for GE, awful for the employees.
15
People used to wonder if the federal bureaucracy could be made back into the servant of the people if everything in D.C. was shipped off to Kansas.
Now we have to ask if the huge cities that are so cruel to those without big incomes could be FIXED if only their entire city governments-
- down to the levels where college degrees are required -
- could be completely replaced with qualified people from other places.
Single-party gov't has NO reason to ever improve because the people have no options - no way to change things with their votes.
You'd think the parties out of power could figure out how to take advantage of this, but apparently the 'ward heeler' idea still works; the pols pay off enough minor leaders among the poor and they will obediently go along with City Hall.
7
Who knew that Babylon, Beijing, Berlin, Brussels, Rome, London, Luxor, Madrid, Moscow, Paris, New York City, Riyadh, Sao Paulo, Singapore, Seoul, Shanghai,Tokyo, Venice and Vatican City were always meant to be separate and unequal?
5
@Blackmamba
Babylon has not existed for millennia. Luxor is a city of 500,000. What is your point?
17
@Eye by the Sea -- your point is valid, even though there exists a Babylon, NY (with severe kinequality within it)
2
Hefty salaries? Engineers earning half what they did ten years ago due to the enormous influx of H1B Visa workers onshore and more offshore. It’s been a race to the bottom for decades but the media repeats the myth about shortages. Shortage means they call us and offer more. I went for an interview in NYC and I was up against 60 others for one position. Six out of seven interviewing me were Indian not Americans.
Is there one brave reporter who will touch the third rail of immigration - specifically the collusion between government and corporations.
399
@How Much Is Enough?
I worked as a dean at a public technology university for almost 19 years. I can certainly attest to what you have stated. I have visited several other such colleges and yes, these institutions’ graduate programs are top heavy and they are disproportionately supported by the influx of students from India first and secondly from China.
We couldn’t get enough US students to enter these graduate level programs and the international students came well prepared and from systems that are highly competitive. They therefore are desired by US companies. While domestic engineering students seemed to focus on civil, mechanical, and construction engineering, the international students focused more on the higher paying disciplines, such as electrical engineering, computer science and telecommunications.
96
@LT
The irony of your post is that a civil, construction, or mechanical engineer is much less likely to have his job outsourced, than a software engineer, computer engineer or an electrical engineer. Maybe some of these American engineering students are playing smart by going into fields that are less susceptible to foreign competition.
76
@How Much Is Enough? Unfortunately a substantial number of American educated engineers cannot tow the line. Why would anyone pay more for mediocre performance. Chinese and Indians who come here as professionals or to get an education have the same exemplary work ethic that most immigrants. This country has lost its work ethic and many of these American millennials aren't worth employing.They want to spend their time texting and complaining how they want their student loans eliminated.
20
Nice graphic on neoliberalism and the legacy of Reagan and Tatcher et al.
33
@Geoff Garver So we can credit them with the economic growth and innovation that has led to a demand in skilled labor?
6
Those educated people are hated by the right wing that populates the suburbs. Why would we ever put jobs there.
5
NYC has billionaires and homeless. And housing and educational segregation higher than anywhere else.
And more opportunities than anywhere else.
10
President Trump forced millions of US jobs overseas in just three years. Not.
9
@Dr. John
He sure is making Viet Nam Great Again....which is kind of ironic.....
6
Inequality is a serious problem but it is not causing unrest or the type of political awareness that induces major change. When Americans wanted change bigtime --1932-- the unemployment rate was over 20% and widespread foreclosures on mortgages led to huge homeless encampments in the most obvious places. A large one was in Central park on the site of what became the resevoir. It took that to switch from the mindless republicanism of the 20's to FDR. Nothing like that obtains now. Different situation; different response. Many are dissatisfied but they have enough that they don't want to lose it. There is a profound and unchallengeable urge to protect what one has. That is why medicare for all and much else in the progressive program turns a big piece of the working class off. It is understandable and an effort should be made to understand it.
14
@Bill H you are dead on. We will know when this becomes a real problem. Are we on the road to having this problem? It is hard to see when credit is still pretty well greased and we have record low unemployment. However, that could change pretty quickly. Deutsche Bank put out a cost reduction plan to be implemented over the next few years and it was dramatic. There are a lot of six figure, professional jobs in these metro areas that will be eliminated by automation in the next 5 to 10 years. At a former employer I watched entire teams exist just to smash data from one system together with data from another system using excel. That sort of overhead just doesnt make sense in a world where anyone can pick up python and spend a few hours a week streamlining data cleaning.
11
@Bill H
This is so true. Probably a testament to the notion that times aren’t bad right now. You’ll know when they are.
There’s more than a critical mass quite content, and 100% not willing to undertake any kind of upheaval. Tinkering at the edges is fine.
2
Many comments would suggest that the urban inequality issue is an intentional one that has risen out of greed and selfish interests. I question this narrow approach. These urban , higher paid individuals are more qualified to support today's economy than the less skilled. They have better education and subsequent opportunities. The higher income is the end result, not the driving force. Obama said it well; it's about leveling the playing field, not curtailing success and creativity. The idea behind less costly education is not a handout, it's meant to fix the playing field.
13
Why shouldn't society value an engineer much more over a line cook? Or a scientist over a truck driver, or any host of critical intellect, knowledge-driven jobs over an ever larger host of limited-educated job holders. Yes, it is elitists but it is also rewards those who spend their time learning, studying and sacrificing while dull June is polishing her nails. AI and automation will rule the drones and be ruled by the elites. So where does democracy fit in? Otto Bismarck understood the threat. Better the elites enter a social contract with the drones and spread the wealth or they will rise, much like the Trumpers, and drag down civilization into the sewer with them. But again, who really wants to condemned to Mississippi?
14
Truck drivers get paid more than scientists, or engineers in many cases.
4
@Will
With increased health problems. abysmal health care, and paltry retirement options, not to mention being aged out of the job. Would you rather be a truck driver than an engineer?
It's a huge house of cards. When the next recession hits and layoffs come, many people will flee San Francisco and New York City, because they won't be able to afford the rent. House values will fall and many people who earn a lot of money right now are going to lose a lot of money.
9
@Mark : from your lips to God's ears!
1
Wages for all workers will rise over the next 10 years as the population ages rapidly and the percentage of adults in the work force decreases. Only 58% of the population will be between the ages of 18 and 64 in 2030.
4
It is a shame that economic growth has been concentrated in large cities to the detriment of smaller ones. This may spell doom for certain areas, but not people. People can relocate. The idea of moving to a place with better economic prospects is as old as the country itself. It is why immigrants have come to the U.S. It is why I left my home town to attend college, then moved again for grad school, then moved again to take a job. Along the way I have sacrificed friends, family and community. These are terrible costs. But the problem of regional economic disparity should be seen as one that imposes high costs on almost everyone (unless you were raised in a job center city) - either you sacrifice your community or your job prospects. It is incorrect to say that it "excludes" anyone.
11
The article, and its associated comments, ignore the root of increasing inequality in the United States, and to a lesser degree other rich countries: the dissolution of progressive taxation.
As Saenz and Zucman, showed in this paper’s editorial page several weeks ago, the effective tax rate for the bottom half of earners has increased 24% from 1962 to 2018, while over the same period it has declined 23% for the top 400 earners in the country. “Stop to think this over for a minute: For the first time in the past hundred years, the working class — the 50 percent of Americans with the lowest incomes — today pays higher tax rates than billionaires.”
A regressive taxation system violates every common principle of fairness and equity we have as Americans. And it furthers income inequality in two main ways. Obviously rich people get to keep more of their money than poor folks, which makes them richer. But more insidiously, there is less money available per capita for government programs that have historically tempered inequality over the long term: education, healthcare, anti-trust enforcement, etc.
Many readers’ comments scratch the surface of the problem without addressing the root cause of income inequality: our increasingly regressive taxation system.
20
@Lamont
According to Bloomberg, we have the following using 2016 IRS data:
The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent).
The top 50 percent of all taxpayers paid 97 percent of total individual income taxes.
What is your suggested breakdown of tax revenue by income? Spoiler alert, the top percentiles pay a lot more of the total tax burden now than in your "progressive" era. So, one could srgue the lowering of high marginal tax rates, and thr increased concentration of wealth in those rstes, has been a big net benefit for government tax revenue.
7
@Kevin
You, and most of the politicians involved in this debate, are confusing income tax with total tax burden. See the Saenz and Zucman op-ed I cited above.
https://www.nytimes.com/2019/10/11/opinion/sunday/wealth-income-tax-rate.html
Your statistics speak to fact just how wealthy the modern uber-rich are—beyond anything that has existed in the history of our republic and most of Western Civilization since the end of feudalism.
2
The wealthy town of Fairfield is next to the urban center of Bridgeport - previously referred as 'the armpit of Fairfield County' by Paul Newman. The factory infrastructure has abandoned Bridgeport, leaving behind a devastated community of homes owned by absentee landlords along with struggling schools, the majority attended by minorities. I teach in one of them.
10
Why are the schools struggling? The tax base disappeared when the corporations left? And obviously, the old factory jobs disappeared, but that was a while ago.
5
I like how the middle of the article sound unbiased and questions whether high paying jobs growing inequality is bad or not.
Then for the rest of the article, it basically says that this is in actuality, bad.
2
Normally, logically, inequality leads to an armed revolution. What for this one?
3
In the post-Elizabeth Warren/Bernie Sanders world, the press has become enamoured with the idea that inequity (the choice of the word is even inflammatory) is evil. Instead, it is a marker of what is economically valued and a guide post for economic achievement (if you care about those things). NYC and Washington are far better cities (crime, living conditions, etc) in their current state than when I was growing up. NYC was a crime ridden armpit in the 70's and DC the same. Instead of policies and opinions which denigrate achievement and try and create and equal forest by cutting down the tops of trees, the press should rename the term - equitable distribution of earnings .
8
The income inequality problem isn't engineers and lawyers vs cooks. It's people who have investment income that pays them more without working than a lawyer makes working.
It's people who have more money than they could spend in several lifetimes buying their political representatives to skew the system even more in their favor. This has included cutting back various kinds of assistance for the bottom 10%, making the problem worse.
42
@mtbspd - - What you missed back at school was that EVERY dime that people have to invest today was originally taxed at the full rate for that city, state, and country.
Before you reflexively moan over how the rich stay rich, remember that the Forbes 400 list of richest Americans is 92% replaced with new names every decade.
4
@L osservatore
Most of the biggest fortunes has been through three or four or five or more 1031 exchanges since that money was taxed, or are other forms of capital gains that have never been taxed, or were inherited through a structure that successfully avoided significant taxes. So, no, "every dime that people have to invest today" was not taxed. It was the great great grand daddy of those dimes that were taxed.
Only about 1/3 of the Forbes 400 started out middle class or lower. About 1/4 are inherited wealth, or got a significant inheritance.
However, the Forbes 400 are an exception, with significantly more wealth than the typical 1/10 of 1% chump.
2
If you believe a city can really work without nurses, teachers, college faculty, firefighters, police officers, drivers, cleaners, waste removers, trades, cooks, childcare (and the vast majority of American jobs) then we can continue to build cities for the benefit of the wealthy. Many American cities are choking from decades of unbalanced growth. Initiatives to build mid-range housing and functional transportation to fill the gaps have failed. Commutes are long; congestion is fatal, and people are looking at options for housing. We love cities for rich culture and easy access to services. Is a city a city without the people who make the wheels turn?
47
I really wish people didn't think that just because it's possible to make data charts animated that this is a good idea. It is almost never a good idea, because that makes it impossible to gaze carefully at the data and absorb what you are looking at.
It is very easy, on the other hand, to draw an arrow from one data point to another, obviating the need to move them around. And displaying earlier data in one color and later data in another color makes it very easy to distinguish which is which.
54
@polymath
I agree! You can get static graphs via the link embedded within the sentence ...
"This chart, using data from a recent analysis by Jaison Abel and Richard Deitz of the New York Fed, captures several dynamics that have remade the U.S. economy since 1980."
2
An equal society is neither possible nor desirable, so the current belief that income inequality by itself is a problem in need of a solution is misguided. This said, there are several problems with extreme income inequality in metro areas that impact the fabric of the city life. I live in the Bay Area and I can see the beautiful city of San Francisco basically divided between world-class areas with great food, shopping, lifestyle and so on, and between junkies-infested slums. A city requires a unified identity in order to function. The plague of homelessness is only one indicator of the city being ripped apart at the seams. Perhaps one solution is subsidized housing for those who actually work in the city and who are necessary for its daily functioning, such as teachers, waiters and so on. For the rest, living in a metro area is not a birthright.
8
@Mor It's unclear what you even mean by 'an equal society' or who you think is advocating that. The point to many of us is that a society in which the top percent, or tenth of a percent, is absorbing a a hugely disproportionate amount of the wealth and resources is not sustainable and is morally reprehensible. And those who believe that the inequitable distribution of wealth in society these days is premised upon the merit of those at the top of the distribution simply haven't been paying much attention to how those people comport themselves and just what the value of their 'contributions' is. I've lived in the Bay Area off and on over the last four and a half decades and what I see in those self-described elites of finance and tech is a lot of rank, self-serving, consumerist parasitism which, to the extent that it serves anything at all, largely serves the interests of the already well off.
4
@richard this is the kind of rhetoric that always sets my teeth on edge because it is informed by virtue-signaling and cheap moralizing rather than by facts and critical thinking. What do you mean by “disproportionate”? What is the proper gap between the rich and the poor? And who decides? The government? Well, even the most superficial acquaintance with the history of the last 200 years will show that any attempt at enforcing equality of income inevitably results in horrifying bloodshed. The Great Terror, the Cultural Revolution, Cambodia are what happens when the government, inspired by the notions of equality and justice, enforces its ideology upon a country. Are you saying that the technological innovations that have transformed our lives and expanded the boundaries of human knowledge are not worthy of reward unless the inventor “comports” themselves in accordance with your idea of virtue? And what should individual effort “serve” if not the individual himself or herself? Now, it is possible to argue that the poor need more help. Sure, I agree. But this article is not about how to uplift the poor. It is about how to bring down the rich.
1
@Mor One can make the argument that its when inequality reaches extremes that bloodshed inevitably results - Alexandria long ago, the French Revolution, and so on. The "technological innovations that have transformed our lives and expanded the boundaries of human knowledge" are worthy of reward, but for everyone, as everyone has participated in its creation. It's "virtue signaling" on the part of the "Masters of the Universe" that only certain individuals should be rewarded, specifically those who own the means that such innovations are produced. If this fundamental imbalance remains unaddressed, I fear the bloodshed to come.
Inequality wouldn't matter if the basics were available to everyone at a median price, no increases allowed because of the demand curve.
We all get the same shot at a short commute; a world class education; etc.
Having a lot of money means that you can have a shorter commute if you work downtown and afford a great school for your child. It's those things where inequality hurts and is felt the most.
Most of us don't care that some rich couple has a 200 foot yacht.
41
There are other trends that will be at play here...
As the big metro areas increase in population of the highly paid workers, they are, de facto, not highly paid so much when their cost of living is so high. Making $200k/year and living in your van in the Bay Area just makes you "rich and homeless".
Economic stresses like that cause 3 eventual corrective actions:
1) flight to smaller, but tech savvy, cities - both at the corporate level and worker level.
2) Changes in where work is conducted. Working from home is growing more and more.
3) Improvements in IT infrastructure in less developed areas.
As an example, my wife and I lived in the Albany area. I am a contractor working in avionics in Connecticut, so I didn't (and still don't) work near home. We decided to move to exurban Missouri to lower our cost of living. Together, we are making about $200k/year, but she works from home as an IT manager, but I only owe 27k$ on my 1000 sq ft home on an acre. Compared to my neighbors, we are doing well, but this is all possible because of her employer (a nationally known health insurer) is fine with work teams spread across the country and because we have high speed Internet in a rural area.
She and I are lucky and ahead of the curve a bit, but more working situations will be like ours in the years to come and this will "equalize the distribution of inequality" over time.
13
@VJR You're lucky? But you're living in exurban Missouri.
5
@PeteG I am in the STL metro area. It's very civilized.
3
The biggest problem with worsening economic inequality and lack of economic mobility isn't unfairness, but social unrest. Arguably, the success of candidates like both Trump and Bernie Sanders in 2016, both of whom were essentially protest candidates against the status quo, should be a warning to all of us of what is to come if this isn't addressed.
13
@Middleman MD Bernie Sanders' strong showing in 2016 is a "warning to all" of what's coming?
Let's consider what Bernie Sanders wants to: impose sharply higher marginal tax rates on the wealthy (like those we had 50 years ago) in order to help fund universal healthcare (as is enjoyed by every developed country on the planet), fund free college tuition at our public universities (as is the norm in most developed countries), fund infrastructure development (to put it back on a par with European and Asian economies), raise the minimum wage and restore union rights.
How in the world is that in any way threatening? How in the world does Bernie Sanders' care for the working man scare you?
32
@Sean I don't think Middleman MD stated or implied that Bernie was a threat. Bernie's broad appeal, however, is a good indication of broad based discontent due to inequality. Not acknowledging or addressing the concerns of Bernie's supporters lost a presidential election for the democratic establishment in 2016.
9
@Sean Minimum wage laws ALWAYS cause the poorest and newest worked to lose their jobs.
There are many workers who can't always produce enough profit for companies to justify $15 an hour plus benefits and taxes, and those people pay the price for a few to earn a wage level imposed from the gov't.
When your solution to anything means more decisions will be made in government offices, you just gave people you can't trust more power than they can handle. Hello, Venezuela.
2
" . . . this economy values an engineer so much more than a line cook." This is not the reason that an engineer makes more than a line cook. The reason is that there are lots of people who can do the job of a line cook, but relatively few who can do the job of an engineer.
23
@Colin Barnett It is the same with sports. Few can do it and they're paid handsomely. But one difference. Truly creative engineers can be compared to athletes, while the bulk of engineers, and other tech folk are just routine. Our system, however, doesn't do enough to broaden the availability to learn these routine skills, keeping the wages high.
5
Sports figures are highly paid for the amusement they provide to some and the vicarious pleasure they give to others whose athletic prowess is not up to par. Plus, it's exhilarating to root for a team. I guess.
Athletes are right up there with TV personalities.
Teachers, nurses, sanitation men, engineers, and others who provide real services -- well.
5
@B.
There are 5,000 professional athletes in the country with a median income of $47,000. Contrary to popular belief, not all of them are millionaires. Those five thousand are the best, most hardworking of the millions who compete and don't make, and yet only a small percentage are handsomely rewarded.
What do the best...
doctors (n = 1.1 million, median = $180,000), teachers (n = 3.6 million, median = $60,000), engineers (n = 1.6 million, median $90,000)
...earn when they reach the 5,000 best in the country? I bet their median is better than that of professional athletes by a landslide.
3
There’s inequality everywhere.
Who decreed life had to be equal or fair?
11
Nobody decreed it, and there always has been and always will be inequality. But when the degree of inequality becomes extreme, those at the bottom are unlikely to remain complacent. Narrowing the extreme gap is only logical, if one wants to maintain a stable society.
12
By all means, allow the corporate crooks to rig the game. And don’t forget to massively reward criminal politicians. Human rights, who needs that? Life was a great deal more fair when there were more unions, higher tax rates for the wealthy, lack of obscene CEO salaries, and lack of microsecond crooked insider trading. Fair? In this era? Oh no, just keep up the fantasy that the wealthy actually earned the no taxes level of nonsense.
5
42% of U.S. workers earn less than $15 per hour. 68% of the U.S. economy consists of consumer spending. If you want to see a booming economy, give that 42% a raise.
92
@Zep You got it! Also cut the top salaries of the corporate CEOs who make more than 400 times that the average worker. And break Amazon, Google, Facebook and the large pharmaceutic companies.
13
@Susan ...I worked in research for a large pharmaceutical company. Small pharmaceutical companies by their very nature will be less successful in providing innovative new drugs because they lack the broad spectrum of science and scientists that nurture cross fertilization of ideas. Now your idea of doing something about CEO compensation is an excellent idea. Believe me, when it comes to a major pharmaceutic company CEOs are not innovators, and if an executive secretary ran the company for six months nobody could tell the difference.
10
@W.A. Spitzer
I too am a career pharmaceutical professional/scientist and I wholeheartedly disagree with your statement. How much time have you spent with executive leadership? It's easy to judge from the outside.
Six months? The competitive advantage that biopharma must maintain has a much longer shelf life. A company's board needs to be thinking and making decisions to benefit for years, not months.
Small pharmas are the scientific method in business form. They have a hypotheses for new treatments and they borrow money to develop and test them. More often than not the treatments fail to have a positive effect on human trials, but not because the pharmas lack "cross-fertilization" of ideas (in fact any such company that lacks the right talent spectrum to implement its ideas has a terrible CEO).
1
Growing inequality is not only a US phenomenon. It’s everywhere in the developed world. It is in England, France, Germany, Japan, Canada, etc too. What makes it more extreme in the US is the lack of a solid medicare for all system - one that basically does not depend on keeping a job with good benefits - and the economic stress caused to the middle class, one catastrophic illness or incident away from personal bankruptcy and homelessness.
Credit to Elizabeth Warren for her singular focus on retail finance regulations, personal bankruptcy regimes and retail lending predatory practices. And shame on Joe Biden, masquerading as a friend of the working class whilst consistently endorsing policies proposed by credit card and specialised finance policies: since 2005, in personal bankruptcy, credit card debts is given priority to alimony. Guess what the impact is on millions of mostly black single mothers. I hope Warren or Sanders make it past the so-called moderate who are really just economic republicans.
30
This does look like the old story of feudalistic cultures moving wealth to a few who rationalize their fortunes as the right of royalty. Of course, the increasing disparity of wealth eventually results in an overthrow of the ruling class. The question is, "will our democracy be a vehicle for change, or not?" If not, then the next question will be, "when and how will the ruling class be removed from power?" Stay tuned.......
13
Tech companies are struggling to hire the people they need. Naturally, high salary becomes part of the lure. If they don't offer that, they can't get anybody. Further, start-ups can't pay as well as Google and Amazon, who maintain large offices in affluent cities.
So what are we to do? Ban these giants from opening offices in these cities? Put a cap on salaries to level the playing field for the companies? What?
2
@Myasara Invest in the communities that foster your success. A struggling mental health hospital is in San Jose just steps from the space-age campuses and on-site chefs of Apple, Facebook, Microsoft, and LinkedIn. If you can't figure out what to do with $150 billion in cash, get out of the cafeteria and walk around during your lunches. If you are an innovator and well-capitalized, maybe you should be the one solving some problems.
4
Envy is at the root of the preoccupation with inequality. It is one of the worst of human failings as it creates personal unhappiness, blocks spiritual growth, and motivates theft murder and destruction — Often on massive historical scale.
If you really care much about inequality, then you have a personal character and spiritual problem.
Equality is absolutely opposed to freedom. I don’t care much about stuff and actively reject ownership of the ordinary objects of middle class life. I have given away far more stuff then I have kept because that is the way I want to live. I feel no ambition to work more than the few hours a week now that are needed to meet my basic needs. Others with many times more feel driven to work harder to gain more. They create the infrastructure of a dynamic economy which allows me to live the unambitious simple life that I have come to prefer. The apostles of equality would destroy the freedom of one or both of us to spend our one life here living by the values that we each individually choose for ourselves.
13
Unfortunately, the “choice” to live modestly but comfortably is precisely what is disappearing : i.e. the middle class. Such massive inequality has rotted out the middle precisely, a space where one does not starve or go homeless but also does not have a yacht or SUV. The opportunities to earn a dignified subsistence living with some perks or luxuries and especially the luxuries of time and healthcare are shrinking. What appears as a lifestyle choice to you is actually the middle class American dream in a nutshell. Reducing envy has nothing to do with restoring a middle class.
38
@KBronson:
with such a morally based worldview, there would never have been a FDR and a new deal. Quit your simplistic thinking and recognise that there are bigger forces at play here and that, yes, economic change accentuate economic outcome in a manner that has nothing to do with personal merit. A lot of the time, it really is just down to luck, birth, personal charm and family connections.
9
@R.
Certainly luck is much of the determinate of outcome but so what? In fact I think it is most of the determinant. What is personal merit anyway? If I am smarter than my brother did I decide to be brighter? Did he decide to be dull? Of course not. But so what. I believe that we should treat all people with kindness and tolerance and personal respect and if a man has that and his basic needs met, what difference does it make how much more anyone else has?
Envy is evil and destructive and is at the root of the desire for equality. Equality is not found in nature. By the throw of the dice we are all unequal. Accepting such banalities is the essence of maturity.
Respecting people also means respecting their freedom to be what they are and live with the life that makes for them short of the point of leaving those incapable of meeting basic needs to perish of want.
42
Robert Frank already diagnosed this in "The Winner Take All Society,' "The Darwin Economy," and "Success and Luck: The Myth of Meritocracy."
His most famous and impactful of these ("Winner Take All Society") was written almost 3 decades ago, so this has been old news for quite some time.
It's only worshipful clinging to neoliberalism, and the intellectual and cultural inertia of sheer mental and moral laziness combined with the calcification of these doctrines in institutions and institutional practice, policy and custom, that prevents and remediation of this.
I won't rehash Frank's arguments, but another worthy critique appeared in Harvard Business Review (of all places), called "Runaway Capitalism." Basically, its authors contended that "competition' and "return on investment" had pushed aside all other moral values and priorities, causing a morally dubious but "turbocharged" (to use a McKinsey & co. term for their Oxycontin promotion scheme) economic efficiency.
18
Big Bob Frank fan here.
Tell me critic of neoliberalism, what MBA program does he teach economics to?
@JJ
Cornell. Kudos to you on your appreciation of such a vital, important, insightful, wise analyst and critic of our system, very big warts and all!
1
Your calculations leave out a big part of the mix: huge numbers of poorly paid immigrants. They are also often here illegally, which, means they are less likely to complain or launch legal action.
It's those same immigrants who make life possible for the top tier in terms of child care, housekeeping, food delivery, and a host of other things.
18
It is eerie how Kurt Vonnegut’s dystopian novel, “Player Piano,” so closely parallels the phenomena described in this article. Player Piano is first a novel; it is not a prediction. But Vonnegut was able to describe this situation some forty years ago. Wake up!?
1
Hey gang! Remember when De Blasio lectured us that inequality was "the defining challenge of our time"? And remember when he took bold steps to meet that challenge? We got a higher minimum wage, universal pre-K, all-in on 'affordable housing.'
And the results are in! "inequality is widening to new extremes. So, you know what our oh-so-smart Progressives are going to do now? Admit they haven't got a clue? Don't be absurd: they will double down and try to cram more of the same down our throats by way of picking our pockets ever cleaner.
What's that definition of insanity again? Doing the same thing...
4
@HMI A "higher" minimum wage is still...minimum and it doesn't do anything to offset the real estate lobby, which is not exactly a friend of "affordable" housing. And pre-k would take about 20 years to really see results. So your idea of "the results" is a little skewed....to say the least.
1
@RH
De Blasio, like his ilk for the past 55 years, imagines himself engaged in some kind of a "war on poverty," whose most striking feature is that however many programs established, however many billions, or trillions are mandated to fund them, actual success is a permanently receding goal.
This administration it's the minimum wage and 'affordable housing' (of which barely anything has been built over 5 years). And right on cue we get RH harrumphing that 'surely you can't expect results yet..." Whereas the one sure thing we know is that we can expect results...never. Not that that will cause our True Believer Progressives even to blink.
1
Its all about greed and callousness.
2
So, shouldn't we focus on educating more engineers (and all other highly skilled workers), to increase their supply? And, the more engineers we have the smaller the supply of line cooks, no? Assuming a constant demand for each category, shouldn't their price (wage) converge? Again, a focus on developing human capital in the form of educational investment is the answer!
6
This article shows how hard it is to understand a complex phenomenon. Part of the growth in inequality is because wealthier people are choosing to live in cities rather than to move to the suburbs. 30 years ago an upper middle class income earner would move to the suburbs to raise a family, which compressed inequality in the City while producing greater inequality in the suburbs. Those same folks now live in the City, with corresponding inequality effects per the article. Moreover, the rise of the two-income family exacerbates inequality. "Assortative mating" means that the family is more likely to consist of 2 MDs rather than one MD and (his) secretary or nurse. We ought to concentrate on increasing opportunity for all ahead of redistribution for its own sake.
18
Yes, and your example shows how a (negative) freedom leads to inequality. Unless we mandate that MDs can no longer marry other MDs. Wages and (highly paid) wives drive inequality. This is the paradox as equality at the level of marriage drives inequality.
Que the rebuttal about billionaires in the US of which there are less than 600.
It gets pretty obvious after a while that economists like Mr Manduca have never worked in tech and so attribute increasing wage inequality to phantom inequities or bad policies rather than what's actually happening. What's actually happening is that leverage in the form or productivity and reach in tech has made skilled jobs in those fields much more valuable. Since demand outstrips the supply of savvy workers in tech, wages have risen based on the increased leverage - worth - on an hour's wages. 50 years ago which I started in tech, it took a week just to write a small program. Now the same program can be written in hour or two. I think that makes an hour of labor worth 40 times as much. So, while my starting salary was 8K per year software engineers make 15 times that (you have to compensate for 5x inflation) today reflecting productivity and the reach (leverage) of the applications that they write. You'd see that if you worked in the field for as long as I have.
Honestly if you want to fix inequality, rather than making the tax code more complex, just eliminate all deductions and set the progressive rates to yield some amount relative to GDP. All those deductions do nothing but act as subsidies to rich people. Given the overall complexity of the tax code, no one really even TRULY knows what the inequality situation in terms of wealth actually is. The distortions created are huge. Huge.
37
The “tax someone else but not me” mantra will not work when high-wage income, middle class professionals realize they’ll pay more in social security taxes than they’ll ever receive in social security benefits, while others will not have their entire “incomes” subject to social security taxes because they’re unearned income investments, inheritances, and pass throughs are not “wages,” per se.
5
@PMD
A small increase in FICA might be justified without complaint since fewer than half of all middle income Americans own life insurance, given that Social Security is also disability insurance, and the extent to which you will receive what you pay in (like each day of life) is not guaranteed. Meanwhile, as you suggest, we might look to other areas of tax law that are more inequitable and change them.
5
So why do we continue to allow those who control capital to be our economic dictators? It’s not their money they’re investing, it’s ours, our collective savings and pension funds. Shouldn’t we be requiring regional balance in capital distribution instead of letting states and municipalities be extorted in order to get job generating investment?
6
Reinvigorating antitrust laws would help, no doubt, in slowing inequality, but the best place to combat these problems is with the tax code. The tax code could, in one for instance, make wages above a certain level -- say four times the wages paid to unskilled workers -- not deductible, forcing companies to take that portion of salaries directly from profit. There are hundreds of other similar-type changes that would alter the behavior of corporate executives to avoid harming the bottom line.
9
There's also the reality of supply and demand in the labor force. Numerous jobs that previously required a high school diploma now require a college degree just because they can.
9
Equality cannot be a goal in itself. In all the universe, one must go down to the level of sub-atomic particles to find entities that are absolutely the same.. As soon as things combine, differences appear.
A government that tries to enforce equality among its citizens will become a tyranny. The government's role is to curb dishonesty and to ensure that each is given the opportunity to develop to the best of his ability. If each person achieves this development, happiness and satisfaction will follow, no matter what the differences in people's attainments.
21
@David S. Hodes, MD Sorry, David, that is a bit of magical thinking. Equality can be a goal, more equality in pay can be a goal. Or don't use the word equality religiously. Each person does NOT have the opportunity to develop because some people are considered to be more deserving than others, and are paid less, are restricted from health care, have no jobs in their areas, etc.
A government that permits some people to have too much (yes, too much) money, education, training to the detriment and exclusion of others is a tyranny to all except those who are profiting.
13
Then what is the point of success? I six years younger than the man who owns the company I have worked at for 40 years. My grandfather had a sixth grade education, my father a ninth grade education. I grew up in Queens in the bad old days of the 1970’s and hold a public high school diploma and an Honorable Discharge. My boss’ family owned and operated a number of successful businesses as he was growing up; his father was very entrepreneurial and his mother was a college professor. He attended top notch Long Island schools followed by an MBA from NYU. He has put his two sins and five grandchildren through Ivys at full price. It is beyond absurd to think that our experiences, education, opportunities or lives would be anything alike.
9
With such a logic, the FDR new deal would never have happened. Quit this kind of short sighted “morally based” political thinking and recognise that there are larger forces at play and that, basically, massive inequality is becoming in itself a theat to true free markets and an impediment to a meritocratic society. And if you don’t, accept that the Trump era is really just the beginning.
8
Why should there be equality? I lived with below poverty wages for 7 years to get myself through a PhD program. now I earn over 150k per year. Why would I expect everyone to get a great income regardless of how hard they worked? Those well paying jobs available to anyone that graduated high school dont exist anymore. Be ready to work hard and smart and you can get wealthy.
43
@George
Then you're lucky, because at the end of seven years your field hadn't become obsolete and there wasn't a glut of PHds in your field entering the job market. In the mid 20th century there were relatively few people with law degrees, which resulted in family-wage earnings for white males born before 1940. Then baby boomers flooded into law schools and entered a job market that didn't have enough demand for them. During the early 1980s recession, a lot of people majored in programming and graduated in time for Cobol skills to be fairly useless. By the time someone graduates with a four to seven year degree, the market has moved on to new skills. This trend hasn't affected me, but I do keep encountering people who have lived this reality.
As for main point of this article , the author hasn't argued the extreme position of absolute equality. The point is history shows how inequality results in rebellion eventually.
14
@John France prior to 1789 is calling you.
2
Would you consider a public defender a low skill job?
3
How could this be I thought our big cities were becoming more progressive and democratic, yet they are dominated by the wealthy who chose not to live with the poor. So interesting
9
@EAH
The interesting thing is, it is the “socially conscious “ millenials who are shattering the cities through gentrification, with the weak excuse those residing in cities for generations are “making a profit” in millenials eyes by being forced out.
2
Generally speaking I have no problems with eating/soaking The Rich, but I fail to see how such mproves the job/life prospects of those being left behind. Since the advent of the Industrial Revolution it's been ever thus...
7
Focusing on taxable income does not really represent what matters more, consumption of goods and services. In New York, consumption of goods and services is quite high for all people, emphatically including many of those in poverty as defined by taxable income. With that said, inequality has two major factors driving it. The success of high performing people (and to a lesser extent, their heirs) on the high end and an abundance of unskilled immigration on the low end, pushing the low end lower. Certain constituencies prize either or both of these phenomena, meaning that this is not necessarily bad news in the first place.
4
@rjs7777 It seems to me one thing left out by both you and the article is the inequality created by investors, especially those at the tippy top. They may be skilled (or their brokers are), but are not wage earners. And your implication that the bottom wage earners are unskilled immigrants is either prejudicial or myopic.
2
"In effect, something we often think of as undesirable (high inequality) has been a signal of something positive in big cities (a strong economy). "
This is the problem. Its economists, and its economics pundits. In many ways its you.
What do you mean "strong economy"?
An economy where 90% of the people find themselves in worse and worse economic condition?
An economy where some become ungodly rich by scamming everyone else, where financial institutions are less concerned about their status as institutions and more about reporting mega-profit every quarter?
An economy eating its young, concentrating resources in flabby white hands that dump it into moldering Caribbean cellars where it does no-one good?
An economy where the paper of record makes a healthy hunk of its bread selling $5,000 pocket books?
An economy that makes millionaires of legislators who pass legislation favoring the rich and corporate, soaking everyone else to cover the shortfall, cutting every kind of social support to make up the deficit?
An economy where sober media report with excited giggles the advent of "poor guy doors" in sparkling new condos, designed to spare the rich the sight of people they routinely impoverish?
An economy eating its seed corn, refusing to support, oh, education and healthcare for the "children who are our future"?
An economy that denies its age of greatest innovation and economic progress was an age of 90% tax rates and powerful unions?
Sounds sick to me.
21
How did the American unions prevent millions of US manufacturing jobs being moved to other countries?
6
“In these places, inequality and economic growth now go hand in hand.”
That might have been Karl Marx writing about the inherent contradictions of capitalism in the 19th Century.
4
@Rod That's right. And something needs to be done about it.
2
Reality Check the problem go all way back to NAFTA . Allowed our government to use tax money to purchase imports. Congress is still in denial trying to improve NAFTA so government has zero accountabity an corperate america can export last of jobs pay living wage. Even the 2008 crash actaully caused by NAFTA . Great Deception.
8
So this is supposed to make me support socialism where everyone is equally poor with a a loss of rights? We are free to make choices in life and what types of jobs we want. My neighbor wants less stress with more time off. To each their own. People in countries all over the world would love to have the choices & opportunities we have. Look at wealth distribution in socialist and dictatorships between their leaders & commoners. They don’t have a middle class.
15
@JOSEPH The USA doesn't have much of a middle class, and there are a whole bunch of people from around the world who realize a country with such great resources that has no paid maternity leave, no free education, low taxes on the rich, for-profit healthcare, etc, is not the place to be a human being.
3
@JOSEPH Lowering the inequality gap is not Socialism. European countries are capitalist but nevertheless have subsidized universal healthcare, free education, etc. Dictatorships are usually not socialist, save China, which has a booming capitalist class.
5
@Kathy Barker I don’t think many of the regions you are mentioning are doing super hot economically. Much of Europe seems pretty stagnant IMO with its 1% growth... Meanwhile the developing countries are dramatically improving people’s quality of life and in coming decades could be dictating trade terms etc to these European powers.
Can you imagine people in south-east Asia taking the whole month of august off???
3
This analysis obscures major facts.
1. Salaries for people who have real skills and actually provide value -- engineers, doctors, teachers, nurses -- have not really gone up in real dollars.
2. Salaries for blue collar people who have real and valuable skills but do not require college degrees -- mechanics, janitors, line cooks, farm hands -- have fallen through the floor in real dollar terms.
3. Salaries for the parasites -- MBA's, economists, bankers, talking heads and political pundits, have gone through the roof.
307
@whaddoino
Right on! Krugman likes to point out that when the financial industry was sane (35+ years ago) it accounted for only a small fraction of GDP - like 5% or less. Now it’s way over that - probably more than 20%. What did that get us, aside from the meltdown of 2008? Parasites indeed
40
San Jose is right up there. It's suffering as a result, as a 30 year resident, I will retire elsewhere.
🇺🇸
3
What was different 40 years ago?
There were not 15M+ low-skilled undocumented immigrants living in our large cities — most with low wages while driving down the pay of low-skilled Americans
17
@Dr. John,
Not many want to acknowledge that what happened during the 1980's and until the present, is that we have had massive immigration, most of it illegal swamping our cities, causing loss of jobs for the working poor, housing shortages are astronomical, Americans are being pushed to the streets and to drug addiction by our inept political class.
Nancy et. al. did that to us.
4
@JRS
There are not many willing to acknowledge what happened because it is simply not as you suggest. There is no evidence that immigrants have done anything other than fill jobs most Americans don't want (including the homeless drug addicts whom immigrants also walk past on their own way to work, which are another problem entirely) and to fill demand while providing valuable growth necessary to our economy.
Low skill, low wage jobs will always exist and, with today's economy, many still remain unfilled. The housing shortage is due to changes in our economy resulting from too many businesses and, ultimately, the workers they hire trying to function in limited places.
2
@Dr. John Don't know where you got 15M+. Most data show 12M or less, and not all are unskilled.
2
You have now convinced me more than ever that Democrats do not know how to run cities. Why would I want them to run the country?
5
@RMM
Have you looked at rural America lately? Wage and job growth are minuscule. Hospitals close because they are not economically sustainable, and meth and opioid addiction are ravaging communities. Young people can't leave these areas fast enough. Most of these communities have Republican mayors, council members, sheriffs and state legislators.
Why would I want them to run the country?
24
Cities are doing just fine, thank you very much. It is rural areas that are in deep trouble.
3
fine for whom, Susan? The rampant homeless relieving themselves on the streets of California's major cities?
1
Kurt Vonnegut May have been into something with Harrison Bergeron. Perhaps the more productive members of highly productive clusters should be made to be less productive. Seriously....what are we saying when the data suggest an a) birds of a feather problem, and b) especially hard working (maybe even over achieving) birds? Are we saying the new increment from clustering is taxable to remedy the inequities? Are we saying we should prevent clustering? Are we saying clusters should change their admissions criteria?
3
Many well off professionals I know in Seattle complain bitterly about the homeless here, maybe not realizing that their high salaries are part of the problem. It's obvious by now that the income of the upper 10% are driving higher costs in the big cities, as they bid up real estate and other goods. Meanwhile, the price of real estate, health care and education are forcing the middle class to borrow more and more, and forcing the folks at the bottom, who may also have mental health and addiction challenges, out onto the streets. It's also become obvious to many of us that the real solution lies in progressive programs like universal health care, student loan forgiveness, and subsidized education, paid for by higher taxes on the upper 10%. The current trend is unsustainable and politically dangerous, and may lead to the election of more autocrats like Trump, not to mention increased suffering for millions of Americans.
15
Good ole’ trickle down economics!
2
One result in Philadelphia, we have 86,000 more women than men. I see those fine young republican boys just racing in to scoop them up.
1
I suspect the inequality is greater than depicted for two reasons. First the data analyzed do not include incomes for the top few percentiles according to the notes at the end of the researchers report. They have seen the largest increases in income over the past several decades. Secondly, the researchers appear to be using before tax income, which does not control for the fact that due to the myriad federal income tax cuts since the 80's the top ten percent of income earners after tax income has increased much more dramatically than other income earners. These other earners have seen much more modest increases in after tax income due to tax cuts, while at the same time experiencing a dramatic increase in social security tax withholding during the 80's which for many earners have wiped out the gains from income tax cuts.
7
There is an article in this month’s Economist that makes exactly the opposite claim, that inequality is actually much lower.
1
@Susan
Is the Economist referencing the same data set?
When I lived in San Francisco from 1982-1988, there were working class and middle class neighborhoods in addition to the wealthy areas. Now, the entire city (and areas surrounding the city) is inhabited by the extremely rich. What I don’t understand is where do the working/middle income people live? Where do The dishwashers, waitresses, and baristas live without two hour commutes? Pretty soon residents of San Francisco will be delivering their own meals and washing their own dishes at restaurants, making their own coffee, and policing their own neighborhoods.
77
Or could it be that they’ll be doing their own shopping, cooking their on meals, and making their own coffee?
In a socio economic system wherein the greatest rewards flow to the most valued professions, income and wealth inequality will follow. See the 11/2019 issue of Scientific America article entitled "Is Inequality Inevitable?" for the mathematical model which basically concludes, "yes, it is."
So the issue is not whether inequality is an outcome of regulated market capitalism. It is. It always will be. Since regulated market capitalism has proven to be the most powerful means of raising quality of life for the most people in the shortest time, we better get used to it. Unless we want to experiment with Soviet or Mao-era communist economics.
The issue is what, if any redistribution of the wealth created by regulated market capitalism is necessary to yield a quality of life to the critical mass of people needed to keep the locale, country progressing. To keep people optimistic that the whole system works for them even if some people make out a whole lot better than others.
There's a clear message to the middle and working classes in the reality of the market economy. Value getting a good education and hold yourself accountable for giving it your best shot. Just as not everybody could play roundball like Dr J, not everybody is going to prosper in our socio-economic system.
Oh, by the way, as artificial intelligence, robotics and other technologies mature even as their capabilities increase, the issue will only get thornier.
At least education is portable.
13
@TDurk
“Since regulated market capitalism has proven to be the most powerful means of raising quality of life for the most people in the shortest time”
Beg to differ. There are many counter examples — e.g., both Cuba and China are counterpoints, for different reasons.
Plus, capitalism even with some regulation has still produced massive inequality, poverty, and widespread hunger. That was true in the U.S. and only partly ameliorated by social welfare programs.
The choice is NOT between regulated market capitalism (that ship sailed a long time ago as the power elite and billionaire class captured government) and Soviet or Mao-era communism. That’s your ideology speaking.
There aren’t many other options. Open up your mind to a greater range of choices. What we need is European style social democracy and a more worker-centered economy — or, even, *democratic* socialism.
5
This is all the result of globalization. The labor pool has expanded by billions of people and somehow it is a mystery why wages have changed? A global economy means larger markets and greater profits, but it also means larger labor markets and more people competing for jobs.
14
@Kohl The way we've handled globalization has been lousy. But globalization itself, the increasingly rapid interconnection of people, products, and ideas is unavoidable.
Improving how we regulate that interaction is critical.
4
@Oscar I could not agree with you more. Unfortunately, I don’t necessarily know what we could be doing to better handle it.
1
For a change, a balanced article in *tone* as well as content. Who but an unrestrained capitalist cannot agree with the concerns raised in this article? And an unrestrained capitalist should consider, if he or she has a working pair of eyes, the practical effect on quality of life even for himself or herself, when such chasms, nay canyons, result? Homelessness on a Dickensian scale, urban blight, and so much more.
An entire capitalistic economy works better when all are employed and employable, and all can afford at least basics.
I don't have answers, but I do see that tying overall housing value in a region to the highest incomes *will* make housing unaffordable for many. I support ceilings on rent.
11
First of all, as the article points out, those at the 10th percentile are better off by 15%than they were in 1980. To a large degree, it shouldn't matter that others are doing even better. How does it affect me if I am doing better to know that there are other people doing even better than me. The only problem I can see here is envy.
Furthermore, the author doesn't ask the question as to why the bottom decile is not improving as quickly as the top decile. Over the last 50 years there has been tremendous downward pressure on wages of unskilled laborers in manufacturing industries. The fact remains, that competitive industries cannot afford to pay an American more money for the same job than they would pay an equally productive Chinese or Indian worker. That is why nearly all of our heavy (and heavily unionized) industries have moved overseas. While most of us benefit from open trade policies that keep prices low, the workers who lost their jobs have not benefited, and those who are still working for low wages are afraid that they too will lose their jobs if they ask for too much. Its time we started proposing policies that recognized this, instead of simply blaming the rich. Otherwise we are gong to face more elections like 2016 and Brexit.
19
@chip Companies could afford to pay American workers if Americans had not been brainwashed to believe that we are all entitled to cheap clothing, furnishings, toys, etc. And companies have decided that rather than make reasonable profits, they are entitled to humongous profits. Even so-called “designer” clothes with high price tags are as often as not manufactured in developing countries.
I have a lot of sympathy for the truly low income folks working multiple jobs to pay for necessities. I have less for those who bemoan wage stagnation while checking FB on the latest Iphone. And just to be clear, I am not a highly paid corporate attorney.
2
Look up the price of a quality American made dress shirt (starts around $150) or shoes (starts around $250) and you will see that even many upper-middle class Americans cannot afford these prices.
This doesn't show the half of it. It only measures individual wages. With women's emergence in college and grad school attendance as well as their increased participation in the work force on the higher end (not as much as it should be, I know) the ratio of household incomes could in fact be even greater. Or at least the absolute amount differentials are greater. A negative biproduct of women participating in higher education and the knowledge economy is even more pronounced income inequality.
2
Binghamton has far lower inequality than New York City. Binghamton’s median income is approximately $31,000 and NYC’s is approximately $58,000. In other words, NYC residents are far better off than Binghamton residents.
The article points out that the lower inequality in Binghamton occurred because high paying jobs left, not because low paying jobs paid more.
Inequality is far less important than absolute income, a lesson that every person who has ever experienced socialism understands deeply.
11
@Shiv
"In other words, NYC residents are far better off than Binghamton residents."
Playing with statistics are we?
What this mans is that many, many more gajillionaires live in Manhattan.
In Binghamton a fabulously wealthy soul is an outlier. In sections The Big Apple, they're the norm.
3
@oogada I made sure to mention the median, not the mean (average) income in both cities. A few high earners don’t affect the median income. So no, I’m not playing with statistics.
7
@Shiv
A few high earners, no.
Lots of very high earners, yes.
What was different 40 years ago? The author fails to mention the role of unions in raising income for the 90%. As union density (the % of the workforce in unions) has declined, a much larger share of income is going to the top 10& and the top 1%. All gains in productivity have gone to the top.
The "good manufacturing jobs" of the past were only good because they were unionized. The service jobs most people are working in now can also be good, if the employees can bargain collectively: retail, hotel, restaurant, hospital, janitorial, home aides, security, delivery, warehouse, etc.
The "market" or "forces" decried by the author is the massive inequality in BARGAINING POWER. Big business has nearly all of the power, except when employees have rare educational capital: engineers, coders, lawyers, etc. They have to pay a lot to get these employees. Everyone else has to work for the pay that's offered--and it's low.
Congress should pass the Protecting the Right to Organice (PRO) Act. The House Democrats have enough sponsors to pass it, but they haven't. NOW's the time.
176
@Jackson
Preferably all of them.
16
At the end of the day Unions were crushed by the globalization of business. Greater than 100M new manufacturing workers entered the world labor supply starting in 80’s when there were a total of 30M in USA/Europe combined. You cannot have union workers in Detroit making $70/hr including benefits vs. Chinese or Mexican workers doing similar jobs at $7/hr. This would have ended one way or the other. The only solution is to keep ahead of the others in education, which we have more or less failed to do in the USA. Tariffs are too little too late and only hurt both sides. Eventually the Chinese economy will have and are having higher labor costs and will not be as big a threat. Education is the key to future success in higher cost countries, will we keep up?
6
@Stevenz that door leads to being put out of business by a competitor from another country.
1
The United States was built mostly by men lacking higher education, because the government gave resources they stole from the Native Americans away for free or nearly for free--land, lumber, minerals, oil etc. That had pretty much wound down by the 1920's, which were artificially boosted by a cut to near zero in the capital gains tax. Then the piper got paid in the depression. The entire process got reset by WWII, when much of the worlds economy was destroyed, leaving the US as the global leader both economically and militarily. China and the Soviet Union were behind "curtains" and did not compete. Now those advantages are long past, there is no reset on the horizon. Globalization, automation have taken hold. That means that uneducated people are in little demand. As time goes by, educated people will be in less demand too. Then see what happens.
24
@Rick Very good description of the two great advantages of America - the expanding frontier and WW2. Since then we have made political decisions aimed at maximizing creation of wealth without regard to its distribution. The beneficiaries of those decisions primary goal is to perpetuate themselves and their advantages. And now they have the resources to do it.
15
@Rick I don’t really agree. Many uneducated people in the US have good careers in the skilled trades.
The US had a “labor shortage” (meaning, excellent wages for labor and low immigration) for the 1945-1985 period. I don’t think technology and globalization have eliminated the most middle class opportunity in the US. Immigration has. Low unskilled wages have been great for well educated elites and terrible for middle and lower income citizens. The underlying demand for blue collar work in the US remains strong and the wealth to pay for it is immense. But the wages will be low if elites continue to get their way on immigration.
3
Something my family doesn't want to acknowledge at all is that more socialist/FDR-like policies help to keep society more equal in status. Small town/rural America hugely benefits from subsidy by the federal government to keep it as an attractive place to stay and invest. When unions are decimated, federal funding is cut, and small towns are forced to burden more costs, they simply can't compete with large urban areas that have infrastructure, universities, and larger tax bases. Small town America advocated for small government and with that comes the death of rural America. That's capitalism for ya.
20
The wage ration of 90th/10th percentile are gross wages. When they are adjusted for taxes and transfers (e.g. child tax credit, earned income tax credit in 2015), the equality is much less.
The highly unequal areas of CT, NY, CA are the areas where the combined Federal/State/City income taxes are the highest, with marginal rates around 50% for taxes on high incomes.
That is not to say that inequality is not increasing, but there is no need to over-hype it by using the ratios before taxes and transfers.
7
@Baron95 If anything this whole study and graphic is UNDER-hyped, because those at the top of the income measures pay less overall in taxes, because much of their wealth is not in wages, but in investments other less-taxed forms of wealth, versus lower income data points who have most or all of their wealth in just straight wages. So, your point is invalid.
8
@Nico Anderson That's not true. higher income earners pay more, almost invariably.
4
@Maximus Both you and @Nico Anderson's points are valid: recent federal administration tax cuts have given more back to high earners, particularly in states without higher taxes. And higher earners pay more in dollars, yet the percentage paid of their disposable income is considerably less. Considering changes to this national (or international) phenomenon will be extremely challenging.
3
Unions. Strong unions would be beneficial.
27
@M Why? So they can build a resort?
3
Something neither the article nor the comments mention (unless I missed something): if perceived inequality is a key source of support for right-wing populism, how do we account for the fact that the largest urban centers are most Democratic?
Obviously the "working class resentment" argument is too simplistic in this case. At the very least it needs refining.
22
@Steve Right-wing populism is strong in the fringes of urban centers and rural areas. Right-wingers told the that sector of the electorate that they could get a better "deal" from them. In terms of social issues, they have received what they desired, but on economic issues, I don't think they have. Core urban centers have received better government services and that may be why they're Democratic.
2
@nedpgh Yes, but the peripheral, fringe areas are not the centers, are they?
It may also be the case that urban centers have a higher minority population -- to cite just one significant factor. My point is that it is not only an over-simplified class phenomenon.
1
The Fed conclusion was that high opportunity for skilled workers (which would include New York's dominant financial sector, and also NY's less than dominant tech sector) drives them to hubs and creates inequality. Low opportunity areas (such as the upper mid-west) have less inequality, but less opportunity to go with it.
I suspect that markets will figure this out without a governmental intervention. People will come to understand they can live better in Binghamton than Brooklyn with lower income.
4
But the jobs are in Brooklyn, not Binghamton. You live where your job is.
9
@Meighan Corbett
Unless you telecommute, which is becoming increasingly prevalent in many career fields.
2
"At the same time, automation, globalization and the decline of manufacturing have decimated well-paying jobs that once required no more than a high school diploma."
And it will get worse.
College should be free.
Not everyone can be an engineer....but kids need a shot to reach their optimum potential.............
6
@TWShe Said In 1960, California made college free, from Junior Colleges to the University of California. The result is that California boomed!!
6
@Rick Come Again--California Tuition is not Free--
2
The US has the highest level of inequality among developed countries. That means that many people do without basic necessities. There are too many homeless, food insecure, indebted, without medical coverage.
The US was great when FDR was in office. He had solutions to many of our problems expressed in his Second Bill of Rights, which was written into law in post WWII countries but not here. To fight Fascism we not only mobilized for war, the top marginal tax rate exceeded 90%, which is why income inequality was not so extreme. It is difficult to tax the rich because they game the system, but that’s where the money is.
It is morally right to have a strong social safety net so that everyone has the basics for a dignified life. A high marginal wealth tax would pay for universal health care (including vision, hearing, childcare, and long-term care), free public higher education, supplemented income for displaced workers, and well-maintained infrastructure.
That would damp down inequality and make the US a much better place. Electing Bernie would be a good start.
Republicans oppose all of this, even now opposing the fight against Fascism. We may have lost WWII.
http://gopiswrong.net/
17
@Robert Vogel
Yep, things were great during FDR's time in office. A depression that lasted 10+ years and then WWII. Everyone had no money and then everyone went to fight the war. Things couldn't have been better.
3
One mustn't forget the impact of Clintonian trade policy. Democratic policy favored coastal cities and abundant consumers of Chinese goods. One can argue that the US should subsidize Mexico's industrial development, but those pushed out of US jobs should not pay the whole bill for that generous gesture. We used to try to compensate to a modest extent, those thrown out of work by national trade policy that helps some sectors while devastating others, but the amounts given workers to retrain or move are pitifully tiny these days. It is estimated that over 700,000 US jobs were lost by NAFTA. Upstate NY (which includes Binghamton) was devastated. A corridor once booming with industry now has virtually no national corporations. On NAFTA-induced losses, see Jeff Faux, “NAFTA’s Impact on U.S. Workers,” Economic Policy Institute, December 9, 2013. http://www.epi.org/blog/naftas-impact-workers/; and Robert E. Scott, “Manufacturing Job Loss: Trade, not Productivity, is the Culprit.” Economic Policy Institute, August 11, 2015. http://www.epi.org/publication/manufacturing-job-loss-trade-not-productivity-is-the-culprit/
18
@Martha
There can be no doubt that upstate NY has suffered at the hands of a competitive global economy and ruthless business and consumer demand.
That said, NAFTA was hatched under Reagan, negotiated under HW Bush, and signed by Clinton with a majority of Republicans.
https://www.washingtonpost.com/news/fact-checker/wp/2016/05/09/history-lesson-more-republicans-than-democrats-supported-nafta/
Many northern jobs moved to southern states before moving out. Today, support for NAFTA is equally mixed both among business and the general public. This is because NAFTA is far more complicated than simply blaming it on Clintonian policy or the Democrats alone. This can be attested to in the last article you cite which states the chief reason for job loss in trade is due to currency manipulation and, principally from China.
3
When this current Bubble bursts, things could get very ugly.
8
if line cooks and store clerks were compensated fairly with living wages and health care, education and rentals were accessible and affordable, the disparity of rich and poor would not be so painful. the gutting of the middle class has destroyed the social fabric of our country
26
@pamela
The employer and employee negotiate compensation. If it wasn't fair, they wouldn't enter into the relationship. The government should step in to set wages? Perhaps you'd feel differently if they stepped in to lower your wages 20%, or required you to double what you pay landscapers/lawyers/accountants/housepainters/whomever
10
@pamela - People are paid what their job is worth, as determined by the person paying for the job - the employer. If prospective employees are not willing to do a job for what the the job pays, then the position goes unfilled, unless the employer can figure out how to make the job more valuable and raise the going rate - usually by adding automation of some kind. Look at the ordering kiosks being installed at McDonalds or the groceries self-checkout machines.
The only way to increase your income is to make yourself worth more to prospective employers. Get more schooling, learn a better skill, master what you do better than others around you. Then employers will compete against each other for your services. That's what happens all over Silicon Valley and in other tight labour markets.
7
@Andy Deckman
what are you talking about?
compensation WAS negotiated by unions for 33% of employees a few generations ago.
and yes, i would be willing to pay more if health care, education, and rentals were more affordable.
2
Gee.... what's wrong with: "From each according to his talents; to each according to his needs."
Oh foul heresy! That dares to question the Moloch of the Market.
But I ask again, by what logic, external to the fetish of the market, should a physician bloat while a janitor starves? Oh, it will sagely be said -- as we have been taught to say -- the first fulfills a more important function. Oh yes? Then why does a Hollywood clown earn more than a surgeon?
Your principle has no clothes. I call it out. The title of the article ought to have read: Free Market Capitalism proves to be destructive of Just Civil Society.
Oh huff and puff. Such childishness! It certainly should not see the light of day in the Times.
15
@Chip "Gee.... what's wrong with: "From each according to his talents; to each according to his needs.""
You expect people to work without the motive of personal gain. Your proposition relies on the fantasy of human selflessness.
A physician clearly should make more money than a janitor, not only because their job is more important, but because it takes enormous effort to become proficient at it. That a janitor should then starve is a false dichotomy. The rich entertainer makes more than a surgeon because of the sheer number of people their job interests. I don't see how this is an argument of substance.
6
The NYT is not afraid to report the bad news about large cities ran by Democratic politicians.
However the impact of millions of low-skilled undocumented immigrants is not included in the analysis.
23
@Dr. John oh please: "the impact of millions of low-skilled undocumented immigrants " you mean the people working here as farmworkers? Housekeepers? Haven't seen too many white males wanting those jobs and besides that's a false flag/red herring promulgated by the right to spread hatred and fear of the "other".
I very much doubt that the highly paid immigrant engineers/doctors/lawyers that are HERE are "undocumented" . That highly educated Indian neurosurgeon is not stealing "bubbas" job.
However, the corporations that OUTSOURCE engineering/Tech work to India/Asia ARE "stealing our jobs". Go after them! Those are the companies laying off people (engineers/tech workers) and replacing them with people in India/Asia .
And the coming "robopocalypse" for jobs .....robots are being used (and are in planning to be used) to automate manufacturing, shipping, delivery, driving,....that is for sure going to take away jobs from the undereducated.
6
@Dr. John What do you believe is the significance of the fact that large cities tend to be run by Democratic politicians? Do you honestly think Republicans would improve inequality? What relevance do these immigrants have? Do you believe low-skill jobs would pay any better if they didn't exist? Why bicker over pennies while a small number of people make off with the bank?
5
Our thoughts, exactly. Thanks!
This is on study area where looking at outliers might be very informative. While company towns likes Binghamton or Schenectady took and are taking body blows by the departures of key jobs (IBM and GE) are there other places, similar demographically that are prospering? Are there other factors at play? Perhaps its also impacted by people settling where they're around people who are politically or socially like themselves. Binghamton and the Southern Tier of NY are largely deep, deep red. The laws, the people and general culture reflect that. While it's comfortable to those who've lived like that for generations, the newcomers may not feel so welcome. And yes, I understand the regional exceptions exist (Ithaca) but look at the voting patterns in that area to get a sense of the culture and its ability to be truly tolerant and accepting of diversity.
5
This really seems to reflect the disintegration of the social contract, the sense that we're all in this together.
A few comments have mentioned labor unions. True. And yes, Republicans have waged war on unions. But the bottom line is that workers stopped organizing because they bought into the lie that capital (vs labor) was the sole engine of economic growth. Millions of workers envisioned their 401k growth as a substitute for wage growth, and the one percenters in charge were happy to oblige.
Fundamentally this is a me-instead-of-you mindset, the false and silly fantasy that because I have 50k in an IRA I'm part of the ownership class.
And concurrently automation and data science are putting millions out of work. Barring some sort of unforeseen economic use for the human body and the labor it could provide, or massive government intervention, inequality is going to get much worse before it gets better.
Consumption is still the engine of the economy. I'm wondering if consumers' unions might replace workers' unions in some fashion.
5
Added to the highly paid technology workers at the top expanding, you have the major metro areas flooded with immigrants, both legal and illegal willing to work for any low wage at all. This is like a rubber band being stretched at both ends. No one wins this game or really can even afford to play it.
4
"But they would not alter the fact that this economy values an engineer so much more than a line cook."
There's a lot of truth in this. It's comes down to need. At some point we're all going to need the services of a plumber, electrician, a doctor and lawyer and a banker. I can't do those things myself, and I'm going to have to pay for that. Grudgingly I might add. Esp the plumber.
Restaurant employees, sit down or fast food, I don't really need those services. It's sure nice to patronize them but if things get financially dicey it's the first thing I have to cut out. Same goes for dry cleaning, maid service, car wash, etc basically any classic service industry job. Therein lies the predicament for folks who fill those jobs. It's precarious and not great for supporting a family. It's okay as a starter job or for those who don't have a command of English (immigrants) but to live on? Not sure it makes sense either to raise the pay up to an amount that won't sustain the position. $15/hr might be okay but if a "living wage" in the area is $25/hr a business might find it can operate only with 2 employees instead of 5. Or go automated instead.
However, I do believe nurses, teachers, and those who make up mid class professions (often public sec jobs) are woefully underpaid and do need salaries commensurate with their positions. Don't ask a prospective teacher to have a $50K degree but only pay them $35K/yr. And that's on voters too for not paying for that.
27
Inequality is life. Stop with the socialist dreamy stuff.
10
This doesn’t capture nuance.
It also infers that rural areas have chronic poverty and have zero capacity to create jobs of value.
There is nothing pulling people out of the city. There are no jobs of value outside it.
That is a real problem as well that can be addressed through government green technology focus in moving to areas and build infrastructure of value outside the main hubs that care the only ones providing middle America even a chance at a life.
7
I lived in a small post-industrial city in Upstate New York. There was very little income inequality. NO ONE had any money. This was not what was promised back in 1980 when everyone was convinced that a more aggressive free market economic approach was going to make us all better off. That approach was only half successful. It made people at the top better off. The market was supposed to redistribute that wealth to others. That didn't happen as promised. It may never happen. Income inequality may just become a fact of life. But at least we can stop giving tax breaks that make it worse. We can stop going down the path of tax breaks, budget cuts, and deregulation.
251
"That didn't happen as promised." Of course not; they lied. The economics profession, is, through deifying the 'free' market, one of the most brazen and ideological components of oligopolistic capitalism. Rampant inequality is not merely a byproduct but its raison d'etre.
31
@Karen Thornton you hit the nail on the head ! Since the 80's politician having been promising the masses yet delivered $$ to their funders. The politician, elites and those that to whom their re-election dollars came from benefited the most along with folks close enough to these groups to grab their share. I think NYT alone has enough data, i.e. "promises not delivered" from their paper alone -14215 days to be precise from 1/1/1980 to come to this conclusion.
8
The high income earners did so be their talents, hard work and acquiring skills of the global economy. Even in schools, you can see which kids strive and which kids spend all day playing Fortnite. Invest in better STEM education for all, encourage work rather than computer games, have a basic support for healthcare for all as a human right. Essentially provide the resources for the low income a decent quality of healthcare and access to education and training but they have got to strive. Meanwhile, tax the super rich. Amazon is exploiting the internet - there is no place of origin of manufacture and and of the company, and isnt it the law that country of origin must be disclosed? I dont want to buy things from.some sellers in some countries. Basic legal and tax inequities / loopholes have to enforced to address unfairness
5
It is important to analyze this in the context of what income is required for a decent standard of living within those cities, including other non-wage support and services. Income is only one component of this equation.
All things considered, I’d rather have the higher inequality driven by some having higher wages than less inequality caused by people losing high-paying jobs. More high wage jobs and a strong economy can be leveraged to bring up the low wage workers. Job and population loss leaves little room to mitigate social problems.
Examining the political anger in the country, It appears that most of it is not in the larger, high income cities. It is in the downward sliding rural areas and smaller cities. That tells me a lot about what is going on.
5
One thing we didn't need in New York, if we wished to reduce income inequality, was more real estate speculators buying up sites for super-skyscrapers to provide every last visiting billionaire with his (or her) own pied a terre. That was what Michael Bloomberg most notably brought us -- and here we have him running for President!
25
Billionaires should be taxed at a higher rate, but there's no doubt that their New York City real estate taxes are hefty and help for our municipal and social services, also hefty.
5
@B. Yes, but if they're only using their NY residence as a pied a terre and not their legal residence, they're not paying any taxes in NY--PH
1
@Piri Halasz
"let's limit prices by limiting supply" - people who slept through economics class
2
Did the study include assistance from various points to those with low incomes. For example, if those with low salaries have an effective negative income tax rate, or get other forms of assistance, the degree of inequality might actually turn out to be less extreme. Things might not be as bad as the chart indicates.
6
This is not new, nor enlightening. As manufacturing jobs have gone away, OF COURSE the gap is rising. Does not mean anything should be done about it. It's just what it is.
2
@Roy P You posit that "It's just what it is", as if government policies and corporate machinations had nothing to do with it.
But they did.
So change those and you will have different, more healthy outcomes.
10
@Roy P
It is what is, that's cool. But don't beef if the market makes corrections by means of crime, social unrest and revolution.
3
Any analysis like this is, of course, skewed by the fact that it is based on wage income. Rich people, especially very rich people, don’t make their money from wage income, they make it from profits on investments, irregularly occurring fee income, commissions, rent income, inheritances, and from other non salary sources.
128
@Pottree Yes, Rich people get richer from excess returns to their capital and excess rentier income.
Do you see how this discourages productive work?
6
@dannyboy
In order to get rich from rental income one has to have property. That property has to be built and maintain to get a return on investment. If a investor invest capital in a company that company has to produce goods or services that provide a return on investment. Investment and returns on investment do not necessarily discourage productive work.
But what we as a society haven't confronted is that the return on capital now exceeds what was traditionally the return on labor. That has skewed the economic dynamics of this country to benefit investors to the detriment of wage earners.
4
@Carl
"rental income" in economic terms it not only what tenant pays landlord. It includes the extra amount earned from capital.
1
This chart looks fancy, but very hard to track individual dots with the uniformed color pattern.
Would be interested to see Nashville in 2019, relatively low for 2015, but with huge population increase past several years, one would assume the wage gap has increased even more.
5
The most important takeaway from this article is NYC and SF are Democratic strongholds from top to bottom. These cities should be a showcase of how well we can address the problems of inequality. Instead, it's yet another example of our complete intellectual bankruptcy. It's symptomatic of a much bigger problem. The growing divide between some Democrats who want to practice what they preach & fanatical progressives who want to strangle everything. Environmentalists in SF will go to the barricades to stop any housing projects from being built here. Mind you we are talking about affordable housing for working-class families. Thanks to their efforts the gateway to middle-class security, has been pushed way beyond their reach. The ease with which environmentalists can stop housing developments is a direct result of the numerous local & state laws that favor environmental concerns over affordable homes. The result: millions of hard-working people are without access to high-quality low-cost housing. NYC not only has some of the most segregated public schools but some of the worst. Parents here will go into heavy debt so they can send their kids to private schools rather than public. The DOE says a huge percentage of public high school graduates can't read or write on a college level. Unacceptable! It's no wonder they flounder when they get into the working world. Why is anyone surprised at the inequality in our major cities when we can't even address our most basic problems?
91
@Bill Brown Are you proposing just giving up?
Or is Blame the solution?
I read both in your comment, so I'm not sure of what you propose: apathy or blame.
Good luck with that.
4
@dannyboy No. I'm not proposing that we give up....never. Progressive Democrats control most of the major urban centers cited in this article...in fact, in most cases, they have absolute control of the political machinery. Look at the results. Massive inequality. Why should we trust them with the reins of power if these are the results?
8
@Bill Brown
I could offer a counter to your argument rural Louisiana, where lax environmental regulation has led to communities near petroleum refineries with some of the highest cancer rates in America. Low taxation means these communities also suffer from children getting sub-standard educations, and poor infrastructure which makes them undesirable places to start or expand a business. The result is type of grinding poverty that doesn't get the media attention that urban poverty gets but leads to the same type of hopelessness.
Oh and most of these places have Republican mayors, and state legislators.
24
A related discussion to today's topic is in Sunday's NY Times (12/01/2019), where an article by Scott Shane discusses the economic impact of Amazon on Baltimore, by making it a type of warehouse hub for its regional operations. On a site where GM and Bethlehem Steel once had manufacturing plants, Amazon has sited two "mammoth" warehouses. Per Mr Shane: "Those on the floor earn $15.40 to $18.00 an hour, less than half of what they their unionized predecessors made. But in Baltimore's postindustrial economy, the jobs are in demand."
A key part of Mr. Shane's analysis discusses how effectively Amazon uses IT data gathering methods to control and winnow its work force. Per Amazon, 309 workers were dismissed at these two warehouses last year for failing to meet productivity standards. (Whereas, other legal sources stated the number of workers dismissed was more than 800.)
On a more positive note, Mr. Shane cites a futurist and tech specialist, Amy Webb, who states that currently at these warehouses: [(The marginal productivity of workers/Their wage rate) > (The marginal productivity of IT-driven machinery)/(All marginal expenses due to this machinery)]. In other words, a la the above cost estimates, and per Ms Webb; the robots haven't taken over just yet. But, "It's that we've been relegated to robot status."
[12/02/2019 Mon 11:42 am Greenville NC]
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@John Joseph Laffiteau MS in Econ The most important takeaway from this article is NYC & SF are Democratic strongholds from top to bottom. These cities should be a showcase of how well we can address the issues of inequality. Instead, it's yet another example of our total intellectual bankruptcy. It's symptomatic of a much bigger problem. The growing divide between some Democrats who want to practice what they preach & fanatical progressives who want to strangle everything. Environmentalists in SF will go to the barricades to stop any housing projects from being built. Mind you we are talking about affordable housing for working-class families. Thanks to their efforts the gateway to middle-class security, has been pushed beyond their reach. The ease with which environmentalists can stop housing developments is a direct result of the numerous local & state laws that favor environmental concerns over affordable homes. The result: millions of hard-working people are without access to high-quality low-cost housing. NYC not only has some of the most segregated public schools but some of the worst. Parents here will go into heavy debt so they can send their kids to private schools rather than public. The DOE says a huge percentage of public high school graduates can't read or write on a college level. It's no wonder they flounder when they get into the working world. Why is anyone surprised at the inequality in our major cities when we can't even address our most basic problems?
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@John Joseph Laffiteau MS in Econ Here's the point: I couldn't care less what Amazon is able to squeeze out of its workers, or what its productivity is. If you're paying poverty wages, then you are cheating the workers, and you're destroying our society.
Amazon should be forced by federal law to pay a living wage. Period.
The wealthiest man on the planet should get a conscience. And if not, America should enforce a living wage.
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@ Sean,
15.40 to 18.00 an hour is $32,032.00 to $37,440.00 a year. That these are poverty wages is new to me. Last I looked the poverty level for a family of 4 was $25,750.00 and the poverty level for an individual was $12,490.00. Amazon’s wages may not be cushy but they are well above poverty levels.
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The continued use of the phrase highly skilled is inaccurate and revealing of unconscious bias at best. How are we defining “highly skilled” in this article? High wages aren’t a hallmark of “highly skilled” positions. It’s a hallmark of a society that values certain people and certain skills over others. I work in academia with many very highly skilled and highly educated people who make very little money. And this is in one of the richest and most prestigious public universities in the country. I work with brilliant, highly skilled researchers who are going into the social work field, where a masters degree is a minimum requirement. People in these positions often qualify for food stamps. And they have masters degrees at minimum!
This perspective also covers over the fact of the gender pay gap and inherently implies that cis men are more highly skilled than people of other genders. While I’m sure this article is well-intentioned, it is contributing to the problem of income inequality that is perpetuated by a highly toxic form of (patriarchal) capitalism that values certain people over others and claims it does so on the basis of “skills,” when the data so clearly shows otherwise. I am personally and professionally deeply offended by the inherent bias and perpetuation of a violent marginalization of so many different communities who have been told their entire lives that they are worth less than these “highly skilled” employees. Please do better research.
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@Elle
Can you share this data with us?
"While I’m sure this article is well-intentioned, it is contributing to the problem of income inequality that is perpetuated by a highly toxic form of (patriarchal) capitalism that values certain people over others and claims it does so on the basis of “skills,” when the data so clearly shows otherwise"
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@Elle Wake Up! The economy is not some conspiracy directed by some evil genius bent upon creating anti-social outcomes. It's an organic process in which things become "valued" according to the relationship between supply and demand. Rational and successful individuals structure their lives to optimize their prospects within that reality. You knew all along that you were not going to become wealthy pursuing an academic career in social work. Who is to blame for that decision.
The saddest part of this new public obsession with inequality is the desire by those who are not succeeding to punish those who are. Do we really think it is a "problem" that some in our society develop highly valued skills, earn superior incomes, move into desirable places, and then try to create advantageous conditions for their families? Is that something we want to stop or curtail?
Our society once was based upon individual freedom. Sadly, many of us use that freedom poorly, and then look for others to blame.
Sorry Elle, it's a competitive world, always has been and always will be.
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@AR Clayboy
The issue isn't so much about punishing successful people. It's that the current economic dynamics are so skewed that it has created fewer opportunities for people to climb the economic ladder.
You attitude in regards to "Do we really think it is a "problem" that some in our society develop highly valued skills, earn superior incomes, move into desirable places, and then try to create advantageous conditions for their families? Is that something we want to stop or curtail?" Reflects that prevalent attitude among many Americans; "I've got mine and if you can't get yours, then too bad."
We used to be a country where the social consensus was it's better for society to offer people the opportunity to improve their lives, based on your opinion and the people that agree with it that isn't necessarily true any more.
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The seeds of income inequality were planted by the Reagan tax cuts for the wealthy. Obama's Fed ratcheted up income inequality by institutionalizing public support for Wall Street, which continues under Trump. Beneficiaries include most if not all decision-makers in our society, so reversing these economic policies will be difficult.
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@RC Income Inequality is based on pre-tax, pre-transfer payments. It is symptom of changes in labor demand, not tax policy.
Said another way, the statistics don't compare net take-home pay of a physician to the wages + Earned Income Tax Credit of a working single father earning $30K/yr. If Andrew Yang provided that working father with $12K additional, it wouldn't show up in the inequality statistics (since the demand factors that drive the single fathers wages aren't changing).
The story of income inequality is one of high demand for very specialized labor (such as patent or intellectual property attorney) and low demand for barbers, cooks etc due to fiercer labor competition.
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It began under Bush II, not Obama.
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@Dinahfriday
Sorry it was Ronald Reagan and Milton Friedman that preached "Trickle Down Economics". We now that was one of the biggest lies told in modern American politics.
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Think it’s bad now. Wait for the next severe economic downturn, triggered by our debt fueled shell game casino economy, where these inequality and declining standard of living trends will accelerate to hyper drive and expand. The upper management/professional class Top 10% know this and that is why they are complicit in this bubble with others who move in and out of the 1% based on the rise and fall of their equity stakes. They are just trying to hold on because they are smart enough to be terrified about what will happen to their own standard of living in the next downturn and could care less about people living on the other side of the moat they have constructed.
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We need more and better education for everyone and jobs to fill for everyone.
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Well, we do.
But the rote jobs people used to do have been replaced by machines, and not everyone is amenable to buckling down and doing difficult academic work. Not everyone can become a physician, a physicist, an accountant, or a civil engineer.
Where are our token booth clerks, highway toll collectors, supermarket check-out people, our ditch diggers, our assembly-line workers? Automation and computers took their jobs.
There's more to it, of course: Americans like cheap junk, and lots of it; so we get our products from China, where people are housed in barracks and spend their days putting things together.
Buy American.
And use birth control, the great leveler: You can do a good job of rearing 1-2 kids under hard circumstances, but not 4-6.
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A "find you city" option on the interactive would have been helpful. Thanks.
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Interesting that Washington D.C. spikes up there with the other top rankers.
Last night I watched a TV special on Homeless in Seattle
Then I looked at Seattle Craigslist where rents are by the week, not the month as most places are. The cost per week far exceeds per month where I now live.
Very glad that right after the 2016 election I decided to move from Chicago, where housing is also exploding. My condo doubled in 14 years, now doubled again in under 3 years.
Bought a cheap house cash near a big college and a wonderful empty forest.
As I am over 65, I can also defer my RE tax until I pass.
No snow here!
yet...
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Low-income city dwellers are at a much bigger disadvantage. My experience in Chicago is the only firsthand experience I have on this untenable situation. The shiny parts of Chicago will almost let you believe in a vibrant Chicago with growing income. I lived in Streeterville with a mix of businesses and residential highrises; thirty-something-year-old couples mixing with retired empty-nesters who moved back to the city. They will tell you every chance they get about how their part of the American dream gets tarnished by the south and west side of Chicago. The low-income and high-income Chicago lives in two different economies. There is nothing wrong with rising income or young educated couples living their dream with two-income households. I loved living in this Chicago - clean, beautiful streets, morning dog walks along the river, wholefoods, parks, and nice cafeteria bustling in the morning. However, it is unacceptable that the other Chicago cannot feed itself and the mortality rate is as high as in any third world country. Houses are run down, stores have hardly anything good, and unemployment is visible in every street corners. Exodus of black citizens of Chicago tells you that the youth sees no path for them to this other economy of Chicago. It is not an economic ladder - it is a community where a path between low and high-income citizens does not even exist. This article is a stark reminder that our governance structure has failed us.
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I wonder if we are focused on the wrong question. I think that people who spend approx. 10 years in school to become engineers and innovators should be paid more. I also think that it makes sense that they go to where the jobs are...
I think that the question more worthy of this level of focus is about the skills or education gap. Along with questions about the quanity of these types high wage jobs .... even if NYS was to miraculously raise the education standards to encourage more participation in STEM classes would there be enough of these high wage jobs for all the engineers and innovators?
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Raising the minimum wage would help. Not everyone can be an engineer
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Growing inequality is one of the two major issues of our time (the other being global warming).
That notwithstanding, inequality driven by rich people choosing to live in fewer and fewer major metro areas isn't a sign of anything other than the choices made by the top 1/2 of 1%.
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As a rule, doctors, engineers, computer scientists, lawyers, and professors want to live and work in a vibrant metropolitan centers such as Manhattan because of the cultural advantages and the multi-cultural environment.
Tech used to dominated by a few large firms such as IBM and AT&T, Boeing, GM, Ford, GE, etc. and they would control the labor market including pay and locations that were less expensive for them but undesirable for employees.
These larges firms could dictate the labor market pay and location.
Now, there are many more firms that are paying the tech talent their true value and competing for top talent and therefore they need to pay appropriate wages and locate where the talent wants to live. Manhattan and not Binghamton.
Amazon HQ2 was split between DC and NYC because that is where the talent wants to live.
Instead of focusing on wages, there should be a focus on the cost of living especially when bad policy has made living costs unaffordable for people with lower wages.
For example, because of artificial scarcity from zoning density restrictions the cost of apartments and housing has risen in NYC, but also Boston, DC, Seattle, SF, and LA. In Tokyo the costs of housing has not increased in two decades because there are national laws against zoning density restrictions. In 2014, there were 20,000 housing units built in NYC, 90,000 in CA, but 140,000 in Tokyo.
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@David MD
Ah, at last.
Private property and the limits of American constitutionalism.
@David MD
David MD, keep going. If low wage earners can’t afford to work at my company, there’ll be fewer available, and I guess I’ll just have to pay more to get one.
Markets are better problem solvers than ideologues - mostly.
What you keep in your pocket matters. What would help would be changing the way school taxes are paid, and cancelling some of the larger exemptions, so that those who aren't in the top 10% can afford to live without doubling or tripling up in housing. Another help would be the federal government -- fund those special needs mandates. And the school district...annual raises for its employees as a percentage are anywhere from five to a hundred times the raises for the parents who do work on the books.
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"In New York, the real wages for workers at the 10th percentile grew by about 15 percent between 1980 and 2015, according to the Fed researchers. For the median worker, they grew by about 40 percent. For workers at the 90th percentile, they nearly doubled."
In other words, every level earns more since the pie got bigger.
Those with a righteous dedication to income equality have to choose: accept a growing pie, with some getting proportionately bigger slices, or demand equal slices, with a very high probability that the pie will not grow. One of these makes people materially better off, while one indulges puritanical ideas about economic justice.
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@Bob Krantz, Whoa, factor in the cost of housing, the price of food, the cost of owning a car; all significantly lower in Binghampton than NYC. It doesn't make all of it up but then people in Binhampton aren't likely to work for Goldman Sachs. Which may be looked at as a positive, depending on your point of view.
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@Bob Krantz your argument ignores the fact that while the income of those at the 10th percentile grew, it didn’t grow enough to keep up with the cost of housing, going out to a restaurant and so on, the prices of which have been driven upwards by those at the 50th percentile and above.
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@Bob Krantz Stretch a rubber band too much and the rubber band snaps. Time to live in the real world.
So sad. Thank you, stupid leaders, who have allowed mega-mergers and the flight of manufacturing. Thanks for ruining our country and depriving people of jobs.
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I am shocked. The Upshot documents sharply rising income inequality in American metropolises, but mentions absolutely nothing about the GOP's actions that brought about that inequality: its war on labor unions; Reagan's slashing of income tax rates for the wealthy, which led to what Thomas Piketty noted was the rise of "super managers" making tens of millions of dollars a year. Not a word about Republicans' keeping the minimum wage at levels far lower than it was forty years ago. Not a word about the attack on defined benefit plans, and the push of workers into risky and vastly under-funded IRA's.
The Upshot continues to demonstrate that its focus is on obfuscation of the GOP's role in destroying the middle class, instead of principled and courageous illumination of its actions.
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@Sean
Yet most of the cities with the largest increases in inequality have been predominantly controlled by Democrats for the last 30 years. And how they howled when the SALT deduction limit on federal taxes was instituted -- which would seemingly have aligned with their stated aim to "tax the better off more". Odd.
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@Cecil Scott Income inequality has vastly more to do with national policy than the actions of mayors.
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@ Cecil Scott. The issues addressed were federally controlled. A politician in a city that you call democratically controlled was not for example, able to veto the reagan tac cuts
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This is an important point. Too many stories and opeds in the media are based on the supposed city/rural economic divide. In fact low-income people have been falling behind everywhere. Democratic as well as Republican policy has assumed that if those at the top get more money, it will eventually mean more for those at the bottom, but there has been little trickling down. Wage suppression is an important part of making profits in the short term, and CEO's will work hard at it. Tax policy is not irrelevant. For example, why would CEO's pay themselves enormous salaries if most of it is taken by the government? Low tax rates shift effort to making a quick killing instead of building up business for the long term. There is no reason to assume that lower inequality in the era of progressive taxation was an accident, and there was certainly no lack or effort by anyone in that time.
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The foundation of inequality has been the unprecedented rise in the stock market from 1983 to 2019. Those who have invested or involved in investment have done much better than anyone else.
It's so simple that it's a shame economists and politicians have failed to notice.
If there is a fix, it is shifting money (through taxation, most likely) from investors/savers to spenders/non-savers.
And one wonders why it's so difficult?
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@OneView Yes, the stock market, but even more effect from private equity, where the returns are much higher. Nothing else has contributed more to the concentration of wealth and enormous gulf between the .01% and the rest of us. And these folks are the ones who have stripped companies of pension plans, so even the few whose jobs haven't been replaced by a circuit board can barely hold together.
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@OneView Once upon a time there was a recommendation to invest some of Social Security in the stock market. Liberals shouted it down, calling it a gift to Wall St.
It amounts to giving wage earners a chance to participate in the gains that investors have. Your solution is to take rather than give.
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Investors often lose money. When a wave of people retires, what happens when they collect?
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This article misses a chance to try and understand what’s good and bad about inequality. Inequality by itself does not make people’s lives better or worse. If you add rich people to a town, that increases inequality without by itself changing anything for everyone else. It can be positive by increasing the tax base.
However inequality can change prices and for whom the town is run. It would be interesting to know what richer and poorer towns think about the changes.
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@jerryg Not exactly true. Adding rich people, especially a lot of them, to a town does change the town and all the people in it. That’s because rich people behave and spend their money differently. They buy or build housing in the best neighborhoods, all congregating there, which drives up the prices in those neighborhoods. It increases income segregation and the schools become more segregated too. That hurts middle class families who used to be able to buy homes in those nice neighborhoods, but now they will either have to spend a lot more on housing in those Neighborhoods or move to a different neighborhood with lower quality public schools. And that, in turn, will drive up housing costs in those neighborhoods. Social consequences abound.
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@Cam
What you've really proved here is that providing school funding through local school districts increases educational and social inequality.
It should be noted that the United States of America is the only major developed country on the planet that funds schools this way. Just about every other country has federalized educational funding and educational standards.
The Economist uses the same data to show our major cities are becoming more integrated
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This economy values an engineer so much more than a line cook because the skill sets and education required for a line cook are significantly less than those for an engineer. This is why so many people are qualified to be line cooks and so many fewer are qualified to be engineers, the pay differential also being a result of supply and demand.
The disparity between value-added for a line cook vs an engineer also helps explain the salary differential between the two.
It is only communists (or the crypto-communists who call themselves “democratic socialists”) who believe that compensation should be driven by the rule “from each according to his ability, to each according to his need.”
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@Mon Ray Wages for low skill jobs have stagnated in the face of inflation, meaning an actual decline in pay. Certainly, a line cook deserves an adequate wage regardless of how many people can qualify for the job. If a person wages were determined solely by how many people can do the job, most managers and all politicians would be paid nothing.
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@Chris The article says real wages for the bottom have increased 15%. It's not much but it's not a decline in the face of inflation. "Real" means taking inflation into account.
Anyway, it is not true that most people can be politicians or managers. Most politicians lose their elections and only a few people who start work make it into management.
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@Glenn Ribotsky, I work in construction/engineering. No they're not. One engineer is worth a 100 laborers.
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Isn't what is being labeled as inequality really just dispersion? Where is the "inequality" in a job market? Don't people just get paid what the market sets (in the long run)?
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This trend is not limited to the US - it shows up even in W. Europe and even in countries like India that have embraced capitalism. Giant cities now wield more economic power than their countries, and urbanization is an increasing trend. Those who hold capital in these cities e.g. housing stock, grow richer much faster than the labor that moves there, not to speak of those who don't live in these Metros. This trend has other long-term negative side-effects - it reduces the mobility of the workforce within the country, for example. And of course, the effect on representative federal elections polarizes the politics of the country radically, encouraging far-left and far-right ideology. One solution might be for government to find ways to incentivize successful businesses to build a presence in these "left-behind" towns e.g. Armonk, NY (in the heyday of IBM), Rochester, NY (Kodak), or even Hillsboro, OR (Intel) as opposed to existing large metros. The way the recent Amazon HQ2 beauty contest went, does not, however, inspire confidence. There are some instructive examples in Europe though. Dresden has turned into Germany's high-tech town, even though it languished in communist E.Germany for years. Ditto for the town of Glashütte that now has a thriving watch industry. And Innsbruck in Tirol where Svarovski put down deep roots.
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This has happened over and over again in our country ie the rich getting richer or in certain times the poor using the richer like with the welfare state abuses and rent control.
Now it is the former.
Don't soak the rich, give the poorer a leg up with job training, temporary welfare benefits if called for, minimum wage increases etc. etc.
Don't view it as the rich must pay, view it as giving everybody a fair shot at being rich and if they don't get it, don't fall through the safety net.
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@Paul
What profession might that line cook be trained for? And what jobs are available for someone who isn't able to earn a high school diploma -- or be trained for something that pays a decent living? What should happen to the people who simply don't have the abilities to rise to higher levels?
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@Rea Tarr thank you for your reply. Hope is not to cold up there in Malone, it a bit messy here in Bklyn.
The bottom line is to give the bottom guy on the totem pole every help you can give them and then if all else fails, welfare.
If this happens, let the rich guy make as much as they want as long as the lowest guy doesn't fall thru the safety net.
That is what is going on now. One example, as many as 50,000 Americans at any one time either are under insured or have no medical insurance.
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I imagine this must come as a blow to the Binghamton Opera Company. And, I suspect that their Fine Art Museum is losing membership. Will the Shakespeare Theater reduce their offering in 2020?
As is the often the case, here in the never, never land of enlightened Progressives, you have gotten a firm grip on the wrong end of the stick and refuse to let go.
The reason that New York City is filling up with rich people is the same reason that another class of individual finds welcome and a home in centers of the mud wrestling community.
Rich people live in rich places with rich environments that include amenities not available in the great waste lands between New York City and...twenty years ago I would have said San Francisco, but that city and its culture have gone far, far into the dark lands of political correctitude and their predilection for contemporary, Latinx, differently enabled, LGBTQRSTUV, international, Union friendly art, theater and music is more a source of amusement than inspiration.
Chicago is not terrible, aside from our orchestra's insistence upon performing in padded cell; the Opera is quite the equal of yours and both Shakespeare and Gaugin are welcome here.
And income inequality flourishes, likewise.
It is called freedom and capitalism and while both have their drawbacks, the stuff You People offer as an alternative is the reason the Oval Office is brimming with The Donald.
Every time Nancy opens her mouth, I reach for my MAGA hat.
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Oh, you mean the Tri-County Opera? Perhaps include the Binghamton Philharmonic, or the Schorr Family Theater? One of the best SUNY schools is located outside of this struggling city, and there's an observatory, local history museum, and other venues, along with a PBS station that reaches 2 tiers, the Southern Tier of New York, and the Nirthern Tier of Pennsylvania. Any city known as the 'parlor city' is destined to struggle in the 21st century, but keep your snobbery to yourself, please. Some of us like living here.
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You are quite the enlightened individual. Must be great to know you.
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@Good John Fagin After living in suburban New York and suburban Philadelphia (among other places), I moved to the Binghamton area more than 20 years ago and have yet to meet a single mud wrestler. You find happiness where you look for it, and I like this town just fine.
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Good analysis. Particularly telling here in flyover country is automation, globalization and the decline of manufacturing have decimated well-paying jobs that once required no more than a high school diploma. Even the farm is more automated now than ever before and science has changed the crops. In 1980, the average farmer grew crops that ultimately fed 18 people. Today it is 43 and our neighbor was a testing area for automated farm machinery 8 years ago which will further reduce farm labor. Two things stand out in every part of the country. First, there is no longer an equal opportunity for an equal quality education for everyone. Educational inequality is helping drive income inequality. Second, every high school graduate should assume their education is incomplete. Whether technical school, apprenticeships, community college or 4 year college, education beyond high school is necessary to get a middle class job these days and in the future.
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@tom Are you complaining that the average farmer can feed so many people? I thought food was good. There will soon be 8 or 9 billion people on Earth. Who will feed them?
One of the main reasons why there were people available to do manufacturing was that they were not needed to make food for the rest of us.
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@danarlington not complaining at all. Just the facts of how agriculture has changed along with other industries with automation.
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Excellent analysis. I must, however, quibble with some of your statements. I graduated as an engineer in 1981 and my son graduated in 2015. His starting salary was about equal to mine, adjusting for inflation. So society values engineers about the same now as in 1980. And I believe the same is true of lawyers.
While a more aggressive anti trust stance may help close the gap, I'd love to see an analysis of the actual tax rates of these two groups over this time period. Nothing redistributes income like taxes.
The funding of public education in America also exasperates the wage inequality issue. Manufacturing jobs left many cities with inadequately funded schools, which in turn leave many of the 90% earners getting inadequate educations. And this in turn reduces their capacity to compete for the jobs of today. (talk to any employer - it's very difficult to hire qualified workers today)
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@deedubs
And why aren’t the employers and capitalist paying for the training? They have had forty years to show their system works yet they keep socializing their costs and blaming government which they defunded.
They want trained people they should pay for it. Since they haven’t tax them.
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When does sharing the wealth of these prosperous firms, ever factor in? By sharing I dont mean redistribution of wealth, but pouring more of the profits back into a high performing business so all the employees share in its profitability. Not just the few at the top, in control of that distribution.
There are plenty of people working for these companies where the inequality of high value skills versus lower value are felt, like a gut punch. Where an unproven college grad with the right CV, is over valued compared to experienced, long employed Office Assistants, etc, who basically run the day to day of the businesses.
There are plenty of middle level non management staff in these urban, high performing firms, who are scraping by, but pound for pound contribute more to the company's bottom line then that gaggle of new college grad recruits most of whom will wash out in approx. 2 years.
Share the wealth.
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Enrico Moretti’s “New Geography of Jobs” is a must-read on this topic. The paradox of growth alongside inequality laid out there is compelling, and calls into question the ability of the free market to equilibrate itself without intervention.
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It appears that those cities clustered closest to the axis are mainly from Wisconsin (or Johnston). What explains their relative stability? I know the answer, but why is that not included in this discussion? Is that not relevant?
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@Ben
Please recite the answer that you know.
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@5barris Economic opportunities that create wider disparities did not develop in these places.
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@Ben
Same can be said for all rural areas. There is nothing pulling people out of the cities because there are no good jobs anywhere else.
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