Over at the New Republic, Timothy Noah, who wrote a ten-part series on inequality, quotes right from the bull’s mouth, a report by Merrill Lynch Wealth Management chief investment officer Lisa Shalett to prove that we’ve been going to hell in a hand basket for the past forty years:
U.S. real average hourly earnings are essentially flat to down, with today’s inflation-adjusted wage equating to about the same level as that attained by workers in 1970…. While employees and families/ households were able to outrun this trend by working more hours for more years, this formula has broken down, with growth in new hours worked becoming increasingly static. Limited expansion of hours worked and no real growth in earnings/hour has manifested themselves in the last two years as total real personal income has dropped for the first time in almost 50 years and has not recovered to the 2008 peak…. [E]mployee compensation as a ratio to GDP is at all time lows.
Sounds damning, right? But there’s more than one way to skin a cat. In 1967, a household at the upper bound of the bottom fifth had an income of around $17,000. In the year 2000, they were earning close to $23,000, only to fall back to $20,000 ten years later. Those at the upper bound of the bottom two-fifths went from $33,500 to $42,000 to $38,000. Those around the 60th percentile went from $47,500 to $66,000 to $62,000, and those near the 80th went from $68,000 to $103,500 to $100,000, while those at the top 95th went 108,500 to 184,000 to $181,000.
Over the past decade, if you factor in employer-provided health care (if you have employer-provided health care), whose cost has (naturally) been sky-rocketing, your total compensation package probably hasn’t suffered. You just don’t know it, which gives you a good reason to believe that it has suffered.
Liberals cite the sort of data that Noah flourishes and feel that the case against Robert Rubin/Alan Greenspan economics is overwhelming. Why are the bottom 99 percent slaving to enrich the top 1 percent? Because the “system” is really favoring the top 60 percent over the bottom 40 percent, and 60 beats 40 every time. The Democratic Party is largely the party of Blacks, Hispanics, women (single women, in particular), and government workers (the categories overlap, of course). However they talk when they’re running for office, once in power the Democrats tend to favor the top 60 over the bottom 40, and when they don’t, as in the case of health care reform, they get hammered.
Talk amongst yourselves: What does $38,000 buy today that $33,500 didn’t buy 45 years ago? Answers soon!
