A substantial fraction of workers ages 25 to 55 (about 40 percent between 2002 and 2003) experience large changes in earnings from one year to the next (defined here as changes in earnings of 25 percent or more).
Large changes in household income from year to year (defined here as changes in income of 25 percent or more) are less common than large changes in individual earnings. Still, about 25 percent of U.S. households experienced such large changes in income between 2004 and 2005.
Isn't one of the purposes of following income by classes to discern and posit reasons for changes, so as to make more-informed policy decisions?
phattonez said:Over the whole year you might see a general trend of decreasing amount of fish, but is that because the amount of fish in the lake is truly decreasing, or is it because of the fish that migrate there in spring and leave thereafter, giving the perception of a general decrease.
phattonez said:Think of a baseball team.
And if I am the manager and I need a pinch hitter, I want to know the stats of individuals. If I am putting together my lineup for tonite's game, I want to field the team with the best overall batting average, taking into consideration each players history with both the opposing team and the opposing pitcher, and any physical ailments that my guys might have at the moment which might limit their effectiveness.
You gotta know the group; you gotta know the composition.
That is exactly the kind of reason you want to research groups: to find out what makes the composition of the group change over time.
If your point is that a researcher shouldn't focus on only on a single characteristic (say, household income), then I would tend to agree. However, I would add that one must discern not only any trends evident in the (household income) time series, but one must posit reasons why that trend is evident. For that, one necessarily studies the composition of the group over time; in particular, whether or not the changing (if it has changed) composition is a reasonable hypothesis that explains any evident trend (or why there is no trend).
For example, household formation has historically been an important variable for housing demand. Personal and household incomes have historically played a significant role in determining household formation, along with employment and a few other demographic variables. Can you imagine making policy without an appreciation of the role played by household formation?
And we don't compose the All-Star teams with teams, we fill them with players.
phattonez said:it seems much more reliable.
Brink Lindsey said:The share of the total population born in foreign countries has jumped from 5 percent in 1974 to 12 percent in 2004. Relatedly, people of Hispanic origin have climbed from 5 percent of the population in 1974 to 14 percent in 2004.
The huge wave of Hispanic immigration over the past generation has been good for the immigrants and their families, and good for the country as a whole. But this big influx of relatively low-skilled immigrants has to have depressed median income compared to what it otherwise would have been. Unfortunately, I’m not aware of good studies that quantify the effect.
Then there's the distinction between "income" and "wealth." Once a person retires, their income generally drops. This is reflected in the fact that seniors have lower household incomes than other Americans, earning $20,761 per year, compared to the median overall household income of $37,005. This does not, however, make them poor. After a lifetime of working and saving, seniors have stores of wealth with an average net household worth of $103,608, far surpassing any other age group with comparable income. Sixty-five percent of seniors own their homes outright.
I really don't see the point in all of this. What's it matter that an individuals income may vary. That is to be expected. What does matter is what the income levels are, regardless of what the names are of the individuals who happen to be in that group at any one particular point in time.
You're trying to pick earnings for everyone else, including the market. It's a fools errand. That's an attempt to dictate the market, i.e. like central planning. It's always flawed. It also happens to be contrary to the idea of a free market where individuls are free to negotiate value. You want to dictate value to everyone. You can try to grab that power, but you may find people enjoy being free from your yoke. I know I amor would it be better to live in a socity where most people make between $50k and
$500k?
Why does that matter? Why do you care what your neighbor makes, it's none of your business frankly. That's why people don't share salary info, someone always gets envious...a shame adults behave this way.
The reason behind having different ways of viewing, interpreting, charting data is to compare the data and see any correlations that might exist - overall - the end result is a deeper and more well rounded understanding of how things work.
To want to ignore one aspect and suggest we remove it from consideration is really taking just one variable out of the equation.
The other problem of following income trends as it relates to household income is the volatility that I showed at the beginning of this thread. If income falls, is it indicative of a serious problem or just that someone has retired? When someone retires, the income may have fallen, but that does not make the household poor.
.
I'm saying none of that can be used to justify tax/spend policy, or overall prosperity, etc. The first part, and all the other stuff you wrote. Disparity doesn't work for the economy. I WORK IN THE ECONOMY. Your misinterpretation of disparity doesn't trump my freedom to work a lot, or not at all.Thats what I am saying. It really doesn't matter what income bracket a particular individual is in. What matters is how many people are in that bracket, how much they make (on average, not as individuals), and how much disparity there is between brackets, and whether it is an amount of disparity that works well for our economy.
If there were such a distribution, it would certainly be some systemtic issue that was obvious, and the "disparity" would still not matter.If there was 308 million people, and on average, people who produced made $140,000, then that sounds pretty good. But what if 307,999,999 only made ten dollars a year and one guy made all of the rest (in the trillions). You have to admit that there would be a problem with that (unless you happened to be the "one guy"). Obviously, income distribution DOES matter, to denie that is to be absurd.
I'm saying none of that can be used to justify tax/spend policy, or overall prosperity, etc. The first part, and all the other stuff you wrote. Disparity doesn't work for the economy. I WORK IN THE ECONOMY. Your misinterpretation of disparity doesn't trump my freedom to work a lot, or not at all.
In business when more people buy an iphone, one may think "more people want an iphone".
When more people don't work for higher pay, one may think "fewer people want to work for higher pay".
But then, if you have the option of making people who work for higher pay, subsidize the lower pay....oh boy, then they have some incentive to label it differently don't they?
Let's then tell all those people that choose to not strive for higher pay, it's actually NOT their fault, it's the fault of the "rich bitches". And it's our due to go get it from them!! Yeah!!! (for shame)
Disparity also doesn't really matter. It *should* increase as the economy does better. Some percentage of people will always want to do bare minimum, that will always be relatively close to 0.
Some will always want to maximize earnings, they will always make more, and more, as populations increase, markets open up, etc.
So yes, as the global economy grows :
2000 Lowest income = 0, top 1% = $1M
2020 Lowest income = 0, top 1% = $1.5M
Obviously that's a simplification, but I would assume the low end would always hover closer to 0, and the upper end should be growing *AS FAST AS POSSIBLE* (legally). Which means, the income gap is a sign of economic prosperity and opportunity. How do you argue otherwise?
If there were such a distribution, it would certainly be some systemtic issue that was obvious, and the "disparity" would still not matter.
Look at it this way. Let's say we have a country A, everyone makes $50K and works up to $100K at retirement @55 (hah). At retirement they all get $50K. Your utopia right?
In a country B, everyone works right off, at $200K, saves up enough to invest early, compound those gains over years, and retire 20 years earlier at $50K.
If you used this bracket/analysis, the income gap is lower in A, and fewer people are in the lower income bracket. Yet I would prefer to be the person in country B. The people in B not only are wealthier, they have 20 priceless years of their life back. Statistics fail? (or did I fail, it's late) Considering I place a high value on the approach of company B, I certainly don't want to use statistics or policy that would trend towards A, and not B.
Either way, people should be free and have opportunity and the rule of law. After that, the rest is just academic IMO.
Please understand that I am not suggesting that the government should directly subsidise anyones wages (although I do believe that corporations freqently subsise the wages of their top executives, for political reasons, and at the expense of lower paid workers and shareholders), only that it should tax the crap out of people who have incomes that far exceed the "norm"
So because households change over time, tracking the net effects of many households doesn't yield useful information?It seems to me that many people have gotten in the habit of following income trends by comparing classes over time. This is a deeply, deeply flawed method.
That right there should be enough to dismiss any claims of income trends using census data, but let's go deeper. In case you were wondering about household income:
It's the same problem with following household income by class! Of course, I like to point out the flaws that household income is unreliable because the composition of the household changes with time, divorces are at about 50% which makes this statistic even more unrealiable (unless this data is somehow corrected by excluding that, but anyway, this isn't my only criticism of following household data).
Now let's look at people who have gained more than 25% and those who have lost more than 25%.
All sourced here. https://www.cbo.gov/ftpdocs/95xx/doc9507/MainText.3.1.shtml#1088998
So people who grow our economy should be penalized?
People who push themselves beyond the norm should be penalized?
What's special about the "norm"? You want to promote average?
It makes no sense.
And they not only directly subsidize wages with despite your desire, they indirectly subsidize the **** out of them as well. Unemployment = direct. SS, medicaire/aid, indirect. All the other services they get for a far lower cost. It's all giving money/services/goods, without having earned them...paid for involuntarily by someone who did.
Every dollar that is earned is at someone elses expense. Trying to paint lower income earners as victims is an age-old argument that still isn't based on reason.
If we are stuck with this injustice, and a complicated tax code, and with tax brackets based on income, I do believe there is reason to question why the highest tax bracket is around $200K, when incomes go into the billions. But that's a very narrow debate, and I'm not about to claim it's in the name of "justice". And it's also not related to income inequality as "bad" thing (which it isn't).
Test it. Take a population say, China 30 years ago. Why were they not booming them? But they start reforms based on capitalism, and low and behold they grow leaps and bounds, create an enormous middle class, lift millions out of poverty. The people did not change!! The masses were the same, how are they so productive now, as opposed to then? Admit it that *something else changed*.Our biggest difference is our view of who grows our economy and whether taxes on exceptionally high income actually penalizes the people who grow our economy. I think that it is the masses who grow our economy.
I oppose it in principle. In practice, if stuck with brackets, adding higher brackets to ease the overall burden is not a terrible idea. Someone making $300K a year seems odd to lump in with someone making $100M a year, no doubt.I agree with you that the highest tax bracket starts at an income that is too low. There is absolutely no point in taxing the heck of of people who have salaries within the norm, and our current highest tax rate starts at about half of the average earnings of commonly found highly skilled professions, so it most certanly penalizes people who are well within our norm.
Test it. Take a population say, China 30 years ago. Why were they not booming them? But they start reforms based on capitalism, and low and behold they grow leaps and bounds, create an enormous middle class, lift millions out of poverty. The people did not change!! The masses were the same, how are they so productive now, as opposed to then? Admit it that *something else changed*.
Or look at the Asian Tigers. Similar populations to many other countries, how did they do so much better? Same reason...capitalism.
If you want an analogy, think of catalysts. They do not do all the work, and the process they catalyze may normally happen, but at far slower rates (or not at all). But you add a catalyst, and BOOM. Rapid change. Same with capitalism. You essentially incentivize the creation of catalysts. Taxes doubly disincentivize it. Both as a penalty on the higher income, and because that tax revenue is used to subsidize NOT working (or not being a catalyst). So someone who might be a catalyst today, if given enough of a free ride, may rationally opt for the lower stress life of just getting by...but with very little need for income.
I oppose it in principle. In practice, if stuck with brackets, adding higher brackets to ease the overall burden is not a terrible idea. Someone making $300K a year seems odd to lump in with someone making $100M a year, no doubt.
But even then the tax rate is typically less important than what the revenue is being spent on, and who is spending it.
Government is the wrong way. Politicans are the wrong ones to empower. I don't think politicians, or the masses who vote based on propoganda, have more of a right to that money than a financial investor who took risk to earn it.
I will admit it. Incentive is what changed, I am sure you will agree. Thats why I am all for capitalism. But that in no way defeats my arguement that in capitalism the masses create product demand, and produce the vast majority of the products.
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