This one explains itself…
If you’re looking for more charts of the like, search no further than the Economic Policy Institute‘s The State of Working America. The one above is from their Income & Poverty category, which brings together two things that are supposed to cancel each other out.
As long as employees are considered expenses, as opposed to, say, investments, they will continue to get squeezed rather than appreciated.
From Daniel Clowes‘ Wilson:
Some Ivy League students are starting to agree with the sentiment after watching so many of their peers head off to work in consulting and finance after graduation. From All Things Considered’s Stopping the ‘Brain Drain’ of the U.S. Economy…
Student protesters recently got into a Goldman Sachs recruitment session at Princeton University to tell student attendees they were listening to a “carefully crafted recruitment pitch” and that they could “do better for society.” Similar protests have been held at Harvard University, and at Stanford University, where Teryn Norris was a student. …
“The problem is that when you’ve got 20 to 30 percent of some of the top talent in this country going into a sector that is not necessarily contributing to economic and social productivity,” he says. “That’s a problem for the country at large and it’s something that we should all be concerned about.”
Economist Paul Kedrosky agrees, except that we’re about two decades late in getting concerned. He believes the current financial morass is the work of a long line of bright minds who decided to spin their wheels in the name of money, as opposed to areas like science, engineering and mathematics, a.k.a. the subjects many of them actually studied in school…
[Wilson is available from Drawn & Quarterly; NPR story via Hacker News]
When one’s income increases, the tendency would be to expect standard of living to go with it. In the following example, however, once you’re making $10,000 a year, you might feel just as poor making $40,000.
The issue is the balance of subsides and taxes on the lower income brackets. The stagnation comes from the loss of social benefits as income rises. Food stamps turn into grocery bills. Free health insurance turns into… costly health insurance.
One way of looking at the situation, and the one taken by the Mises Institute, which made the chart above, is to say that by helping the poor, we are taking away the motivation to work. And sure, when you find out low-wage work might leave you with less money than being unemployed, where is the motivation? But, what’s the problem here: the helping of the poor or millions of full-time jobs that don’t pay enough to make ends meet? Ape Con Myth’s take on the chart is that the base cost of life for hypothetical families of three in Virginia is about $40k.
But that’s Virginia. What about the country as a whole? Below we have similar charts based on singles and couples at ages 30, 45 and 60 from a Boston University/National Bureau of Economic Research report. Don’t worry about the fine print. Just notice how different they all are…
(click to enlarge)
As the researchers were quick to point out, “the patterns by age and income of marginal net tax rates on earnings, marginal net tax rates on saving, and tax-arbitrage opportunities can be summarized with one word – bizarre.”
What do they think of our chances of understanding the elements at work? “Thanks to the incredible complexity of the U.S. fiscal system, it’s impossible for anyone to understand her incentive to work, save, or contribute to retirement accounts absent highly advanced computer technology and software.”
Try doing that on a computer at a library.
[Mises chart and NBER report via Greg Mankiw via Kottke]
The Economist gave a nod to the 99% by way of some numbers from the Congressional Budget Office that make you go, “Ouch.” Those are some tough percentages to defend.
But how do you stop it from being easier to make a lot of money when you have a lot of money?
[graph from the CBO's Trends in the Distribution of Household Income Between 1979 and 2007 (PDF)]
How many people does it take to make the not-so-merry-go-round go round? If you’re talking about the United States economy in 2007, which we are, then the answer is 146,047,000 people, or … wait for it … 48.4% of the population.
Did you think it would be more? Either way, it certainly brings new meaning to the next logical question: How does the other half live?
Let’s look at some basic numbers:
As you would expect, kids and the retired account for much of this other half who magically don’t have jobs, though there are about 50 million working-age wizards out there. It’s interesting to know whether they want a job or not, but isn’t the real question, do they need one?
Meanwhile, ‘Civilian Noninstitutionalized Population’ is one of the creepier ways of speaking about people over 15 years old who aren’t in the military, prison, a nursing home, etc. How about Civilian Labor Force Pool or simply People Who Can Work?
While the Institute for the Study of “Making a living” will continue to explore how the noninstitutionalized do and don’t make ends meet, ACM’s take-away is that it didn’t take everyone to create the world’s largest economy in 2007. The next question is, how many of those jobs were mission critical?
Which mission? We will consider a few.
According to the Bureau of Economic Analysis, the self-employed consist of “active proprietors or partners who devote a majority of their working hours to their unincorporated businesses.” Another thing the BEA says is that, despite the civilian labor force tripling during the same period, the number of self-employed persons in the United States has remained fairly constant over the last 80 years.
The only thing that has changed is industry composition…
Where we once had farmers, we now have service providers. But does that explain why the self-employed went from 21% the size of the labor force down to 6%? Do we have fewer independent operators in the economy or are more of them turning to the corporate or LLC structure to protect themselves from the modern consumer?
[Self-Employment data via BEA NIPA Tables 6.7A-D; Civilian Labor Force figures from ERP B-35]
