Inequality day continues with a link to Larry Mishel and Richard Rothstein noting that even wages for people with college degrees are lagging way behind average productivity growth. Consequently, while there's no doubt that some good would come from having a higher proportion of the population graduate from college and acquire more skills, there's no reason to think this would seriously impact the inequality situation.
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Education and Inequality
12 Oct 2007 05:27 pm
Comments (33)
More to the point, the ignoramus Dr. Pangloss's, who attribute growing inequality to increasing returns on education and "skills" are, once again, shown to be full of crap.
Mishel is playing his usual game of cherry-pick-and-spin to create a misleading impression of what's actually happened to worker compensation. If you look at the national income data from the Bureau of Economic Analysis, you will see that the share of national income going to "wage and salary accruals" declined only slightly between 1990 and 2006 (from 48.0% to 45.7%). And "supplements to wages and salaries" (health insurance, pension contributions, etc.) increased slightly over the same period (from 10.2% to 10.8%). Combining the two, we get "Compensation of employees, paid." This declined slightly from 58.2% of national income in 1990 to 56.4% in 2006, but this is within the range of normal fluctuation. The 2006 figure is only 0.3% lower than the figure for 1997, during the middle of the Clinton Administration. And during Bush's first term, the figure was above 58%.
Mixner,
Which NIPA table are you looking at?
I can't comment without knowing which table, but I do know the Census figures show fewer Americans get health insurance through their employers these days than used to be the case. (Not to blogwhore, well, OK, this is to blogwhore, I've got the figures graphed here.)
The fact that benefits haven't declined much on average may simply be a function of fewer people getting health insurance and other benefits, but those who receive those benefits are getting more expensive benefits. In other words... potentially another sign of increasing inequality.
Which NIPA table are you looking at?
1.11 Percentage Shares of Gross Domestic Income
The fact that benefits haven't declined much on average may simply be a function of fewer people getting health insurance and other benefits, but those who receive those benefits are getting more expensive benefits
As I said, the share of our domestic income (the value of what we produce) going to employment benefits hasn't declined at all over the period in question. It has increased slightly, from 10.2% to 10.8%. And yes, health insurance is more expensive. We pay more because we get more. All those new drugs and surgeries and tests cost money.
I hate to be Captain Obvious here, but a college degree has been a proxy signifier for intelligence since Griggs v. Duke Power restricted companies' ability to use IQ tests to sort out the smart people. As marginal teens have been encouraged to go to college, through a combination of loans, affirmative action, lowered standards, remedial courses, etc., the supply of college grads has increased and they worth of the degree has decreased.
And yes, health insurance is more expensive. We pay more because we get more.
We pay more because someone gets more. The more exotic medical services science makes available for the wealthy, the more of our medical resources can be directed towards them. Even without insurance this would raise prices for everyone else--there's fewer medical resources available for ordinary folks. A lot of people are paying more for less. Stuff like that is (sort of) captured in the CPI--health care is more expensive not merely when totaled up, but per service rendered.
That said, your point about share of gross domestic income is actually pretty good. Of course, the share going to wages and salaries includes CEOs, managers, and people in the finance industry. So your tables are an interesting data point as to whether too much money is going to management or too much to capital (embarassing question: are capital gains even in the gross domestic income?), but doesn't negate the observation that the worst off are worse off than they used to be.
consum,
We pay more because someone gets more. The more exotic medical services science makes available for the wealthy, the more of our medical resources can be directed towards them.
The benefits of advances in medical science and technology obviously don't go only to the wealthy. Tens of millions of Americans today get the benefits of drugs, tests and surgeries that not even the wealthiest man in the world could buy 30 or 40 years ago, because they simply didn't exist. That represents a huge increase in wealth for ordinary Americans.
That said, your point about share of gross domestic income is actually pretty good. Of course, the share going to wages and salaries includes CEOs, managers, and people in the finance industry.
The point is that employment compensation has largely tracked economic growth. You would never know that from looking at Larry Mishel's ridiculous chart, however.
... doesn't negate the observation that the worst off are worse off than they used to be.
That's not an "observation" it's a falsehood. See my comments to Matthew's other posts today about inequality for details.
The benefits of advances in medical science and technology obviously don't go only to the wealthy.
It goes to those who can obtain the treatments. Those exotic new treatments use up the supply of doctors and nurses, and price them out of range for other people. (Admittedly, this argument doesn't apply to prescription drugs, but drugs aren't the only cause for health care prices increase.) There's no way around the fact that some people are paying more for less--no one has the option of paying 1980s prices for 1980s level of care, though many without insurance would probably choose exactly that. That's why real wages for many segments of the population have gone down--health care just costs more per unit of benefit received.
The point is that employment compensation has largely tracked economic growth. You would never know that from looking at Larry Mishel's ridiculous chart, however.
Well, I'm not sure your data includes all the non-wage ways that the rich make money. It might--I'm expressing genuine ignorance here, if anyone knows for certain let me know. But the real point is that CEOs, managers, and finance managers are employees too. So even if Mishel is wrong (I'm not sure he is), this has nothing to do with the larger war on equality.
To be honest, I've seen that labor share of income thing, which combined with rising inequality suggests managers are cheating owners, but found that hard to square with other arguments by economists that owners are getting a great deal from CEOs. But I don't really have a dog in that fight--whether the new super rich are CEOs or stockholders has no effect on my arguments for redistribution.
See my comments to Matthew's other posts today about inequality for details.
I had those comments in mind when I wrote what I did It ignores the fact that some people are paying more for less in health care. You can't say that the bottom 20% are getting more for their dollar today than they were 30 years ago. And because they are receiving fewer or about the same real dollars, well, there you go.
I do have to complement you for making more sense than you were here.
consum,
It goes to those who can obtain the treatments.
Which, as I said, is tens of millions of Americans. Perhaps hundreds of millions. A huge range of new drugs, new surgeries and new tests have been developed over the past 20 or 30 years that are used by tens of millions of Americans. Everything from CAT scans to new blood pressure medications. The benefits of the vast majority of medical advances of recent decades are not confined to the wealthy, they are available to ordinary Americans with ordinary health care coverage.
There's no way around the fact that some people are paying more for less--no one has the option of paying 1980s prices for 1980s level of care,
How, exactly, have you determined this "fact?" Anyway, even if it's true it's irrelevant. If we wanted 1980s level of care, that's what we'd still have. Drug companies and MRI machine manufacturers wouldn't stay in business if there weren't a demand for their products. We have a relentless appetite for new and better medical treatments. It's the same in other countries, where health care spending is also growing rapidly.
Well, I'm not sure your data includes all the non-wage ways that the rich make money.
It doesn't. It doesn't refer to non-wage ways in which the non-rich make money, either. It doesn't refer to any kind of government benefit people receive, for example, such as social security checks, or housing subsidies, or medicaid. I cited it to rebut Mishel's piece which referred specifically to wages.
To be honest, I've seen that labor share of income thing, which combined with rising inequality suggests managers are cheating owners, ....
There you go again. How do those things suggest that managers are cheating owners? I'm not even sure what that means. You mean business managers cheating the owners of that business? Or what?
consum,
I had those comments in mind when I wrote what I did It ignores the fact that some people are paying more for less in health care.
No, it doesn't ignore that at all. Income data clearly indicates that even "the worst off" are better off than they were before.
You can't say that the bottom 20% are getting more for their dollar today than they were 30 years ago.
No, they're not "getting more for their dollar," because inflation has eaten into the value of that dollar. But they have lots and lots more dollars, so even after adjusting for inflation they're still richer. And this is using the defective CPI deflator. We have strong evidence that the CPI overstates inflation and therefore understates real growth. So the true increase in wealth is almost certainly even greater than real (i.e. CPI-adjusted) income data suggests.
they are available to ordinary Americans with ordinary health care coverage.
In case you haven't noticed, lots of ordinary Americans lack coverage.
If we wanted 1980s level of care, that's what we'd still have.
Who is this "we" you're talking about? Lots of people would prefer 1980s care to having no care at all.
We have a relentless appetite for new and better medical treatments.
Demand driven by those who can afford it.
It doesn't. It doesn't refer to non-wage ways in which the non-rich make money, either. It doesn't refer to any kind of government benefit people receive, for example, such as social security checks, or housing subsidies, or medicaid. I cited it to rebut Mishel's piece which referred specifically to wages.
If your data is incomplete, it's not much of a rebuttal. I'd agree the situation is more complicated than Mishel allows, but what's really happening isn't clear either, at least to either of us who I'm pretty sure don't know what we're talking about.
How do those things suggest that managers are cheating owners?
It suggests CEOs are making way more money but owners aren't. We know workers are taking a smaller cut. If capital isn't taking a bigger cut (which is apparently your argument), that leaves management.
But they have lots and lots more dollars, so even after adjusting for inflation they're still richer. And this is using the defective CPI deflator.
Adjusting for CPI they do not have lots and lots more dollars. CPI doesn't measure health care inflation, so it's probably understating inflation experienced by the poor.
CPI doesn't measure health care inflation
Okay, consum, I'm done with you. You don't have the slightest clue what you're talking about, as the above statement illustrates. Maybe if you manage to come up with a serious argument or piece of evidence against something I have said here, I'll respond to it, but I think you're just arguing with me reflexively out of a general annoyance with my position and don't have anything serious to contribute.
Alright, looking it up I got one thing wrong. You got everything else wrong though--real wages for the bottom 20% as indexed by the CPI have not risen significantly. So I got a fact wrong, but you got the main point wrong. I'm annoyed with your position because it's wrong. Decide for yourself if you have anymore to add, but as it is you're wrong.
Knowing that your technique is to latch on to minor errors when your conclusion is shown to be wrong (though in the torture discussion most of the time you were wrong about those as well), I should have been more careful about intermediate errors.
consumatopia, mixner is right. You're just making stuff up. Show us where you got your information about wages.
It's all over the place. Show me where mixner got his information about wages he stated earlier.
Any google search will tell you real wages for the bottom 20% haven't significantly increased. Do your own homework.
Well, you've really shot yourself in the foot now, consum. You'd have been better off continuing your "Oh, everyone knows it's true" routine. From your own source:
Mean household income of lowest fifth, 2006 dollars:
1976: $9,929
2006: $11,352.
Is 11,352 higher or lower than 9,929, consumptia?
An even more basic problem is that you've cited income data to support a claim about wages. But you probably don't even understand the difference between the two. You're obviously just hopelessly out of your depth.
It's not significantly higher (look at how the other groups did!), and it's not at all consistent with what you wrote here
But total income itself has increased so dramatically over the past 30 years that even though their share is smaller, their income is much higher.
That's funny, it seems like you were talking about income there. Which is what I gave you. Fascinating. What's the difference between income and income? You're right, the difference between X and X is way beyond me.
Above in this thread you were talking about wages and salaries, but those go to CEOs and managers just as they to the poor.
But go ahead, explain to me how $11,352 is plenty of money.
consum,
It's not significantly higher
Your whole comparison is meaningless. You're trying to support a claim about wages by citing data on household income. And you didn't claim merely that wages are not significantly higher, you claimed "the worst off are worse off than they used to be." You've contradicted yourself with your own citation.
and it's not at all consistent with what you wrote here
More nonsense. You're now comparing a real income calculated from income share with a real income calculated by applying a deflator. Those are two completely different ways of calculating income. Another apples to oranges comparison.
You're trying to support a claim about wages by citing data on household income.
My claim was never about wages. Your claim was, but as I pointed out, it's not really relevant to inequality, because rich people get wages and salaries too. It might disprove Mishel's point, but that's kind of gotten lost in your resentment of me.
More nonsense. You're now comparing a real income calculated from income share with a real income calculated by applying a deflator.
It's sort of hard to decode what you're saying because you're confused and don't really have a good idea here. But nobody calculated a real income from income share (that wouldn't make sense. You listed an income share and claimed that this somehow showed that real incomes for the bottom 20% were "much higher". (This was a red flag--if this was the case, you would have just listed what the real incomes were, not left it as a multiplication exercise to the reader). I gave you the real incomes. I *did* compare the gains in real income in different groups, but I don't see any other way to define the "much" in "much higher".
consum,
My claim was never about wages.
So when you claimed: "real wages for the bottom 20% haven't significantly increased," that wasn't you, but an imposter posting under your name, was it?
You really are a piece of work. You flatly contradict yourself over and over again. You confuse "wages" with "income" and "workers" with "households." You make bizarrely irrelevant statements about CEOs. You don't understand what the CPI is. You claim I said things that I never said. You make up "facts" out of thin air. And so on and so forth.
So when you claimed: "real wages for the bottom 20% haven't significantly increased," that wasn't you, but an imposter posting under your name, was it?
My claim was never about wages in any way that the difference between wages and income was relevant. If you've got information that wages increased significantly even though income didn't, let's see it.
You flatly contradict yourself over and over again.
The chart I linked to clearly contradicts your quoted words, and if you can't admit that you have no honesty whatsoever.
You confuse "wages" with "income" and "workers" with "households."
Nope. You're just making stuff up.
You make bizarrely irrelevant statements about CEOs.
Wow, you are ridiculous. I just pointed that your wage share of income stats includes CEOs, so it's no evidence of the absence of inequality. The relevance is obvious.
You don't understand what the CPI is.
There I made a mistake, but I corrected it.
You claim I said things that I never said.
It was a straight copy and paste with associated link! Wow! You've got balls!
You make up "facts" out of thin air.
Yep, I hacked census.gov.
You started out this thread pretty smart but you got dumber as it went along. Next time keep your cool. See ya.
Re: Tens of millions of Americans today get the benefits of drugs, tests and surgeries that not even the wealthiest man in the world could buy 30 or 40 years ago, because they simply didn't exist.
PCs did not exist 30 years ago either. Nor did cell phones. Yet the cost of these innovations, initially high, have come down quite a bit. Why shouldn't all those new drugs, tests and aurgeries also decline in price once they become standard? And what was the price of a new drug back in the 60s? Sorry, but I think something is amiss here because the heakthcare market is not acting liek other markets; in fact it is not even acting like the healthcare market of a generation ago.
There's no way around the fact that some people are paying more for less [healthcare].
Mixner completely lost me when he responded "Income data clearly indicates that even "the worst off" are better off than they were before."
First of all, that sounds to me like a non sequiter. More importantly though, I'm paying about 100% more for health insurance than I did a very few years ago and have a higher deductable - without having had to 'use' the insurance. I am a person, and surely not the only one with this experience, ergo 'some people..etc.' is clearly accurate, at least minimally.
Furthermore, how do the phrases 'you shot yourself in the foot', 'you haven't the slightest idea..', 'I'm done with you' etc. advance your argument? They merely give you away for the bleating asshole you are. When your precious (in every sense) worldview isn't supported by facts (not to say statistics) having a hissy doesn't change it, buddy. There has been a long vogue in this country for assholes, but thankfully, it's ending. I hope.
BTW, this is the sort of thing women tend to despise about men. Yes, extremely elaborate lying - florid rationalizations in support of much more basic biases and hungers - can be sort of cute to an extent (in a 'how/why the hell do they DO that?' sort of way), but it's ultimately more tiresome, and more dangerous, than cute. Grow up.
HA HA HA HA HA HA HA
Mixner accusing anyone else of cherry picking facts. That's a fucking riot.
Jonnybutter, that's some pretty bigotted shit right there. only MEN lie to explain away baser instincts?
This is why most men don't like feminists. They have no clue as to what they are talking about. The problem you identify is just as likely to make men hate women, as to make women hate men. If you think women never engage in self-serving lies and passive aggressive defense mechanisms, I really don't know what to tell you. Women break up with men because they find mates with more money, and then pretend they would never do such a thing and the real reason is 'X', which never bothered them before they found the person with a thicker wallet. Women deny men access to their children for made up or invented slights all the time. They pick fights about 'X' when they are really mad about something else, but know they will be judged harshly by others for discussing.
These aren't gender specific failings. They are human ones.
So Mixner, a 0.44% annual increase in real household income over the past 30 years shows that the American poor have it great and anyone who argues otherwise is out of their depths? Wow.
PCs did not exist 30 years ago either. Nor did cell phones. Yet the cost of these innovations, initially high, have come down quite a bit. Why shouldn't all those new drugs, tests and aurgeries also decline in price once they become standard?
They do also decline in price. They don't decline as fast as electronic devices because the rate of advancement in medical science and technology is much lower than in electronic and computer technology.
So Mixner, a 0.44% annual increase in real household income over the past 30 years shows that the American poor have it great
I never said they "have it great." I said that most of them are not "poor" by any reasonable definition of that word, and that their real income has increased significantly.
First of all, that sounds to me like a non sequiter. More importantly though, I'm paying about 100% more for health insurance than I did a very few years ago and have a higher deductable
Then you're very unusual. You cannot infer large-scale trends in medical costs from your personal experiences.
"They do also decline in price. They don't decline as fast as electronic devices because the rate of advancement in medical science and technology is much lower than in electronic and computer technology."
This is also because the R&D costs (especially including the clinical trials) are a lot more expensive with health care. But often expensive medications obviate the need for even more expensive invasive procedures.
Re: Then you're very unusual.
Not unusual at all. In 2002 I paid 90 a month for a policy I considered decent (it included office visits and Rx benefits). In 2006 a policy with very similar benefits was priced for me at $248. That's quite a jump. To be sure I had aged four years (but really now, why should that matter-- we don't price anything else by age!) and yes, I had moved from Ohio to Florida, but my health was unchanged.
Re: They do also decline in price. They don't decline as fast as electronic devices because the rate of advancement in medical science and technology is much lower than in electronic and computer technology
Hmm, not a mention of the real culprit: monopolistic pricing. Odd that folks who I take to be free market advocates (correct me if I am wrong) are unwilling to put the blame on an very unfree market. And yes I know a firm should be able toi recoupo it's R&D. But how is it that cell phones, PCs etc have all been sold by multiple firmsfrom the earliest days they became popular, while drugs must be under monopoly for many years?
JonF,
Not unusual at all.
No, highly unusual. You cannot draw reliable conclusions about large-scale trends from anecdotes and personal experiences. Your failure to understand this simple principle seems to be at the heart of a lot of your misunderstandings about a lot of things.
In 2002 I paid 90 a month for a policy I considered decent (it included office visits and Rx benefits). In 2006 a policy with very similar benefits was priced for me at $248.
According to the Kaiser Family Foundation, which conducts an annual study of the cost of health insurance premiums, the cumulative growth in premiums between 2002 and 2006 was 68%. So if your policy had followed the national average, it would have increased from $90 a month to $151 a month. Not $248. The annual rate of increase has been slowing since 2003.
Most Americans get their health insurance through their employer. The 2006 Kaiser study found that the average employee-paid portion of these insurance premiums was $627 annually for single coverage. That's $52 a month.
Hmm, not a mention of the real culprit: monopolistic pricing. Odd that folks who I take to be free market advocates (correct me if I am wrong) are unwilling to put the blame on an very unfree market. And yes I know a firm should be able toi recoupo it's R&D. But how is it that cell phones, PCs etc have all been sold by multiple firmsfrom the earliest days they became popular, while drugs must be under monopoly for many years?
Drugs don't "have" to be under monopoly any more than computers do. For new drugs that are still under patent protection and that cost hundreds of millions of dollars to develop and bring to market, it usually just doesn't make economic sense for a rival drug company to buy the rights to manufacture the drug from the company that developed it.
"The 2006 Kaiser study found that the average employee-paid portion of these insurance premiums was $627 annually for single coverage. That's $52 a month."
Or, $23 per pay-period for the average covered employee. So, for these "working" Americans -- and most retired Americans who have Medicare parts A, B, and D, as well as private insurance or Medicaid -- any Dem proposal for nationalized health care will probably be a worse deal: they will pay more than they are paying now, for worse care. That's why Dems are trying to get to nationalized health care by salami slice-steps, like demagoguing S-Chip expansions.
Comments closed October 26, 2007.
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Heads in the Sand
Maybe not. But it would allow the cream of our society to rise ot the top, making us a stronger nation. Right now, that doesn't really happen. Everyone doesn't have a change to be successful. That's a worse problem than inequality. We resemble a society of lords and peasant, not just based on inequality, but based on class heredity. Theres no reason why your children should automatically do better in life than the children of a waitress in Idaho, regardless of their relative abilities.
Where do you think your latent hostility to egalitarianism comes from?
Posted by Soullite | October 12, 2007 6:02 PM