I’ve noticed on social media that the hosts are doing things to try to keep their participants engaged. It makes sense, there is so much going on and we all can’t be tweeting, linkingin, facebooking, instagraming, blogging, emailing, texting, etc., all at the same time. There simply isn’t enough time in the day; at east not if you expect to take a deep breath once and a while, or keep your life in balance.
When I lapsed in making posts on Twitter they began sending me summaries of my followers’ tweets. I guess to try to pull me back into interacting on their forum. “Come back, come back,” they cried. They probably have advertising dollars at interest – more viewers, more money for them. Sorry, that’s the cynic in me.
On LinkedIn, I suddenly began receiving notifications called “Daily Rundown.” Now these I actually like, because they give brief synopses of trending news stories in the business world. You can skim them fast and be on your way. And, two of these posts caught my attention in the past couple of days.
First, I learned that: “The world got a new billionaire every two days last year — a new record, according to a report from Oxfam International. Wealth is “increasingly concentrated” at the top, the charity says, with 82% of money generated last year going to the richest 1%. The world’s 2,043 billionaires saw wealth surge $762 billion in 2017, and billionaire wealth has grown an average 13% per year between 2006 and 2015.”
Second, in America: “We don’t have a shortage of jobs, but we might have a shortage of employers — and that could explain why wages aren’t rising. Hourly pay, adjusted for inflation, has grown by a meager 0.2% a year since the early 1970s. A group of economists argue in a working paper that limited competition between employers — due to mergers and other forms of industry consolidation — may be a prime culprit, reports Slate. The economists found that, between 2010 and 2013, local job markets were dominated by a disconcertingly small number of employers. It’s called a monopsony: A situation where a company is pretty much the only game in town, giving them major sway over suppliers, business partners, and employees.”
So it seems that 1% of the people world-wide control 82% of the world’s entire wealth, and their wealth grows at the current rate of 13% every year. And I’m not sure what wages look like in other countries, but in America, wages have only been growing at the rate of 0.2% a year for the past almost 50 years – that’s 10% growth over 50 years. Wow! What a disparity. Things certainly seem out of balance, especially from a socioeconomic humanitarian point of view.
It seems, at least in some circles, there is more concern for consolidating individual wealth and power than there is for helping our fellow humans or contributing to the growth of community.
I remember back to my senior year of nursing school. I was in a professional development course and the topic was centered on socioeconomics and health. I don’t remember how the conversation started but I remember adding that I would be willing to lower my standard of living to help improve the standard of living of others. The instructor asked the class if anyone else agreed with me. Not a single student raised their hand. And perhaps there is an illustration of the problem. I don’t blame the individuals, it is the way people are socialized and the values they are taught.
We can all do things, even small things, to help achieve balance. Balance in ourselves, balance between work and home, balance between taking and giving. While certainly not in all sectors, the scales seem to have tipped away from humanitarianism.
Photo: From a Japanese Garden in Idaho.
Update: Some new numbers to mull over, but I wouldn’t let the numbers get you down. I put a premium on happiness and peace of mind. They aren’t measuring these when they take these surveys.
From LinkedIn this morning (Jan. 27th, 2018) – a success survey to show what Americans think defines “Making It.” “For the average American, the picture of success is about $150,000 in annual income, marriage, a couple kids, a 10-minute commute, and a generous amount of vacation time, reports MarketWatch, citing survey data from ThermaSoft.”
Last time I checked the average income for a family of four was around $50K, but that number included benefits. And over half of Americans had only $1000 or less in savings. It looks like the materialistic brainwashing is way out of step with reality, or basically, very few people are “Making It.”
From the article: “This is what success looks like to the average American” in MarketWatch.
Another Update – March 11, 2018: We now have a dollar amount of what equates to “happiness.” It apparently takes earnings of $60 to $75k a year to be “happy.” But you have to earn $95K to achieve “fulfillment.” See the full article: “How Much Money Do You Need To Be Happy? More Than Most People Are Making.” Again, I don’t believe happiness is measured in terms of material wealth, but we do live in a society that does.
Another Update – March 15, 2018: I try to keep updating this post with relevant material and another piece of the puzzle came along today. This one is about health care and what happens to our income if we need to be hospitalized. I’m quoting from the article “Getting Sick Can Really be Expensive, Even for the Insured.” “On average, people in their 50s who are admitted to the hospital will experience a 20 percent drop in income that persists for years. Over all, income losses dwarfed the direct costs of medical care.” Also: “A 2015 survey conducted by The Upshot and the Kaiser Family Foundation found that, among people struggling to pay medical bills, 29 percent said their illness or injury had led to a drop in household income.” It seems, the US is behind other advanced countries that offer some form wage insurance. Since the leading causes of bankruptcy in this country are divorce and a single serious illness, medical treatment represents a huge factor in individual wealth and security. A healthy lifestyle and insurance goes along way to help maintain economic “balance.” These are strong arguments for a universal health care program.
Update – March 26, 2018: The average Wall Street bonus in 2017 was $184,220, according to the Washington Post. This represents a 17% increase from the previous year. It is also the closest the industry has come to its pre-2008-crisis high of $191,360 in 2006, according to data from the New York State comptroller. The financial industry’s revenue increased 4.5% last year to $153 billion. Wall Street accounts for less than 5 percent of local jobs but 20 percent of private sector wages in the city.
Update – May 17, 2018: I think this study sums up something I’ve been saying for a very long time. The stock market is not an actual measure of the wealth of the average American. Historic stock market highs only mean a few selective people are getting wealthy. The study found that 34.7 million working U.S. households live above the official poverty line, but below the cost of paying ordinary expenses. That is double the 16.1 million that are in actual poverty. “These are households with adults who are working but earning too little — 66% of Americans earn less than $20 an hour, or about $40,000 a year if they are working full time.”
You can find the summary of the results of the study here: 40% in U.S. can’t afford middle-class basics, and the full report here: Do You Know Alice? As with all web links, they are subject to “link rot” and the article may not be there forever. “Alice,” by the way, stands for “Asset Limited, Income Constrained, Employed.”
Update – May 23, 2018: Well the economic data just keeps coming. This time it is from the Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2017. I’ll let the numbers speak for themselves, but it looks as though few Americans are going to be able to afford retirement.
A large majority of individuals report that financially they are doing okay or living comfortably, and overall economic well-being has improved over the past five years. Even so, notable differences remain across various subpopulations, including those of race, ethnicity, and educational attainment.
• When asked about their finances, 74 percent of adults said they were either doing okay or living comfortably in 2017—over 10 percentage points more than in the first survey in 2013.
• Individuals of all education levels have shared in the improvement over the past five years, though the more educated still report greater well-being than those less educated.
• Over three-fourths of whites were at least doing okay financially in 2017 versus less than two-thirds of blacks and Hispanics.
• Three in five urban residents describe the economy in their local community as good or excellent versus two in five rural residents who offer this positive of an assessment of local conditions.
The latest SHED interviewed a sample of over 12,000 individuals—roughly twice the number in prior years—with an online survey in November and December 2017. The anonymized data, as well as a supplement containing the complete SHED questionnaire and responses to responses to all questions in the order asked, are also available at http://www.federalreserve.gov/ consumerscommunities/shed.htm.
In an effort to understand how the opioid crisis may relate to economic well-being, the survey asked questions related to opioids for the first time. About one-fifth of adults (and one-quarter of white adults) personally know someone who has been addicted to opioids. Exposure to opioid addiction was much more common among whites—at all education levels—than minorities. Those who have been exposed to addiction have somewhat less favorable assessments of economic conditions than those who have not been exposed.
Changes in family income from month to month remain a source of financial strain for some individuals. Financial support from family or friends is also common, particularly among young adults.
• Three in 10 adults have family income that varies from month to month, and 1 in 10 adults experienced hardship because of monthly changes in income.
• Nearly 25 percent of young adults under age 30, and 10 percent of all adults, receive some form of financial support from someone living outside their home.
Most workers are satisfied with the wages and benefits from their current job and are optimistic about their future job opportunities. Even so, challenges, such as irregular job scheduling, remain for some. Three in 10 adults work in the “gig economy,” though generally as a supplemental source of income.
• Less than one-fifth of non-retired adults are pessimistic about their future employment opportunities, although pessimism is greater among those looking for work or working part time for economic reasons.
• One-sixth of workers have irregular work schedules imposed by their employer, and one-tenth of workers receive their work schedule less than a week in advance.
• For many, stability of income is valued highly. Three-fifths of workers would prefer a hypothetical job with stable pay over one with varying but somewhat higher pay. Those who work an irregular schedule in their actual job are somewhat more likely to prefer varying pay in the hypothetical choice than those who work a set schedule.
• Three in 10 adults participated in the gig economy in 2017. This is up slightly from 2016 due to an increase in gig activities that are not computer or internet-based, such as child care or house cleaning.
Dealing with Unexpected Expenses
While self-reported financial preparedness has improved substantially over the past five years, a sizeable share of adults nonetheless say that they would struggle with a modest unexpected expense.
• Four in 10 adults, if faced with an unexpected expense of $400, would either not be able to cover it or would cover it by selling something or borrowing money. This is an improvement from half of adults in 2013 being ill-prepared for such an expense.
• Over one-fifth of adults are not able to pay all of their current month’s bills in full.
• Over one-fourth of adults skipped necessary medical care in 2017 due to being unable to afford the cost.
Banking and Credit
Access to bank accounts expanded further in 2017. However, substantial gaps in banking and credit services exist among minorities and those with low incomes.
• Nearly 95 percent of all adults have a bank or credit union account. However, this varies by race and ethnicity. One in 10 blacks and Hispanics lack a bank account, and an additional 3 in 10 have an account but also utilize alternative financial services, such as money orders and check cashing services.
• One-fourth of blacks are not confident that a new credit card application for them would be approved—twice the rate among whites.
Housing and Neighborhoods
Satisfaction with one’s housing and neighborhood is generally high, although notably less so in lower income communities. Renters face varying degrees of housing strain, including some who report difficulty getting repairs done or being forced to move due to a threat of eviction.
• While 8 in 10 adults living in middle- and upper income neighborhoods are satisfied with the overall quality of their community, only 6 in 10 living in low- and moderate-income neighborhoods are satisfied.
• Nearly half of adults age 22 and older currently live within 10 miles of where they lived in high school, but those who have moved farther from home are more likely to be satisfied with the overall quality of their neighborhood.
• Three percent of renters were evicted or moved because of the threat of eviction in the past two years.
Economic well-being rises with education, and most of those holding a postsecondary degree think that attending college paid off. The net benefits of education are less evident among those who started college but did not complete their degree; the same is true among those who attended for-profit institutions.
• Two-thirds of graduates from bachelor’s degree programs feel that their educational investment paid off, but less than one-third of those who started but did not complete a degree share this view.
• Just over half of those who attended a for-profit institution say that they would attend a different school if they had a chance to go back and make their college choices again. By comparison, less than one-quarter of those who attended not-for-profit institutions would want to attend a different school.
Over half of college attendees under age 30 took on some debt to pay for their education. Most borrowers are current on their payments or have successfully paid off their loans, although those who failed to complete a degree and those who attended for-profit institutions are more likely to have fallen behind on their payments.
• Among those making payments on their student loans, the typical monthly payment is between $200 and $300 per month.
• Nearly one-fourth of borrowers who went to for-profit schools are behind on their loan payments, versus less than one-tenth of borrowers who went to public or private not-for-profit institutions.
Many adults feel behind in their savings for retirement. Even among those who have some savings, people commonly lack financial knowledge and are uncomfortable making investment decisions.
• Less than two-fifths of non-retired adults think that their retirement savings are on track, and one-fourth have no retirement savings or pension whatsoever.
• Three-fifths of non-retirees with self-directed retirement savings accounts, such as a 401(k) or IRA, have little or no comfort in managing their investments.
• On average, people answer fewer than three out of five basic financial literacy questions correctly, with lower scores among those who are less comfortable managing their retirement savings.
Update – May 28, 2018: A new survey by the Pew research center that examined issues facing rural and urban households found many similarities. A couple of the interesting responses are that some 60% of the respondents say they cannot afford the life they want, and that workers across all areas in the US have seen their wages drop by 1 to 3%. You could compare that with the wage stagnation cited above when I made the original post. The Pew report is here:
Update – June 24, 2018: Home prices and mortgage rates have outpaced wages so fast that now 75% of US wage earners cannot afford the median price of a home, which has risen to a record $264,800.
Update – August 12, 2018: The 2018 World Inequity Report
So here are some of the take-aways from this report with respect to the U.S.
2.4 Income inequality in the United States
Information in this chapter is based on the article “Distributional National Accounts: Methods and Estimates for the United States,” by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, forthcoming in the Quarterly Journal of Economics (2018).
Income inequality in the United States is among the highest of all rich countries. The share of national income earned by the top 1% of adults in 2014 (20.2%) is much larger than the share earned by the bottom 50% of the adult population (12.5%).
Average pre-tax real national income per adult has increased 60% since 1980, but it has stagnated for the bottom 50% at around $16 500. While post-tax cash incomes of the bottom 50% have also stagnated, a large part of the modest post-tax income growth of this group has been eaten up by increased health spending.
Income has boomed at the top. While the upsurge of top incomes was first a labor-income phenomenon in 1980s and 1990s, it has mostly been a capital-income phenomenon since 2000.
The combination of an increasingly less progressive tax regime and a transfer system that favors the middle class implies that, even after taxes and all transfers, bottom 50% income growth has lagged behind average income growth since 1980.
Increased female participation in the labor market has been a counterforce to rising inequality, but the glass ceiling remains firmly in place. Men make up 85% of the top 1% of the labor income distribution.
Income inequality in the United States is among the highest of rich countries
In 2014, the distribution of US national income exhibited extremely high inequalities. The average income of an adult in the United States before accounting for taxes and transfers was $66 100, but this figure masks huge differences in the distribution of incomes. The approximately 117 million adults that make up the bottom 50% in the United States earned $16 600 on average per year, representing just one-fourth of the average US income. As illustrated by table 2.4.1, their collective incomes amounted to a 13% share of pre-tax national income. The average pre-tax income of the middle 40%—the group of adults with incomes above the median and below the richest 10%, which can be loosely described as the “middle class”—was roughly similar to the national average, at $66 900, so that their income share (41%) broadly reflected their relative size in the population. The remaining income share for the top 10% was therefore 47%, with average pre-tax earnings of $311 000. This average annual income of the top 10% is almost five times the national average, and nineteen times larger than the average for the bottom 50%. Furthermore, the 1:19 ratio between the incomes of the bottom 50% and the top 10% indicates that pre-tax income inequality between the “lower class” and the “upper class” is more than twice the (1:8 ratio) difference between the average national incomes in the United States and China, using market exchange rates.
Income is very concentrated, even among the top 10%. For example, the share of national income going to the top 1%, a group of approximately 2.3 million adults who earn $1.3 million on average per annum, is over 20%—that is, 1.6 times larger than the share of the entire bottom 50%, a group fifty times more populous. The incomes of those in the top 0.1%, top 0.01%, and top 0.001% average $6 million, $29 million, and $125 million per year, respectively, before personal taxes and transfers.
As shown by Table 2.4.1, the distribution of national income in the United States in 2014 was generally made slightly more equitable by the country’s taxes and transfer system. Taxes and transfers reduce the share of national income for the top 10% from 47% to 39%, which is split between a one percentage point rise in the post-tax income share of the middle 40% (from 40.5% to 41.6%) and a seven percentage point increase in the post-tax income share of the bottom 50% (from 12.5% to 19.4%). The trend is also of relatively large proportionate losses in income shares as one looks further up the income distribution, indicating that government taxes are slightly progressive for the United States’ richest adults.
Update – August 19, 2018: This one is on CEO compensation, and it comes to us from Pacific Standard and their article titled: “CEOs Got a Big Raise in 2017.” We can sum this one up with a few quotes from the article.
“In 2017, the ‘average CEO of the 350 largest firms in the United States received $18.9 million in compensation, a 17.6 percent increase over 2016,’ the report states. (By another measure, which includes stock options granted, average CEO compensation rose from $13.0 million in 2016, to $13.3 million in 2017.)”
“Between 1978 and 2017, CEO compensation (including stock options realized) increased by 1,070 percent, according to the Economic Policy Institute report. During this same time period, compensation for the typical American worker increased by 11.2 percent.”
“Today, as a result of this surge, the average CEO’s compensation (including stock options realized) is 312 times that of the typical worker, a ratio that’s dramatically higher than the 1980s (although still not quite as high as in 2000).”
“The Trump administration maintains that wage growth for average Americans will come, although even fans of the tax reform legislation suggest it may not be ‘immediate.’ In a report released yesterday, the Tax Foundation, a center-right think tank whose modeling of the Tax Cuts and Jobs Act’s effects has typically been more optimistic than most other models, projected that long-term wages will increase by 1.5 percent. Nicole Kaeding, the Tax Foundation’s director of federal projects, told the Washington Post that they ‘definitely think it’s going to take a few years for this to obviously manifest.'”
So there you have it. The CEOs win the lottery every year while the average wage earner’s income can’t even match inflation.
Note: All web links are subject to link rot and I cannot guarantee the links will take you to those sites forever.