Where are the wage gains going?

From David Cay Johnson:

From 2000 to 2012, American workers as a whole had a tough time, as population grew much faster than new jobs and many people gave up looking for work. There was one major exception: jobs paying $100,000 to $400,000 (in 2012 dollars).

This is what I call America’s new prosperous class. Many of these workers have an advanced degree. They no longer struggle, but they continue to work because their wealth is far from adequate to support their lifestyles.

The number of prosperous-class jobs soared to 10.8 million, an increase of 2.1 million since 2000. That is almost 10 times the growth rate of jobs paying either more or less.

Most astonishing is how much of the overall increase in wages earned by the 153.6 million people with a job in 2012 went to this narrow band of very well paid workers: Just 7 percent of all jobs pay in this range, but those workers collected 76.9 percent of the total real wage increase.

For the pointer I thank Mary Ray.  (p.s.: the paperback edition of Average is Over is out today).


That's not fair! We should tax them at 100% and give the money to people who will spend it, thereby increasing the economy with a multiplier effect and we all get richer! In fact, since this works so well, why can't we just tax everyone at 100%, hand the money out fairly to everyone, and all that increased spending will shoot our economy through the roof!

Sounds good! Let's do it!

Ha ha, libertarians saying "that's not fair" like it's stupid and childish while committing absolutely to an ideology where it's taken as an article of faith that 'fairness' is an emergent property of market transactions absent government intervention.

As opposed to being derived by Michael Foody and Friends? Give me the market.

Come now, that is uncharitable. Michael Foody probably has a philosopher-king in mind who will perform the fair redistribution.

@Michael, I'm pretty sure that "life isn't fair" is a libertarian principle. Also, you are talking about articles of faith, but the wealth and technological progress of modern times have happened in societies with free markets, and this has been vastly welfare-improving for these societies, not just for the rich, but for people of all classes. There is a huge amount of evidence in favor of the libertarian position that you need to consider.

I am not sure if people born retarded, stupid, disabled, or without parents would agree that a rising tide lifts all boats, but life isnt fair, right? I wonder if you would shrug and say, you know, life isnt fair, if some well armed muscle bound savage came along and took your blessings away at gun point or with a big stick. But hey, that isnt playing by the rules. well... life isnt fair weakling, you should have been born with big muscles and small conscience, its not the savages fault your a puss.

I am a fan of free markets, no doubt, but I do believe we are a society and not just a bunch of self-seeking independent brutes, and think that even those born retarded or lame deserve to have something to eat and a place to live. It seems to me many libertarians seem to think haves always derserve it, and the have nots dont, yet we all have the obligation to protect the property of the haves. Interesting how that works.

" if some well armed muscle bound savage came along and took your blessings away at gun point or with a big stick." That would be somebody with a badge or some kind of plastic government ID.

"even those born retarded or lame deserve to have something to eat and a place to live." For several millennia they've lived with their families but you've got a better idea.

Those people unable to take care of themselves are already given a quality of life greater than the majority of all humans currently alive and better than 99% of all humans who have ever lived. The current debate is about whether or not to embark on two simultaneous policies of massive wealth redistribution and massive regulatory burden. But, by all means, continue to shriek about the muscle bound men who will take things away from people (and I'm not even talking about the police).

Unless we minimum-wage their jobs out of existence, there are a lot of Wal-Mart Greeter and Burger Flipper jobs available to those who are moderately mentally limited. (Wage subsidies, possibly significant, will be needed.) Even many of those physically lame have online jobs available to them.

This won't cover 100.0% of workers, of course.

"I am not sure if people born retarded, stupid, disabled, or without parents would agree that a rising tide lifts all boats, but life isnt fair, right"

If they're knowledgeable of the quality of life improvements over the last hundred years for these groups then absolutely yes they would.

Also your strawman characterizations of your opponents positions aren't doing your arguments any favors.

I think many of us are quite happy with current levels or redistribution, I am for example. I think we have it about right. How many times have you been robbed by the police or teachers or those parasitic civil servants? Maybe you are talking about the IRS? I suppose taxation would be robbery, except for all those roads, basic R&D, cops and military members protecting your property, those schools educating you, those programs making sure grandma has something to eat. Robbery indeed.

for millenia, they lived on scraps their lords "blessed" them with. It is true that people used to take care of their families in old age. You are right. But you also realize that back then, families were probably 3-4 times their current size right. That modernity discussed above happens to have lead to a dramatic decrease in the size of families. ying and yang. In modern time, we are all a family. That was kind of my point, weird as it came out.

straw man? spoken like someone who isnt lame or retarded and has no sense of compassion.

@thomas, what new policy is being proposed to embark on a massive redistribution of wealth? What massive regulatory burdens would you like to remove? Do you think people should be able to dump anything they want in the stream in your back yard? Would you like any old corporation to be able to pump whatever pollutants they want into the air you breath without having to pay for it? would you like to get rid of testing for toxins in the food you buy at the grocery store? I hear this constant droning on about overly burdensome regulations. What regulations would you like to disassemble? I am guessing they are quite minor and that the vast majority (particularly the big expensive ones) make pretty good sense.

I 'lol' in your general direction, Mr. Diem. You must have missed the part where the inequality discussion exists within a broader political battle over whether or not to expand wealth redistribution and regulatory oversight. Again, do we follow the Road to Serfdom by imposing Michael Foody's philosopher kings, or do we establish a limiting principle that stops the ever-growing government? The mentally handicapped have already been covered. Now the focus is on the plight of people who are among the wealthiest in the world. As for regulations, there are so many that should be repealed that it takes remarkable mental gymnastics to avoid recognizing it, I'm not going to list them out for you - you've already demonstrated that you are going to focus on the most agreeable aspects of government in order to defend the worst.

What drugs are you taking? How can you be so wrong about so much? I would guess that about less than 1% of the people are in favor of imposing philosopher kings. The risks for that are extremely low except in the minds of conspiracy theorists like you.

I think you must be referring to the inequality discussion embedded into the the debate about whether to decrease taxes on the wealthy while cutting benefits to the poor (or completely and permanently disassembling the social safety net as we know it) or not do that (i.e. maintain the status quo). That is the current debate.

Expanding regulatory oversight? You mean face up to the fact that global climate change is real and that our reliance on fossil fuels for all our energy needs is not sustainable nor good for the American economy or the planet earth in general.

The focus is on the plight of the wealthiest of people among the wealthiest in the world? I take it you are referring to tax cuts on millionaires... i mean "job creators", cuz we all know only increases in supply create jobs. Lastly, I take it there are so many regulations that need repealed that you cant name a single one? As I said, I think we have it about right as it is. I am for maintaining the status quo with the possible exceptions of government (and corporate!) invasions into our private lives, legalizing marijuana, and slightly increasing taxation on people with yachts bigger than the median family's homes.

Yes, I must, I must, I must. I must accept more redistribution, I must accept more regulation, and I must accept whatever else you come up with. Like I said, philosopher king.

still waiting for even one regulation.... bueller, bueller, bueller...

I think that you are unable to come up with a single regulation which you think is excessive, counterproductive, or otherwise net negative, says a lot more about you than it does about me. Do you really think that I don't have access to lists of excessive regulations via my everyday reading lists? In your view has there ever been a regulation or law too much?

The successes of Western economies are automatically ascribed to the free market.

Their failures are ascribed to "socialist policies."

Since Western economies are mixed economies they can be both free market and socialist at the same time.

dan1111: "There is a huge amount of evidence in favor of the libertarian position that you need to consider."

It's possible to recognize the benefits of free markets without being a libertarian. The main problem with the libertarian position is that it, implicitly or explicitly, refuses to acknowledge the costs. Libertarians either pretend that capitalism's downside doesn't exist or wave it away and claim it doesn't matter. The libertarian position has nothing to offer the casualties of capitalism if it even bothers to acknowledge that they exist.

The prosperity Western civilization has known, particularly since World War II, has been due to the balance struck between free market, survival-of-the-fittest capitalism on one side and liberal concepts of community and social justice on the other. When the system works, the two complement each other, successfully mitigating each other's downsides. Since the end of the Cold War, a variety of forces, globalization and automation among them, have scrambled economic incentives among the elite and, in so doing, disrupted that balance.

As for "life isn't fair"... Certain stripes of conservatives and libertarians love love LOVE to throw this in everybody else's face. It's their favorite retort. Yet their entire belief system is premised on the implicit axiom that life is absolutely fair. God/The Market rewards the worthy and punishes the unworthy. You get out what you put in, and people get what they deserve. Shit never just happens. If something bad happens to you, you deserve it because either you did something you shouldn't have or you failed to do something you should have. It is, fundamentally, an absolutist and deterministic worldview. And, as such, it's a steaming pile of bullshit.

Stop hitting me over the head with your shovel!

"Stop hitting me over the head with your shovel!"

Then stop being true.

But I 'm only true inside your head. Don't you recognize me? You pull me out and beat me up constantly. Boring, and it doesn't accomplish anything.

"But I ‘m only true inside your head."

Clearly, you're not a regular consumer of American right-wing political commentary.

"Don’t you recognize me?"

Yep. I believe the word is troll.

"Boring, and it doesn’t accomplish anything."

If I didn't have a point, you wouldn't be irritated.

Yes, the amount of irritation one causes to others is the truest measure of the strength of their argument.

the irritation isn't but claims of strawmen, when no such strawmen were set up is.

The libertarian tradition does none of those things but them you've never read a single libertarian intellectual. Hence your confusion about conservative talk radio. Your ignorance is not unusual.

Thomas, you seem to be the ignorant one.

Thomas: "The libertarian tradition does none of those things but them you’ve never read a single libertarian intellectual."

I've read Rand. I'm also familiar with Nozick and Rothbard. Rand was full of it, but her work is understandable if viewed as the product of someone personally traumatized by the violence of the Russian Revolution. I found Nozick and Rothbard logical and consistent, but unrealistic. Like Marx--and most political theorists--they're very good at articulating first principles and constructing coherent abstractions. Practical, realistic, implementable solutions, not so much.

That said, libertarian intellectuals don't hold monopoly ownership of the term libertarian. They're also not the "certain stripes of conservatives and libertarians" I was referring to.

So maybe you'd like to substantiate your claim about libertarian beliefs in "the just market" by producing some quotes or perhaps a synopsis of the works of Rothbard or Nozick which make that argument? Of course, you can't, because the libertarian philosophy inherently acknowledges the justification for a (small and limited) government to redress the flaws inherent in anarcho-capitalism.

thomas: "So maybe you’d like to substantiate your claim about libertarian beliefs in “the just market” by producing some quotes or perhaps a synopsis of the works of Rothbard or Nozick which make that argument?"

What part of "They’re also not the “certain stripes of conservatives and libertarians” I was referring to" did you not understand?

When I made my "claim about libertarian beliefs in “the just market”", I wasn't talking about Nozick, Rothbard, or libertarian intellectuals.

So by "libertarian", "libertarian position", "Libertarians", "libertarian position", you really meant "Certain stripes of conservatives and libertarians" the whole time. I see. So are you now amending your original post to acknowledge that you were only addressing "Certain stripes of conservatives and libertarians" or are you acknowledging that you were beating up a strawman?

Thomas: "So are you now amending your original post to acknowledge that you were only addressing “Certain stripes of conservatives and libertarians”...?”

Sure, if it makes you feel better to put it that way.

Markets are a phenomenal tool for allocating scarce resources and have a demonstrably better track record than central planning (though I think there are certain utility improving state interventions that can be pursued). My issue is with a common absolutist libertariansm that is utterly dismissive of concerns over the unfairness of extreme and growing income inequality but treats progressive taxation as 'unfair'.

Mike, you demolished that strawman!

If you feel what I said doesn't apply to you that's great and I trust your judgement. (though the strawman talk is a bit rich if you're the same thomas quipped "As opposed to being derived by Michael Foody and Friends? Give me the market.") But it's not like objectivism isn't a reasonably influential ideology and it isn't as though a number of mainstream conservatives have bought in more or less completely into the social darwinist aspects of it even as they've rejected other aspects of the ideology.

Sure, Mike, as long as you assume that "absolutist libertarianism" is mainstream and common, you would be correct in claiming that "absolutist libertarianism" is mainstream and common. Of course, "absolutist libertarianism" is anything but common, but why worry about that when you can scream "AYN RAND!" if someone suggests that we ever slow the rate of growth in government spending. Because that's what "absolutist libertarians" are all about; tiny decreases in the rate of growth of government. Amirite?

Every libertarian I know is angered by wealth gained from rent seeking: monopoly profits, government largesse and favoritism, inefficiencies created by government, etc.

Income inequality is not fair per se to libertarians, not by a longshot.

Government exacerbates inequality by enabling rent seeking, establishing monopolies, protecting incumbents, and returning investments on campaign contributions, and I've never seen this point addressed by those who propose to solve our problems by increasing the amount of power government agents have, to sell.

If you expose their cognitive dissonance, Thomas, maybe their heads will explode.

That 7% suffered the entire burden of Obama's income tax and Medicare premium increases and only the 90% still enjoy Bush tax cut bounty.

These comparisons never make sense on a pre-tax basis. The $100,000 earner does not bring home 2x the $50,000 earner.

Wow, Obama gets all that tax? I'd be mad too.

Colloquialism-- what is it?

Wow, inventing a crazy position (100% tax rates) so that you can get mad at your own position. Brilliant.

Do people like Tarrou even have the self-awareness to know how far they divorce themselves with reality to make their criticism "work?"

I think this is often referred to as beating straw men, or some such thing. It serves as a convenient whipping post.

Even most Marxists would think this is silly. A 100% inheritance tax? Many a Marxist or Leninst would applaud loudly. But I've never met anyone with so extreme a view as to endorse "perfect" taxation and redistribution (in the sense of tax 100% and redistribute perfectly equally).

What is the Progressive principle which limits government spending or taxation? I've never heard it.

Plenty of leftists have advocated for total economic equality. The crooked timber folks have run posts discussing the problems with Rawls and how to get to a philosophy that supports total economic equality. Loomis over at LGM has basically the same position, although his preferred implementation is as idiotic as you can get. I'm on the left side of the political spectrum, but you can't really deny the existence of these people. Maybe there's no voting block there, but there's definitely plenty of voice for that view.

Perhaps we could wonder about ways to more effectively employ other people, so that they too can earn more income and therefore pay more taxes, for example to pay for the infrastructure deficit or to help provide employers with the healthy employees they need.

But that's largely a matter of wondering what the private sector will do, and how things can be made easy for them to expand, without undermining the tax base which affords things like roads worth driving on and employees who get medical care when they need it.

I suspect that a higher minimum wage will draw much talent out of the woodworks and also contribute to reducing this highly inegalitarian low growth trajectory we have been experiencing.

"Perhaps we could wonder about ways to more effectively employ other people"
"But that’s largely a matter of wondering what the private sector will do"
"I suspect that a higher minimum wage will draw much talent out of the woodworks"

Well at least we know who to talk to about what the private sector doesn't know that it needs. You must make a killing on the stock market?

"Many of them serve the rich, not as household help but as managers of wealth: accountants, bankers, investment advisers, lawyers, business managers and money managers." In times past these "managers of wealth" were called courtiers. They remind me of cattle egrets. I'm not sure if average is over, but resourcefulness is definitely in.

I'm one of these people. Trust me, I'd rather be working with underprivileged youth--I'm sure many I work with would as well. But in these days of zero job security, no pensions, shitty or no health insurance, you have to make as much as you can as fast as you can to survive.

Cowen is right: Average is over. But Cowen is wrong in thinking this is fine, or this is some natural way of things.

So am I. But unlike you, there is no way in hell I would work with disadvantaged youth over other professionals even if you paid me the same...

I've worked with both: financial services to the decently wealthy and legal help for the poor.

Generally most people are surprisingly decent if you give them a chance to talk. The rich seem to have had a small but greater percentage of downright mean people, the poor a greater percent of people who don't get basic social conventions.


I also was in this class, and agree with Michael that it's not the natural order of things to have these people prosper, but a sign of decay. I also agree with this: "This is what I call America’s new prosperous class. Many of these workers have an advanced degree. They no longer struggle, but they continue to work because their wealth is far from adequate to support their lifestyles" - very true. You simply cannot, even as as single person, get by with less than USD $100k a year in the US in any major city. In fact, over 20 years ago I made this as a starting salary, and I actually had negative savings by a small amount my first year, until I learned to reign in my expenses. The USA is expensive. If you want to live on $1k to $2k a month, come here to the Philippines where you can live like a prince, but forget the USA.

PS--@rayward - Cattle egrets might have a useful purpose, and not simply be parasites, in the wild, as they warn of approaching predators?

Jesus, shut up Ray. You're by far the most annoying person on this site, which is saying something since it's populated by blind ideologues, racists, and morons.

Wow, that seems uncalled for. Egret poop in your coffee this morning?

Michael, I think you edged him out.

Dude - I love Ray Lopez and Z-Man (blessed be his name). Why so serious?

Does Major Freedom ever post over here or does that troll permanently reside at TheMoneyIllusion. That is the most annoying person on any site. I tend to agree with the others. This site has a small percentage of annoying commentors (many probably put me on that list) but i wouldnt say its populated by racists and morons, though there are some.

poop in his coffee = +1. that is good stuff.

Props to Ray and Z-Man, two of the people that make my creaky life worth living.

Blind ideologues are OK. I don't know any outright racists-people talking freely.

Morons, that's subjective.

Well, if one must pay $13 for a martini, I guess not? As with anything, it's about choices.

"You simply cannot, even as as single person, get by with less than USD $100k a year in the US in any major city"

Demonstrably false. You probably cannot do so if you refuse to have roommates, refuse to eat food you cook yourself and drinks you mix yourself, refuse to make all purchases with cash (including your car), and refuse to live in anything less than the 'hippest' of neighborhoods...

However, if you live like a normal person did one or two generations ago - a couple of roommates, to split the rent, save to buy a 7-10k car (or take the bus!), eat out only once or twice a week, and generally not be an idiot with your money - you can easily live almost anywhere in the US on far less than 100k, or live on 100k and have a decent savings and charitable giving rate.

The problem isn't the economy, it's the expectation of luxury...

You're being way too charitable to Ray and the rest of these idiots.

Look, guys: I've lived in the San Francisco metro area for my entire working life (ie, post college). My salary started at $55,000, and, as you might imagine, went upward from there. I lived in this city, comfortably, as a single person, for a decade on less than $100k a year. Some of that time, I had a roommate, some of it I didn't. I bought my (compact) cars new and used them until they got a bit over 100k miles on them. I rarely cooked, and mostly ate out (though, obviously, not at super swank restaurants for every meal).

My wife, before we got together, started at more like $18k a year (Americorps), and had made it up to $55k before we met. She had no roommates. She basically never cooked.

Michael B Sullivan: "My salary started at $55,000"

When? What year?

"I lived in this city, comfortably, as a single person, for a decade on less than $100k a year."

What time period? San Francisco proper? Or, by San Francisco, do you mean Oakland? Also, was this with or without long-term debts to pay off?

To be clear, I'm not just being snarky. If there's a way to live in San Francisco on less than $100K that doesn't involve subsisting on ramen, living eight people to a room, and constricting entertainment options to self-hypnosis via ceiling fan, I'm genuinely interested to know.

$55k was in 1999. I don't remember exactly when my income crossed above $100k, but it was something like 10 years later -- 2009 give or take a year.

I didn't have long-term debt.

I didn't live in SF proper until my income was slightly higher than $100k (I think it was $105k), though I note that when I did move there, I rented a 2,000 sq ft house with a garage, and continued my previous lifestyle of living a comfortable, not-terribly-frugal life (this was in... 2011 I think?). My wife, whose income was considerably lower than mine, probably would have had to make some very serious concessions to live in SF proper on her own (which is to say: she'd probably have had to live in Hunter's Point or something).

Rents have gone up since we moved in -- the house that I rented and she later moved into was $2,000 per month (in the Excelsior). The house we purchased about a year ago has a mortgage of $3,000 per month (near Balboa Park, with a sizable down payment). But a glance through craigslist shows plenty of offerings for apartments today that are less than $2,000 a month.

So, look, there are two different things going on here:

1. The absurd hyperbole. Did anyone seriously believe that you couldn't live in "a major city" for $100k? Or is that cover for some kind of vaguely reasonable position like, "Well, you'll have to watch your expenses a lot more, and live in a much smaller house for $80k in the city versus $80k in rural Alabama"?

2. The narrowing of scope. San Francisco proper -- that 49 square miles -- is pretty expensive. Median household income is $74,000, so plenty of people live on much, much less than $100k, but it is pretty expensive. But so what? The claim wasn't that you couldn't live in one of the single most expensive cities in the US that also happens to be a rather small city that, compared to New York or Chicago or Houston or whatever leaves its more affordable suburban areas outside the nominal city limits instead of inside. It was that you couldn't live in any major US city for under $100k. Which is idiotic.

Sullivan: "The narrowing of scope. San Francisco proper — that 49 square miles — is pretty expensive. Median household income is $74,000, so plenty of people live on much, much less than $100k, but it is pretty expensive. But so what?"

The San Francisco focus was just me. I've long heard tales of its expensiveness and was curious to hear if there was any truth to it. Sounds like it is expensive, but not necessarily worse-than-Manhattan expensive.

As to the original post, I think the real meaning was that you can't live Ray Lopez's preferred lifestyle in any major U.S. city on less than $100K a year.

True. I live in Baltimore (yes, city not suburbs) on less than 100K (just one in fact have I hit 6 digits, with a one-time windfall in 2008). And I have friends here as well who live on less than 100K so this is nor unusual.

"You simply cannot, even as as single person, get by with less than USD $100k a year in the US in any major city."

I'd amend your statement to say it's not possible to live _comfortably_ (i.e. a suburban-equivalent, middle- to upper-middle class lifestyle) in any major U.S. city on less than $100K a year. With emphasis on in and major.

I am close to the middle of the earnings bracket described in this article, single, and I live in the fourth biggest city in the country, yet my monthly living costs are comfortably under $3,000, unless I choose to splurge on travel. I guess it helps that I own my (modest) house and car outright, and have no debt.


When did you buy your house? How long did it take to pay it off? Is it in the ghetto?

Are you a college graduate? If so, how did you pay for it? How long ago did you graduate? If not, what sort of work do you do for a living?

Fourth biggest city or fourth biggest metro area?

Bought house this year, mid $200k range, from savings + equity from sales of house where I moved from. In a nice quiet residential neighborhood (modest early 60's ranch houses). Went to university in Canada 25+ years ago, paid for by summer jobs, part-time jobs while studying and about $10K in loans. Grad school was fully funded (tuition waivers and RA/TA work). I am an economist working in Houston.

Point being, one can choose to live well within one's means if one wants. Basically, i am spending less now so that I can afford to work less in the future. It seems to me that the ability (or lack thereof) to perform that little bit of intertemporal optimization explains a lot of what might be called "intelligence".

Middle aged Canadian = no ridiculous student loans. Most people graduating college or grad school in the US to a decent paying job these days have loans. A lot of people have very, very high payments. Almost nobody can afford to buy their house outright.

Also, the city you live in is stupid-cheap compared to most sizable metro areas.

I wouldn't call what you've described a suburban-equivalent, middle- to upper-middle class lifestyle. I suppose we have different concepts of what that means.

I live in SF on $100K as a single person and put 15% into my 401K. I don't own a house (and who could with 1 bedroom condos selling for $700K?) and I'm just on the line of being able to itemize my deductions.

My take-home pay after taxes and 401K contributions is around $57K/year.

One bedroom apartments start at $2500/month around here so roommates are a requirement. But that doesn't mean we actually share rooms. I live in a solidly middle class neighborhood in a very nice house. I eat out most nights and own my newish Honda outright. I wouldn't say that I'm struggling or eating ramen or racking up debt.

SF is expensive, but it's totally doable on $100K/year. I have friends earning a lot less than that who do just fine.

However, once you get below $50K/year, the city becomes totally unaffordable. You just won't be able to find a safe place to live.

This is ridiculous. As a single person you can get an apartment for $2K/month in virtually any neighborhood in the US, much less cities. Yeah, it'll be a little small if you want to live in Manhattan, but you don't need 1000 sq feet if you're living by yourself. 300 sq ft is fine. And if you want more, there are very reasonable neighborhoods in Manhattan or *gasp* Brooklyn, where it is possible. And that's 24K/year. That should be your biggest expense. You should not have a problem living on under 100K/year.

Now if you want to live in a super expensive urban area and have a car or need the living space to support a spouse and kids, that's a whole different ballgame.

Too bad this Wordpress site does not allow better comment threads. Yes I agree with FUBAR007 . Comfortably meaning you don't have to mix your own martinis nor have annoying roommates. In Frisco (yes Frisco, please, and no I'm not some hick from Bakersfield), where i lived in the 90s, lived in the Pacific Heights region and had celebrity neighbors, with no roommates, and rental costs were less than 25% of take-home pay, I saved, after making 150k, about 20%, or $30k. Remember, taxes are almost 45% of gross pay, so you have 83k a year after tax money to play with, subtract $30k for rent (2.5k/mo) for a small furnished one-bedroom, leaving 53k, subtract your car payments (I had a cheap compact at the time, later I upgraded to a BMW) of about $6k a year, leaving 47k, subtract your entertainment expenses of about 1.5k a month (18k a year, and I did not do illegal drugs nor have any love partner while there) leaving 29k a year savings, or 29/150 = a 19% a year savings rate on 150k a year, just as I said, for living a modest upper middle class lifestyle . If you want roommates, live in South of Market, or move to some cheaper parts of the Bay Area, maybe parts of Oakland or Fremont or some place in the mountains with a two hour commute, then of course your cost of living is cheaper. Nuff said.

Is this the "real" Ray Lopez?

You can live on $50 K a year as a single person if you keep your housing costs under $20 K a year, do without a car, and stay out of debt. I don't think you can save anything, but that is more of a function of ZIRP, anything you save basically just sits there and loses purching power, or goes to a bubble investment. But its doable, and not even that difficult, if you keep the predictable monthly cash outflows to a minimum. Its tougher if you have to pay for your own health insurance, though.

The obvious problem with Manhattan and San Francisco is the keeping housing costs under $20 K part. I think people on this site exaggerate urban crime, but there are central cities where the housing costs are low, but its hard to get a job or otherwise generate income. Housing costs of $10 K a year doesn't do much good if your income is zero. The car is a bigger deal financially than people tend to think, and outside of the NY-DC bubble I suspect there is a "don't need a car" premium that captures alot of the difference in housing costs.

It's true. I have a very high IQ and studied my ass off in college and graduate school just so I could work 100 hours a week at a law firm or investment bank. I also wear frilly shirts and hose.

Which begs the question ... just how smart are you?

This list is bullshit. Business managers are courtiers? They're the fucking drivers of economic investment and growth. They're the ones who put in the work and effort to make the market work. It doesn't just magically figure things out on their own. People try to figure out which investments are good or bad (and spend a lot of time and energy in the process) and then get rewarded or punished accordingly. CEO's maybe make too much due to agency issues, but there are hordes of middle managers across the country in this category. If you're going to group them with the personal accountants of the rich, you've created a meaningless grouping.

So Davey is still singing his baleful song, but now he's doing it from Al Jazeera.

"but those workers collected 76.9 percent of the total real wage increase."

P(Worker earners > $100k in period t+1 | Worker earned > $100k in period t) = 100%!!! Assume can opener!

76.9 percent may not be an accurate number, but it seems reasonable to accept that the direction of the shift would hold up under scruitny. Even at 38 percent it would be a noteable shift, right?

"From 2000 to 2012, American workers as a whole had a tough time, as population grew much faster than new jobs and many people gave up looking for work " I think Malthus recommend something to the effect that the poor in England should be prevented form procreation. Perhaps it is better for these unfortunate Americans to stop having kids so that America has only the affluent lot?

Yes...but how to do it? Lifetime welfare in exchange for sterility. All voluntary of course. This would have the economic losers self selecting. Perfect eugenics.

How about temporary sterility if someone can't afford the children they already have?

Well sure, if you like half measures, that'd be better than nothing. How do you temporarily sterilize a man? A woman could use iud or a shot.

Also sterilize repeat violent criminals... criminality is quite clearly heritable (whether through nature or nurture...)

You could take a hammer to the nuts...

Without necessarily vouching for a system out of a Heinlein novel, men can get an operation on their scrotum that leaves them infertile for ~5 years, reversible at any time. Google "reversible inhibition of sperm under guidance"

The majority of population growth has come from immigrants and their children.

Malthus may be relevant to some parts of Sudan, perhaps, but not so in an age where women finish college at 25 then start a career, and where the washing machine and dishwasher pick up on most of the menial labour attributed to them prior to the 1960s.

The best way to reduce population growth is to offer better chances to women. But if you don't see a trajectory to a good job, why would they bother to go to uni and start (not) a career?

Instead, many consign themselves to working at the local Walmart or fast food joint, 800 square feet for a family of four in two bedrooms, and oops abortion is a sin, family of four becomes four, five, six, seven ... now I wonder why they need assistance when the only jobs on offer pay a paltry minimum wage and they don't have time or money to retrain?

They could try not having children they can't afford. It's not like it's a mystery how they come about.

XVO: "They could try not having children they can’t afford. It’s not like it’s a mystery how they come about" . I agree but perhaps having kids makes life more meaningful for most people the world over and women in particular consider motherhood as an integral part of being women, irrespective of income. And in countries like India , where I live, there is social pressure to marry and have kids. "Don't you want to make your parents happy?" is the query often asked to single men and women or married but voluntarily childless couples. In a society where the extended family's influence is strong and parents still live with heir children lifelong, it is difficult to argue ( like my sisters and I do) that one's own happiness at times gets precedence over that of parents, whom we take care of nevertheless. Such social pressure in my country is too strong for many to resist. So remaining childless by choice, even if it is for he best , is for most an impossible option

+1 for sympathetic analysis

-1 for sympathetic analysis. Everyone has sympathies but that is not what is being asked for. What is asked is that you work some portion of each day in order for people to consume luxuries they can't afford.

For decades the workers of other lands marvelled at the pay of American workers - surely they couldn't be worth it? Exposure to world competition revealed that indeed they were not. So it goes.

are you saying the American workers would be better off without globalization? If so is it not heresy for a libertarian?

Military bases all over the world protecting the oil kingdoms, patrolling the Pacific, occupying Europe; central bank monkeying with interest rates and exporting inflation; foreign governments and their central banks in turn subsidizing exporters; shelves of laws and propaganda enforced by nuclear-backed bureaucracy so Westerners don't flat-out bar the gates ... there's your "free" trade. The legumes, however, are delightful with a pinch of single-sourced, organic cumin.

No I'm not saying that; the great decades of American prosperity were, I guess, (i) when she was a great primary producer, based on oil, soil, and ore, and was then able to piggy-back on the industrial revolution overseas, using the remarkable drive and energy of her industrialists, and (ii) the post-WWII years when her potential competitors were ruined.

Once those competitors were in production again the US needed to remove internal impediments to competing effectively with them but seems instead to have introduced all sorts of impediments on a heroic scale. I suspect that lots of the "accountants, bankers, ... lawyers ...." make their livings from those very impediments.

It seems to me to be axiomatic that some American workers would be better off without globalisation. American doctors are, aren't they?

I suspect that lots of the “accountants, bankers, … lawyers ….” make their livings from those very impediments

+1. The problem is that with less regulation there will still be a market for people who excel at getting around them. There would be fewer practitioners, but they would be even more handsomely compensated.

You've got the libertarian thing wrong. Things that are not heresy for a libertarian:

- Saying that prices that are artificially or unjustifiably high (in this case wages) will go down with increased competition
- Saying that lower prices are in general to everyone's benefit
- Not confusing the fact that while this might make things much better - drastically better - for the multitudes, it might also make things worse for some people, particularly those who enjoyed an unfair advantage
- Not valuing lives of one Team above any others.in terms of scoring the benefit to humanity.

Crud, need to work on my bulleted list formatting; my apologies.

Bah, libertarians don't need formatting.

We need more anarchist spreadsheets!

It may be a few generations before that proves true in the stricter sense. Many jobs were lost, and cheaper lawn chairs and coffee makers doesn't help much when you don't have a job at all.

In time, competition will exert its productivity enhancing benefits, and this is theoretically almost certain to benefit everyone, say, ten generations from now. Whereas it is sure to benefit multinational corporations, Joe Bloe might have a harder time finding his niche in the new economy, to the detriment of the opportunities and colleges his children will be able to afford.

There are a lot of people without advanced or technical degrees in this category: sales, client relations, senior managers, etc.

The greatest indignity of all!

One word: professional licensure

Two words. (Thank you, I'm here all week ....)

I'm a guild member myself. As got pointed out to me, if you like national socialism for you, why not for other Americans?

Nothing another 5 million poor people can't fix.

"Those not born with the capacity for mentally demanding jobs will face a less prosperous future than their forebears in the industrial era, when brawn and hard work often paid well."

There was a time when things were better, today is difficult and the future is just doomed. Brawn was competitive just 50 years ago? Or 10K years ago?

Wherever the money's at this instant is proof that the entirety of evolution has been geared towards demonstrating the inherent superiority of this group, as proven by the fact that they earned more money both last year AND the year before.

Rephrased more sympathetically, how many of the 100k-400k element could be persuaded to buy this, only to turn it back on them.

Generations are a blink of the eye from the evolutionary perspective.

I remember a post here a while ago that a large portion of the post-recession job growth was in low-wage jobs. For some reason, it was considered a bad thing (by some) that poor people were finding jobs. (Although I guess some people do want to outlaw low-wage workers' employment, i.e., raise the minimum wage, so I guess that is consistent.) Now, we hear that high-wage workers are also gaining, helped by their advanced degrees. That is also considered a bad thing by some, even by some of those who advocate for more college education.

You assume that the persons getting the low wage jobs were people with no jobs prior, rather than persons who once had medium- or high-wage jobs.

What share of university graduates earning less than 10-20% over the minimum wage?

What share of people earning less than 10-20% over the minimum wage have degrees?

Hollowing out of the middle class!

I know that all MR readers are infinity-MP knowledge workers paid hundreds of thousands of dollars to perform high-IQ tasks, and thus may be excused for making statements that clearly come from a high income bubble, but it's a small percentage of people who make over $100k. 7.6% of jobs are in this range, as the OP says, and many of them are concentrated in just a few metro areas.

The actual middle class - families making $50k or $60k - is certainly hollowing out.

High income bubble my ass. I was raised in a home that was at the median in national income in 1970s- the definition of middle class. My four siblings and I have, in adulthood, ALL grown, up and out of the middle class by your "families making $50k or $60K" definition, as have most people I know from my pretty ordinary public high school. Virtually all of these people, I assure you, think of themselves as middle class.

And, if your own children, nieces, and nephews grow up to be similarly successful as you and your siblings, that will be seen as evidence of falling "mobility" rather than continuation of sustainable, past success.

Well, why is that surprising? Pretty much anyone who "makes it" is sure they did it through hard work, determination and intelligence. Almost nobody wants to think of themselves as wealthy, no matter how much more money they make than their parents, cousins, or the national average. If you make a lot of money, your friends and peers almost always make about the same. Maybe you can accept that you make a lot of money, but really it isn't that much considering the cost of living where you live. Of course everyone is middle class, forever and ever, amen. Nobody is able to pay more in taxes and/or accept that their income might be more than is necessary to live a modest life and "give their kids more opportunities" than they had.


I live 10 minutes from where I grew up. I know lots of people that I graduated high school with who are still in the area. Three of my siblings graduated from Northern Illinois University. My most financially secure friend did not go to college and has worked as a custodian for 30 years- he's just a couple years away from a pension.

I'm not talking about some gilded group of Ivy League chums. This is a middle America. And all of these people (custodian included) are considered above middle class based on Hadur's definition, which is absurd.

What you read into my comment tells me a lot more about your attitudes than my life.

And Jan,

Notice I never said anything about me. I'm really smart. I went to Fancy U. I have worked way harder than I ever intended. I have made a lot of money. I have been extremely fortunate. I am no longer middle class, though I like the people I grew up with and prefer to live in the area. I pay a fortune in taxes and don't think it's confiscation.

I think this covers most of the misperceptions about me you brought to this conversation.

Brian, I realize I switched from "anyone" to "you" in my comment. But I wasn't talking about you specifically, rather the Any Above Average Dude USA. I have no idea where you live or anything else about you more than was indicated in your comment. If you read it again I think that's clear, but sorry if you see it as a personal attack. I'm glad you're really smart and went to Fancy U. ;-)

That said, my point stands. Why can't a custodian possibly be a little above middle class? That's absurd? People who are relatively well off very rarely recognize it and don't appreciate how poor average (read: middle class) is.

OK, forget about your annoying hijacking of my comment to make some tired point of your own.

You are tying yourself up in knots to justify an 'upper class custodian' rather than admitting that a ceiling of $60,000 in family income applying to the middle class is a ridiculous perspective.

Mood affiliation and/or intellectual dishonesty are more charitable readings of your comment than stupidity, so I'ma go with those.

Ok, look at how your comment began. That is some deeply perceptive stuff. Hijacked?

To your larger point. You think most custodians make $60,000? Just cause you know one who happens to, that doesn't mean that's normal. Try about $23k: http://www.bls.gov/ooh/building-and-grounds-cleaning/janitors-and-building-cleaners.htm

The US median household income is about $50,000. That is almost by definition the middle of the middle class. That's just a fact. How high and how low do you want to go to define middle class? What percentiles do you think are reasonable? Would you say the lower 50% of households (making ~$29k and below) are _all_ lower class?

That last stat should be $50k and below, not $29k.

In American everyone thinks he is in the middle class. It's a kind of perverted inverse lake woebegone effect.

I was middle class, and now I ain't, but most people I know are. So...great theory.

How much of the shortfall in social security receipts is due the the fact that 76% pay increases have been above the cut off for SS taxes

None, since benefits don't increase beyond the cut off either.

Current workers pay for the benefit or retired workers and in 1980s when they adjusted for demographics they assumed that SS tax receipts would increase with GDP. However they have not, both because the wage share of GDP has fallen and most of the increase in wages has been above the tax cut off.

As well the fact that the share of GDP returned in wages has fallen while that returned via other means (e..e, capital gains, dividends, etc.) has increased. The latter are not subject to FICA taxation.

Do the people that occupy these 7.6% of jobs have them for life? I doubt it. People move up and down the pay scale throughout their careers. Of course, some never earn this much but my point is this isn't a problem that needs solving.

Do the people that occupy these 7.6% of jobs have them for life?

Petroleum engineers likely do.

Until cheap CNG undermines petroleum excess profits.

Careful making jokes like that; some people might think you seriously thought CNG was a threat to petroleum engineers.

I'm impressed. I takes a lot of skill to get that much stupid in seven words.

Indeed, this is often overlooked by people concern with inequality. But when used to wish away a problem, it is not very conducive to thinking of solutions.

Wouldn't this be the statistical result of any reasonable improvement in incomes? If you imagine a graph of the distribution of incomes, and then move that graph to the right, aren't all the net new jobs going to be over $100,000?

"Wouldn’t this be the statistical result of any reasonable improvement in incomes? If you imagine a graph of the distribution of incomes, and then move that graph to the right, aren’t all the net new jobs going to be over $100,000?"


There are many statistical possibilities with reasonable improvements in income that won't have that characteristic. For example if everyone on the graph got a raise it would shift to the right without any net new jobs at all.

You may be confusing the location of the the right tail with 'net new jobs'. If the graph shifts to the right there are indeed more jobs at a higher pay. But that isn't the same at all as the top 7% getting 90% of the recent increases in income.

But, in your scenario, if you're putting the incomes into range bins, then if you have 100 million workers, with 10 million about $100,00, and the raises pull 2 million workers above $100,000, then it will look like you lost 2 million jobs under $100,000 and gained 2 million jobs above $100,000. And, if you're just adding up all the incomes, according to the range they are in, it will look like a massive amount of the added income came to the $100,000+ category, because in addition to the raises, you're transferring $200 billion in income from "below $100,000" to "above $100,000".

Actually Kevin hit this one on the nose. Rising income inequality is real, but this is a bogus story that exploits a statistical quirk resulting from a large number of jobs crossing the $100k line since 2000.

Oops 77%

Well this is unfortunate - My political philosophy was pretty much based on the idea that there is a cruel exploitive 1% and a virtuous victimized 99%. If there are another 8% who aren't living in increasing penury we may need to rethink. For a start, "We are the 91%" doesn't seem nearly as catchy.

The notion of a literal "1%" was always naive. I assumed it to be metaphoric for something more like the top 0.01 or 0.001% who had exorbitant wealth and income. I recall hearing lots of complaints about CEOs and relatively few about doctors, engineers, and financial advisers (although I wouldn't mind a protest against the last).

I don't think many people hold it against doctors and engineers who earn $250,000 a year. Most people can fathom what you could reasonably want to do with that income.

But CEOs who rake in $10,000,000 after driving companies into the ground?

I understand that a single person could theoretically create $10,000,000 more in additional profit to a company by various brilliant decisions. But pay models only seem to acknowledge the upside and somehow they walk away with millions more when a downturn proves that they were lucky more so than talented.

Principal-agent problems abound, and I do not think executive boards will be the source of the solution.

It's all principal-agent problems. That's why private equity pay their CEO's even more on average. If you want to lower CEO pay, the best way is crude public policy measures. It will work and governance quality won't be effected (may get better truthfully), but it's also not the world's biggest problem.

FWIW, I think the most interesting line was really "They no longer struggle, but they continue to work because their wealth is far from adequate to support their lifestyles."

The household wealth figures support this, right? They may make $100-200K, but their net worth is ... lost in car leases and a house full of iStuff.

For me, it's mostly saving for retirement and for my kids' college... so that they can obtain the skills/signals needed to also make $100-400k. And have the privilege of working 80 hour weeks to save for my grandkids' college.

You don't have to work 80 hrs/wk to live in this category.

I wonder how much of this reflects the demographic aging of the workforce?

The 1% or 10% or 20% top earners isn't a static set; nearly half of earners are in the top 20% at some point in their careers. This makes sense: An inexperienced teacher or engineer or marketer hired in at $x, if s/he is any good, will eventually have a more senior/higher paying position at a salary of $2x or more.

So if the proportion of older workers increases, the salary increase should also be at the higher end.

The problem in this specific subpart of the question is that the people most able to answer this question are far less interested in explaining why some people are getting far richer and are far more interested in trying to figure out whether anything might be useful in making it easier for others to access opportunities to do the same.

But it would be interesting to have some good analysis of that, imo.

The people who work on inequality are probably more concerned with the millions in the 50-65 age group who lost their jobs in one sector and are essentially relegated to no-low skilled positions because it's too expensive to retrain or they don't to how to access opportunities in other sectors.

The noise in here is unbearable. I need to step over to the trading floor.

As our regulatory bureaucracy expands in power and control, we are shifting massive amounts of money to the educated elite. Be they lawyers, PR experts, environmental experts, agency staffers, etc. they have advanced degrees and earn > 100K$.

When it takes over ten year for permits for a desalination facility in water short So. Calif., where high priced "experts" on all sides have been well paid for the last decade and the median workers who would build and operate the facility go without jobs. It is clear that this present impossible NIMBY system has evolved into a mechanism for benefiting the educated elite.

I have benefited, but it is at the expense of others.

managers of wealth: accountants, bankers, investment advisers, lawyers, business managers and money managers.

Others work in the fast-growing medical field, spurred by an aging population and new technologies. In 2012 the median pay — half make more, half less — for general surgeons was $187,200, according to the Bureau of Labor Statistics. For dentists the median was $145,240, a little less than pediatricians and nurses specializing in anesthesiology.

Median wages of petroleum engineers hit $130,280, reflecting the sophisticated skills needed to find and extract oil and natural gas from deep beneath the earth’s surface.

1. Accountant demand for them is increased by our strange and complicated tax code.
2. Bankers due to people's demand for riskless cash and aided by FDIC.
3. Investment advisers - Due to many rich people not understanding the efficient market hypothesis (Vanguard has a solution.)
4. Lawyers - Due to licensing and our complicated legal and tax systems. Simplify.
5. Business - no comment
6 Money managers.see #3
7. Medical - due to excessive licensing.
8. Petroleum engineers - the oil boom.

Addendum: We can and should fix much of this.

Another Addendum:
My post assumes that the article was well researched, which might be completely wrong.

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Do you have any tips on how to get listed in Yahoo News?
I've been trying for a while but I never seem to get there!

Thank you

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