I guess I have confused the gentle readers here with my use of "saving". What I meant by saving is not spend couple with investing in something more diverified than a bank saving account. I don't really see a solution at all. Market forces are driving salaries. I also don't see a change in the falling salaries trend. I do see some long term relieve in increasing the personal saving rates though. I am assuming the savings are invested. In the long term, income from investment portfolio could replace the real term drop in salaries.
OK OK many things wrong with this. First, while the UK's minimum wage is $9 an hour, unfortunately for your argument, England doesn't use dollars. It's 5.05 pounds an hour, and in a city such as London, that's actually less than $5.05 an hour because of how expensive London is. Also, there are many other factors contributing to unemployment besides a minimum wage, but a minimum wage does contribute to unemployment. Refer to this article: http://www.cato.org/pubs/pas/pa106.html
Corporate earnings and profits are the nature of the beast. I don't see that changing. BTW, outsourcing (companies reducing costs by having work done overseas more cheaply) reduces costs and increases profit margin. I think that outsourcing puts downward pressure on lower level employee wages. Outsourcing is the natural side effect of a global economy, which I also do not see changing. What to do? This just may be the way it is and is going to be. In this depressed wage and reduced job opportunity environment, the average person may need to think about spending less and investing more. I do not think anything short of a depression though will actually change the savings rate.
Outsourcing also lowers costs. Every producer is a consumer and every consumer is a producer. Lower costs and lower wages negate each other.
No - that's not really germane to this discussion. As an intiial matter, we're not talking about "millionaires" in the sense of assets vs. liabilities. We're talking about income, which is the baseline measure of wealth, more or less, when talking about global economics. If we just looked at assets vs. liabilities, then the US would potentially be among the poorest nations in the world given current account issues. Anyway, having 1 million in assets doesn't really make you "*rich*" these days, so the 57 year old who has scrimped and saved and owned real-estate, it's a nice story but ultimately irrelevant. In fact I'd barely say that makes you upper middle class. (and in fact, with the stagnation of middle class & working class wages, this points to stories like this being less common in the future - when capital amalgamates at the top it perpetuates itself). To be in the top 1% of income earners, the cutoff point is somewhere around $500,000 in income. You don't have to be a great disciplined saver to save $1 m in net assets - quite the contrary, it's hard NOT to do so. As long as you don't go on an MC Hammer spending kick - rising real estate prices alone should do the trick. Again, I don't see how this is too germane to the issue. The issue with income inequality is not the upper middle class or bourgeois with good saving habits - it's the fact that the very top/top end of the scale the top 0.1% - the hyper-rich, are pulling away very fast and gaining an inordinate amount of income. A lot of the people beating this drum? The top 0.1%, the Gates/Soros/Buffers of the world, warning about this. That's exactly the issue, it's a small percentage that is controlling an increasingly large share of wealth, which unsurprisingly, translates to an enormous degree of political power, to a point where it's unhealthy for both democracy and economies. As the US Gini shoots towards that of Mexico & BRazil and other, more dysfunctional states, and pulls further away from what it traditionally has been and from what most other mature western democracies are. Vast differences in equality tend to create social instability throughout hhistory in various contexts. It's not a liberal issue, it's an economics issue.
1) $9+/hr is implied as US equivalent. That saves lots of trouble for the currency conversion challenged. 2) Sure it's tough to live off £5.05/hr wage in London, but how is it any more difficult than living off $5.05/hr in NYC? Plus, UK is not just London. 3) The facts from UK and Ireland don't support the close correlation between higher unemployment and higher minimum wage insisted by Cato Institute.
What to do? Tell Corporate America to pay their top execs less? I personally think it is stupidity of the highest order to pay execs what they make. They would certainly work for less, say for a salary more aligned to their actual value-add.
Not eliminate the estate tax is a start but not a major issue. With respect to executive comp, it's interesting that US execs are so overcompensated relative to their peers abroad, there's a variety of explanations for this, none of which I'm sure I fully understand. I'm guessing but I believe some of it is due to the fact that many CEO's are large shareholders, so any dividend payments etc kick back to them. Perhaps a good idea would be a limit as to how much stock executives can hold? I mean, I understand that CEO stock ownership enforces positive incentives, but I would say that the marginal incentive difference to do a good job when one owns $75m in stock of a company vs. one ownng $200m in stock is not very big.
Execs don't get wealthy from dividends. Afterall...dividends have to be shared with other shareholders -- including that pesky middle class with their 401K and all. Stock options and bonus arrangements however.... The first key is recognizing the problem. Why such a disparity in the US vs other developed nations? A more 'progressive' tax system would help too.
It's not a liberal issue, it's an economics issue It is certainly a liberal issue (as well as a who-runs-the-government political issue which indirectly also makes it an economics issue). Many of the rich feel that the liberal Democrats do not have their best interest at heart. How is that for an understatement? And you gotta admit that there is a stick-it-to-the-rich undertone to the liberal agenda. I personally hate it when either party attacks the demographic groups that don't support them. It is small and petty.
Well there is evidence that a minimum wage leads to unemployment, and also allows employers to discriminate. According to a study by the Mackinac Center for Public Policy, 500,000 blacks lost their jobs to whites in 1933 after passage of the first minimum wage in the United States.
Switching horses mid stream are we? I thought we were addressing the salary issue not the savings/investing issue
Well you switched first, so I was actually staying on track. bnb: I meant options & dividends, etc. W/regard to executive pay, there's very few economists who will tell you that US exec pay is inefficient as you could get the same productivity for far less.
Maybe having Warren Buffett own more companies might not be a bad idea. BTW I could see CEOs going to the board and getting raises to compensate them in reall terms for any new progressive tax.
How many people and of what color were they who lost their jobs after the subsequent 20-30 minimum wage increases which have been implemented in the following 73 years? What about in 1997? Was there a disparate racial impact? Come on, that's really playing with the data.
My brain is a bit fried but ... So there are many economists who will tell you that US exec pay is efficient?
