I thought this was a good article. Economic growth has benefitted all in society and is what needs to be focused on in my opinion to bring all people up in terms of lifestyle. http://online.wsj.com/news/articles/SB10001424052702303773704579269990020773098 By Robert E. Grady Dec. 22, 2013 6:07 p.m. ET In his widely noted speech, President Obama said that "a dangerous and growing inequality and lack of upward mobility" is "the defining challenge of our time." This belief makes Mr. Obama unique: Unlike the other presidents since World War II, he places inequality above economic growth as the organizing principle of U.S. economic policy. The president's Dec. 4 speech, at an event hosted by the Center for American Progress, also stressed that increasing inequality is a "decades-long trend"—which carries with it the strong implication that the country needs to reverse the direction it has taken for the last three decades. But like so many of his other pronouncements, the assumptions behind his defining challenge are misleading. Enlarge Image cat President Obama at an event hosted by the Center for American Progress, Dec. 4. Reuters Virtually all of the data cited by the left to decry the supposed explosion of income inequality, as Lee Ohanian and Kip Hagopian point out in their seminal paper, "The Mismeasure of Inequality" (Policy Review, 2011), use a Census Bureau definition of "money income" that excludes taxes, transfer payments like Medicaid, Medicare, nutrition assistance, the Earned Income Tax Credit, and even costly employee benefits such as health insurance. Thus the data that is conventionally used to calculate the so-called Gini coefficient—the most commonly used measure of income inequality—ignore America's highly progressive income tax system and the panoply of benefits and transfer payments. According to Messrs. Ohanian and Hagopian, once the effect of taxes and transfer payments is taken into account, "inequality actually declined 1.8% during the 16-year period between 1993 and 2009, when the Gini coefficient dropped from .395 to .388." In his speech, Mr. Obama cited a recent study from economists at Columbia University that found that already enacted benefits and tax programs have reduced America's effective poverty rate by 40% since 1967—to 16% from 26%. But he ignores all this when he claims that inequality is increasing. The Columbia study shows that Messrs. Ohanian and Hagopian's research is hardly an outlier. The Congressional Budget Office released a study that came to a similar conclusion in October 2011. The CBO study picked an artificial starting point of 1979, amid a crushing period of stagflation. Yet it still showed that family income, including benefits, on average experienced a 62% gain above inflation from 1979 to 2007. It also showed that all five quintiles of the income distribution spectrum experienced real gains in family income. The CBO study contradicts Mr. Obama's claims in the 2008 presidential campaign and early in his first term that the middle class was "falling behind." The real concern is that some people were getting too far ahead. With respect to upward mobility, longitudinal studies conducted by the U.S. Treasury have found that there was "considerable income mobility" in the decades 1987-1996 and 1996-2005. For example, roughly half of those in the bottom income quintile in 1996 had moved to a higher quintile by 2005. The "median incomes of those initially in the lowest income groups increased more in percentage terms than the median incomes of those in the higher income groups" in that decade, while the real incomes of two-thirds of all taxpayers experienced an increase. Here is the bottom line: In periods of high economic growth, such as the 1980s and 1990s, the vast majority of Americans gain, and have the opportunity to gain. In periods of slow growth, such as the past four and a half years since the recession officially ended, poor people and the middle class are hurt the most, and opportunity is curbed. Consider the Census Bureau data, which measure only money income. The data show that median family income adjusted for inflation has not been on a steady or stagnating path since the 1970s. It fell, in real terms, by 5.7% from 1974-1982, when slow growth and high inflation ravaged the average family. Tellingly, in this period, real income fell for the bottom four quintiles, but held steady for the top 20%. From 1983 to 2007, however, median family income grew substantially—by 21.6% above inflation—and real income grew for all five quintiles. Then, beginning in 2008, real income plunged again, both for the median family and for all quintiles. The point is this: If the goal is to deliver higher incomes and a better standard of living for the majority of Americans, then generating economic growth—not income inequality or the redistribution of wealth—is the defining challenge of our time. Regarding growth, Mr. Obama claimed in his speech that we should use some money "to create good jobs rebuilding our roads and our bridges and our airports, and all the infrastructure our businesses need." Yet a recent analysis by BCA Research shows a sharp drop in real spending by the government on nondefense infrastructure since the president took office. When a Democratic Congress passed the president's massive $800 billion stimulus bill, seven-eighths of the total went to transfer payments like Medicaid, food stamps and sending a check to millions of Americans who do not pay income taxes. The president claims to be concerned about spurring private investment. But investors at home and abroad can readily see that his steadfast refusal to reform the country's entitlement programs threatens spending on physical infrastructure, education, university research and other items that will contribute to the future productivity of the United States. That same unrestrained entitlement growth, and the debt that comes with it, will ultimately compromise the value of dollar-denominated assets. Public companies have trillions of dollars of cash to invest sitting on their balance sheets, but the Obama economy's growth record is weak, and insufficient to attract capital investment. Straining credulity, Mr. Obama also pointed in his income inequality speech to the Affordable Care Act as one of his initiatives to improve the economy, despite clear evidence that the law's employer mandate is discouraging full-time employment. For most of this year, the overwhelming majority of jobs added to the U.S. economy have been part-time, not full-time. Gallup's payroll-to-population ratio, the proportion of the American population working full time, has dropped almost two full percentage points in the last year, to 43.8%. Mr. Obama said in his speech that "making sure our economy works for every working American" is what "drives everything I do in this office." Accomplishing this worthy goal requires growth, not redistribution.
Interesting - so you think it's a good thing that we're relying on transfer payments and welfare to keep people out of poverty instead of better jobs? As for the rest of the article, it conveniently mixes the 1990s and 2000's to show improvement amongst all groups. No one questions that the 90's were fantastic for the middle class - the problem has been 2000 and on. We've now had two consecutive periods of economic growth with major inequality problems (2000-2006, and 2009-now).
the NYTimes is on it. -- Hey, Stars, Be Nice to the Stagehands. You Might Need a Loan. By LORNE MANLY and MICHAEL COOPER They create the technical razzle-dazzle when the Rockettes take the stage for the “Radio City Christmas Spectacular.” They raise the 45-foot-high Christmas tree for “George Balanchine’s The Nutcracker.” And on New Year’s Eve, they will make the opulent ballroom set spin for the Metropolitan Opera’s new “Die Fledermaus.” The stagehands of Local 1 of the International Alliance of Theatrical Stage Employees bring some of New York City’s most glittering stage effects to life, from the auditoriums of Lincoln Center to the theaters of Broadway. But their work comes at a steep price, even at venues where they do little more than load in orchestras and set up music stands. Those high costs were underscored by a stagehands walkout that forced the cancellation of this season’s opening night at Carnegie Hall and called attention to the hall’s five full-time stagehands’ total yearly compensation, an average of more than $400,000 each. An examination of tax records, contracts and other documents by The New York Times found that hefty stagehand salaries at many New York nonprofit performance institutions are more widespread than was previously known. At nine top such institutions that have contracts with Local 1, stagehands make up 36 of the 98 most highly compensated employees, or about 37 percent. The average annual total salary and benefits of those highest-paid stagehands, at places from the Metropolitan Opera to the Roundabout Theater Company, is nearly $310,000, according to the nonprofits’ most recent tax filings. Backstage workers can earn more than the onstage talent. Five stagehands at the David H. Koch Theater at Lincoln Center were each paid more in total compensation in 2011 than the highest-paid dancer at New York City Ballet, filings showed. And, in 2010, “Spider-Man: Turn Off the Dark” paid its stagehands a total of $138,000 a week, while the principals and members of the ensemble earned slightly less than $100,000 put together, according to documents submitted to the state attorney general’s office. Even as organized labor in the United States has weakened significantly, the nearly 2,600 active members of Local 1 have retained their clout, allowing them to push for good wages and work rules. Labor historians, Broadway producers and executives at the nonprofit performance institutions chalk up the union’s power to two major factors: that Local 1’s members have hard-to-replace skills, and that their jobs cannot easily be outsourced. The threat of a strike can be enough for Local 1 to win favorable terms, said Martin J. Oppenheimer, a former board member and negotiator for New York City Opera, which is now bankrupt. “Particularly in the not-for-profit area, it is just so important for the organization to perform,” he said. “You can’t take a chance.” James J. Claffey Jr., the local’s president, rarely grants interviews. “While I can appreciate your obligation to report to your readers,” he wrote in an email, “I sincerely hope you can appreciate my obligation to represent the membership of Local 1. The story you wish to do will not serve my union or my members well.” Local 1 was founded more than 125 years ago, in 1886, when most major theaters were below 14th Street in Manhattan and lit by gaslight. In the 19th century, popular entertainment strove for the spectacular, and the scenery and special effects made stagehands a necessity. Since then, the demands of the job have only increased. The electricians, carpenters, stage riggers and other members of Local 1 build, run and break down the most complicated of sets, handle the lighting and sound equipment and manage the special effects. At the Metropolitan Opera, that means moving tons of scenery day and night. Their tasks are “extremely complex, extremely high-tech and possibly extremely dangerous,” said Martha S. LoMonaco, a professor of theater at Fairfield University, in Connecticut. “They should not be viewed as the schleppers of the theater industry.” Although Local 1 officials declined to comment for this article, a close reading of their newsletter, Spotlite, gives an indication of their goals, priorities and mind-set. “We are a proud, unified, hard-working, family-oriented bunch of people with only the welfare of our families, the future of our children and the pride of being the best stagehands in the world deeply embedded in our hearts,” Robert S. Score, the union’s recording-corresponding secretary, who worked at the New York State Theater (now the Koch) for more than 25 years, wrote after the 2007 Broadway strike. “We simply are not what they said we were. Will they ever understand that?” That camaraderie has helped make Local 1 a potent opponent at the bargaining table, and arts executives are careful not to alienate the group’s members, although even the biggest nonprofit performing arts institutions must scrounge for dollars, and most Broadway shows lose money. Seth Popper, the director of labor relations for the Broadway League, which represents producers and theater owners, called the stagehands “incredibly skilled tradespeople.” Peter Gelb, the general manager at the Metropolitan Opera, said that “of all the Local 1 employees working in New York, the ones who work at the Met are probably the hardest-working, and among the most talented.” And Clive Gillinson, the executive and artistic director of Carnegie Hall, said that the hall’s staff and stagehands “all do a great job supporting a very high volume of performances and wide variety of events in any given season.” But the pay that top stagehands can earn — often bolstered by overtime that is virtually guaranteed by their contracts — is eye-opening. In 2011, for example, the four top stagehands at the Metropolitan Opera earned more than $500,000 each in total compensation (including retirement and other benefits), tax filings showed. Stagehands are also well paid at more modest organizations. Three of the 10 most highly compensated employees in 2011 at the Roundabout were stagehands. Their average annual total compensation was $236,147 each. Mr. Gelb, who declined to discuss union work rules or pay in detail, did note that managing costs was essential. “Arts organizations are faced with financial challenges that don’t seem to get smaller, they get larger,” Mr. Gelb said. “And what we’re all looking for is to find a sustainable business model that will enable us to secure our future, which also involves the welfare of the people who are members of the unions.” Many of the costs in Local 1’s jurisdiction are driven up by work rules. A recently expired contract with the organization that runs the Koch Theater, a copy of which was obtained by The Times, specified how many stagehands were needed — 22 — for each paid performance. If the crew was required for even one performance outside the 39-week season, the contract called for them to be paid for a full week. It also virtually guaranteed overtime, stating: “Management may not replace men on a job in order to avoid payment of higher rates. The same men must be kept until the end of the call.” A similar provision at Carnegie Hall means that the five regular stagehands there work 80 hours a week, much at overtime rates, officials there said. But they added that the system provides continuity, with the same stagehands working rehearsals and performances. The work rules are fiercely protected in contract negotiations. When Broadway producers and theater owners tried to roll back some of the more lucrative rules in 2007, it prompted a 19-day strike that cost them and the city almost $40 million in lost economic activity. With the rate of unionization in the United States at its lowest rate in nearly a century, the power wielded by Local 1 can seem like an anachronism. But stagehands work in a unique political and cultural environment hospitable to unions. The Broadway League, for instance, deals with 14 different unions. In recent years, Local 1 has worked hard to extend its jurisdiction, adding such sites as the Samuel J. Friedman Theater and the Danny Kaye Playhouse at Hunter College. The recent strike at Carnegie Hall was not, in fact, about the wages or benefits of its current stagehands. They struck for the benefit of other union members by trying to expand Local 1’s jurisdiction to the educational spaces Carnegie is building above the hall. After two days, a settlement was reached that gave Local 1 some limited work in the new spaces. This strategy of pushing for more venues, and more work for members, has bred loyalty in a union that can seem like a family affair. Jobs are often passed from father to son, and some members are now the fifth generation of their families to hold Local 1 cards. Mr. Claffey, whose total compensation in 2011 as Local 1’s chief was $277,000, is one of six Claffey brothers in the union. (It is most definitely a band of brothers. The union is still overwhelmingly white and male. Two years ago, it convened a meeting of its Sisters Committee for the first time, drawing 28 women, which the union’s newsletter said was nearly 20 percent of all the women in the local, suggesting that there are around 140.) Mr. Popper, of the Broadway League, said that while he preferred to talk generally about its dealings with all the unions, the most recent negotiation with Local 1, for the three-year agreement struck in 2012, was “one of the most constructive.” Ultimately, the 86,000 jobs and $11.2 billion in annual revenue that Broadway generates, and a significant portion of revenues for nonprofit cultural outposts, like the Metropolitan Opera, are dependent, as Mr. Popper put it, on getting “butts in seats every night.” It’s the peril of the live performance racket: Once a performance is scuttled, those revenues are gone. And for organizations that rely on subscribers, any interruption that can break the habit is potentially dangerous. The stagehands understand that logic, too, which may help explain why there have been only a handful of strikes in the union’s 127-year history. “We are very mindful of each other’s fragility,” Mr. Popper said. “We only work when we have a show.”
Don't need no stinking facts/ history. With more tax breaks for the "job creators" and more deregulation/less governement, conservative/liberartarian dogma says it will trickle down eventually. This may have caused trickle up in the last thirty plus years, but don't be so impatient.
Yes, apparently disregard the history and all evidence to the contrary let's continue an economic policy that favors the most wealthy.
Congrats, Basso, you have discovered why real wages are falling for millions of workers and why they are not sharing in increased productivity-- the thirty six highest stage hands in NYC are paid $300 k. Actually sort of laughable for a little guy who yearns to be wealthy to focus on this.
The real force behind economic development is the continuos movement of money. Banks create money by loaning out more than their actual deposits, higher wages create more demand across a broader markets, more people with better educations create more productivity etc. The concentration of wealth stifles these factors. It's pretty obvious that the greatest period of economic development in this nation's history, the post-war boom was an egalitarian boom based on rising wages for the general population. These WSJ articles praising an aristocratic system are getting a little rediculous.
Yes, they are, but hundreds of thousands of biz school grads with decent jobs have been raised to see the WSJ as the truth. Now that Murdock owns it they have their own version of Fox News to follow.
Can't decide which is the most destructive to America: The war on terror. The war on drugs. The war on intelligence. (not spying, generally being intelligent and making good decisions based on data and facts)
If you look at US history periods of wealth inequality have almost never been good for the US over a long term. The Gilded Age and Roaring 20's had high wealth inequality, even while the economy was booming, were marked by severe social problems and ended up in depressions.
The war on intelligence or "Manufacturing Consent" (kudos Chomsky) i.e the use of public relations techniques is the most destructive as it leads to the bogus wars on terror and drugs and voter fraud and food stamp dependency and the progressive tax system etc.
What a **** op/ed typical of the WSJ. Author name is more like Robert E. Greedy...whose credentials is running some (parasitic?) private equity firm and being an economic mouthpiece for Chris Christie's upcoming campaign. When the Walton heirs own more wealth than the bottom 41% of America's families, and whom fight nail to keep that fortune they had no toil nor hard work in achieving, then I like to give whomever puts inequality with pretentious quotes a hearty **** you.
My favorite Walton family stat is that they will save $40 billion if the conservative/ libertarian types can abolish the inheritance tax for the few thousand families that actually pay it.
Major I appreciate the actual discourse rather than the above type of commentary that just reinforces divisions and embodies the American political system. The 1980's and 1990's was a period of strong economic growth though the capital markets overheated as they always do during multiple year increases. The huge gains and spending in the 1990's in technology resulted in huge productivity gains and that combined with the 2000-2002 recession was hurtful towards middle income workers as more productive people means less jobs for others. I think the other large factor that led to a more wealth at the top .1% was the globalization of American businesses that skyrocketed in the late 1990's and still continues to this day. Workers are paid for their value at their specific job, whereas owners benefit from the scale and if they are able to have business all over the world then they disproportionately benefit from global wealth whereas the employee still only makes money as per his specific task and the value that he brings. This globalization allowed the owners of capital to skyrocket their wealth and the employees and growth in places like China benefitted from it as did the very wealthy in the US, though correctly noted the working class did not benefit. An example would be Coca Cola's prospects in the late 1980's was seen as a peak business due to its US market saturation but had an enormous run the 1990's as a global force. What it did in the late 1980's and 1990's is what American business did in the late 1990's and 2000's. The connectivity can even be seen when viewing correlation of US financial markets to International and Emerging Markets economies. Whereas before the correlations were 15-20% or movements were correlated by 2007 that increased to over 80%. Entrepreneurs and Entrepreneurial organizations injected capital into the places like China and India and the emerging Russian states and reaped huge gains by risking their capital. As entrepreneurs their capital is at stake so they benefit from the upside, whereas the average worker in the US does not. I believe the above factors may have assisted in the increased unsustainable spread between classes in this country which is concerning to me. Its a question of whether the US is better off by having these entrepreneurs which can at times amass atrocious amounts of wealth or is it better to tax them into more reasonable levels and normalize earnings through government intervention and which will lead to a more sustainable society?
The group where I got the number from, the left leaning Economic Policy Institute, did have a response for the negative to zero wealth earners. http://www.epi.org/blog/inequality-exhibit-wal-mart-wealth-american/ But still, these critics charge, the Walton wealth comparison is unfair because the negative net-worth families distort the whole calculation. Anyone with positive net worth, even $1, they point out, has more wealth than millions of American families. Let’s take these critics’ suggestion and remove all the negative values at the bottom of the distribution, extinguishing the value of their debts that exceed their assets and assigning them a zero net worth instead. What does the comparison look like then? Not that different: After making this adjustment, about 15.4 million families (13.1 percent of the population) have zero net worth, no small number to be sure. But the Walmart heirs’ $89.5 billion is still equal to the combined net worth of the bottom 33.2 million families (about 28.2 percent of the total), even after extinguishing all negative net worth values in the SCF. Again, it should be noted that this modification of the SCF is just not an economically sound thing to do; the negative net-worth observations in the SCF data represent economic information (let alone the realities of millions of families) that cannot just be discarded because people think that the number of families that need to have their wealth added together to sum to the Walton family’s total is arbitrarily “too high” in some way. To address these points in one last way, take the wealth of the Walton family ($89.5 billion) compared to the wealth of the median American family—that family that is wealthier than half of all others and less wealthy than half. In 2010, median wealth was $77,300 (down from $126,400 in 2007). How many of these “typical” American households (i.e., those with median wealth—wealthier than fully half of the overall population) would you need to lump together to reach the Walton family’s wealth? About 1.16 million, up from 580,000 in 2007. In short, it would still take a city’s worth of families with the overall median wealth to match the Walton family’s net worth. The figure below shows just how many families with median wealth would need to be combined to equal the Walton family’s wealth, and how this has changed over time. <img src="http://i.imgur.com/8X3ZLmk.png" alt="****" height="600" width="800">
