The Growing Economic Wage Gap

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#1

continuing from here- The Mosh Pit: Post your Rage here

Just for you @mblatz . Mostly cause I think it is a worthwhile conversation.

My 2 cents are corporate greed. Sure there’s other factors, but it can mostly boil down to that. Since around the 70’s, the middle class has been slowly shrinking. Raises and compensation are just slightly lower than inflation and economic growth, so while you cant feel that 0.5-1% loss each year, over 50 years its definitely adds up. I think its particularly harder in some places like DFW where the economic boom has been 4-5% each year and most of us are over here getting 1-3% raises.

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#2

Yep…a lot of the inequity you refer to is horrible, borderline criminal. But you can’t blame “corporate greed”, because corporate greed is just human greed…many, many individual stock holders and individual employees are behind virtually all corporations; individual consumers buy their goods and services knowing what they are doing (e.g. Walmart, Lowes Depot, etc.); and individual politicians at all levels voted in by individual citizens are why corporations can get away with so much…no sense listing all of the horrible stuff.

Figure out how to get citizens to care and vote “better”, how to get shareholders to pick “better” directors and require them to hire “better” management, and how to get people to be “better” consumers, and I’m in. You could start a corporation and teach people how to do all of this…I’d invest in that company, and work there, and buy their product :–)

But my main point from other thread is that home prices and income/wages are nearly completely decoupled; saying one went up and the other didn’t is near meaningless. And the statement “home prices have doubled” is silly to me…have they doubled in Appalachia? In south Chicago? In Pigs Knuckles, NE? There are probably very few places home prices have doubled, actually. I know those were not your statements, just addressing as that was the post that got the ball rolling.

In the same vein, if a society wants wages to go up, I’d suggest 1) quit importing a servant class and 2) quit exporting higher paying jobs. Also target good legislation at all levels that incentivizes employers to focus on long term growth rather than short term profitability. Also, incentivize training and education outside of normal, traditional pathways given all of the disruption in various industries.

All of this is clearly a job for “Mblatz & Lordrook, Inc.!! :–) (yes, I am named first…it was my idea!)

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#3

My new band name!

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#4

The biggest issue is that too many wage-earners believe they’re capitalists. And too many people have bought the line that all taxes are bad. Texans especially - somehow we’re resigned to our broken method of funding public education because “income tax bad.”

Meanwhile, in survey after survey of “the best places to live,” those “socialist” countries with high taxes come out high on the list.

Decades of people voting against their own best interests have compounded, and the effects are coming home to roost.

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#5

I’d say you have it 180 degrees backwards…they vote specifically in their own best interests and not in the overall interest of the larger group, tribe, team, community.

#6

Yeah, our housing market is basically a distributed ponzi scheme. All the boomers expecting to pay for their retirement through inflated home values didn’t bother to actually raise wages enough for people to buy their overinflated investments. I know someone who paid a little less than $100k for a home in the late 80s that recently pulled comps of around $500k, while the average wage is nowhere close to 5 times what it was back then, even adjusted for inflation. We’re headed for a big adjustment in the next 15 years, and a lot of people will be in for a big surprise. IMO, remote rural real estate that’s still reasonably priced is the only safe long term RE investment - it’s been steadily appreciating since the 70s.

#7

That’s why we were willing to move to Crowley. 4 bedroom 2 bath 2 car garage brand new for $200’s. It’s a hassle to get to DMS, but we have a home we can afford rather than trying to afford our house.

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#8

without getting too nitpicky I think were on the same page. Where our corporate leaders are you can bet that there’s a politician nearby. Their hands are weirdly in each others pockets which you don’t see a lot in our general society. are they borrowing each others chapstick? trading cars for a day? playing pocket pool?

An over simplistic start to a solution would be to disallow corporate sponsored politicians, and more unbiased awareness and education for the masses. No more lobbying or corp donations to campaigns and things might chill out a bit. But I realize none of that will ever happen in my lifetime.

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#9

This is an interesting article.

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#10

Good article and a good comparison of the changes which have taken place in business.

I’ve always felt we as consumers and investors also play a big part in this process. We’re always chasing the lowest cost item or the highest performing stock/fund. Business is just responding to customer demand. Then we wonder why business respond by slowing wage growth and outsourcing. We can’t have our cake and eat it too…

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#11

Upton Sinclair once said ‘It is difficult to get a man to understand something, when his salary depends on his not understanding it.’

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#12

Income Taxes are bad… Why should one person pay more for the same services another person is getting just because they earn more. Do you believe that the price of a dozen eggs should be based on your income?

As for your best places to live… name the source.

And yes we do need to have better voting, especially where we have people voting on taxes that have no effect on them… Property Taxes are a very good example of this. Either change the way the Taxes are levied or remove renters and leasers and non-property owners from the vote…

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#13

Actually Home prices are based on two factors, desirability and local government. My house has doubled in value since I bought it. One because the county keeps raising the Value of it to increase their tax revenue, and two because it has become a desirable location, the more people trying to buy the same house the higher the resale value. That’s why apparently_weird can buy a $200k house in Crowley that he couldn’t touch for less that $600 in Plano, supply and demand.

#14

Want a good lesson and economics and taxes?

https://www.armstrongeconomics.com/

Lot of history and political lessons too.

#15

The electorate has been ensnared in social issues for decades now with economic issues given lip service by politicians but little actual traction outside of the interests of the donor class.

I have an aunt that lives in Berkeley CA who bought a fixer-upper in the late 90s for the bargain price of ~$300k that’s likely valued at treble that amount now; some of it is legitimate improvements (it’s been raised and a garage/ground floor added below) but most of it is the insanity of Bay Area real estate valuations. Drop that house in a bad neighborhood in Dallas and it would be worth 10% what it is in Berkeley - likely with less crime to boot. Like a strong majority of homeowners in the area, if my aunt had to start over tomorrow, she could not afford her present house.

I recall that just prior to the collapse of the Japanese bubble economy, if you sold all of downtown Tokyo at face value, it would purchase the rest of the surface of the earth at face value.

Hell, according to Denton County my house has appreciated by some ⅔ relative to when I bought it a ~decade ago.

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#16

Income Taxes are bad… Why should one person >pay more for the same services another person >is getting just because they earn more. Do you >believe that the price of a dozen eggs should be >based on your income?

So you don’t even believe in a flat tax (i.e. everybody pays 20% of income) correct?

It sounds like you believe that we should just take the total bill for the places one resides (City, County, State, Nation) and divide each if their liabilities for the year by the number of taxpayers in each location and that’s your tax bill?

That would result in everybody in the same city paying the same amount.

Is this what you mean?

Edit: grammar

#17

True dat! The Framers understood this, but then again they were eminently practical, far-seeing, reasonable people, by and large.

It’s axiomatic: When you subsidize something, you get more of it (e.g. Amtrack riders); when you tax something, you get less of it (e.g. cigarette smokers).

That said, I’d support a very minimal national fair/flat tax supplemented by national, state, and local sales tax/transaction privilege tax, understanding, of course, that even that will get screwed-up by complacent voters --> feckless, greedy politicians.

#18

I don’t believe in a tax on personal income. As for Property taxes I believe that only property owners should be allowed to vote on this.

The founders wrestled with these questions. They wondered about the rights of minorities. In their day, that meant worrying if the rights of property owners would be overrun by the votes of those who did not own land. James Madison described the problem this way:

The right of suffrage is a fundamental Article in Republican Constitutions. The regulation of it is, at the same time, a task of peculiar delicacy. Allow the right [to vote] exclusively to property [owners], and the rights of persons may be oppressed… . Extend it equally to all, and the rights of property [owners] …may be overruled by a majority without property…

And that’s what we have now. Too many people with no skin in the game are deciding the rules…

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#19

as for a Flat Tax, again I don’t believe in any form of income tax. I do support Value Added Tax (VAT) and a Transaction Tax, that being that money is taxed each time it passes thru a financial agency.

#20

… that are applied to them.

The Founding Fathers decried “taxation without representation” and then only gave the vote to white landowning males. Who would then decide what was best for the other dumb schlubs who weren’t smart enough to know what they wanted.

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