Income Mobility -- A Lifetime of Data

In Sunday's NY Times, Mark Rank from Washington University provides a take on "income inequality" looked at from an individual longitudinal perspective, rather than from a desire to create hysteria about abstract statistical groupings. Here are some of his findings:

• Almost three-quarters of the population will be in the top 20% of income earners at least once in their lives.
• Only 12% of the population will be in the top 1% of earners more than one year during their lifetime.
• Only 0.6% of the population will be in the top 1% for more than 10 consecutive years. 

This paints a very different picture than the President and his friends who would like you to think of "The Rich" as a small monolithic group standing at the gates of wealth barring others from entering.

Common sense would tell you that if you took a snapshot of people in their twenties and compared it to a snapshot of people in their fifties, there should be a very large difference in income between the two groups. Should you be upset by this? Would you conclude that those in their 20s are doomed to low incomes for the rest of their lives?

The hysteria that Democrats are trying to generate would be akin to looking at major league baseball batting data, observing that only 1.4% of all hitters batted over .325 in 2013, and then trying to convince players that they have no chance of having a number of multi-hit games during this season. Might as well hang up the spikes and turn to the commissioner to fix this awful situation.

Tax Day "Fairness" Tidbits

20% of the population pays 94% of the federal income taxes. That means for the other 80%, government programs that might increase current or future taxes have virtually no cost to them. And you wonder why they're so popular.




Over the last 30 years the federal income tax average rate has gone down for 99% of the population. The only group experiencing an increase is the reviled Top 1% .

Tax Day: Where Your Income Tax is Spent

Today is a day to reflect on what all the tax you pay (at least for the half of us who pay income tax) goes for. Pay attention to the note at the bottom. As much as you might be paying today, you'd have to pay about 25% more to cover all of what the Federal government actually spends.

The Fed Monetary Bubble

In 2008, the Federal Reserve held $800 billion on its balance sheet. For the last few years, it has purchased over a trillion dollars in U.S. debt. The Fed has been creating a 100-year supply of money every year for the last few years. It currently holds a 400-year supply of money. The last times I saw something like this (late 90s stocks and mid 00s housing prices) they were later called "bubbles". Just wondering. 

Promoting Workplace Envy at USA Today

In today's USA Today the front page story (above the Fort Hood shootings!) is "CEOs Get Richer; Workers Left Behind." At one point they quote Eleanor Bloxham (a "governance expert") as saying that "CEOs are scoring big and we still haven't left the land of layoffs."

I'm going to give USA Today the benefit of the doubt and assume that they are trying to support the Democrat's talking points. Otherwise I would have to conclude that they are just woefully ignorant.

First, the purpose of a company is not to provide jobs and income to its employees. It is to provide a return on the investment the owners have made in the company. Second, the pay of the CEO has nothing to do with the pay of others that work at the company. Each has a value to the company, and if Howard Schultz is paid less, that does not mean his barristas will be paid more. Let's turn this imagined linkage around. If there were a labor shortage and Starbucks had to pay more to attract barristas, would that mean Mr. Schultz should be paid more?

In a well-functioning economy pay is a function of market conditions. In poorly functioning economies (like France, for example) pay is something determined by entities like USA Today that have absolutely no ownership interest in the companies they try to bully by promoting envy among its readers.

Monday Update

Excellent timing from the Wall Street Journal and the Labor Department that offers some less sensational perspective on compensation. 

Among the interesting insights:

• On average orthodontists earn more than CEOs (I anxiously await USA Today's expose on orthodontists)
• While there are 250,000 CEOs, there are only 5600 Orthodontists. 
• One of every 17 works in retail stores. 

So essentially what USA Today is all worked up about are the outliers. The people at the very ends of the distribution. It's a bit like trying to hold up the Wichita Herald as evidence that USA Today's circulation is outrageous.