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Thursday, August 20, 2020


Before I begin the second part of my reflections, let me respond very briefly to some of the comments posted yesterday. Several folks asked why I said nothing about the labor movement in the United States, which has played such an important role in the past two centuries. I intend to talk about that later on, but note that the labor movement was not and is not a liberation movement designed to remove discriminations against some subset of the population. It is instead a frontal assault on the structure of capitalism itself, or alternatively an attempt to ameliorate some of the more serious damage that capitalism does to workers. Remember what I said: these reflections are not an integrated and systematic theoretical discourse but an attempt to put on paper (or the Internet equivalent thereof) some thoughts that I have not yet succeeded in transforming into a single coherent story. There were also a good many comments back and forth about whether a socialist society would exhibit some significant measure of economic and social stratification. That is an important question which I shall try to say something about down the road, but let us be clear: the primary target of socialist theory and action is not social stratification but capitalist exploitation. These are not at all the same thing and need to be analyzed separately.

Today I want to talk about patterns of income and wealth inequality in the United States. As I am sure you all know, inequalities in wealth are dramatically greater even than the very great inequalities in income. Let me start with income. One useful way in which income statistics are presented is in the form of annual income accruing to households. There a bit more than 128 million households in the United States. Some of these but by no means all are traditional nuclear family households with a father, a mother, and one or several minor children. Others are single-parent households, blended family households, multigenerational households, and households consisting of a single individual. My favorite category is POSSSLQs, which is the number crunchers’ term for persons of the same sex sharing living quarters.

In 2019 the median household income in the United States was just about $63,000. (I am sure regular readers of this blog fully understand the distinction between average income and median income but for those who may have stumbled on this site more or less by accident I will illustrate the distinction by a little imaginary example. Suppose five workers are sitting in a bar having a beer. Each of them, we may suppose, earns $30,000 a year. The average income of the folks in the bar is $30,000 a year and so is the median income, because half of those sitting there make less than $30,000 a year and half make more. Then Lebron James stops in for a beer. The median income remains $30,000 a year but the average income is now something more than $6 million a year because Lebron James, according to Google, makes $37 million a year all by himself.)

So there are 64 million households making less than $63,000 a year. There are also, as it happens, 32 million households making less than $31,200 a year, and 1.28 households making less than $14,203 a year. That is several million people living each year on less than the earnings of a worker employed full-time at the federal minimum wage of $7.25 an hour.

At the other end of the spectrum, there are more than 19 million households making more than $150,000 a year. And then of course there are the 1.28 million households making more than $475,000 a year. One striking way to think about this is that some young man or woman who inherits $63 million thereby acquires an amount equal to a millennium of median household annual incomes.

By the way, the median weekly earnings for full-time employed workers at the end of 2018 works out to be a little bit less than $45,000 a year or $22.50 an hour, which tells us that very large numbers of households have two or more wage earners.

The data for household wealth are dramatically more unequal. Thomas Pikkety reported that fully half of all American households have zero net worth. How is that possible? Don’t they have cars and phones and beds and kitchen tables and dishes and clothing? Yes, of course they do, but they also have debts – maxed out credit cards, second mortgages, student debt, unpaid taxes and the rest.

The United States is the richest country in the world but the people of the United States are, by and large, a good deal poorer than we tend to suppose. Let me offer a few concrete examples to orient us. Here in North Carolina, which is by no stretch of the imagination the wealthiest part of the United States, the average high school teacher makes $58,800 a year. A husband-and-wife team of high school teachers in Greensboro North Carolina both making that amount are, as a household, taking in annually more than 73% of all the households in the United States. If the term “upper-middle-class” has any measurable meaning at all, then they are upper-middle-class but nobody commenting on economic affairs in the media thinks in that way at all. A husband-and-wife household in which both of them are FBI special agents has an annual income greater than 96% of all the households in the United States. Once again, if the term “upper-class” or “rich” has any functional meaning then it applies to this couple. And yet television commentators routinely would call such people “middle-class.” A long time Walmart assistant store manager who just never made it to the next step, with a stay at home wife and a couple of kids, brings in more money for his household than is earned by 60% of the households in the United States.

The terms “middle-class” and “working class” have lost all functional meaning in American public discourse these days. A husband and wife each working a $15 an hour job for the year are, as a household, just about exactly the median household and yet nobody would describe them as “middle-class.”

I will stop here for today and tomorrow add some facts and figures about higher education and the role it plays in determining income and wealth distribution.


Chris said...

I love this point - "The terms “middle-class” and “working class” have lost all functional meaning in American public discourse these days."

I have long-time friends who make probably north of $250k/yr in salary, who (pre-COVID) take 1 or more luxury cruises a year, live in a 3000 sq ft house, 2 cars, etc, etc. They would certainly consider themselves "middle class" and not "rich".

Someone will come up with the quote I can't remember about "rich" being purely comparative.

Richard Lewis said...

But these kind of data also point in an awkward direction, as the blogger 'Policy Tensor' and others have pointed out: the 'class enemy'(those who use political power and social networks to extract surplus from the general economy) is as much the upper middle class professionals (the 5-10%) as it is the 'owners' of capital (the 0.1%).
This has political implications obviously, since the Democratic Party is nowadays the party of upper middle class professionals (I mean in terms of de facto control and agenda setting, not its electorate which is a complex ad hoc coalition). The ideology of these upper middle class professionals (UMCPs) favors globalization of capital, labor, services, goods, and 'expertise' and has anti-racism, anti-sexism, anti-homophobia and anti-nationalism as its cultural glue.
Going forward, the Republicans are better placed (with imaginative leadership) to capture resentment at UMCP's (and their culture) as their party is more permeable to non-UMCP leadership. This could lead to odd political formations in the future, with a possible exodus of working class Hispanics to the Republicans for example - IF they find imaginative leaders who can dump some of their old baggage.
Whether any of that is cause for optimism or pessimism I don't know: a Republican Party in 2040 that is the 'Non UMCP' party might be genuinely progressive in a way the Democrats cannot be given their current ownership.
I am assuming that the 0.1% are now politically ineffectual compared to their 'managers' in the UMCP group in academia, media, government, high tech, etc.

R McD said...

Since you're going on to say something about education, maybe you'll find the following interesting/useful?

Danny said...

'..the primary target of socialist theory and action is not
social stratification but capitalist exploitation.'

Given that 'social stratification' is as abstract and
informal a locution as 'capitalist exploitation',
I think you still need a primary target.

'The terms “middle-class” and “working class” have lost all
functional meaning in American public discourse these days.'

Ah, the sort of point that I bring? Yet I am not sure, even,
that 'functional meaning' is even that desirable a property--
I think this all maybe is not only pretty vague, but
for boilerplate polemics, it's better that way.
Thus, 'wealth without work', 'commerce without morality',
I get those phrases from a sermon given by Frederick Lewis
Donaldson in Westminster Abbey, London, on March 20, 1925.
Or juxtapose 'future happiness for Americans, if they
can prevent the government from wasting the labors of
the people under the pretense of taking care of them'.
This is what Thomas Jefferson predicts. Or 'The smallest minority on earth is the individual'.
That's Ayn Rand who adds: 'Those who deny individual rights cannot claim to be defenders of minorities.'
I might find this intriguing, but when things are stated so very abstractly and
informally, being intriguing is so easy that Ayn Rand can do it. Or
again: “In politics, stupidity is not a handicap.” ― Napoleon

'A husband and wife each working a $15 an hour job for the
year are, as a household, just about exactly the median
household and yet nobody would describe them as “middle-class.”

Heck, who wouldn't? How would they describe themselves? Suppose that they came to America from Haiti and were *already* calling themselves “middle-class.”

Danny said...

Haiti -- currently the poorest country in the Western Hemisphere, of course -- the annual per capita income is about US$450, and most of the population (60 percent) faces underemployment.

If we tarry with the United States, household income has increased significantly since the late 1970s and early 80s in real terms, partly due to higher individual median wages, and partly due to increased employment of women, and according to the CBO, between 1979 and 2011, gross median household income, adjusted for inflation, rose from $59,400 to $75,200, or 26.5%, and also, once adjusted for household size and looking at taxes from an after-tax perspective, real median household income grew 46%. Plus if it's relevant, the Kaiser Family Foundation conducted a study in 2013 which shows that employer contributions to employee healthcare costs went up 78% from 2003 to 2013.

Household income as well as per capita income in the United States rise significantly as the educational attainment increases. Thus, individuals with graduate degrees have an average per capita income exceeding the median household income of married couple families among the general population ($63,813 annually). Also, household income in the United States varies substantially with the age of the person who heads the household. Also, most of the poverty in the South is located in rural areas, and median household income tends to be the highest in the nation's most urbanized northeastern, upper midwestern and west coast states.

None of this is to insist that median household income is not, like, a politically sensitive indicator, but just, what *is* median income?