President Trump?

[Loyal Rogue]

Ok. Since you insisted, I went through the Saez paper, looking for explanations of the points I listed.

There is only one that I see being addressed at all: changes in household size.

Saez argues that household changes were uniform between income groups. He offers no source or data to support this assumption. So, you will need to supply that if you believe it to be true.

Furthermore, even if household changes over time were uniform between income groups, that doesn't mean that factoring them in wouldn't significantly change the data. In fact, it would cause all income groups to show more growth.

Not only did Saez not address the issues you claim he does, he confirms that the problems are in the data when describing his methodology. He specifically lists the things that are counted as income ("salaries and wages, dividends, interest income, rents and royalties, and business income") and they do not include entitlements and benefits. He removes a massive amount of income that disproportionately calculates into the lower groups incomes.

This is a classic case of garbage in, garbage out statistics.

Fair enough.
I don't dispute that garbage in does equal garbage out.

As Burtless pointed out his his assessment of the debate, both parties are using different sets of data each with their own flaws.
One side is using data from income tax returns and the other is using data from census forms.
The reason that Burtless says that it is misguided or unfair for Reynolds/Rose to use census data to critique P&S's study is because the census data is not accurate for the top 2 to 2.5%, which is part of the main focus of the study.

On a sidenote... talk about good timing, I just got a present in the mail yesterday, and it brings this point home.
I've been selected for the second round of census data, the American Community Survey and am in the process of filling it out right now.
This thing is an f'ing book.
Am I seriously going to treat this the same as my taxes and go pull out all my bills and records for the last 12 months and take days to fill this thing out accurately, or am I just going to fill in a half-hearted guess and do this as quickly as possible and be done with it?
There's no penalty for filling it out wrong, like being audited, paying massive amounts of money or going to jail.

Given that fact, and your concern with garbage in/garbage out data, which data do you think is going to be more trustworthy or accurate? Census or tax returns?

He also confirms that the individual filer problem is part of his data:

"Because our data are based on tax returns, they do not provide information on the distribution of individual incomes within a tax unit. As a result, all our series are for tax units and not individuals."

I think we are arguing more than one issue here and they are becoming confused.
On one hand we are debating income inequality between the top 10% and bottom 90%.
No one is disputing that there is a growing inequality between the classes, just by how much.

On the other hand we were debating/clarifying your "majority of the lower 20% move to the top 20%" statement. (which I can't seem to find the basis for, other than that it is a repeated talking point by pundits)
Even so, I'm not going to dispute it.
I am willing to take your word for it because my point was when you look at the actual dollar amounts and income thresholds for it to be true, it is not that big a difference.
Now if you said that a majority of the bottom 20% moves into the top 10% I'd call BS.
Instead, I'm just saying that it doesn't mean what you seem to think it means.

No mention at all about his methodology for computing inflation, whether he used an updated pricing index, etc.

I've long since closed out all the pdfs but I do recall seeing an updated table that mentioned consumer price index which I believe may be the one that Rose was referring to that was changed to 50% the caveat being that it stated 50% growth for the top 1% instead of the top 10% as Rose's article implied.
Unfortunately I'm dealing with a death in the family so I don't have the time to go hunt it down at the moment, but I'll hunt it down when I get the chance.

But getting back to logic for a moment, if the whole study is done using the same parameters, is it going to change the results whether they equate everything to 2008 dollars or 2010 dollars?
Isn't inflation and consumer price index going to have the same affect on the value of $1 in the pocket of everyone equally?

Yes. But, I don't expect anyone to agree with me just because I say it. I expect them to agree because they also understand the evidence and logic for themselves.

For example, it doesn't require you to trust my opinion in order to understand how excluding massive amounts of income that disproportionately go to lower income groups would substantially alter the data.

Speaking of logic, in the scope of income data that we are talking about, how much of a difference are entitlements going to make between the lower 90% and the top 10%?

Yes, as a whole, the amount going to the lower class in welfare, unemployment, food stamps, housing assistance, etc. is a massive amount of money, but when broken down by household it is a very small amount.
No one is getting rich or moving to a higher bracket based on welfare checks and entitlements.
On top of that, most entitlement income counts as taxable income that gets reported so wouldn't it have automatically been counted in P&S's tax return data?

Even if it hadn't, does it really make logical sense that entitlements going to those near the poverty line are going to make a huge difference when comparing their income to multimillionaires?

[FlashLackey]

Given that fact, and your concern with garbage in/garbage out data, which data do you think is going to be more trustworthy or accurate? Census or tax returns?

I suspect that census data tends to be more accurate because there is an incentive to cheat on taxes. People take credits for going to school when they don't, write off "storage sheds" as business expenses, etc. because it allows them to take home more money. Also, I think that the risk of penalty for cheating on taxes most likely disproportionately affects the wealthy.

The IRS isn't going to spend $10k of public money investigating whether or not a $1000 storage shed was a legitimate business expense. However, they will spend a lot more than $10k investigating whether or not a millionaire is reporting $100k of rental income.

Anyway, the reliability of IRS vs. Census data isn't really the most significant problem with Saez' data. Saez, by design of his methodology, leaves out a very large amount of income and doesn't account for other factors that would skew the data. So, even if the data he does use is accurate for what it is, the outcome for his intended illustration would still be inaccurate.

I think we are arguing more than one issue here and they are becoming confused.
On one hand we are debating income inequality between the top 10% and bottom 90%.
No one is disputing that there is a growing inequality between the classes, just by how much.

Agreed. I think that Saez' data greatly exaggerates income inequality. However, to me, the larger point is that an improving economy is supposed to report increasing income inequality because many people start at zero and go higher. Going higher from zero is better and serves an important function in a free market economy. Starting new businesses and innovation often requires taking risk and investment. If the incentive to take those risks is minimized, fewer people will start new businesses or invest in unproven innovations (or they will seek other countries/states with greater incentives).

We should expect that the value for an entry level job like waiting tables rises with inflation. However, a restaurant owner will make an unspecified amount depending on how many waiters he can justify keeping busy. In better economic times, he will hire more waiters and serve more customers who have the money to eat out, etc. He makes more money (changing income disparity figures) while creating more entry level jobs.

Similarly, Mark Zuckerberg would be counted in the lower 20% while being a student at Harvard. However, he created a popular product that in turn created an entire niche of new jobs in application development, advertisement, etc. Now he is in the top 1%. In a less healthy economy, his rise to 1% would not have been possible because the capital needed to pay for application development, advertisements, computers to view his product on, etc. would not be available for investment.

I've long since closed out all the pdfs but I do recall seeing an updated table that mentioned consumer price index which I believe may be the one that Rose was referring to that was changed to 50% the caveat being that it stated 50% growth for the top 1% instead of the top 10% as Rose's article implied.
Unfortunately I'm dealing with a death in the family so I don't have the time to go hunt it down at the moment, but I'll hunt it down when I get the chance.

I'm very sorry to hear about this. Obviously, getting back to me is trivial next to taking care of that. My condolences to you and your family.

But getting back to logic for a moment, if the whole study is done using the same parameters, is it going to change the results whether they equate everything to 2008 dollars or 2010 dollars?
Isn't inflation and consumer price index going to have the same affect on the value of $1 in the pocket of everyone equally?

Yes. Rose's point is that it would show more income growth for the 90%. Not that it would change the amount of disparity between groups. Without the correct adjustment, it would make it appear that incomes didn't grow as much as they did for the bottom 90%.

Speaking of logic, in the scope of income data that we are talking about, how much of a difference are entitlements going to make between the lower 90% and the top 10%?

Medicare alone paid out $599 billion in 2008. It was 20% of the entire amount spent by government. We're talking about trillions of dollars of income that Saez has left out. It would make a big difference.

The vast majority of people have their health care paid for by their employers. That's another several thousand per year, per person that is not being counted by Saez.

[dagrom]

forgive me for jumping in so late but for me the discussion about who's income is going up the fastest and which % of tax payers give the most money to the government isn't as important as Freedom.

Should I be allowed to agree to pulling rusty nails out of boards for $0.10 an hour 15 hours a day / 7 days a week from a stranger? from my dad?

Can I choose to do nothing and get nothing for it?

If everyone wanted to do nothing and get nothing? Are we allowed to?

If one person made a billion dollars a year trading (flash web development services of course) to other countries (since the rest of us are doing nothing) should she be required to force others to take some of her money even if it is against the recipients core belief system to have money?

Even if the billionaire *wanted* to give money to the 99% of people that *don't want it* should the government force the poor people who *don't want it* to take it? If instead the poor people *do want it* does that change your answer? Why?

I realize it's easy to just toss the questions out as "unrealistic" but i'm curious how people would answer them.

[FlashLackey]

Should I be allowed to agree to pulling rusty nails out of boards for $0.10 an hour 15 hours a day / 7 days a week from a stranger? from my dad?

Yes.

Can I choose to do nothing and get nothing for it?

Yes.

If everyone wanted to do nothing and get nothing? Are we allowed to?

Yes.

If one person made a billion dollars a year trading (flash web development services of course) to other countries (since the rest of us are doing nothing) should she be required to force others to take some of her money even if it is against the recipients core belief system to have money?

No.

Even if the billionaire *wanted* to give money to the 99% of people that *don't want it* should the government force the poor people who *don't want it* to take it? If instead the poor people *do want it* does that change your answer? Why?

No. Yes.

Because if the billionaire wants to give money to the poor and the poor want to accept it, it should be allowed.

If the billionaire does not want to give money to the poor but the poor want it, it should not be forced. In that case, the poor need to trade their own flash development services to obtain their own billions.

[dagrom]

Should I be allowed to agree to pulling rusty nails out of boards for $0.10 an hour 15 hours a day / 7 days a week from a stranger? from my dad?

Can I choose to do nothing and get nothing for it?

Yes.

Why do all successful nations have a minimum wage? Did they all decide to do something bad for their economy?

edit: it drives me crazy when governments decide i'm too stupid to choose what i will or won't do for $1 so how come minimum wage seems to help nations succeed? i'm really mixed on this issue. is it that we are succeeding in spite of minimum wage laws or is it that the collective really is dumb and needs government to decide their worth lest they be chewed up and spit out?

[jAQUAN]

It's a good question but I suspect the answer lies in the slippery slope section. It may have to do with the societal impact of people working 40+ hours a week and still not being about to afford basic necessities like food and shelter. It may be less about setting the appropriate rate as setting one at all. How about I pay you $1/hr? If you'll take that, how about I pay you in candy bars? While were at it how about I just pay a lump sum to someone else for the right to own you outright?

[FlashLackey]

Why do all successful nations have a minimum wage? Did they all decide to do something bad for their economy?

Because some politician eventually realizes that they can win votes by selling minimum wage increases as only a positive thing and nobody will remember who is responsible when the cost aspect occurs.

Minimum wage increases simply give one group of people an extra $20 per week at the expense of causing another group of people to have $0 per week because it is no longer worth any employer to pay minimum wage for their unskilled/entry level labor.

edit: it drives me crazy when governments decide i'm too stupid to choose what i will or won't do for $1 so how come minimum wage seems to help nations succeed? i'm really mixed on this issue. is it that we are succeeding in spite of minimum wage laws or is it that the collective really is dumb and needs government to decide their worth lest they be chewed up and spit out?

Minimum wage laws do not help nations succeed. They remove entry level jobs from an economy.

[david petley]

Minimum wage laws do not help nations succeed. They remove entry level jobs from an economy.

Really? They seem to be working fine in Australia, which is looking a bit successful right now.

http://www.economywatch.com/world_ec...-forecast.html

I know our Aust. dollar buys lots more of your US dollar than it ever has before, even with our long-established minimum wage laws.

david

[silverx2]

Why do all successful nations have a minimum wage? Did they all decide to do something bad for their economy?

edit: it drives me crazy when governments decide i'm too stupid to choose what i will or won't do for $1 so how come minimum wage seems to help nations succeed? i'm really mixed on this issue. is it that we are succeeding in spite of minimum wage laws or is it that the collective really is dumb and needs government to decide their worth lest they be chewed up and spit out?

I think the big issue isnt so much that the government is worried that you will do anything for $1, but a result of If there was no minimum, It would result in companies being able to low ball people into doing jobs for less and less.

Jimmy and bob both want to flip burgers at the local burger joint,

Jimmy says he'll work for $.75, Bob says he'll work for $.50 Bob gets the job. It essentially Devalues employees and causes a reverse auction effect until you have someone working for less then what a person needs for cost of living. On top of that a company like walmart could force/buy all the other companies and then when a person needs a job walmart can force them to take tiny amounts of money because there is no competition . "hey walmart i want a job" "sure here you go plus your getting paid $.15 an hour!" "Wait what no way dude, im outa here im going to go work at this place they offer $4.50 an hour" "LOL we just bought them with all our profits now their employees are all fired, but they can work here for $.15 if they want"

End result, a lot of people getting paid Less then what it costs to but what is being produced by everyone else, This means products go unsold, Which results in businesses losing money not because of labor costs, but because the supply is so much higher than the demand they wont make a profit.

[FlashLackey]

Really? They seem to be working fine in Australia, which is looking a bit successful right now.

I wasn't arguing that the success of an entire economy hinges upon whether or not there is a minimum wage.

I think the big issue isnt so much that the government is worried that you will do anything for $1, but a result of If there was no minimum, It would result in companies being able to low ball people into doing jobs for less and less.

Jimmy and bob both want to flip burgers at the local burger joint,

Jimmy says he'll work for $.75, Bob says he'll work for $.50 Bob gets the job. It essentially Devalues employees and causes a reverse auction effect until you have someone working for less then what a person needs for cost of living. On top of that a company like walmart could force/buy all the other companies and then when a person needs a job walmart can force them to take tiny amounts of money because there is no competition . "hey walmart i want a job" "sure here you go plus your getting paid $.15 an hour!" "Wait what no way dude, im outa here im going to go work at this place they offer $4.50 an hour" "LOL we just bought them with all our profits now their employees are all fired, but they can work here for $.15 if they want"

End result, a lot of people getting paid Less then what it costs to but what is being produced by everyone else, This means products go unsold, Which results in businesses losing money not because of labor costs, but because the supply is so much higher than the demand they wont make a profit.

Companies wouldn't be low-balling, devaluing or forcing anyone to do anything. If it is worth Bob's time to work at a lower wage, he will do it. If not, he will continue looking for other jobs that pay more. Wal-Mart would not be able to pay that low of a wage without the disadvantage of losing employees as soon as they develop valuable skills/experience and leave to get a better wage somewhere else. They also wouldn't be able to realistically control every low-skilled job that Bob would qualify for. Besides, Wal-Mart already pays most people better than minimum wage: http://www.glassdoor.com/Salary/Wal-...aries-E715.htm

It's also not true that "a lot" of people would be getting paid less. Even with minimum wage laws in place, 97.3% of hourly wage earners already made more than minimum wage in 2004.

We're talking about a tiny fraction of the labor force, consisting mostly of part-time, inexperienced teenagers, working temporary jobs while going to school.

http://www.bls.gov/cps/minwage2004.htm