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Thursday, September 21, 2023

Is There a Solution?

          Mandatory Bonuses to Employees     

The largest U.S. corporations have allocated 96% of their profits to shareholders (owners) through stock buybacks and dividend outlays over the ten year period 2012 to 2021, and even since 2003 shows the research of William Lazonick. Wages for 80% of all workers have not grown since 1969. The Bureau of Labor Statistics shows wages for 80% of workers are no higher since 55 years ago, while the "Real" (inflation adjusted) per capita income has grown by 181%, nearly tripling. The result is stiffling inequality, 41% of Americans are either poor or struggling with bills. RealTime Inequality documents an income shift of 15.4% of total national income (from 37.7% to 53.1%) going in favor of the top-earning 10%. (See my previous posting.) 

The big picture: income for all triples, but for 80% of workers income stays flat, 41% of Americans live in poverty or hardship. If we had the income distribution of 1976, then 90% of households (all with annual incomes below $200,000) would all have about $30,000 more income, and poverty would be eliminated. About $3.4 trillion of income would be shifted back to the lower 90% of households. Get the big picture. 

The economy has egregious maldistribution. In the face of this, what can we do? Labor union power is one solution, but also the following is a solution.  

The largest corporations would be required to pay a yearly bonus out of total profits. There are more than 2,000 giant corporations in the U.S. who employ more than 5,000 workers; their average number of employees is over 20,000. More than 40 million workers comprise this group, over a quarter of all workers in the U.S. (see Lazonick, p. 6). To cite another essay, Lazonick states that over 10 years, 2012 - 2021, the largest 474  corporations "funneled $5.7 trillion into the stock market as buybacks, equal to 55% of their combined net income, and paid $4.2 trillion to shareholders as dividends, another 41% of net income."  Simplified, 96% of their net income was dispersed, about $9.9 trillion over ten years. Christian Weller supplies this graph for a clear understanding: 

If half that $9.9 trillion went to around 40 million workers, about 40% of full-time employees, each would receive approximately $12,000 more income each year. These firms would be required to register with a national corporate registry and pay a portion of profits, up to 50%, to workers earning below 150% of the median annual worker income. As the median annual worker's income in 2022 was $40,847, 150% is $61,270. In 2022 around two thirds of workers (108 million) earned less than $60,000. We could also mandate a minimum wage for workers at these giant companies at about $22 per hour, indexed to inflation. Such a wage hike has been proposed in New York state. The hike would raise incomes by $3,307 for 32% of New York workers. This plan I present is called a prototype, not a finished plan, but the reader gets the general idea. As I show below, these "domestic nonfinacial corporations" have nearly doubled their pre-tax profits in the last four years. 

That's my quick solution to the gross malfunction and inequality plaguing the U.S. economy. What follows is a lengthened comment I left at an article by William Lazonick, "The Scourge of Corporate Financialization". The target is to raise the incomes of lowest paid workers. I suggest the reader go to RealTime Inequality, adjust the graphs for "factor income" and "working age adults". There you'll see the average annual income for the lower 50% is $25,200. This low-earning half desperately needs a raise, and the nation can easily afford to make it happen. The minimum wage hike to $22 an hour would be major, and the bonus would bring their incomes more in line with their contribution. 

Lousy Pay Is Endemic in Large Corporations  

The study Executive Excess shows the lousy pay from the 100 most-lousy paying large corporations in the S&P 500. Its #1 finding: 

1. The CEO-worker pay gap at the Low-Wage 100 averaged 603 to 1 in 2022

The lousiest paying large corporations pay workers as little as they can. Their executives make 603 times their middle paid workers. From page 5: "Last year, median worker pay at these Low-Wage 100 companies averaged $31,672, and the gap between CEO and median worker pay at these enterprises averaged 603 to 1." That would equal $15.22 per hour for a full-time worker. At Lowe's hardware, the giant mega-hardware, it's median worker earns $29,384, which is $14.12 per hour for a full-time worker. Of course, the median earning Lowe worker is not full-time. 

Another example, The Dollar Tree: 

"Dollar Tree: CEO Michael Witynski reaped the biggest stock gain in the Low-Wage 100. During his three year stint before resigning in early 2023, his personal stock holdings ballooned 2,393 percent to $30.5 million. Dollar Tree’s median pay fell 4.4 percent to just $14,702 in the same time period, while the retailers’ customers saw an increase in most products from $1 to $1.25. The retailer has spent over $2 billion on buybacks since 2020." 

Walmart had a CEO to worker pay ratio of 931 to 1, and each of their workers could have had a $6,600 pay increase if the retailer had instead delivered a raise to each worker, who earned at the median $27,136 per year, or $13.04 per hour for a full-time worker, $521 per week, and $2,261 per month. A worker in Louisville, Kentucky, with a wife and 2 children pays $1,052 per month rent. That leaves $1,200 for all other expenses. The Economic Policy Institute estimates this 4 person family needs $7,756 to afford a moderate life style. Two workers at a lousy paying corporation would still find themselves about $3,000 per month short "in order to attain a modest yet adequate standard of living." -- See the Economic Policy Institute's Family Budget Calculator.   

The Average Household Income in 2024 ---  $170,000 per year  

I walked today around the little neighborhood where I live in Mariposa, California. My friend and neighbor with two chihuahua dogs walked with me and got me talking about the economy. I mentioned that the average household income in the U.S. is $170,000. She didn't believe me, so I explained, and she still had a hard time believing. This paragraph is an aside -- I'm adding it much after the other parts. The theme is "What is the average household income in 2024?" The answer: $170,000. Let me explain: four sources confirm this number. How many households in the U.S. is answered by the U.S. Census: 131,434,000 in 2023. What's the total income? The Congressional Joint Committee on Taxation, Overview, states it's $19.926 trillion (see page 39). The Federal Reserve's report Flow of Funds says it's $22.5121 trillion (see page 10). The Bureau of Economic Analysis says $23.289 trillion (see bea.gov, Interactive Table 2.1). The "average household income" answer is either $151,604, or $171,280, or $177,191, respectively. Let's try RealTime Inequality; their answer is $22.2 trillion total, yielding an average of $168,906. The average for the lower-earning 50% of households is $36,546 (says dqydj.com, household income by percentile calculator). The average for all households, $170K, is about five times the average of the lower half's average, $36K. This paragraph may read like over-kill, but I have a hunch my neighbor is like most people -- totally ignorant and unbelieving, but willing to listen and learn. Her two dogs enjoyed the other dogs along the way, and returned home very happy. Change happens gradually, but it needs conversation and actual facts. I hope everyone will have this conversation, and act on it.  

But first -- My May, 2023, essay says that 90% of U.S. household earn less than $200,000 per year (117 million out of 130 million), and all 90% could/would have $29,000 more income each year if we had the income distribution ratios of 1976, according to data from RealTime Inequality. This is an important claim; in the near past we had a much more equitable economy; it is possible to enrich everyone; we did it before. I load so much data and information into these essays, I hope readers take away at least one thought. Take your choice. You don't have to understand everything, just understand we have fixable inequality. It depends on a mass public understanding, and then voting for common sense equality of income and wealth.     ------- Read on  -----

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We might require the largest corporations to share 50% of profits in bonuses to employees. This sharing of profits would raise incomes considerably. This would be a statutory requirement for corporate licenses, only applied to companies with more than 2,000 workers. Something like that. Nonfinancial domestic corporations have increased their profits by 95% since October of 2019 (from $1302 billion to $2551 billion), shows the Table 6.16D at BEA.gov, Interactive Tables. Here's the graph showing profits from 2011 to 2023 Q3:


A second, confirming report comes from the Flow of Funds report, a Federal Reserve quarterly report. It reports an increase of 91% (adjusting for inflation), (See December reports for 2019 and 2023, Table F.3, line 9). In Q3 2019 "domestic nonfinancial corporations" earned 6.0% of all income, and in Q3 2023 they earned 11.2% of all income. Adjusting for inflation the pre-tax profits of 2019 reveals the same 91% increase. (I did the inflation adjustment here.) 

Inflation has gone up 19.7% over the same four year period shows the data at BLS.gov, see CPI data. The public should be asking very hard questions about corporate price hikes. The supply chain bottleneck problems are over, we have greed in operation. It seems to me absolutely impossible to generate such huge profits during a period of very high inflation. Corporations are making a killing at the expense of all consumers. Shareholders are the wealthy minority, and they are literally killing our economy. My January, 2023, essay is all about inflation and its causes.

By my calculations the share of national income going to nonfinancial corporations pre-tax profits increased from 6.0% in 2019 to 11.2% in 2023, Q3 for both years. I calculated the figures from the Fed's Flow of Funds report, Table F.3, Lines 1 and 10, from the Dec. 2019 report and Dec. 2023 report.. The increase of $1.202 trillion in profits means every household paid an additional $9,037 to corporations for the same amount of goods. 

The Pulse Survey from the U.S. Census       

Naturally not every household could afford such a huge increase. Hardship is the result; families experience  added anxiety, worry, grief and ill-at-ease. The U.S. Census conducts a Pulse Survey almost every month, the last issue was November 2023, and they asked questions about many topics including "Spending" and "Health". When asked to rate "Difficulty paying usual household expenses over the last seven days" only 30% report no difficulty, another 30% state "a little difficult", and the last 41% report "somewhat" and "very difficult" about evenly divided. True to the United Way report, the ALICE report, 41% of U.S. households experience hardship. And the Census's Supplemental Poverty Report also reports 41% of households living with incomes less than 200 percent of the very low Official Poverty Line.

 The Poverty threshold for a family of 4 is $29,950, that doubled is $59,900, but the United Way ALICE basic survival budget requires $73,464, the M.I.T. Living Wage Calculator requires $76,814, and the EPI.org Household Budget Calculator requires $72,640 in the median cost county of Des Moines, Iowa. But in late January, 2024, the EPI re-adjusted its calculator. Now EPI reports $90,260, which is 3 times the Official Poverty Line (OPL). And the M.I.T. Living Wage Calculator shows the living wage income needed is $95,763 if both parents are working. The M.I.T. report is dated February, 2023. The Census report HINC 01 shows the median household income for a 4 person household is $117,900 in 2022. The median is nearly 4 times the Official Poverty Level of $29,900 (4 times $29,900 is $119,600). So, 52% of 4 person households live with incomes below $119,600.  

The Supplemental Poverty Measure and the ALICE report      

The U.S. Census' Supplemental Poverty Measure for 2022 (page 13) shows that just 22% of U.S. households have incomes 4 times above the OPL using the SPM (bluish-grey strip in the chart below); 78% have incomes below 4 times OPL. So, the total living with income above 4 times is 22%, but for 4 person households it is about 50%. The four-person houehold must be doing better than the other 1 and 2 and 3 person households who have at least 78% living below the 4 times OPL level. Using the HINC-01 data, about 40% of 4 person households earn too little, not the amount the EPI or the M.I.T. studies indicate are basic floors to avoid hardship. A basic survival income of $90,260 is 24% less than what half earn, the median, for a family of four ($117,900). This shows that about 39% of 4 person households live with incomes below the basic survival budget. Looks like the ALICE report is accurate. Hardship afflicts at least 40%, more or less, of Americans, the richest nation on earth. I should analyze the 1 and 2 and 3 person households, but I don't have the patience. If I did the conclusion would be worse, not better, is my guess. Excuse me. I'm not wasting your time, I hope.  

          This is page 13 or the 2022 year Supplemental Poverty Measure, U.S. Census
 

So, we might ask "What is the average household income in 2023?" The Flow of Funds tells us the national income in Q3 2023 was $22.512 trillion, and divided evenly among 133 million households, the average is $169,000. The median income for all 133 million was $74,580 in 2022. If the average were $1000, then 50% would be earning less than $450, and their average would be around $300. We have massive and harmful inequality.    

A look at the U.S. Census Hinc 0-1 file shows the details of income distribution. But this site shows a total of $15.1 trillion as the national income, which is far short of the $22 trillion shown by the Flow of Funds or the Bureau of Economic Analysis. Furthermore, one should be sure to compare post-tax and post-transfers incomes with the same.     

Corporations have subdued wage increases, and they have also had no restraint in raising prices.The "retail trade" corporations have seen their profits grow by 153% over the four year period, Oct. 2019 to Oct. 2023. 

Retail trade profits since 2012 to Q3 2023. 

In that 4 year period inflation rose by 19.6%. The net result is the impoverishment of workers, their families and communities. Does society benefit or only the profit driven corporations? Corporations should be forced to share their profits with workers. A national corporate licensing law would effect all large, multi-state corporations employing more than 2,000 workers. There should be a flexible rate of mandatory bonus dispersal, be it 50% or 10% or between both. Workers deserve raises. 

The largest corporations are "looting" America claims professor William Lazonick. (See here and here)  Between 2017 and 2019, 111.8% of their total profits were used for shareholder dividends or stock buybacks. In other words, they took all their market profits and also borrowed additional billions, going into debt, to buyback their own shares. His 2014 article in the Harvard Business Review claims that 91% of profits since 2003 have been dispersed through the combination of buybacks and dividends.  The word 'eviscerating' captures the essence of this greed. That chart in Lazonick's recent essay, page 17, shows the growth of this process. 


Lazonick makes a strong case for ending stock buybacks in essay after essay, take a look

The "Real GDP per capita" grew by 153% between 1969 and 2023, from $26,162 to $67,039, inflation adjusted, an increase of a multiple of 2.5. The "Real disposable income per capita grew by 2.7 times (from $18,249 to $50,438). The U.S. population is now 335 million, so total "disposable" (meaning post-federal-tax) income (population times income per capita, 335M x $50,438K) should be almost $17 trillion. The "average" family of four therefore has a post-tax income of 4 times $50,438 = $201,752. But, instead, the median post-tax  income for a family of four is about $92,000 in 2022, not $201,000. The median household income of $74,582 is 45% of the average of $165,000? Inequality? Yes. The national income divided among all households in 2023 is now $170,000 per household, but half of households have incomes below $80,000, and the average for the lower half is around $45,000, a quarter of the average for all. (See the Fed's Flow of Funds report, Dec. 2023, page 10 for national income.)

Comparing income growth with wage growth    

The graph below shows the inflation adjusted ("real") disposable personal income per capita, January 1968 to December 2023. It increased by 290%.
In stark contrast, for the same dates, the "average weekly earnings" for 80% of all workers over  the same 54 year period increases by under 2%.  

I am a bit obsessed with this piece of news. I try to repeat it over and over. The economy is broken, my friend. 
And the  hourly wage earnings increased by only 8% over 54 years (the graph at the Fed FRED web page shows numbers unadjusted for inflation, but you can do that here). 

To drive home this fact, the Realtime Inequality web page shows the income growth for adults age 20 to 64 years old from 1976 to 2023. The four groups are top 1%, the next top 90 to 99%, the 50th to 90th percentiles, and the lower-earning 50%. The EPI growth numbers are very similar:
In 1976 the income difference between the lower 50% and the top 1% was 22 times
and in 2023 it was 75 times. Even worse than what the EPI reports, as I show in the following paragraph. 

The Economic Policy Institute has tracked this problem for decades, and their report (here) shows that between 1978 and 2019 annual wage income for the lower 90% has grown by 26%, or $8,043 (from $30,934 to $37,977); while wages for the top 90 to 99%% (less the top 1%) has grown by 64%, or $64,781 (from $101,220 to $166,001). And wage income for the top 1% has grown by 156%, or $466,815 9 (from $299,240 to $766,055). Looking closely, this shows the difference between the 90% and the 1% was 10 times in 1978 and 20 times in 2019! And a look at the Fed's FRED page shows that between those same years the Real GDP/capita grew by 95%, almost 4 times faster than wage growth of the lower 90%. Where did the extra money go? Workers' income growth was virtually paralyzed. The page from the Job Quality Index, Buffalo, shows between 1990 and October 2023 full-time year-round nonsupervisory weekly (and yearly) wages grew by 18%. The Fed's Real GDP/capita shows a growth of 66% between Q3 1990 and Q3 2023, which is 3.6 times faster than wage growth. 

Let's try comparing Median earnings for "men" nonsupervisory workers, and for all nonsupervisory workers, and with Real disposable income per capita
Weekly earnings for men were higher in 1979 than in 2023, for all workers in 2023 they were 9% higher, while per capita disposable income increases from $5,164 in January 1979 to $16,848 in October, 2023, an increase of 226%! It tripled. 

This is a disaster. It is a devasting hurricane, flood, tsunami, and earthquake fire in one slow movement. It is absolutely necessary to grasp the importance: Eighty percent of workers saw no income increase in 54 years while the economy more than doubled on a per person basis. Where did the additional income go? Not to workers. The economists and media downplay this event, they say "wages stagnated"; instead they should say wages did not grow at all while the economy did very well. 

The Washington Center for Equitable Growth presents this graph that disaggregates the growth, or separates growth among four income groups: the lower 50%, the next 40%, then the top 10%, and the top 1% of households (I presume households). Note: not much for the grey lower 50%, somewhat more for the blue 40%, mostly orange and red. 

And another from WCEG compares two periods: 


         Wealth         

Total national private wealth (household net worth) is almost $151 trillion (see here, page 1), which comes to $1.1 million per household as an average savings for all U.S. households. Yet the lower half own about 1% of all wealth (0.8% shows Realtime Inequality). Therefore, the average household net worth for the lower half of the U.S. is about $18,300. The Federal Reserve shows the lower half owning 2.6% of all wealth, about $48,000 per household, mostly in the 5th decile. The lower 40% own very little. 

Here is the Fed's page on wealth, 1990 to 2023 Q3.:

Here is the RealTime Inequality page on wealth, 1976 to 2023, notice the growth of the yellow line, representing the top 1%, its share growing from 22.5% to 35.6%.



       The Hypertrophic Wealth Picture     
I should also mention that wealth has exploded since 2009, tripling in nominal terms (from 48 trillion to $154 trillion, and adjusting for inflation increasing by 140%, a multiple of 2.4). There's a graph at the Fed's FRED page showing the ratio of "household net worth"(i.e., private savings) to annual "disposable personal income" (i.e., after-tax income). We are in extraordinary times: 
You can see that 
            from 1946 to 1997 the ratio ranged around 520%, and then it increased for the dot com boom, and the for the financial/housing price debacle, and now as a result probably of the corporations pouring profits into the hands of the minority of the population who own most of the financial assets. The Fed's Flow of Funds  reports the same ratio as in the graph above, at Table B.101 (line 50, page 142, September, 2023). The total private savings stands at $154.281 trillion. It was at $48 trillion in 2009. The "national debt to the penny" on November 9, 2023 stands at $33,700,702,394,486.03.  


       A Wealth Tax     
The part of the debt held by the public is $26.6 trillion, the national income in 2023 Q2 is $21.8 trillion. The federal budget expenses for 2023 will be $6.3 trillion, and the deficit is projected at $1.56 trillion, about 1% of total savings. Since 2009 wealth has increased by $106 trillion or $7.5 trillion per year. Obviously a modest wealth tax could balance the budget and pay down the debt rapidly. Bernie Sanders proposed a modest wealth tax in 2020, it would bring in $4.3 trillion over 10 years, or $435 billion per year. Adjusting to inflation it now would equal about $500 billion per year. A wealth tax of $500 billion is a 0.3% yearly tax on wealth, a very small tax (500 divided by 151000 = 0.3). Thinking more radically, we might tax wealth to fund the entire federal budget until the ratio of wealth to annual income came into the range of the 1950 to 1995 norm. Not likely, but a valid goal to think about.

To recap-- wealth has exploded. 
In fact, if we reduced the total wealth figure down to its historical norm, 520% of "disposable personal income", we would have about $45 to $60 trillion less wealth. I judge this to be hoarded wealth, and it should be reduced and put to use. This would improve the economy because "reducing the wealth" would transfer the wealth into actual tangible goods distributed to the lower earning 90%. But that would be socialism, and we only permit socialism for the wealthy. 
The Sanders' wealth tax amounts to 0.3% per year. Reducing wealth until the ratio returned to its historical norm would add $45 to $60 trillion to the U.S. Treasury, enough to fund the entire federal spending for 10 years. This tax would be broadly supported by the public. My conclusion is that finding the optimum, correct and sensible income and wealth distribution profiles are imperative and inseparable to a healthy economy.   That thought is worthy of a book, and it is eminently intuitive.   
 
Not all government spending proceeds from Congress and the President. The Federal Reserve buys back Federal Treasury Bonds, owns them as assets; here is the graph: 
Note that it bought them in emergencies such as the financial crisis of 2008 and then the crisis instigated by the Covid crisis. It ensures that banks have enough reserves to weather the economic storm. It prints money out of thin air and distributes it to banks, upon which the banks do what? Mostly place the money in other financial assets, thus boosting the value of the financial assets. Socialism for the rich. That's my theory, I have to admit I know little about this. Now I will find a graph of the rise in value of the S&P 500 since 2009:-- From Yahoo Finance, it shows a 5 fold increase since January 2009 to November 2023. 

Comparing Growth Rates -- 
     Financial Assets, Real Disposable Income Per Capita, and Wages 
1969 to 2024
Total Financial Assets (inflation adjusted) in 55 years increased by 8.9 times.
Real disposable income increased by 2.7 times.
Weekly wage income decreased by 0.1%.
 
1996 to 2024
The financial assets increased by 150%, as this Federal Reserve graph shows, below.
Real disposable income per capita increased by 50% times. 
And "average weekly earnings" for nonsupervisory workers increased by 24%. And the cost of rental apartments increased by 66% (see here and adjust for inflation here). 

2009 Q1 to 2024
After the Great Recession financial assets increased by 93% since Q1 2009. 
The "Real disposable income per capita" increased by 26%. 
Inflation adjusted wages for nonsupervisory workers increased by 10%. 
The pattern is clear -- wages never keep up with average income or financial assets.

Below is "Domestic Financial Sectors: Total Financial Assets, Level (in current dollars, not inflation adjusted). -- 



And also to bolster my case, a graph of the "median sales price of existing homes::
The cost of a home, the median sales price, was $222,200 in 1969 (adjusting for inflation), and today the median price is $431,000. Wages have not grown at all, but the price of a house has almost doubled. How is it that the percentage of homeowners or mortgage holders has not decreased significantly? It has increased from 63% to 66%, see here.  I can't explain it. Median household income in 1969 was $75,679, adjusting for inflation (see here). In 2022 it was $74,580, a decrease of $1,099 or 1.4%. Again, the economy has grown by 153% on a per capita basis, but the median household income is 1% lower. How could this be?  Question: Is this damaging the economy? Does the "economy" work only for the wealthy? The Economic Policy Institute wrote a long article with 9 charts in 2015, it's worth looking at. 

William Lazonick's Research on Corporate Profits and Greed      

Instead of sharing the prosperity with workers or investing in innovative improvements, American corporations are bleeding their own organizations for the wealth they can extract. The victim is the U.S. population. Lazonick's 2020 book is titled "Predatory Value Extraction". We need a method to stop the bleeding and to distribute the rewards of work to all workers. . 
Requiring the largest employers to share their profits with workers is a natural response to this disaster.  (Another chart can been seen here.)

 The U.S. Census reports on business firm sizes; Wm. Lazonick (on page 6 and 7, here) reports that in "2017 some 2,156 firms with five thousand or more employees in the United States, with an average of 20,859 people on the payroll, accounted for 35.0 percent of all business-sector employees . . ." These 5,000-plus employee corporations are the ones I would target to disperse half their profits to workers.  Let's say they create half of all nonfinancial corporate profits, about $1.132 trillion. Then each of the 64 million nonsupervisory workers, 40% of all workers, would receive around $9,000 in added pay each year. (I took the annualized pre-tax income for nonfinancial corporations, found on page 18, here, the Fed's Flow of Funds report.) But I think the details could be easily worked out. This policy would in turn add pressure for other employers to raise the wages of their employees. Therefore about 134 million workers would see the benefit.  

The RealTime Inequality web page, created by economists at Univ. of California, Berkeley, shows that an income shift of 15.4% of total national income has happened between 1976 and 2023. That's $3.4 trillion that once went to the lower-earning 90% now goes to the top 10%. If that $3.4 tr. were restored to the 90%, then every household, 117 million, in the 90% would receive $29,000 more income. The lower 90% in 1976 received 62%, now it's 48%; the top 10% received 38%, now it's 53% (factor or market income, pre-tax). The average household income is $165,000 (Fed's Flow of Funds' report - page 10, line 1), but half of households earn less than half, half earn less than $74,580 in 2022. The average household income for the lower 50% is about $40,000 (see here). The average for the lower 50% is about 1 seventh the average for the higher 50%. That may seem incredible, but in my earlier essay I show that income distribution of 53% going to the top 10%, and 47% going to the lower 90%, the 1 to 7 ratio is accurate. The U.S. Gini for income inequality is above all OECD nations except Mexico and Turkey. And "Our World in Data" also shows income Gini higher than other developed countries. The median wage income in the U.S. was $37,587 for 2021, shows the Social Security report on wages. The average for the lower half is around $17,000, and 30% of all workers earn below $20,000/year. The total wage earnings for the lower half is less than 7% of the national income. Wages were higher for "nonsupervisory workers" in 1969 than in 2023. And as Lazonick cites, 69% of workers in Urban locations are living "paycheck to paycheck". --- A mandatory sharing of profits is needed to quickly change this crippling malfunction.

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Lazonick in his top paragraph links to six studies showing the fragility of working America. For instance, one shows that 61% of U.S. adults are living paycheck to paycheck, and 69% in urban areas. That paragraph is a good reference. A report he sources is from Oxfam America, The Crisis of Low Wages in the U.S.. If any reader gets this far in this essay, some other week or month later he or she may climb the mountain of the Oxfam report. 

Writing for In These Times magazine, Colleen Boyle claims and proves that "In  a Single year, $1.78 trillion Was Taken from the Working Class".  Boyle claims, "In 2017 alone, then, the average worker lost $17,385 — because wages have not kept up with productivity."

In a two worker family that would mean an added $35,000 per year. 

I am going to leave this as is, short, to the point. When I wrote "short", months ago, it was short. The posts that predate this long essay mostly repeat the details I've stuffed into this essay.  

An excellent source of Facts on Inequality can be found here at Inequality.org. They offer an informative weekly newsletter also. Marjorie Kelly is featured in the newsletter of September 25, 2023. The Prosperity Now Scorecard also details state by state the disparities of income, wealth and home ownership. 

I just discovered a few excellent articles at Common Dreams: Tim Koechlin has written about a dozen articles, the last echoes my own views. And I enjoyed this one by Bruce Boccardy; he also has published 12 articles, most recent was 10/29/23. 






  

Sunday, September 10, 2023

This posting is for Marjorie Kelly, author of Wealth Supremacy, to be released in September 2023, a message for M.K.. I am copying a comment I recently placed to a Michael Roberts' article

ADDENDUM: 1% of all adults in the world own 44.5% of all personal wealth, while more than 52% have only 1.2%. 

Michael Roberts, August 24, 2023 – Global Wealth Report -- by Credit Suisse Bank  -- His article reviewed the recent publication of this year's wealth report.

Here's my comment, with some lengthening: 

I fish around in the (Credit Suisse, 2023) Databook that accompanies the main report. (Search toward the bottom of the C.S. web page.) Just now I found that between year 2000 and 2022 the total wealth of China has grown by 12.6 times, and the average for the world wealth total shows it grew by almost 3 times. (page 117) The wealth for North America stalled between 2005 and 2010 due to the Great Recession, and since 2009 wealth doubled, shows the CSB Global Wealth report. In contrast the Fed’s Flow of Funds shows that wealth (total household net worth) was $48 trillion in Jan. 2009, and in early 2022 it was $150 trillion -- it tripled. Adjusting for inflation private wealth still grew by 140%, a multiple of 2.4. In the same 13 years real GDP per capita in the U.S. grew by 20% (Fed’s FRED graph). But average weekly earnings for 80% of workers, the nonsupervisory workers, went up by just 10%, in constant 2012 dollars. The growth in wages is half the rate of per capita GDP growth, and much slower than total wealth growth. This is common for wages to lag way behind over all growth. In fact I just looked up how much the total GDP per capita went up since 1969; it went up 150%. And somewhat unbelievably, "weekly earnings of production and nonsupervisory workers" went down by 2.9%, call it 3%. (And see here, also) In the last 54 years weekly income, adjusted for inflation, fell, it is actually lower, even though the entire output/capita has increased by a multiple of 2.5!!!! As most know, the S&P 500 went up since Jan. 2009 to Dec. 2021 by about 6 times. (from 700 to 4300). If I had $1 million in an index fund, in 14 years it would be worth $6 million, and subtract expected and moderate living expenses (about $70,000 per year), I'd still be about $5 million wealthier. The point is that something strange is happening to the economy when wealth grows so much faster than income. And something equally weird when wage income goes down in 54 years.  

Just for fun, I'll look up total U.S. savings during January 2009 to July 2023, it's at the BEA.gov site, Table 2.1, line 34 --- total is $16.5422 trillion. This is a mental challenge: apparently American households set aside $16.5 trillion over the past 13 years, but their total net worth increased by about $100 trillion. How do we explain that? How do you make $16 grow to $100? How also do we account for Wm. Lazonick's finding that the nation's biggest corporations devoted over 90% of their profits to stock buybacks and dividends, and many even borrowed (went into debt) to place their additional funds into the stock market with buybacks? They calculated (speculated) that wealth was growing at an accentuated pace. You or I could make more money without lifting a finger than by working, especially if corporate profits continued to grow steadily. And lately nonfinancial corporate profits have increased by over 100% in 2.5 years (see the Flow of Funds report, page 18, line 1). From 2019 to Q2 2022, pre-tax profits increased from $1,235 billion to $2,507 billion, an increase of 103%. Not good for low-income families. The most recent Flow of Funds shows that total household net worth (on page 4) grew by $50.078 trillion in 5 years since 2018, from $104.204 tr. to $154.282 trillion, a 48% increase in 5 years. Each adult is worth $617,000, and each household is worth $1,160,000, on average. Does that make anyone reading this feel wealthy or feel lost because their net worth really went no where over the past 5 years. The lower-saving 50% are worth about $8,500 per adult. That's better than being in debt.     

I took the data from RealTime Inequality, they have graphs for the distribution of income, and another for wealth. See my next post/essay for many graphs from RealTime Inequality.

For Wealth: 

The most up-to-date shows the lower 50% of US adults own an average of $8,500, the group between 50% and 90% own $383K, the 90% to 98% own $2 M, the last 1% own $18M.  

Since 1976, the wealth share for the top 1% grew from 22% to 35%. The top 10% own 74%. It gets too loaded with numbers. With the income graph, not wealth, it shows an income shift of 15.4%, which amounts to $3.4 trillion that once was earned by the lower 90% is now earned by the top 10%. The top 10% earned in 1976 38%, now it's 53%; the lower 90% earned 62%, now it's 47%. If we had the same distribution ratio as 1976, each household in the lower 90% would have $29,000 more income each year. It’s shocking. That’s my essay below.  

This RealTime Inequality graph shows the wealth share of the top 1%, next 9%, the 50% to 90% group, and the lower 50% at the bottom. Notice the red line that goes from 22% to 35%. 

                    


I created a mental picture to describe wealth -- take the lower 50% of Americans, give them the height of a 1 inch stone; then take the next 40% (from to 50% to 90%) and give them the height of a bicycle; then take the next 9%, give them the height of a 2 story building or 2 basketball hoops; then take the last 1% and give it the height of a 20 story building.

That's how wealth is distributed in the U.S. -- a Stone, a bicycle, a 2 story building, a 20 story building. That simple. 

Added, 8.26.23

The other facts that come from the world wealth pyramid at Credit Suisse, page 21, not the Databook: 

the top 1.1% own on average $16.8 million, and 47.8% of global wealth. The next 12% average net worth is $193,753 and 38.1% of global wealth. The next 34.4% net worth averages $33,512 and 13% of global wealth. And the majority 52.5% average $1,935 per adult and 1.1% of global wealth. (This is all my calculation with $454 trillion being the sum of all world wealth). The last group owns between $1 and $10,000, meaning a good number own less than $500. This is a group portrait of a primitive group of humans. The ratio is from the bottom: $1, then $17, then $100, then $8,682

That's an inverted pyramid -- I wish I could draw it. 

The median wealth per adult for the whole world is $8,654 (page 138). But the average is $84,718(on page 138, Databook). On page 138 you see that Belgium wins the prize for most equally shared wealth, the median is pretty high, just under $250,000, and the average is over $350,000., and (page 144) the Belgium top 10% own just 43% of all wealth, compared to 74% in the U.S.. and 81.1% in Russia. Cell phones are very popular, no matter the wealth level. So are eskimo pies, I'm sure. An overview of wealth enables people to see the great potential that is unrealized. 

We might ask, why can't the median wealth owned per adult be about half the average, about $42,000? What would the world gain, and what would it lose? Who is in control, and who should be in control? In China wealth per adult grew (2000 to 2022) from $6,754 to $85,234, multiple of 12.6; with a median wealth of $27,273 in 2022, (Databook, page 138). In Turkey (2000 to 2022), like China, it was $6,555, and in 2022 $17,775, a multiple of 2.7, and a median wealth of $10,433. Again, the global adult wealth average is $84,718 (page 138 Databook). 

The goal for the world might be to increase net wealth for most who don't have it; not only private wealth but public wealth as well. A broadly shared ethos would be required to make progress. A criteria for determining excess hoarded wealth would be needed. The ethos of maximizing personal wealth would have to be discarded.     



Friday, May 12, 2023

        Income Growth for the Rich, Stagnation for the Majority,  

                                                   from 1976 to 2023                      

                    (data and graphs from RealTime Inequality -- Factor Income) 

Since 1976 a shift of 15.4% of all national income share has increased the incomes of the top ten percent of households. (See Realtime Inequality, Income, Factor Income, Households, Share of Total Income.) This shift represents $3.4 trillion that once went to the lower-earning 90%. If the economy were to return to 1976 distribution ratio each and every household of the 117 million households in the lower 90% would see an income gain of about $29,000, and poverty would be eliminated. 

The household at the

20th percentile could earn $57,000, not $28,000

the 40th percentile could earn $84,000, not $55,000 

The median household income would be around $100,000, not $71,000

the 60th could earn $119K, not $90K 

the 80th could earn $178K, not $149K.                        --- I got the household income percentiles at dqydj.com, household income percentiles. 

But that is unlikely. The snap-shot picture of this period shows that wage growth froze for the 80% of workers who are "nonsupervisory workers", and government social benefit transfers increased, particularly Medicaid, Medicare, Social Security, and so on. Yet the social benefit transfers only filled about a third of the income loss experienced by the majority 90 percent.   

Economic growth has rewarded only a fraction of U.S. households. The average annual household income is over $165,000, yet the majority of households have incomes below $71,000.(Total national income is $22.046 trillion, page 10 of Fed's Flow of Funds report, March 2023; total households is 131 million, U.S. Census, hence the $165,000 average for all households.) In the U.S. the average height for all humans is 12 feet tall, yet the majority of people are under 6 foot tall -- a mental picture of our inequality. There are a few enormous giants and many sickly midgets --- the U.S. economy is not well. 

         I am posting three graphs: the first shows the rate of income growth since 1976 (adults, factor income, age 20+), 

the second shows the dollar amount of growth, and 

the third shows the growth in household costs and the non-growth of wage income. The near-incredible disparities show a broken economy. The cost of living has increased in certain areas including health care, housing, education, childcare, and retirement savings, but wage income growth has not matched rising costs. See the third graph below.

The above shows 

  Rate of income growth since 1976  for four groups, top 1%, the 90 to 98 percentile group, the 50 to 90th group, and the lower-earning 50% group, and the average for all in white: 

                        

The above shows 

 Income growth in "Real dollars"  for the same four groups. 

              Real Income in 1976    Real Income 2023    Income Growth since 1976   Gain

Top 1% ----         $487,900                  $1,900,000                   282.5%                  $1,400,000

Next 9% ----        $124,100                    $269,000                    117.2%                    $144,900

50% to 90%  --      $57,600                      $92,100                      59.8%                      $34,500  

Lower 50%  ---      $15,700                      $18,400                     18.2%                         $2,700  

For all adults         $46,900                       $88,800                     89.2%                      $41,900

The next graph below shows the rise in prices for healthcare, school and childcare, and the flat line of "workers' income" ("Employed full time: median real weekly earnings, wage and salary workers, age 16 and over")  (an edited graph from the Fed's FRED series). I could not find a "real" housing sales price graph, but that is also a major increase in family expenditures with stagnant incomes. But I did something clever: I found "median sales price of houses sold" and the "average weekly earnings for . . . nonsupervisory workers" for two years, Jan. 1976 and Jan. 2023. I found that the house bought in 1976 cost 4.4 times the annual earnings of the NS worker, and in 2023 it cost 8.5 times his or her average yearly income. There are a combination of reasons that the rate of home-ownership has not slipped downwards, (it was 64.6% in Jan 1976, and in Jan. 2023 was 66.0%) but undoubtedly it now requires a greater income sacrifice. 

When the income for half the families and households has barely risen since 1976, how might these expenses be dealt with? The top red line is healthcare, the middle line is tuition, school and childcare, and the lower line the stagnant wages for wage and salary workers, over 80% of all workers, since 1976. 

______________________________________________________________


The above graph compares prices to income, from the OECD report (page 78). The median household income increases by 23% (though the Fed's FRED graph shows an increase of 17%), housing costs by 70%. Another factor to consider is brought out in the report about women joining the workforce and contributing their incomes to the family budget. ". . . the average middle class couple works 600 hours more per year than in 1975". Without women joining the work force there would have been no gain, as the authors state (1979 to 2013), "In middle-class families, the average annual income grew by $8,984. But, like low-income families, this change was also entirely due to women’s added hours and earnings."  
And between 1979 and 2013 the following list of changes: the "Real Gross Domestic Product per capita" increases by 34%. As usual, the real median income increases 6% (see here, page 23), at a sixth  the rate of the per capita GDP, 34%. And to confuse you a little more, the "average weekly earnings for production and nonsupervisory workers" (80% of the workers) between 1979 and 2013 went down 7%. And "real median earnings" for the same 80% went down 1%. And what happened to wealth (total household net worth)? It went up by 181%. Scratch your head. Makes you wonder where the rest of the money went. 
____________________________________________________________________________________


The source is the Economic Policy Institute. It shows the separation in 1979, since then productivity has risen almost 4 times faster than typical worker wage income. The wages of the typical worker would be 40% higher had they tracked the productivity growth. A family income 40% higher than the median household income is just under $100,000 -- a gain from $71,000 to $100,000. -- $29,000.  


One more graph showing rising inequality and lower union participation rates, or density: 
Same story, in 1976 about 33% of income goes to the top 10%, but in 2007 50% goes to top 10%, a shift of 17%. The graph originates from a 2012 report from the Economic Policy Institute, author Colin Gordon, professor of history at University of Iowa. It's a video/graph with narration. 

  Rising Costs and Inflation  

 An article at "The Balance" shows that the cost of health care per capita in 1976 was (in real dollars) $3,178 and in 2020 was $12,530. The Federal Reserve graph for  Median House Sales Price shows the "real" cost in 1976 at $232,448 and at $436,800 in 2023, a rise of 88%; in the year and a half between Q2 2020 to Q4 2022 it jumped 48% (from $322,600 to $479,500). The cost of "Tuition, Other School Fees, and Childcare" rose in "real dollars" in 1978 from $277 to $831, tripling in cost, in 2023. Yet, the price of food stayed  almost identical 1976 to 2021 (it was about 2% cheaper), but between April 2021 to April 2023 food  costs have risen by almost 18% (17.7%). 

The inflation story is not well understood. Corporate profits have gouged the public. 

Nonfinancial corporate profits rise by 103% in 2.5 years 
Retail Trade Profits Double, up 100%, in two years, how is it possible?
The Federal Reserve's Flow of Funds report of June 2023 shows (page 18, line 1, Pretax profits) a 103% rise in profits from 2019 to Q2 2022. Profits for 2019 stood at $1,235.2 billion, and in Q2 2022 at $2,507 billion, up 103%. Nonfinancial corporations made $1.271 trillion more profits in Q2 2022, and that comes to
                   an added expense of $9,708 to every U.S. household.   
The official 2021 median household income was $70,784, so obviously most people are struggling with the added $9,700 of expenses that have gone directly from the family budget into corporate profits. Later on I have quoted results from the U.S. Census Pulse Surveys showing that over 80% families with medium to lower incomes are struggling.   

Wages grew by 2.9% in chained 1984 dollars, in comparison. 
The above graph shows the great surge in "average weekly earnings of production and nonsupervisory workers", which receded as the Covid epidemic receded and employment levels returned to normal. Unfortunately for 80% of the workers who are "nonsupervisory" their incomes did not keep up with the continued surge in corporate price hikes and profits.   

The Bureau of Economic Analysis, Department of Commerce, also shows similar data, see BEA.gov. 
The following graph shows the profits for just "Retail trade" over two years, a doubling of profits, from 2019 to 2021, and holding steady in 2022. Profits in 2019 were $155.6 billion, and in 2021 were $311.3 billion -- a little more than double. (From Table 6.16D)The graph shows years 2014 to 2022. Have average wages doubled in the past 2 years? No, in fact the Real median household income fell from $72,808 to $70,784 from 2019 to 2021. A basket of goods costing $100 in December 2019 cost $118.05 in April 2023, total inflation devaluation of 18.05%. Incomes did not keep up with inflation.  
                                    

The graph originates from BEA.gov (Bureau of Economic Analysis, Department of Commerce), Table 6.16D, Interactive Tables. 

All corporate profits except financial corporations rise by 78.8% over three years  
A profit of $100 in 2019 is now a profit of almost $180 in 2021 and 2022 -- for all nonfinancial corporations. 

"Predatory Value Extraction: How the Looting of the Business Corporation Became the US Norm and How Sustainable Prosperity Can Be Restored"

 
William Lazonick's most recent book title summarizes the mindset of U.S. corporations. 
Vultures are feasting on the value of their own corporations and on the U.S. public as well.
Strong words, but the facts reflect this practice. 
There are no longer "supply bottlenecks" depressing the supply of products which drive up the prices. High prices reflect a coordinated value extraction by companies. 

On Table 10, line 13, of this May 2023 BEA report, nonfinancial corporate profits are at $$2.2412 trillion, while 3 years prior on this BEA report for 2019 they were at $1.2080 trillion -- indicating a gain of  85.5%. Profits peaked at 89% higher in Q3 2022 and have come down a little. Profits tend to fall when material and labor costs rise -- it's obvious. Mark-ups is the only reasonable explanation, as the essay by Mike Konczal and Niko Lusiani at the Roosevelt Institute have argued in their essay "Prices, Profits and Power: An Analysis of 2021 Firm-Level Markups". An added $8,100 in expenses per household is the effect of these price gouging practices.  
 
In three years profits are 78.8% to 89% higher for all corporations, except financial corporations, is the finding of the BEA graphs and data. How can all corporations increase profits by 25% per year for 3 straight years when the costs of everything are rising due to record-breaking inflation? If a corporation pays more for materials and labor expenses, then profits tend to fall. Rising costs of everything decrease profits, make it far more difficult to earn a profit. The following graph shows, "Pre-tax profits increased from $1.236.7 trillion to $2.211.7 trillion, by $975 billion, or by 78.8%, which also adds $7,442 per household to family expenses." I took this sentence from my essay of January, 2023. The numbers originate from the Bureau of Economic Analysis, Table 6.16D (BEA.gov). Over a three year period, 2019 to 2022, "domestic nonfinancial corporate profits" increased by $975 billion, or by 78%, a hefty expense ($7,442) to the ordinary families of America. This is the graph:

 


A scholarly paper at PERI by Isabella Weber and Evan Wasner argues that "In contrast, we argue that the US COVID-19 inflation is predominantly a sellers’ inflation that derives from microeconomic origins, namely the ability of firms with market power to hike prices. Such firms are price makers, but they only engage in price hikes if they expect their competitors to do the same."
In an inflationary economy, profits are more difficult because businesses pay more for input costs such as labor and materials. Consumers with sub-inflation wage gains buy less products as their dollars buy less. This cuts into corporate profits. Excess profits are possible only by price mark-ups in excess of already high costs, or by selling far more which did not happen. This graph above indicates a strange condition of ill-health in the U.S. economy that effects negatively the poorest population in the U.S. 
The next graph, from the BEA, shows the track of personal consumption (in billions of dollars from 2010 to June of 2023). The question is: Did personal consumption drive inflation? 



The above shows personal consumption expenditures over 13 years. The spending trajectory was disrupted for 13 months, as the dip clearly shows. By March of 2021, when the vaccine was being disseminated, spending returned to normal. The unemployment rate in March 2021 was still high at 6.6%, and the employment to population rate also had not recovered, for ages 25 to 54 it was down from 80.5% to 76.9%. But personal consumption resumed its normal course. Was consumption driving inflation? I don't see it. 
 
I have an essay on inflation here. Another economist, Servass Storm, has contributed his assessment and he summarizes it saying, "Two-thirds of the U.S. profit share growth reported in Table 1 can thus be attributed to corporate profiteering. . . .  The increase in the profit markup by U.S. firms explains the remaining (almost) two-thirds of U.S. profit share growth during 2020-2022 (as was already clear from Figure 5)."


 The Census's almost monthly Pulse Survey  -- People are Stressed  
Yet, the U.S. Census Household Pulse Survey, of April 10, 2023, shows 39% of those who responded indicated "somewhat" or "very difficult" paying "normal household expenses" (Household Spending, Table 1). This is almost identical to the ALICE report from United Way charity that states 41% of adults experience hardship or poverty. The Pulse survey further states that 75% of all answered "moderately" or "very stressful" to "level of stress caused by increase in prices". (See Household Spending, Table 4) Among the 60% of U.S. adults with household incomes below $75,000  80% to 89% indicate "moderate" or "very stressful" level of stress

The worst news from the Pulse Survey comes out of Health Table 2 which asks about "Frequency of feeling down, depressed, or hopeless" in the last two weeks; some 64% report either "several days" (25%), or "more than half the days" (17%) or "nearly every day" (22%) -- for  a total of 64% who suffer this hopeless depression. Those with incomes above $200,000 had a 51% depression rate, those with incomes below $25,000 had a 70% rate. Therefore, feeling "down, depressed, or hopeless" tracks income level and is more common than joyful, carefree or blithe. How do you feel? Blithe, and humming with joy? I hope you're having a good day. Maybe you should take a break from reading depressing news and relax? The universe is burgeoning with prem energy, didn't you know? Prem means "love". We should all bask in this love, if we can. The Pulse Surveys are under-reported and depressing. This most recent one was #56 since 2020 when they began. The Center for Budget and Policy Priorities carried several articles during the pandemic.  


Nine Households earn $1, and the Tenth Household earns $10 
The Great Depression was caused by inequality. All the banks were shut down on the day FDR was inaugurated. Capitalism without banks is impossible. "Death bed" may be the appropriate description.

The Great Depression was caused by high inequality. There are other important factors, but a general malaise of purchasing power was a large factor. This was argued by the head of the Federal Reserve, Marriner Eccles, and also John Maynard Keynes. Eccles said "a giant suction pump" had stripped purchasing power from the majority of society, they could not buy the output of goods that they produced, and that collapsed the economy. Keynes said as much in his January 1933 "Open Letter" to FDR. He urged, "The stimulation of output by increasing aggregate purchasing power is the right way to get prices up; and not the other way round." That is, government employment creates income which will raise the "aggregate purchasing power". 
Federal spending directed at "direct job creation" in the WPA and CCC and PWA increased employment. As a result consumer purchasing revived, and corporate profitability was resurrected, and that brought us out of the Great Depression. Read the article here by Marshall Auerbach, the unemployment rate fell from 25% to 9.6% in 4 years, 1933 to 1937, caused by public employment. FDR won the 1937 election with 98.5% of the electoral votes and 60.8% of the popular votes. The economist Daniel Alpert writes that we need such a program of fiscal boosting today. The web page for the National Jobs for All Coalition has been making the case for "sustained full employment" for decades, and my recent post explains the campaign for a minimum wage of $21.50, that post immediately follows this one.   

The U.S. economy can be portrayed simply as 10 workers together earning $19; the lower-earning 9 each receive $1 and the last worker, #10, receives $10, a $1 for 9 and a $10 for 1 ratio. The top-earning #10 earns 53% of all income (divide 10 by 19 = 53%). The other #s 1 to 9 receive $1 each (divide 9 by 19 = 47%). Nine people earn a buck, the last worker earns ten bucks. This is a broken economy, no way around it. 

Here's the graph from RealTime Inequality showing "Income Share" for January, 2023:
                       


As I did above, I'll compare the 1976 income shares with the 2023 shares:

                       Income share 1976       in 2023               shift
Top 1%                    11.2%                  22.9%               11.7%   Top ten% earn 53.1%  
Next 9%                  26.4%                 30.2%                 3.8%    Top ten% gained 15.5%    
50 to 90%                50.4%                 39.1%              -11.3%    Lower 90% earn 47.0%  
lower 50%               12.0%                   7.9%                -4.1%    Lower 90% lost 15.4%     

15.4% of the national income equals $3.4 trillion, or over $29,000 for every household in the lower-earning 90%, 117 million households. 

  Income ratios  
In this next section I apologize for all the numbers. Try to read the large print, skip the other stuff. I try to show the ratio between the lower 90% to the top 10%, both the pre-tax ratios and the post-tax ratios.  

 In 1976  --  Pre-tax Income Ratios 
The top 10% took in     37.6%
The lower 90% took in 62.4%
When 9 workers earn $62.4 then each earns $6.93.
The ratio 6.93 to 37.6 is also 1 to 5.43
The ratio is $1 for 9 workers and $5.43 from the tenth worker  --  1 to 5.43 

In 1976 --  Post-tax Income Ratios 
The top 10% of households take in 32.0%
The lower 90% take in                     68.0%
The ratio is $1 for 9 workers and $4.24 for the tenth worker  --  1 to 4.24  
_______________________________________________________________

In 2023  --  Pre-tax Income Ratios 
This is the crucial ratio, it shows the untouched voracious inequality we now experience. 
The top 10% of households take in 53.1%.
The lower 90% take in                    46.9%
The ratio is $1 for 9 workers and $10.07 for the tenth worker  -- 1. to 10.21 

The top tenth earns $53.10, and the lower nine together earn $46.90, and that divided among nine is $5.21 for each of the nine. (5.21 X 9 = 46.90)
The ratio 5.21 to $53.10 is the same as 1 to 10.21. 

               Nine receive $1, and the tenth receives $10.21 
                               A broken economy.    Give it some thought; this is really broken. 

In 2023 -- Post-tax Income Ratios 
The top 10% of households received 41.7%.
The lower 90% of households receive 58.3%.
When 9 workers earn $58.3, then each earns $6.48.
The ratio 6.48 to 41.7 is 1 to 6.43. 
The ratio is $1 for 9 workers and 6.43 for the tenth worker   --  1. to 6.43 

The 1976 pre-tax income ratio is 1 to 5.43, it is reduced by taxes to 1 to 4.24. 
The 2023 pre-tax income ratio is 1 to 10.21, it is reduced by taxes to 1 to 6.43.

The inequality of 1976 was reduced by 22%, about a fifth. 
The 2023 reduction is 37%. There were more social programs in 2023 to balance the loss of income for the lower 90%. My snapshot view is that the lower 90% lost 15% of national income, but this was compensated by an increase that made the loss about 10% in the post-tax picture. I would argue that seniors benefited more than other populations. 

The above compares "factor income" (which is earned or market income) with "post-tax" income. 
Post-tax and post-transfer (for social benefit programs) income ratios today are not $1 to $10.21 but $1 to $6.43; 
the top 10% receive 41.7%, the lower 90% receive 58.3%. 
The ratio is $1 to each in the lower 90% to $6.44 to each in the top 10% -- the post-tax ratio. 
For 2023 the "post-tax and post-transfer" ratio is $1 to $6.43

The pre-tax incomes share, in 2023, for the 10% was 53.1%, and is reduced post-tax to 41.7%.
(The lower 90% receive post-tax 58.3%, and 58.3 divided by 9 =  6.48% for each decile, and top ten percent's share of 41.7%, and 41.7 divided by 6.48 = 6.43 -- therefore 1 to 6.43 is the ratio of average post-tax income for the lower 90% to the income of the top ten percent) --- that's for 2023.
For 1976 the "post-tax and post-transfer" ratio is $1 to $4.24.   
 
The pre-tax share for the top 10 (53.1%) is reduced to a post-tax share of 41.7%, a reduction of 11.4%  -- government taxes create a transfer through social benefits programs. In essence, about a fifth (21.7%) of the top ten's income has been transferred to the lower 90% in the form of normal government services and life-support in 2023. Their pre-tax total income was about $11.7 trillion, their post-tax income was about $9.2 trillion -- a tax bill of $2.5 trillion or 21%. This 21% figure is unusual, it implies an overall effective tax rate of 21%, which is much lower than other estimates I've read. See the article Who Pays Taxes in America in 2020, from ITEP.org at the very end of article. 
 
In 1976 the top ten percent's pre-tax share of 37.6% was reduced to 32.0%, a shift of 5.6%, not a shift  of 11.4% as in 2022. This smaller  shift was permitted because the incomes for the 90% were adequate and prices were also lower in inflation adjusted dollars.  

The RAND Corporation report "Trends in Income from 1975 to 2018" states in its Abstract that,  "aggregate income for the population below the 90th percentile over this time period would have been $2.5 trillion (67 percent) higher in 2018 had income growth since 1975 remained as equitable as it was in the first two post-War decades." Let's take the income of the 45th percentile, the median of the lower 90%, and increase it by 67 percent: $62,000 becomes $103,000, an increase of $41,000. (I used the dqydj web page.) The RAND analysis is not a twin but a close relative to the RealTime Inequality analysis.

I think it very important to reflect on this last "$1 to $10.21" pre-tax ratio and compare it to the 1976 ratio of "$1 to $5.44". The quality of life would be enormously improved, no doubt. 

The average income for the top 10.6% of taxpayers is $474,745 for the 2023 year (see the table below from the Joint Committee on Taxation). The RealTime Inequality analysis shows the average for the top ten percent is $641,000. The CJT table shows that all top 10.6% earn over $200,000, but add up all their income and divide by the number reporting, 10.6% of all taxpayers, their average is $474,745. 

RealTime Inequality reports the average income for the top 10% was $641,000. This is 35% higher than the JCT figure. More important, the average income of the top 10% compared to the lower 90% is 
10.2 times higher -- it takes 10.2 taxpayer incomes to equal one in the top 10%.
The lower 90% has an average household/taxpayer income of $62,900, the top 10% has an income of $641,000 
-- the difference is a multiple of 10.2.   !!!!   
I must be trying to shout with those !!!!. 
It must be false -- perhaps a false view is more comforting. 
In 1976 the multiple was 5.4 times. I realize that I'm repeating myself, these multiples are expressed above, "pre-tax income 1 to 5.43 in 1976, and pre-tax income 1 to 10.21 in 2023. 

Social Security Report on Wage Income 
Now we might also look at the wage income report from the Social Security Administration. I will  compare the average wage income of the lower earning half of all U.S. workers with the hourly income of the top 10%. 
The SSA report shows that 30% of U.S. workers earn less than $20,000 per year. 
Their average annual income is $8,274. Not much. 
The median earnings for 168 million workers in 2021 was $37,586.03 -- not .02 or .04, but .03.

The report also shows 52% of U.S. workers have an average income of $17,544 per year. Again, not much. They earn collectively $1.552 trillion, which is about 7% of the national income of $21 trillion (for 2021). Ouch! 

U.S. Labor Force Statistics 
The U.S. labor force is confusing to me. With help from the Jobs Quality Index and the Bureau of Labor Statistics I'll explain some basics. 
How many are working in July 2023? 161 million.
The "labor force" is 167 million. So 6 million (actually 5.8 million) are not working, the unemployment rate is 3.5%.
How many work full-time? About 137 million.   
How many part-time? 26 million (26.488 million) or 16.4%.  
And to add more confounding details, 30.5% were partial year or part-time workers in 2017. 
So, on top of the roughly 17% who were part-timers is another 13% who worked only part of the year. 

How many are nonsupervisory workers working full-time? 108 million. (The Job Quality Index has also the exactly same figure as bls.gov) 
Therefore 67% of workers are full-time and nonsupervisory workers. 
Full-time nonsupervisory workers and part-timers (mostly nonsupervisory workers) together are 134 million, or 83% of all workers. 
Therefore, 108 M work full-time, and another 26.5 M work part-time, a total of 134.5 M nonsupervisory workers. 
Therefore 26.5 M are supervisory workers or self-employed, but make it 24 million because there are 2 million workers in agriculture. The self-employed can be independent contractors, carpenters, barbers, window washers, owners of restaurants, dentists, CPAs, consultants and supervisors are employed (non-independent) supervisorial managers and highly paid executives. 

My big point is that almost 60 million full-time workers and almost 26 million part-time workers, call it 86 million or 53% of all workers are earning very low incomes. The SSA report shows that 52% of workers collectively they earn less than $40,000/year and on average $17,544 per year.
Did you get that?   --- Half earn on average $17,544/year. The average household income is around $165,000 per year.  

The Job Quality Index deals only with full-time workers; it shows the lower-earning 55% earn an average of $35,300 per year. 
And the higher-earning 45% earn $69,210 per year, about double the lower-earners. 
The average for both high- and low-earners is $50,842 per year. 
Two workers earning $35,300 will have a household income of almost $71,000, near the median.  

We look at the Social Security Administration report on wage income. 
It shows for 2021 the middle worker, #84 million out of 168 million workers, earned $37,586, and the average income for all 84 million low-wage workers in the lower 50% was about $17,000. This is just above the wage income of a minimum wage worker working full-time year-round, $15,080. The average household income is $165,000 per year (remember with national income at $22.3 trillion divided by 133 million households, this equals $167,669). 

At this point, I can't handle the numbers, all I can see is that incomes for about 57% of workers are  extremely low. There are about 50 million nonsupervisory workers doing well, about $70,000 per year, and there is a portion of independent and supervisory workers also doing very well, extremely well in some cases (10% of households have incomes above $200,000). But the average for the lower half of all workers is around $17,000, and the average factor income for the lower 50% of households/taxpayers is $18,400 (RealTime Inequality) -- while the income for the upper 10% is much higher, about $475,000 (JCTaxation) or $641,000 (RealTime).  

Compare $17,000 with $474,586 or $641,000.  
        What's the ratio? --- 1 to 26 or 1 to 30. 
    Can't we do better?    
          
I'm comparing the yearly income of half of all workers with the yearly income of about a tenth of all workers, a ratio of 1 to 30. It would take 30 years for that low-wage worker in the lower half to equal the one year income of the average income in the top 10%. The average work-life is about 45 years. 

Yes, many in the lower half work part-time or just a short part of the year, or are disabled, and are very low-skilled. It's not a fair comparison. But looking at the Job Quality Index from NYU Buffalo we learn that 54% (or 59 million) of all full-time and year-round workers earn an average income of $35,015 per year (that's $16.83 per hour and $673 per week, for April 2023). That's about 59 million workers. Two such workers together earn about $71,000, just about the median household income.  

Half of U.S. workers (84 million), including part-time workers, are taking home about $17,000 per year (adding part-time with low-paying full-time workers, using the SSA wage income report) which means a pay rate of not even $8.50 per hour over a 40 hour week, compared with 10% who are earning about $228 or $295 per hour.  
Half of all workers earn $8/hour, and 10% earn $228/hour, or is it $295/hour! It makes me squirm. 

    Is the income distribution a just distribution?   
For every $1 received by an average someone in the lower 90%, the average someone in the top 10% receives $6.43 (after transfers and taxes). Shall we agree that this is not fair? 
I have a brother-in-law who worked long and hard hours designing airplanes for NASA, he earned over $150,000 per year; he deserved more than I as a public school teacher (median pay for a high school teacher is about $63,000 in 2023). But how much more? Did he deserve 6 times more than say a clerk at Home Depot or some other cheap-paying retailer? 

                 Executive Excess,     a report       

The report Executive Excess says, "In 2022, the CEO-worker pay gap at the 100 lowest-wage major companies averaged 603 to 1."    

"In 2022 Lowe's spent more than $14.1 billion on stock buybacks to enrich its executives. That's enough to give everyone of its 301,000 U.S. employees a $46,923 bonus." 
If Lowe's were owned by its workers, as a worker-owned coop, the average pay would by over $76,000. And they could still pay dividends. 
The median worker pay at Lowe's was $29,584; and at Home Depot $30,100, and at Walmart $27,136.
The CEO of Lowe's owns $108 million in stock options and received a salary above $17 million. 
Read the report, Executive Excess. 

As I mentioned earlier, in 1976 the ratios were much different,
                               a 15.4% shift of income share has happened. 
Restoring the 1976 ratio would mean a $29,000 income increase for all 117 million households in the lower-earning 90%. This would eliminate poverty and create a healthy middle class, at least. And we could do even better. 
_____________________________________________________
The same result can be culled from data at ITEP.org (once called Citizens for Tax Justice). 
For every dollar earned by some average one in the lower 80%, some average one in the higher 20% earns $8.05. I went to ITEP.org, “Who Pays Taxes in America, 2020” for their data on income distribution, found at the bottom of the report.
______________________________________________________
The same result can more or less be calculated from the May 11, 2023, release of the Congressional Joint Committee on Taxation, page 39, the table on projected income for 2023, see below: 
    
The table shows under "Share of Income" that 10.6% of all "taxpayer units" earn above $200,000, and they take in 46.3% of all income. 
I ask "What is 46.3% of $19.926? -- answer is $9.225
   and "What is 53.7% of $19.926?  -- answer is $10.70
Then divide $10.70 by 9 --           answer is $1.18 
 Nine receive $1.18, and one receives $9.22 --- the ratio is 1 to 7.8
                                   not far off from the RealTime Inq. numbers.
The CJT reports the income of 183 million "taxpayer units", and the Census reports there are 131 million households, so some households have two tax filers --- about 50 million file joint returns, that's 40% of all adults, and 37% of all households. Note the total income projected is $19.9 trillion, a little lower than the $22.2 trillion at RealTime Inequality. This $2.3 trillion difference of reported vs actual income may also indicate the lost tax revenue of $1 trillion the IRS is unable to collect.  President Trump's IRS Commissioner, Mr. Rettig, placed the shortfall at $1 trillion each year; other estimates are considerably lower. Main point: one of ten tax filers receives about $8, the other 9 out of 10 tax filers receive $1. 
This is a broken economy.  
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Wealth and Hoarding 
$100 trillion in new wealth was created over a 14 year period! 
In nominal dollars, total private wealth tripled in 14 years, from about $50 trillion to $150 trillion. 
The Flow of Funds, from the Federal Reserve, shows private wealth grew from $48 tr. to $148 trillion.
In 2022 total federal government revenue was $4.9 trillion (for comparison). 
Over 14 years the federal government collected almost $40 trillion, but none of it was from a wealth tax. 

What was the total personal income over 14 years? Total nominal income was $326,125 trillion over 14 years -- see BEA.gov, Table 2.1. And personal savings total over 14 years was $16,539 trillion, about 5.1%. (see Line 34 of Table 2.1). 
Therefore a savings of $16.5 trillion created a wealth increase of over $100 trillion. 
                                MAGIC !!!    
Saving $1 over 14 years became $6 of wealth! Putting money aside as savings or wealth was more profitable than working. This is why corporations borrow billions to buyback their own stock; their share holders profit in actual economic well-being, while the company lags in competitive productivity improvements. William Lazonick's essay about Cisco Corporation shows the looting of this company by this practice. 

Wealth growth has been astronomical in the past 14 years, January 2009 to January 2023; it has grown from a nominal $48.592 trillion (see here, page 104 from the Fed's Flow of Funds report) to $148.835 trillion (see here, page 138). Wealth has grown by over $100 trillion in 14 years.  
Adjusting for inflation, the "real" growth has been from $68.850 trillion to $148.835 trillion, 
                                                                                                              a growth of 116%. 
How much did Real GDP per capita grow in that 14 years?                              ---   23%
And how much did Real "disposable" personal income grow in that 14 years?  ---  22%  
And how much did average weekly earnings of nonsupervisory workers grow? --- 10% 

What causes inordinate wealth growth? 
Answer: The economic surplus all goes to the already wealthy. Saved money is placed in a finite pool of financial resources (U.S. and international corporate stocks and bonds, and government bonds). The assortment of valuable financial assets is much too small for the flood of money, the demand. How much did the S&P 500 grow from January 2009 to June 2023? Answer: it quadrupled; it increased from around 1100 to around 4400. Adjusting for inflation it increased by a multiple of 2.8 times, or 180%,  nearly tripling. Average weekly earnings for 80% of workers increased by 10 percent. 
  
A graph in my recent essay showed the history of corporate stock buybacks and dividends: 
The source is this 2022 essay by William Lazonick. 
Professor William Lazonick has published for more than a decade reports on great corporations distributing their profits to shareholders. In the essay of 2022 he states that 216 large corporations have remained on the S&P 500 for 38 years, 1981 to 2019. He says, "From 2017 to 2019, buybacks for the same 216 companies were 62.2 percent of net income and dividends 49.6 percent." (page 16). That means 111.8% of the net income were distributed to shareholders, either with dividends or stock buybacks. Corporations borrowed billions in order to buyback their stock, thus raising stock prices and the total value of financial assets. I'm familiar with his other reports that claim that 91% of profits for major corporations have been distributed to shareholders. His Harvard Business Review article of 2014 states, 
"The allocation of corporate profits to stock buybacks deserves much of the blame. Consider the 449 companies in the S&P 500 index that were publicly listed from 2003 through 2012. During that period those companies used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market. Dividends absorbed an additional 37% of their earnings. That left very little for investments in productive capabilities or higher incomes for employees."
That is 54% plus 37% for a total of 91% of earnings. This is the source of the stock market and financial asset surge. This article won the Harvard Business Review "Best article" award for 2014. 

The MAGIC of the wealth increase of a real 116% between 2009 and 2023 is in the corporations dispensing at least 91% of their profits to the small number of Americans who own corporate shares, or stock. A flood of dollars raised the price of a finite supply of financial assets -- wealth increased astronomically. Need I say that workers were not included in the growing wealth phenomenon. 
RealTime Inequality has the capacity to show the relative growth of wealth for the four groups I've concentrated on, the top 1%, the next 9%, the 50 to 90th percentiles, and the lower-saving 50% of households. Here's the graph: 


                       January 2009      April 2023    wealth growth        % growth
    Top 1%           14.2 mn              27.1mn          12.9 mn                   90%
    next 9%            1.7 mn                2.9 mn            1.2 mn                  70%
   50 to 90             207K                     469K               207K                  79%
lower 50%            $392                neg $152          negative                negative

During the past 14 years, the top 1% received 51% of all wealth gains; the next 9% received 23%, and the next 40% received 26%, and the lower 50% received no percent of the total wealth gains in "real" dollars. You'll have to take my word for this. I looked up "Total real wealth", and "households". It is a little imperfect because they define household in terms of 183 million tax filers, which is much different than 131 million actual households. 
Suffice it to say, the top 10% received 74% of all gains, the next 40% received 26%, and the lower 50% received zero. 
   
And for the entire period, 1976 to 2023, the graph shows even greater polarity: 
                                     
The above shows wealth growth in real dollars, 1976 to 2023. 
I looked a long time at these grafts. What I conclude is that the average wealth for the top 10% is ten times the average for the 50% to 90% group. This is too large a gap. It holds true for both 1976 and 2023. 

The above shows the growth of average "real worth" for the top 1%, the next 9%, the middle 50 to 90% group, and the lower 50%. 
Again, the top 10% takes in 75% of new wealth in the past 47 years. The top 1% takes in 40% of all, the next 9% take in 35%, the 50 to 90% group takes in 25%.
 
The share of all wealth (another graph at RealTime Ineq.) shows the top 1% grew from 24% to 38% (rounded figures)
      The next 9% had 44% in 1976, now has 36%.
       The top 10% therefore owns 74% of all wealth. (38% plus 36% = 74%)
       The middle 50 to 90% group had 32%, now has 26%. 
       The lower 50% had 0.2%, now has 0%. 
All wealth is reported at $132 trillion, different from the Flow of Funds figure of $148 trillion. 

       Unproductive Wealth   
Another consequence of extreme inequality is unspent money. When wealthy people accumulate more and more they save it in a safe place, unspent. It becomes unproductive, it buys nothing, creates nothing, and becomes a hoarded mass of wasted resources, or stacks of paper financial assets, digital or otherwise. We have more savings than ever as a percentage of annual income. The Fed's Flow of Funds displays this ratio between annual disposable personal income (DPI) and private net worth, on Table B.101 (line 50). In Q1 2022 the ratio peaked at 835.88 --- DPI is 1, wealth is 8.3588. That means 8.35 times more wealth than annual income. In 1987 the ratio was 496.2. People with very high incomes do not spend it or invest it, lately they mostly save it and watch it grow magically. And frankly, I think it is a curse on the nation. The incentives are totally screwed up.  I haven't researched all the years, but it appears we have today about 50% to 66% more savings than normal, call it $60 trillion. Out of about $150 trillion, about $60 trillion is hoarded. Isn't it time for a tax on wealth, instead of shutting down the government? 

And of course the optimal savings/annual-income ratio is a debatable ratio -- we could survive with a much smaller amount of national savings. In 2019, a normal year, federal outlays excluding Social Security were $4.2 trillion (adjusted for inflation). Call it $5 trillion -- We have almost $150 trillion in savings. What does that tell you about the "debt ceiling"? It could easily be paid with a minor tax on wealth. A tax on wealth has recently been proposed, read the next paragraph. In fiscal year 2019 the federal budget spent $3.540 trillion excluding outlays for Social Security. Therefore, 2.3% of all private savings was the sum of all federal spending excluding Social Security in 2019. Social Security is funded by a payroll tax, not a personal/household income tax. 

Even if we had a normal $90 trillion in savings we could still pay off the public national debt of $24 trillion in a blink. Donald Trump called for such a plan in 1999. Since Trump called for it, it must be wise. Veteran Congresswoman Barbara Lee, along with others, proposed recently a mild wealth tax, you can read about it at Common Dreams

Thomas Piketty on a Wealth Tax 
Interviewed on the Roosevelt Institute podcast, Piketty explained that an increase of the income tax on high incomes was not enough to effect wealth and income inequality; in the middle he says, "the problem with an income tax is that when you’re very wealthy your income is very often a ridiculously small fraction of your true economic income and of your true wealth, you can increase the tax rate on income as much as you want. But if the tax base itself is a ridiculously small fraction of the wealth, that’s not going to work. Only a wealth tax can change this."
"Ridiculously small fraction" he repeated twice; if wealth grows at $7 trillion per year over 14 years (to increase by $100 trillion) this $7 trillion dwarfs the growth of income, and distorts your  "true economic income and of your wealth". As I calculated already, the total national savings over the 14 years was $16.539 trillion (or 5.1% if all disposable 'post-tax' personal income, DPI), which is about $1.2 trillion/year. (16.539 divided by 14 years = 1.18) So the income saved is $1.2 tr., and the wealth that grows subsequentially is $7 tr. --- the income is a "ridiculously small fraction". Wealth money grew actually 6 times greater than income money. The wealth tax is a necessity. 

  

Tax Cuts Are Primarily Responsible for the Increasing Debt Ratio,

 ---- the title of an article at Center for American Progress. The introduction states
" . . . the true cause of rising debt: Tax cuts initially enacted during Republican trifectas in the past 25 years slashed taxes disproportionately for the wealthy and profitable corporations, severely reducing federal revenues.  . . . If not for the Bush tax cuts and their extensions—as well as the Trump tax cuts—revenues would be on track to keep pace with spending indefinitely, and the debt ratio (debt as a percentage of the economy) would be declining."

The Historical Tables of the U.S. budget (Table 1.3) show the federal deficit averaged 2.8% of GDP during the last 3 "budget years" of Obama (through 2017). But the average for the first 3 years of Trump's term was 4.0%, about 70% higher than Obama's 3 years, thanks to the Trump tax cuts. Then in Covid-19 year 2020 the deficit was over by 14.9%; in 2021 it was 12.3%, and in 2022 it was down to 5.5%. Is it time to close down all government spending? The economy has experienced a surge in "total household net worth", nominally tripling in 14 years (from about $50 trillion to $150 trillion); and ratio of national disposable income to wealth is at its highest, there is an excess of about $60 trillion in savings, which is about 225% of GDP. We could tax about 5% off that 225% and balance the budget. My radical solution which may make perfect sense. Congresswoman Barbara Lee agrees, she stands for me.   

If you had an emergency expense of $1,000, plus you had a savings of $500,000, would you be looking for a loan, or threatening bankruptcy? Would you just stop payinig all your bills, the way GOP Congressional reps are calling for?  

    Growth of Wealth  

Below is a graph from RealTime Inequality showing the growth of wealth for various household  groups. As we would surmise after looking at the income data, the top-earning groups had the greatest wealth growth. It shows the growth for "adults age 20+". One can also go to Credit Suisse' Global Wealth report, 2022, Databook, page 140, which shows the lower-saving 40% of U.S. adults own 0.1% of all wealth. Do the math -- this comes to $1,500 for every adult in the lower 40%. The mean average for 100% of all adults is about $580,000, and half own less than $93,000, the median (page 134). Like the average physical height of all people is about 80 feet, but for half it's less than 6 feet, and many are midgets. And on page 121 it shows the Gini coefficient (wealth inequality index) for the U.S. at 85.0 (very high); out of 39 major economies the U.S. inequality is surpassed by only 3 countries, Russia, Sweden, and South Africa.  


The above graph shows 
          real dollar wealth growth since 1976 for households (top 1%, then next 9%, then 50 to 90%, and bottom 50%). The lower-saving 50% peaked its wealth at $4,800 in October, 1989, then went negative, and in March, 2022, saw another peak of $1,500, and now is negative again. 




I've shown this graph before, above, so I'm repeating it.
The above graph
shows average wealth per household for:                  Growth since 1976
 
the top one percent, the average household owns             $26,700,000.                498%
The average for the next 9% between 90 and 98% is       $  2,900,000.                 212%
the middle 40 between 50 and 90% own                           $     476,000.                 209%
the lower 50% own                                                            $    neg. -$64          neg. 126%
The average for all households is                                      $     530,000.  (?)           278% 

The Fed's Flow of Funds report shows $147 trillion of "household net worth" and with 131 million households, the average per household is $1,122,000. The above graph shows wealth per adult (with 250 million adults), $530,000 average, (not the average for 183 million tax filers). The graph showing "Share of Total Wealth" shows 74% of wealth is held by the top 10% of households, 26% by the 40% between the 50th and 90th percentiles, and 0% for the lower 50% of U.S. households.  

Poverty hurts and income insecurity hurts. I am an economic determinist. Your income often determines the quality of your life, the safety of your environment, the life opportunities you encounter, the social group you interact with. More and more households are sliding down a slope of insecurity. This is a recipe for massive social trouble that is not easily repaired. 

RealTime Inequality is a product of economists at University of California, Berkeley. 

While I'm at it, I wish to recommend the book "Poverty, by America" authored by Matthew Desmond. It's well researched and makes me think a lot. 

__________________________________________

Bonus Speculation

Let's create the ideal distribution ratio between the lower 90% and the top 10%? 

I choose 1 to 3 ratio, post-tax. Each of the lower 9 deciles would receive $1, while each of the top decile receives $3, post-tax. $9 plus $3 = $12 total. As I've shown, the distribution in 1976 was 1 to 5.43 (pre-tax), and it was reduced to post-tax 1 to 4.24. I gave some thought to a ratio of pre-tax 1 to 4.0 and     post-tax 1 to 3.0 -- Ideal  

Nine workers would earn $1 (for $9), while the tenth would earn $3, for a total of $12;                         or 75% would be earned by the lower 90, and 25% would be earned by the top 10%. 

Universal health care, a vigorous public housing investment, a generous Earned Income Tax Credit  along with traditional expenses for the truly poor would reduce the pre-tax ratio,                                            1 to 4, to post-tax 1 to 3.  

The average income for the lower 90% would be $141,000 (with a spread from $50,000 to $230,000).   After $230,000 the top 10% would earn between $230K and $1 million. Maximum income, post-tax, would be $1 million. Picture the slope in an imaginary graph. Also note that in 1976 the average income for the top 1% was $480,977, as shown in the table below the second graphic of this essay. My "ideal" distribution profile looks much like the actual 1976 profile, except for the fact that real GDP per capita has increased by 123%. 

In an economy with a total income of $22 trillion of income (today's total found in the Flow of Funds for national income), the lower 90% would earn 75% or $16.5 trillion. And $16.5 tr. divided among 117 million is $141,000/household.  And the top 10% would earn $5.5 trillion, which would equal $420,000 per household. This is very close to a 1 to 3 ratio. Note that I am dividing the income among households, 131 million, not among "taxpayer units". This changes the outcome significantly from the idea of dividing the $22 trillion among 183 million tax filing units. But bear with me. 

 The income for each decile in the lower 90% will equal about $141,000 per household. That will be the median for the lower earning 90%, and the lowest 10% would have a minimum of $50,000 per year. The median at the 45th percentile would earn  $141,000, and the 9th decile would earn on average $230,000 -- a smooth slope from $50K to $230K for the lower 90%. I imagine a $24/hour minimum wage, which yields an annual income of $50,000 for 2080 hours of work (one year). 

Therefore the slope of the earning line for the 90% would begin at $50,000, and pass through $141,000 at the 45th percentile, and arrive at $230,000 at the 90th percentile. At that point, the 90th percentile, the slope increases from $230,000 to $1,000,000, which I arbitrarily choose as the maximum household income. Income above $1 million would be taxed at a 95% rate. The average income for the top 10% of households would be -- $5.5 trillion divided by 13.1 million -- $423,000, post-tax. The ratio is exactly 1 to 3  ---- 141K to 423K.  --     

This distribution is more fair than the present distribution,  1 to 10.21 -- pre-tax -- 2023                                                                                                  1 to 6.43 -- post-tax  -- 2023                                                                                            Ideal --  1 to 3 -- post-tax -- possible  

 RealTime Inequality shows a 2023 pre-tax income for the top 10% at pre-tax $648,000, and post-tax it's reduced to $505,000, a 22% reduction. My post-tax ideal top 10% income average is $423,000.

The $141,000 average for the lower 90% means a sizeable income gain for that group, the majority of Americans. The highest 10% earning $423,000, ideally, instead of post-tax $505,000, is still very wealthy. I've shown extensively that the top 10% today earn 15.4% more of total income (income share) in pre-tax income than in 1976 (from 37.7% in 1976 to 53.1% in 2023, a gain of 15.4%). For the lower 90% that comes to a pre-tax total loss of  $3.417 trillion, or $29,000 per household. (Reader can probably remember all this from before.) The idea of adding $70,000 to the 2022 median household income, about $71,000, would bring the median to $141K, and this is much closer to the "mean average" of $165,000 (which is $22.046 trillion divided by 131 million households). 

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A few articles supporting the corporate greed theory:                                                                                  From the Federal Reserve: How Much Have Record Corporate Profits Contributed to Recent Inflation?               From the American Prospect: A Return to Rentiership                                                            From The New Yorker: What If We're Thinking about Inflation All Wrong?

And about low wages, listen to this interview with Michael Lind, author of "Hell to Pay -- How the Suppression of Wages Is Destroying America": and read this article, here

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If you got through all that you deserve a prize -- I should mail you a tranquilizer, I should pour you a good alcoholic refreshment, and buy you a year's subscription to the Russian Ballet or any ballet troupe. And a sticker to put on your car: Tax the Rich $$$ Beaucoup Bucks. I suggest you take a pleasant walk around town. Try to forget it all. Then remember to vote.