2 studies suggest how much more of the wealth pie the rich take nowadays

Two studies released over the past few days both beg a simple question: what happened/happens to the money? In both cases, the answer is the same: it’s going to the wealthy.

In one study, Center for Economic and Policy Research (CEPR), a think tank that leans left, created a definition of a “good job” and then added up all the jobs that met that definition 30 years ago and all those that do today.

We should all wonder about the criteria by which CEPR determined if a job was good or not. By clever criteria selection, it’s possible to fix an argument one way or the other.

While I don’t think CPR is fixing anything with the criteria it selects, you be the judge:

  • Make at least $18.50 an hour, or $37,000 annually (the median hourly pay in 2010, which means that in 2010, exactly half of all employees made more and half made less than $18.50 an hour).
  • Get any employer-sponsored health plan, no matter how paltry, for which the employer pays some portion, no matter how small, of the premium.
  • Have an employer-sponsored pension or retirement plan.

Using these criteria, CEPR found that the share of all jobs that could be considered as “good” fell from 27.4% in 1979 to 24.6% in 2010 despite the fact that gross domestic product increased by 63% per person. Americans were being 63% more productive and yet it wasn’t leading to better compensation. In fact there was a decrease in “good” jobs.

What happened to all the money produced by the additional GDP?

The answer, of course, is that rich folk got more, as a variety of studies have shown us over the past few years. The wealthiest 1% and 5% of Americans get a bigger slice of the wage and wealth pie than 30 years ago, leaving less for the rest of us.

Where’s the money going? We could ask the same question about a recent study conducted by the nonpartisan Tax Policy Center, which found that if Mitt Romney’s proposed tax plan were enacted that it would cut the taxes of the wealthiest 5% of the population while raising taxes for everyone else.

This study, too, rests on assumptions that are open to question. The assumptions in this case fill in the blanks where Romney has been fuzzy on the details of his tax plan. But let’s assume that the highly reputable Tax Policy Center got the Romney details mostly right.   We’re left with the same question and the same answer:

What happens to the money? It’s flowing to the wealthy from everyone else.

Because they are based on assumptions, these studies prove nothing, but they certainly do suggest that over the past 30 years the wealthy have perpetrated class warfare against the rest of the country.

The study on Romney’s tax plan also indicates that the wealthy are ready to continue their assault. For 30 years, tax policy has been one of the weapons of choice in the economic war against the non-wealthy. Other weapons have included privatization of government functions, cutting of social welfare programs such as support for education, suppression of the minimum wage and anti-union policies.

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2 comments on “2 studies suggest how much more of the wealth pie the rich take nowadays
  1. Loch Ness says:

    Only 2 types of Republicans: Millionaires and suckers. Middle class and poor voters have been convinced by rich Republicans to hate others in the same boat. Meanwhile, they steal everything not nailed down.

  2. Jacob says:

    I’m afraid that you’re assessment of the studies is fundamentally flawed. There is no “wealth pie”– for this implies the amount of wealth in the world is fixed, when in fact wealth can be created. The process of taking the world’s natural resources and making them more useful for society as a whole is wealth creation, and it happens constantly.

    It’s true that of the wealth we create on a daily basis the top 5% get a disproportionally large amount. It’s true that these exceedingly rich people are only getting richer, and it’s also true that the gap between them and the bottom 5% is rising. But that doesn’t mean that anyone is falling- no one is getting poorer. The “rich” simply get richer faster than the “poor” get richer.

    The increases in wealth from the richest in society are ultimately to the benefit of all of society’s members. We know from experience that the ultra-rich are exceedingly charitable, and in this way wealth trickles down from the top to the bottom. Furthermore, for the most part, the very reason these people become wealthier is because they provide products that are superior and cheaper to what previously existed, which results in an improved quality of life for people of all income levels.

    You say you’d like me to be the judge regarding your data? How about I explain what it actually means:

    Nothing.

    You’re looking at percentages of jobs acquired by the population, which takes into account more factors than you or I have time to discuss. You’ve shown a correlation- that over time the percentage of jobs held which are “good” decreases- but haven’t the slightest ounce of evidence to prove that anything in particular caused that change. Therefore, you can’t even verify it’s an undesirable thing to occur.

    Consider for example that between the time periods of 1980 and 2010 far more young people have chosen to apply for college instead of going directly to a line of work. The jobs people apply for in college are going to be part-time, and therefore less likely to be “good.” College students will likely retain these “bad” jobs for a long portion of their college career, whereas people who enter the workforce immediately would find a “good” job more quickly.

    I’m not saying I can verify that college explains the statistics you’ve presented, but it is reasonable to assume that it contributes, even though the increase in education has been beneficial for society in numerous ways (and detrimental only in that it’s been producing more liberals.).

    In response to your criticism of Romney’s tax plan, I will take a jab at the “highly reputable” Tax Policy Center. Romney has never proposed raising taxes for anyone, and a closer look reveals: “The study, filling in the gaps, assumed that he would have to eliminate various tax breaks like mortgage-interest deductions that would result in a net tax increase for 95 percent of taxpayers.”

    It’s not what Romney *is* going to do- it’s what the “non-partisan” Tax Policy Center *assumes* he *must* do in order for his plan to “work out revenue-neutral.” I would argue that they underestimate the effects of the Laffer Curve in their assumption however- tax revenues would rise through tax cuts due to an increase in economic growth- and seeing as it’s impossible to determine exactly how it would come into effect, the study’s ability to throw out exact numbers like “a raise of $546” is as wrong as it is utterly absurd.

    I’m not contesting your sources (for the most part), but your interpretation is irreparably misconstrued.

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