Sunday, June 19, 2011

income inequality: united states worse than ivory coast

Yeah, I don't post here much anymore. But today's Washington Post had an excellent article today about income inequality, based on recently-concluded research by economists based on US tax returns.

Some of the highlights: in the 1970s, the top 0.1% of earners in the US took in 2.5% of the pay. Now, that same 0.1% take in 10.4% of the total pay - they are four times better paid, while wage earners get about 9% LESS in constant dollars.

Most of that 0.1% are executives - 60%, the breakdown being about 18% at financial firms and 42% at other businesses, so it ain't just the crooks on Wall Street getting rich.

Lawyers are only 6% of that 0.1%, and athletes and media figures only 3%. So for every LeBron James or Lady Gaga out there making big bucks, there are 20 corporate executives.

The difference - James and Gaga do not get to set their own compensation levels. Executives do.

Oh and this article failed to note another issue: the massive decline in the top marginal tax rate. The increase in take-home pay for top executives is even BIGGER than indicated in this study.

In terms of the GINI coefficient (which tracks income equality), we rank way worse than other developed countries like Japan or Germany or France. In fact, according to the CIA, the US is worse than the Ivory Coast and Cameroon.

Banana republic?