Interesting chart from Kevin Drum showing that if you take government help into account – Medicaid, Food Stamps, the EITC – the incomes of poor Americans have risen much more than those in the middle. From his post on his best charts of 2019.
Having your income grow by 50% or 75% sounds great, but if your income is tiny to begin with, the extra percentage is also tiny.
Income growth at the lowest levels of wealth is totally different than than the same percentage at higher levels of wealth.
Someone going from $20,000 a year to $30,000 a year doesn't compare to someone going from $200,000 a year to $300,000 - the poorer individual makes only an extra $10,000 while the rich individual makes a whopping $100,000 more. The richer individual sees ten times as much actual money added to their income, for no other reason than they started with ten times as much.
Income also doesn't exist in a vacuum. Raw growth is meaningless - you also have to consider growth compared to inflation, rising cost of living, et cetera. If your income grows by +100%, but your necessary spending also grows by +100%, you're still exactly as poor as you were previously.
And again, your overall level of income comes into play here. An individual who made $10,000 in 1980 and now makes $17,500 in 2020 is going to have also seen their cost of living rise by similar rates. But someone who made $100,000 in 1980 and makes $175,000 in 2020 is not going to have nearly the same increase in cost of living, in terms of a percentage of their income.
It's absolutely monstrous that the highest percentage gains in income have been seen among the richest individuals. They should be seeing the lowest percentages.
Income Growth is a wildly relative thing.
ReplyDeleteHaving your income grow by 50% or 75% sounds great, but if your income is tiny to begin with, the extra percentage is also tiny.
Income growth at the lowest levels of wealth is totally different than than the same percentage at higher levels of wealth.
Someone going from $20,000 a year to $30,000 a year doesn't compare to someone going from $200,000 a year to $300,000 - the poorer individual makes only an extra $10,000 while the rich individual makes a whopping $100,000 more. The richer individual sees ten times as much actual money added to their income, for no other reason than they started with ten times as much.
Income also doesn't exist in a vacuum. Raw growth is meaningless - you also have to consider growth compared to inflation, rising cost of living, et cetera. If your income grows by +100%, but your necessary spending also grows by +100%, you're still exactly as poor as you were previously.
And again, your overall level of income comes into play here. An individual who made $10,000 in 1980 and now makes $17,500 in 2020 is going to have also seen their cost of living rise by similar rates. But someone who made $100,000 in 1980 and makes $175,000 in 2020 is not going to have nearly the same increase in cost of living, in terms of a percentage of their income.
It's absolutely monstrous that the highest percentage gains in income have been seen among the richest individuals. They should be seeing the lowest percentages.