Ron Johnson thinks that Income Inequality is the American way

[muon2]

Here's a better chart in response to Ernest. This is also from the historical household income data at the US Census. I found that the top of the second quintile (40%) was the most stable in real dollars, only increasing 5% from 1969 to 2014, so I used that to compare the other quintiles. The bottom quintile remained almost unchanged compared to the second quintile during that span of years and is very close to half the second quintile.

The growth is in the upper three quintiles. The middle quintile grew about 17% compared to the bottom two quintiles. Since the bottom two quintiles had little growth in real dollars, that 17% is close to the growth in real dollars since 1967.  The fourth quintile grew at 35% compared to the bottom two quintiles, or about double the rate of the middle. The limit for the upper 5% grew at 54% compared to the bottom two quintiles, or about triple the rate of the middle. My apologies for the year sequence which looked fine until the software rendered it to a bitmap.

[muon2]

Thanks.  That definitely shows the change, tho it doesn't look as dramatic as the other graph, which is why I suspect the other was used.  It always peeves me when bad data representation is used to support a point, and it peeves me even more when it wasn't needed as is the case here.

Of course, there's still plenty of other things that could be done to massage the data, such as using a different definition of income, but at least then one is debating what should be measured, not how the resulting data is presented.

People looking for dramatic change like to show the actual dollars since the compounding effect of inflation will dominate the graph and the changes appear large. Once the result is controlled for inflation, as in my chart, more meaningful relationships can be seen. Personally I think my graph could make their case, but they would then have to dig deeper to say what had happened and what they would do to fix it.

As I noted on a similar thread on the Economics board, I think the data is quite telling. What it clearly shows is that income for unskilled and semiskilled work has lost value compared to skilled labor. I would like to see data from the first half of the twentieth century to see if the relationship was more stable during the era of heavy manufacturing and its need for semiskilled labor.

[muon2]

The data in my chart is from the Census. Here's their description of income.

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Have you now joined the artful trollers with your teacher union rant?

[muon2]

The focus on "income inequality" is misplaced; there should be a larger focus on wealth inequality and income inequality. In truth, the two cannot be separated and when economic inequality is perceived as a function of wealth and income, the problem is rendered very severe.

I agree that inequality in both wealth and income are at play here. The perceptions may also be closely linked. However, the causes are quite separate and the means to address them are also quite separate. Conflating the two tends to block solutions since it's easy to poke holes by showing how a proposal wouldn't address either the income inequality or the wealth inequality.

[muon2]

The regressivity of sales taxes can be addressed by basing rates on the type of good or service taxed. Higher income groups use some services in higher proportion than the general population. Many states do this with reduced sales taxes on food and/or clothes, but there are many other categories of retail sales and use taxes that are tracked. Systems can be made less regressive by including categories that are more often used by the wealthy (eg financial and accounting services).

One suggestion to tax wealth accumulation is to treat capital gains as income. I would modify the usual suggestion so that the capital gain only includes the gain over inflation. Then it better rewards long-term investment over short-term asset manipulation.