Is Everything We Think We Know About Income Mobility Wrong?

[badlydrawnjeff.livejournal.com]

The video above was put out in February of this year, so it's not really in response to any current happenings as much as a statement of what appears to be true. Granted, I had some skepticism, and then I unrelatedly found this release:

Washington DC--The Treasury Department today released a study on income mobility of U.S. taxpayers from 1996 through 2005.

The study showed that, just as in the previous 10-year period, a majority of American taxpayers move from one income group to another over time. The study also recognizes that the dynamism of the U.S. economy significantly contributes to income mobility.

The study itself is quite illuminating - I was fairly accepting of the idea that income mobility generally doesn't happen, even if the framework exists for it, but the data appears to be completely destroying that viewpoint for me. Now, granted, the last few economic years have almost certainly slowed this, but this is new information for me, and it also puts into question about the overall stagnancy of wages - are we truly seeing stagnant wages, or are we simply seeing people replaced in income brackets as others move up?

Is everything we think we know about income mobility wrong?

Comments

[underlankers.livejournal.com]

No, we are seeing stagnant wages, and the rising gap between rich and poor calls in a lot of this data into question. If ever-smaller numbers of people have ever-more money then either those people are lying through their teeth when they say that they have that money or the social mobility does exist and it's going the other way, down, as opposed to up.

[badlydrawnjeff.livejournal.com]

No, we are seeing stagnant wages, and the rising gap between rich and poor calls in a lot of this data into question

I don't see what the latter has to do with anything - if everyone's wages are rising, some can still rise faster than others.

The common wisdom is that wages are stagnant. That does not appear to be the case according to this study - what is the issue with it?

[underlankers.livejournal.com]

Not at all. If everyone's wages are stagnant then rising prices mean as the rich continue to get richer the poor increasingly lose ability to afford even basic necessities. The other question with this is it is narrowly focused on a specific point in time when real wages have been stagnant since the 1930s, and also misses the difference between real wages and income per year.

With stagnant real wages and rising prices and continuing inflation money can rise by amount but the increase means nothing in a practical sense.

[meus-ovatio.livejournal.com]

Commenting on income mobility from 1996-2005 sort of misses the point.

[meus-ovatio.livejournal.com]

There is a lot of income mobility in bubble markets and speculative capitalism. On one end of the swing. That's the whole point, really, of the problem. The inflation of available capital through bubble markets creates a highly mobile class of workers... for six years.

Truth.

[montecristo.livejournal.com]

Of course, one shouldn't refer to it as "speculative capitalism." Such a term is not anymore illuminating than referring to "finance industry socialism." At the end of the day, it is government control over the monetary system that is the problem.

[badlydrawnjeff.livejournal.com]

It's the time the data is compiled. The linked study offers up other times as well.

[meus-ovatio.livejournal.com]

Yes, income mobility is part and parcel the game of cyclic markets.

[existentme.livejournal.com]

Lol, well played, mate.

[devil-ad-vocate.livejournal.com]

The pizza reference makes me suspect a conspiracy.

[kylinrouge.livejournal.com]

I find it funny that someone who says the other data is misleading because it's taking a snapshot of one statistic at two different points in time does the same exact thing.

[kylinrouge.livejournal.com]

I'm not sure how to link tables, but in this study the

bottom quintile is defined as under 15k in 1996 then under 19k in 2005
the second as 15k then 19k,
the third as 25k then 33k,
the median as 32k then 42k,
the third as 39k to 51k,
and the fourth (apparently before it goes to top %) as 60k then 83k.

Hate it break it to you, but the first three categories are all poor people. Live in a big city, and I would say the first 5 categories are poor people. If mobility from poverty to working poor is the great example that the poor aren't getting poorer then I don't know what to say. I guess they should feel lucky they can afford a refrigerator AND a car.

[badlydrawnjeff.livejournal.com]

$33k is poor?

I think you're just pasting my point right now, in any regard, and trying to paint it as something it's not.

Trick questions.

[montecristo.livejournal.com]

Incomes have been stagnating, unfortunately. Note that this is not the same thing as saying that people are not experiencing income mobility. One can acquire more income by changing jobs through promotion or job hunting. I suspected that the studies being cited are not using constant dollars but the study itself claims to be inflation adjusted. I am skeptical of the government's inflation calculations, designed to make government politicians look good and hide the effects of Fed money creation. The Fed has been debasing the currency like a besotted Roman emperor. THIS is what inflation is. Consumer prices are a symptom, not the disease, and government agencies and their employees and beneficiaries have a vested interest in obscuring this economic reality. I suspect that many of "the poor" are still, even at this date, moving into the middle class, but I suspect also that the success rate itself slows as we go up the income ladder.

Re: Trick questions.

[underlankers.livejournal.com]

Yes, people falling down a class is definitely social mobility....

Re: Trick questions.

[kylinrouge.livejournal.com]

Well technically it involves mobility if you're falling down.

is everything we think we know wrong?

[spaz-own-joo.livejournal.com]

I suspect when you say "we", you really mean everyone else, since none of what you've said contradicts what we all already knew that you think you know.

Re: is everything we think we know wrong?

[badlydrawnjeff.livejournal.com]

I think I made my previously-held position explicitly clear in the post.

[kylinrouge.livejournal.com]

Short term economic mobility is worthless. An important statistic is inter-generational economic mobility.

Look at table 1. 42% stayed at the lowest from the lowest. 28% moved to the second aka got a minimum wage job. 13.9% moved to the middle, the highest rung of the working class. Still blue collar. A paltry 9.9% gets to the fourth, which would be the lowest one would consider to be middle class, and that's only if you live in a rural-suburban area. In a city, that income still makes you poor as hell. Still blue collar, or at best entry-level professional. Basically, barely 15% make it to middle class.

From the second quintile, you got 17% dropping down, aka losing their minimum wage job, 33% keeping it, 26.7% getting a raise at McDonalds, and 15.1% actually graduating into the middle class, with a total of around 25% getting there or higher in total, from the status of 'having a job'.

This is seriously the best you got?

[kylinrouge.livejournal.com]

http://en.wikipedia.org/wiki/Gini_coefficient

Learn it and love it.

[allhatnocattle.livejournal.com]

The idea is that the older one gets, the more educated, the more experienced, one is compensated with higher incomes through pay raises, promotions and trading up for better jobs.

Reality is that it doesn't always work out that way.

[kylinrouge.livejournal.com]

I still can't get over these stats. Only 15% of people in adject poverty get out of that condition. Only 15%! And they think that's high. They think that's okay.

and only 25% getting out of abject poverty when they have a minimum wage job. Over a course of 10 years.

And this is supposed to be evidence that things are okay?????????

[eracerhead.livejournal.com]

The problem is that the economy has degraded to the point that it is now affecting middle class white kids in the same way it has historically affected minorities and immigrants.

Anyhow, a 2011 video using data created prior to the high tech bubble is automatically suspicious.

[enders-shadow.livejournal.com]

short answer: NO

[badlydrawnjeff.livejournal.com]

Long answer?