How the top 5% do it?

[Senator]

Its interesting how some posters are referring to past times and how it is just "politics pure and simple". The fact is, that income inequality is rising. What most people feel were the USA's most golden economic years (1950's / 60's) was when income inequality was much less than it is now.

History doesn't always repeat, but we should learn from it. Rising inequality can lead to populist outcomes. Back from the late 1800's to early 1900's we had rising inequality and eventually this lead to the unions and social insurance systems despised by many.

So when people think, "I got mine all on my own, go get your own on your own"...you may end up being part of what creates a populist surge that will lead to new social insurance policies that will inevitably tax you.

Look at the below chart and think about it in the context of the timing of the introduction of social security, the rise and fall of trade unions, medicare etc.

I do find those income inequality statistics interesting. My personal thought is that when the social safety net becomes more and more comfortable, people get satisfied and lose the desire to achieve more. A great example of this is why people collect social security at 62, rather than wait. They have enough, so why go for anything more. It begins to exasperate the situation.

Life is like a chess game, and you are playing against life circumstances. If you can see six moves ahead, you have the ability to mitigate the risk. If you can see 10 moves ahead, you have an even better opportunity.

If you only see the next move, you are destined to lose.

 

[Letj]

I'm average height, bald at age 16, and ugly. Yep, unlucky.

It drove me to study damn hard and choose a profession requiring a lot of education. I couldn't just skate through certain jobs that require nothing but good looks.

It was OK. While the pretty boys were out partying during the week in college, getting lucky, and smoking pot, I was studying. Didn't have a choice. Who would want to party with me, the ugly duckling?

So maybe I was lucky to be ugly because it drove me to work hard. Yep. That's it! I'll take it. I was lucky.

Yeah. You were lucky. Lucky to be born healthy with a good brain and drive to succeed in a place where you can get ahead with some luck and taking advantage of opportunities.

 

[24601NoMore]

Its interesting how some posters are referring to past times and how it is just "politics pure and simple". The fact is, that income inequality is rising. <snip>

Look at the below chart and think about it in the context of the timing of the introduction of social security, the rise and fall of trade unions, medicare etc.

Well, I suppose I'm one who does believe (pretty strongly) that all of the talk that ultimately pits different socio-ecomic groups against each other with talk of "privilege" or "luck" is indeed for the most part largely driven by politics. (Psst - buddy..look how "unfair" it is that group X has more than you [leaving out the small fact they earned it]. Vote for me, and I'll even things out to be more "fair")..

That whole approach while politically a great way to buy..err, win..votes flies in the face of our entire capitalistic system. Income is paid to people based on a combination of their skills and experience, and the demand for those skills and experience in a free market. Trying to "even things out" to make for "equality" is a fools errand, as who on earth would want to be a Dr, lawyer, IT professional, etc vs. working in a far less stressful position - say, as a carpenter, cashier at Kroger, etc? Heck, if I could have worked in a surf shop, or maybe give tours down in Florida for 40 hours a week vs. having to spend decades constantly learning and improving my skills and working 80+ hour weeks to earn what I earned..and in the end have less "inequal" pay..hey, who WOULDN'T find that to be appealing?

I did notice that the chart you posted was talking about the 1% and the .5%, so not sure how that applies to the top 5% mentioned by OP and which many on this forum likely belong. And, aside from the egregious examples of CEOs and sports starts making gazillions of dollars, I personally don't see any issues with a system where pay is tied to experience and skills vs being mandated or influenced by some social policy ultimately created by politicians simply looking to buy votes so that they can either get or stay in power.

We all ultimately had a choice of the path we chose in life and what careers we wanted to pursue. Part of making that choice involves evaluating whether the pay that goes along with the position will meet your expected financial needs. I still remember, for instance, looking at estimated compensation ranges for different jobs when I was trying to decide what I wanted to be when I grew up. To this day I don't even remember where that data came from (probably from info our high school guidance counselors had available to them) but it was absolutely part of my decision process on what career path I chose..I looked at a bunch of options from being a fireman (every young lad's dream) to being a Dr..and in the end chose a totally different route. But these are the choices we all make.

 

[stepford]

Yep anyone claiming the existence of privilege in our society is just looking for another excuse to redistribute the wealth that we earned (with no help from anyone). Even worse, they probably plan to redistribute it to people who don't look like "us".

 

[CardsFan]

Just waiting for the bacon.

 

[marko]

+1
Your chess analogy is spot on! Bravo!

Life is like a chess game, and you are playing against life circumstances. If you can see six moves ahead, you have the ability to mitigate the risk. If you can see 10 moves ahead, you have an even better opportunity.

If you only see the next move, you are destined to lose.

 

[Mdlerth]

I like bacon!

Just waiting for the bacon.

Yay, bacon!

As I noted in post 119, success really comes down to hair anyway.

 

[pjigar]

And I said this, being among the few that passed such entrance exams into two desirable colleges. And I had the top grade in these two exams. Yes, the scores were published.

I was in top 100 out of 70000 who appeared in the state-wide entrance exam. I had too many friends who didn't have great memory, math skills or analytical skills but they had lot of abilities I lacked and wished I had. All those friends couldn't succeed in the education system designed to produce what I call "smart robots".

I much prefer the US system, where people can have a shot in another way. Gates and Jobs never finished college to get any degree. The same is true with many successful entrepreneurs.

Ditto. Skills can be learned but creativity must be fostered and US system fosters creativity at a very young age.

There are many reasons why the US has been leading in technology. Are Americans really smarter than people elsewhere? And why do other countries suffer brain drain to the US, when their smartest come here?

I think the sum of the parts of our country is way bigger than the whole simply because the distribution/mastery of skills and abundance of creative/entrepreneurial spirit. Brain drain always helps and I am one of those!

 

[jollystomper]

Sorry for the side track, but I wanted to tell a story where a conscientious hard worker got rewarded. If my son felt the technician job was beneath him, he would not be where he is now as a senior engineer. He overcame his bad luck of graduating into the Great Recession.

This is an important point.

Sometimes the "bad luck" in the long run turns into "good luck".

What becomes important is what one does with that "bad luck".

Earlier in this thread someone commented about me being a minority and how I probably had to work harder to succeed. Perhaps having to work harder was "bad luck" from being a minority. However...if I had not been born a minority, with the same skills and capabilities, would I have still had the same motivation to work harder than others? You never know.

My parents, rather than focus on the "bad luck" of being a minority and having to dealing prejudice and racism, instead pushed my siblings and I to focus on building our skills and capabilities as best as we could.

Sometimes, instead of having "luck", being able to deal with things that seem like "bad luck" or "failures", can be beneficial in the long run.

 

[pjigar]

This is an important point.

Sometimes the "bad luck" in the long run turns into "good luck".

What becomes important is what one does with that "bad luck".

Earlier in this thread someone commented about me being a minority and how I probably had to work harder to succeed. Perhaps having to work harder was "bad luck" from being a minority. However...if I had not been born a minority, with the same skills and capabilities, would I have still had the same motivation to work harder than others? You never know.

My parents, rather than focus on the "bad luck" of being a minority and having to dealing prejudice and racism, instead pushed my siblings and I to focus on building our skills and capabilities as best as we could.

Sometimes, instead of having "luck", being able to deal with things that seem like "bad luck" or "failures", can be beneficial in the long run.

So true. I have experienced such "bad lucks" twice that put me in high gear.
1. I almost failed in 10th grade (despite being top student throughout otherwise) only to excel big time in 12th grade which secured admission in a good engineering college.
2. I didn't find a decent job after graduation due to lack of spoken English which motivated me to immigrate to this land of opportunity.

 

[24601NoMore]

On the subject of being tall and having good hair (neither of which describe me, darn it!)..

 

[NW-Bound]

I agree that income inequality may be rising in the US. I don't think that is because of lack of opportunities. Rather, the new jobs that pay better are getting more concentrated in fewer and fewer fields, and not everyone has the knack to qualify.

A friend of my wife is an IT worker. She makes a living, but appears to be miserable all the time, and constantly worries about losing her job. I don't think she likes her job, and because she does not like it, she spends no time learning new things to improve her knowledge and skills. A lot of people pursue a technical field, but are not cut out for it. I was glad I loved my work, and I made sure that my children loved their work too. I keep telling them that they have to work to make a living, and if you hate your work the 8-hour days will be that much more miserable.

Darn. If megacorp was not like Dilbert's work place, I would still be working. I really liked what I did, and spent a lot of my own time doing work at home, or spent time in the nearby university library to do research (back before the days of the Internet).

But back on income inequality, as a society, what can be done to help people find meaningful work that pays well, and does not require them to toil physically? Some blue-collar jobs pay very well, but are looked down upon.

I don't know how the situation can be improved.

 

[24601NoMore]

I'm not sure it's the role of government or society to help people (other than those with severe mental or physical limitations) find meaningful work - especially ones that don't require them to toil physically. We have a free market system and it's up to the individual (not the government or anyone else) to determine how to best "make it" within that system.

If people choose jobs that don't pay as well as others, well..that's the choice they are making. Like any of us, they have the opportunity to learn skills that are in higher demand and then go chase those higher paying jobs if they want higher incomes. (I realize not everyone is suited to every single job - but do believe that all of us have pretty much equal opportunity to find what it is that we are good at that is in demand - and then to go work at being the best we can be at doing it, so that we reap the financial and other rewards for our efforts).

PS - I can relate to being miserable in IT..I was SO miserable (after 35+ years in the field) that I ER'd at 55. I loved my job and technology in general, but IT can be a freaking BRUTAL business in countless ways including constant fear of losing your job to cheaper (eg: offshore) resources. It's definitely not for the weak - but then, it also pays reasonably well so it like everything is a trade-off. I have a sibling that works in design for a big florist shop because she wants to (and, because she can't envision herself in an office) - and while she doesn't have anywhere near the W-2 of a typical IT worker, that's the choice she made..she's probably happier, but while I chose the income over the happiness, she chose the happiness over the income. And that's what makes our system great - we all for the most part have the choice of what we want to do.

 

[CardsFan]

But back on income inequality, as a society, what can be done to help people find meaningful work that pays well, and does not require them to toil physically? Some blue-collar jobs pay very well, but are looked down upon.

This so true, and it is a shame. I was an engineer/project manager for a megacorp. My two best friends both worked as tradesmen. One union, one non-union. Their wives worked and also took time off with the kids when they were small, as did mine. We are all retired now (though one has a hobby business), and we live almost the exact same lifestyle. We don't have expensive tastes, but we can do just about anything we want. We spend a lot of time together, and vacation together 2-3 times per year.

The union guy, and his wife have decent pensions plus SS (and some IRA money). The non-union guy has a 401k/IRA that is substantial (as well as SS for both). We have our IRA's, with SS on the come. I am pretty sure the only difference is, we will leave a larger number on table (for DS) when the time comes.

 

[daylatedollarshort]

I'm glad our adult kids understand they had a privileged upbringing and are grateful for it. They went to public schools and once at college they met kids worried about having enough money for basics like car repairs and tuition, and realized they never had to deal with those kinds of problems. Not having to scrape for every dime allowed them to do resume building club positions and volunteer work in college. One got a highly competitive job directly stemming from networking from volunteer work. If they had been poorer and had to help pay the bills more they never would have had time to do volunteer or club work.



There's quite a bit more they mention from time to time about how fortunate they have been in life due to factors related to being born into a white collar household. They are hard workers which was of course a big factor in where they are in life but they realize and are grateful for the opportunities they had not available to many of their college friends from less affluent households.

 

[jollystomper]

I'm not sure it's the role of government or society to help people (other than those with severe mental or physical limitations) find meaningful work - especially ones that don't require them to toil physically. We have a free market system and it's up to the individual (not the government or anyone else) to determine how to best "make it" within that system.

If people choose jobs that don't pay as well as others, well..that's the choice they are making. Like any of us, they have the opportunity to learn skills that are in higher demand and then go chase those higher paying jobs if they want higher incomes. (I realize not everyone is suited to every single job - but do believe that all of us have pretty much equal opportunity to find what it is that we are good at that is in demand - and then to go work at being the best we can be at doing it, so that we reap the financial and other rewards for our efforts).

Some would argue that the system has become too rigged, in favor of promoting income inequality. Competition for jobs that used to be well paying is now global, and many white collar jobs that paid well have been outsourced overseas. Not a bad thing for the receiving countries, as it in many cases has helped improve their standard of living. But, for example, even with that improved standard of living, a company can hire 3-5 workers for the cost of a single U.S. worker.

Many U.S. companies also lobby Congress for more work visas, saying they have very skilled jobs that they cannot find workers for, so need to bring them in overseas. At the same time, they are laying off workers - particularly older ones - who have those skills, or who have the ability to be quickly trained in those skills. And the market tends to boost a company's stock at the news of layoffs, as they see it as the company improving profitability.

Even for jobs that cannot be outsourced, some would sat that the education system - high school and colleges - are not focused on teaching the type of skills that would make more people competitive for good jobs. They have little incentive in that direction. While some college-business partnerships are trying to address that, I seem to hear more of colleges planning to start charging higher tuition for majors that can lead to good jobs - a way of making money off of the inequality.

And then, even if you have a good paying job... a large percentage of it will go towards paying health insurance and costs.

I am not trying to stir things up... just pointing out certain things that some feel can make "making it" in the current system more difficult than the past. There are likely other items I have not considered. I might have opinions on some of these things, but they are not answers, it is a complex undertaking.

 

[calmloki]

I've always enjoyed seeing how people treat me based on what they see and hear. Some years back I was staying at Two Bunch Palms - at the time it enjoyed a fair bit of Hollywood clientele, and sitting in one of the hot springs one night the talk was mostly of what famous actors and directors the patrons were hobnobbing with and what big movies they were working on. When I was asked what I did for a living I said I fixed toilets for a living - which was true, because owning a bunch of rentals meant having more than a passing relationship with care and repair of the porcelain thrones. It was awesome watching the circle of people ease away from me.

Earlier still in my life I was working for Mountain Bell telephone after getting out of the Navy. I was single and pumped up and full of myself for not much reason. At one point I was eating lunch next to some sub 100 IQ sweeper. I deigned to open a conversation with him - noblesse oblige - and that gentleman started talking about his child and the life he wanted to provide for the kid and why all his actions were in furtherance of that desire... well, Mr. Calmloki was right well shamed that day. The love that that menial showed was far beyond anything I'd ever offered and ever since I've tried to give respect to people first and remember that I don't know what their lives hold; what shapes them.

 

[ERD50]

Its interesting how some posters are referring to past times and how it is just "politics pure and simple". The fact is, that income inequality is rising. What most people feel were the USA's most golden economic years (1950's / 60's) was when income inequality was much less than it is now.
History doesn't always repeat, but we should learn from it. Rising inequality can lead to populist outcomes. Back from the late 1800's to early 1900's we had rising inequality and eventually this lead to the unions and social insurance systems despised by many.
So when people think, "I got mine all on my own, go get your own on your own"...you may end up being part of what creates a populist surge that will lead to new social insurance policies that will inevitably tax you.

Look at the below chart and think about it in the context of the timing of the introduction of social security, the rise and fall of trade unions, medicare etc.

Why is anyone surprised at this? And why should it be any different than what it is?

I'll try to answer the first question: it's because we aren't used to thinking in these terms, yet it is all around us. Who graduated in the top 1% - why the top 1% of course! But think of it from a different angle:

EX 1: What if we made up teams for a High School academic contest, and 1 of the teams was made up top 1% students, and 99 teams of the other 99%. Heck, to compare to these income stats, we should include the drop outs. Now wouldn't we expect that top 1% team to win way more than 1% of the games? I'd bet they'd win far more than 25% of the contests!

So shouldn't we expect them to do much better than average in the contest of 'income'? Now maybe the top 1% in income aren't represented that highly in the 1% of students, but I bet most of them have some other 1% skills.

EX 2: Baseball, Football, Basketball, Golf, etc - Aren't the players far more select than just the top 1% of the population? Can you imagine making up a professional team by selecting the top 1% from the general population? They'd get creamed!

Life is like that. Why can't we accept it? Changing it might make things much worse. I'm not a sports fan, but how many people would follow a team designed to reduce the "inequality" that we see here?

Be careful what you wish for.

And yes, I think there are people/organizations (not all political) that are trying to profit/advance from playing up his "inequality". Either by pitting one group against another, or by offering a "solution" they can profit from.

-ERD50

 

[RobbieB]

Well yeah, we have the Gatsby / Rockefeller years and the rise of the unions / automakers followed by the computer age Microsoft / Apple / Google / Facebook.

If you're low tech and not trades good luck finding a factory job. That stuff was hot in the 60's at the Detroit automakers.

Look at Detroit now.

Yeah, I'm a lucky guy. A degree EE in the automation business. I sold stuff to make hourly jobs gone. I was always busy. Never worried about losing my job. Never made a hundred grand a year. But I'm in the 5%.

I thank my lucky stars that I partied so hard and did so much drugs in school that I could only manage a 2.4 GPA. Not good enough to get hired at Ford Motor Co.

Lucky indeed -

 

[gayl]

I'm another person who never made that much. I was homeless from 17 to 20, then I had a business that did not do well but enabled me to buy a modest (by today's standards) house, finally I went to work for the government and consistently saved an increasingly larger amount every paycheck. The last 5 years I actually socked away 50%. So I went from 0 to the 5% with a 2050' house .... comfortable but not extravagant

Oh and I'm not a clothes horse

 

[NW-Bound]

Income inequality by itself should not be a cause for alarm. A country with a strong and vibrant economy that richly rewards entrepreneurs who create new businesses is going to have more billionaires and also the millionaires working for the latter. Would we want Microsoft, Apple, Intel, Google and other high-tech companies to be created by Americans or by other nationals and in their countries?

The measure that should be used is something that shows that the masses are not left out to be cold and hungry. I have shared the following info that shows many developed countries having more homeless people than the US. I found this very surprising.

See the following chart from Yale University. It shows Spain and Portugal doing better than other Western European countries, although Spain and Portugal trail other countries in terms of per-capita GDP and also personal income. I do not understand this.

 

[street]

WOW! I would of not guessed that.

 

[NW-Bound]

Now, New Zealand takes the infamous top spot, and that is shocking. I have been there, and it was some years ago, but did not see anything bad. It was a nice country.

Just now, I found the explanation. It was because of the way NZ compiled its own statistics. They made themselves look bad compared to other countries.

The US is estimated to have 1 million people living in RV, and many by choice. They do not consider themselves homeless. That would have added another 0.3% to the US number, bringing it closer to the top.

Statistical authorities in New Zealand have expanded their definition of homelessness to include ‘people living in improvised shelters’, ‘people staying in camping grounds/motor camps’ and ‘people sharing accommodation with someone else’s household’.

 

[6miths]

Income inequality by itself should not be a cause for alarm. A country with a strong and vibrant economy that richly rewards entrepreneurs who create new businesses is going to have more billionaires and also the millionaires working for the latter. Would we want Microsoft, Apple, Intel, Google and other high-tech companies to be created by Americans or by other nationals and in their countries?

The measure that should be used is something that shows that the masses are not left out to be cold and hungry. I have shared the following info that shows many developed countries having more homeless people than the US. I found this very surprising.

See the following chart from Yale University. It shows Spain and Portugal doing better than other Western European countries, although Spain and Portugal trail other countries in terms of per-capita GDP and also personal income. I do not understand this.

Could you share the reference please.

 

[CardsFan]

Now, New Zealand takes the infamous top spot, and that is shocking. I have been there, and it was some years ago, but did not see anything bad. It was a nice country.

Just now, I found the explanation. It was because of the way NZ compiled its own statistics. They made themselves look bad compared to other countries.

The US is estimated to have 1 million people living in RV, and many by choice. They do not consider themselves homeless. That would have added another 0.3% to the US number, bringing it closer to the top.

I am sure there are some living in a camper under the bridge, but the vast majority of folks I have seen in 24/7/365 campers are living quite well, and always by choice.