2004 December 21 Tuesday
Wages For Top Two Fifths Rising Twice As Fast As The Rest

The trend toward higher inequality continues unabated.

Pay is rising more than twice as fast for the top fifth of wage earners as it is for all others, and the pace of gains at the high end is quickening, according to economists' analyses of government income data through September.

Meanwhile, the top 20 percent of households, ranked by income from all sources and earning $127,000 or more as of 2003, accounts for more than 40 percent of all consumer spending, according to Labor Department figures.

While the size of wage increases is accelerating at the top end it is slowing for workers earning smaller incomes.

The rate of wage increases for the higher-paid group had risen for four consecutive quarters through early this year, Stone found. Meanwhile, the pace of wage increases for the lower-paid workers slowed over the same period.

While technological trends that place a higher value on brains and international trade are both contributing to the trend of greater inequality these are not the only causes. The United States has an immigration policy that is letting in millions of people who are going to be found disproportionately in the lower income groups not just in the first generation but among their descendants as well.

Immigration is putting pressure on wages at the bottom end as immigrant total employment increases at the bottom while native born employment decreases as natives get out-competed by people willing to work for even lower salaries and under the table in low-paying and lower skilled jobs.

As intuition would suggest and as Steve Sailer has shown widening inequality is bullish for the Democratic Party. Some (though not all) business interests may benefit in the short term from cheap labor. But in the longer run the businesses will be under the whip of Robin Hood tax-and-spend Democrats elected by swelling ranks of lower class immigrants and their descendants. The American middle class will be big losers as they are forced to pay more taxes to support people who are not capable of earning higher salaries.

Open Borders libertarians and free market conservatives need to think about the long term consequences of the immigration policies that they support. The nation is going to be become less libertarian and less free market as a result of policies that they defend and promote.

Share |      By Randall Parker at 2004 December 21 10:55 PM  Economics Demographic

John S Bolton said at December 22, 2004 12:45 AM:

This widening of the income disparities between the top and the median, is exactly what is expected if it is caused by a vast over-supply of unskilled immigrant labor getting absorbed through lower real wages. This is not what progress looks like; even though the administration says they feel that it is a move forward. These business people will see their taxes soar, as the country becomes more populated by those who can't be net taxpayers. It is not a wash; the governments' way of handling redistribution is intensely destructive, compared to how the market performs a similar operation. Antagonism against employers of a different background can be expected to intensify also, leading to unionization, public outcries for unforgiving regulation, and the right may turn on their contributors, switching back into a snash-the-rich pattern. After the last major wave of immigrants before 1914, there followed two huge bursts of motion towards welfare-statism: WW1 and the Roosevelt administration. The immigrants were not grateful to the big-business Republicans for helping them get in.

Invisible Scientist said at December 22, 2004 6:42 AM:

The net worth of a social group, in average, progresses as
C[n] = c[0]*exp(b*N)
where N=year, c[0]= the initial net worth at the year N=0, b=log(1+h),
with h=h(IQ) being an INCREASING function of the intellectual quotient IQ of the social group.
Thus the net worth of the upper class, necessarily grows faster than less intelligent groups.
The function "h" above incorporates the salary, interest income, taxes, consulting income, inflation,
and everything that influences the net worth.

Right now, the top 1 % richest families own more than 45 % of the USA. In 1982, the top 1 %
owned only 20 % of the wealth in the US. But in 1929, the top 1 % owned 44 % of the wealth in the US.
The top 10 % own 90 % of the wealth at this time.

Tommy Owens (EEF) said at January 9, 2005 8:36 AM:

New immigrants entering into the US is not an economic problem. It is more of a moral problem potential. Yes, it is true that most of the new immigrants and nearly all of the illegal immigrants fall into the non-skilled labor markets which create a surplus. However, this can not be blamed for the low wages or the gap in economic wages in our country (USA). In the late 40's up until the early 80's most of the unskilled labor jobs were occupied by white males. And, if you would look at the data numbers, the gap were about 20 percent less than what it is today. Since the late 80's until now, more and more blacks and foreigners have entered the unskilled labor markets. When that happened, wages came to halt. Why, because blacks and foreigners are simply not valued as high as white males and females are. Sure there are some white males who slip through the cracks. But they are few. In distribution logistics (non-skilled labor) there are about 2 white males to 10 blacks and others. And even theses white males are 5 times more likely to be promoted than blacks and other. Our topic is not about race. However, we most certainly have to acknowledge that race play a major factor in these numbers. And, we must also acknowledge that worker skills have nothing to do with it. In the southeastern parts of the US, the average hourly wage for non-skilled workers is about $7.90 an hour. The lowest is minimum wage and the highest is at about $17.00. NOW, if you will take a look inside the doors of the higher paying non-skilled labor jobs you will find the 8 of the workers are white males and only 2 are black and other. So how do we fix the problem? How do we improve the quality of life for all Americans? How do we narrow the gap between the wealthiest and the poor?

P.S. KISS - If we post comments that are simple, everyone can read and maybe understand it. If we post comments that are too tehcnical, we limit our audiance. Lets post comments that the well learned and the not so well learned can understand.


Randall Parker said at January 9, 2005 2:12 PM:


Immigration is an economic problem because people who earn low salaries cost the taxpayers more than these people pay in taxes. They are net drains on the system.

Also, the people at the bottom are more likely to commit crime. So the rest of us are victimized at higher rates as a result of the immigrant influx.

They are also a political problem because their kids will be able to vote and to vote for more Robin Hood taxation.

We fix the problem by building a border barrier and then deport all the illegals and raise the standards for who gets to be a citizen.

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