Department of Distressing Trends
Earnings going down down down for everyone without professional degrees as illustrated by the chart on the left. One major factor here is the rise in health insurance premium costs. As we saw yesterday the employee side of insurance premiums is rising quickly and reducing disposable income. But the employer side of the premium ledger is also rising rapidly, so employees are getting more-and-more of their compensation in the form of employer health care costs and less-and-less in the form of money.
There are other factors in play here, especially for workers near the low-end of the skill gradient, but that health care angle is the one with the most immediate policy relevance and underscores the need for meaningful reform of the system. More broadly, the fact that this sort of thing is happening underscores the need for a broader conversation in American society about where the gains from economic growth are going, why they’re going their, and what can be changed. The conservative habit of seeking to shut any such conversation down by shouting “class warfare!” isn’t going to cut it any more. That’s why it was good to see David Frum trying to tackle the issue even if I don’t think his diagnosis of the problem is quite on the mark.
19 Responses to “Department of Distressing Trends”
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September 11th, 2008 at 8:33 am
Re “conservative habit of seeking to shut any such conversation down by shouting “class warfare!” ”
—————-
Isn’t class warfare when the conservatives give a $2 Trillion tax cut to the richest 1 percent of the population –and pay for it by stealing the money out of the Social Security/Medicare Trust Fund accounts that workers have been paying into for decades?
So why did NOT ONE single fucking Democratic Senator have the nerve to point that out over the past 8 years? INCLUDING during this campaign season?
Answer: Because the Democrats’ wealthy donors told them to shut the fuck up and screw the base.
September 11th, 2008 at 8:38 am
If every group save professional degree holders declined in real income, how the heck was the average an increase in income? Do 95% of workers have professional degrees or something?
September 11th, 2008 at 8:44 am
How do you tackle this problem without under-cutting the one clear source of economic growth in the economy (healthcare industry)? If you shift the burden of payment to companies, they will simply shift it back to workers through lower compensation. If you shift it to workers, you can hope that premiums will decline (Massachusetts), but if they don’t you’re doubly screwed (Massachusetts). Somehow, the cost of healthcare must be brought under control, but without costing the industry a massive number of jobs. In other words, it might be REALLY difficult to reform healthcare during a recession.
September 11th, 2008 at 8:57 am
Matt B,
I had the same question. It can’t just be because people with professional degrees make high incomes, because apparently they were able to move the median, not just the mean. I don’t get it.
Braden,
I think you need to break out different segments of the healthcare industry. For example, you might want to see no less money going to actual healthcare providers, researchers, and so on, but less money going to healthcare administration, advertisement, and so forth. That said, I actually have no idea what the ultimate economic or distributional effects of such a shift would be–kinda obviously, it depends on what would otherwise happen with the money you are saving in the latter categories.
September 11th, 2008 at 9:12 am
These trends will only continue when “post-partisan” pundits like Matthew support “post-partisan” candidates.
September 11th, 2008 at 9:14 am
Matt b and DTM:
Ditto on your observations. Perhaps the wages of those without high school diplomas made up the difference?! How are GEDs treated here? It seems that the number of GEDs has really exploded over the years.
September 11th, 2008 at 9:29 am
OK, I think I figured it out. If I recall correctly, the overall median income is actually around the same range as the median income for the some college/associate degree subgroups. This chart didn’t break out those subgroups if people with HS degrees and some college short of a 4-year degree, and I suspect there may have been slight positive median income gains in one or both of those subgroups, even though the subgroups below (HS, no college at all) and above (4-year graduates) have experienced declines.
September 11th, 2008 at 9:33 am
I’m sorry, but that “all group” figure has to be wrong. Gains among professional degree holders should not be capable of moving the median income of all groups higher if every other group declines. I mean, the median income should be almost completely driven by changes in bachelors and high school grads, right?
September 11th, 2008 at 9:47 am
By the way, I also recall that median real incomes for women have been increasing while median real incomes for men have been decreasing. So it might actually be specifically women with some college or associate degrees driving up the all groups median.
September 11th, 2008 at 10:19 am
“The conservative habit of seeking to shut any such conversation down by shouting “class warfare!” isn’t going to cut it any more.”
Evidence, please? That habit has had a very long and successful run so far.
September 11th, 2008 at 10:24 am
Haven’t you heard the phrase: “He left (one place) for (other place), and raised the average IQ in both places”.
The high earning bachelors went and got MBAs. Their income went up, but they lowered both groups Median; even though the population as a whole had a RISE in income. Or the highest earning HS only people, went back to school and got a bachelors.
September 11th, 2008 at 4:20 pm
This chart makes me wonder why I decided to get a PhD in a humanities field rather than go to law school.
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