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Wages For The 1% Just Reached Their Highest Level Ever (Demo)

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By Gary Reber Uncategorized October 24, 2018

Salaries for the top 1% grew nearly four times the rate of those in the bottom 90% of earners

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The top 1% of households as measured by income have median savings of $1.1 million, a new report finds. The bottom 20% of Americans have no money saved for a rainy day, by the same measure.

On October 20, 2018, Quentin Fottrell writes on Market Watch:

The 1% has never had it so good.

The average wage for the top 1% of income earners hit $719,000 per year in 2017, up 3.7% on the year, exceeding their peak of $716,000 per year just before the Great Recession, according to a report released Thursday by the Economic Policy Institute, a progressive, nonprofit think tank, citing data from the Social Security Administration. The average wage for the top 0.1% reached $2.7 million in 2017, the second-highest level ever, just 4% below their level in 2007. However, wages for the 0.1% rose 8% on the year in 2017.

Income inequality has soared in the U.S. over the last five decades, despite increases in worker productivity, the report said. “Incomes for most Americans have been stagnant for four decades,” according to a separate report released earlier this year by the staff of Keith Ellison, a Democratic congressman for Minnesota. “Instead, this increase in income inequality was almost entirely driven by soaring compensation levels for the top 1% of income earners.”

Average wage growth for most working Americans continues to flat line in 2018, the EPI said. “Some of this real wage stagnation can be explained by an uptick in energy prices, but even the underlying pace of nominal wage growth has yet to pick up in the way it historically has as labor markets tightened,” it said. (The median household income was $61,372 in 2017, up 1.8% after accounting for inflation, according to the U.S. Census Bureau.)

For most U.S. workers, real wages have barely budged in decades, the Pew Research Center said in August. “On the face of it, these should be heady times for American workers. U.S. unemployment is as low as it’s been in nearly two decades,” the Washington, D.C.-based think tank said. “In fact, despite some ups and downs over the past several decades, today’s real average wage — after accounting for inflation — has about the same purchasing power it did 40 years ago.”

Senator Bernie Sanders, a likely candidate for President of the United States in 2018 commented on this story:
“The top 1 percent have never had it so good and have more money than they could spend in their lifetimes. Meanwhile more than 40 million Americans are living in poverty. Unacceptable. We need real solutions to rising income inequality, not more tax breaks for billionaires. We need to turn this around and create an economy that works for all, not just the people on top.”
Gary Reber Comments:
This is not well articulated article with no clearly stated terms or distinctions of terms.
First, is it the “average wage” or “earnings” for the top 1% of income earners? The distinction is a wage is strictly in the form of hourly  or salary compensation, whereas if it is meant by “wage” to be actually earnings, which include both wages and income derived from capital asset ownership.
This is important as the  wealthy among us are wealthy because they own productive, wealth-creating, income-producing capital assets. This is what characterizes the wealth of the 1 percent, and more so the .1 percent. The vast majority, or 99 percent, are not owners or not significantly so of productive capital assets.
Second, “Income inequality has soared in the U.S. over the last five decades, despite increases in worker productivity” is false in the sense that the term “worker productivity” is misleading. Fundamentally, economic value is created through human and non-human contributions. In actuality, the non-human or capital does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary.
Technological change makes tools, machines, structures, and processes ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power — and relatively constant). Industries are always changing, evolving and innovating. The result is that primary distribution through the free-market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contribution through labor.
The “real solutions” that Senator Bernie Sanders should be seeking are those that will make it possible for EVERY child, woman, and man to purchase part of the nation’s annual new capital formation that would be financed . They can do this by purchasing, using insured, interest-free capital credit, newly issued shares that finance the new capital, making dividends tax deductible at the corporate level, paying out all earnings as dividends, and repaying the capital credit extended to purchase shares out of the dividends on a tax-deferred basis.
Afterwards, the dividends can be taxed as personal income to the recipient and the balance used for consumption purposes. This would take a great burden off the government and increase tax revenues at the same time, allowing repayment of the outstanding debt strictly out of future earnings in viable investment that grow our economy.
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