I've been working lately on a lot of wealthy clients. I have yet to see someone making 200,000+ have an effective tax rate of greater than 23%, and they aren't even realizing any capital gains at 15%, which would pull that rate even lower. One was a consultant who earned just under $300k. His effective rate without having any production expense is about 19%.
And I wouldn't worry too much about the minimum wage line on that graph. Most jobs with a high school education will start out higher than minimum wage because that rate has been below the supply/demand equilibrium for some time. It's rather meaningless.
In 2010, 72.9 million American workers age 16 and over were paid at hourly rates, representing 58.8 percent of all wage and salary workers.1 Among those paid by the hour, 1.8 million earned exactly the prevailing Federal minimum wage of $7.25 per hour. About 2.5 million had wages below the minimum.2 Together, these 4.4 million workers with wages at or below the Federal minimum made up 6.0 percent of all hourly-paid workers. http://www.bls.gov/cps/minwage2010.htm
AdmiralKird wrote:And I wouldn't worry too much about the minimum wage line on that graph. Most jobs with a high school education will start out higher than minimum wage because that rate has been below the supply/demand equilibrium for some time. It's rather meaningless.
It was the production workers line that has barely paced inflation I was concerned about. I imagine it was why the said it 'stagnated' as opposed to fell. That concerns me.
AdmiralKird wrote:And I wouldn't worry too much about the minimum wage line on that graph. Most jobs with a high school education will start out higher than minimum wage because that rate has been below the supply/demand equilibrium for some time. It's rather meaningless.
It was the production workers line that has barely paced inflation I was concerned about. I imagine it was why the said it 'stagnated' as opposed to fell. That concerns me.
Sorry vin, I didn't read anyones posts, just looked at the pretty graph so I wasn't commenting on anything someone in particular was saying - tired after a long work saturday.
About the line workers, I'm not sure there's much you can do there. As GDP increases line workers probably won't increase in income. Foremost, you've got companies investing in machines that can autonomously do that work for less. Thus the demand for line workers decreases, supply of workers increases, and the average wage doesn't increase in accordance with national GDP. So where does that money go? The top of the company of course. Why pay a line worker over what the rest of the market is dictating when you can give more of that to shareholders and yourself? To be nice? Pfft, this is the corporate world! And you should be rewarded for your ingenuity, not someone else. And secondly, you've got manufacturing outsourcing, so the supply of workers increases with that also, dropping wages further.
AdmiralKird wrote:About the line workers, I'm not sure there's much you can do there. As GDP increases line workers probably won't increase in income. Foremost, you've got companies investing in machines that can autonomously do that work for less. Thus the demand for line workers decreases, supply of workers increases, and the average wage doesn't increase in accordance with national GDP. So where does that money go?
Since the company's competitors are doing the same thing, the surplus should go to the consumer in the form of lower prices. Somewhat perversely, this shrinks GDP.
I would guess that the logic behind the "rich people create jobs" argument is that their savings provide a good chunk of the capital required to start new businesses and fund the expansion of growing ones.
I find the article because it is largely arguing semantics: so it's the economy, and not rich people, that create jobs? Thanks for clarifying that Mr. Blodgett.
But he's right. Given that consumer behavior drives roughly 70% of our GDP, a healthy consuming middle class is going to drive the bulk of economic consumption that occurs.
Nice to see the Greek rioters out in force protesting the austerity budget. I wonder if they are being joined by bondholders of Greek debt, who stand to lose 70% of their principal on this. That's not a haircut, it's a scalping.
AdmiralKird wrote:Sorry vin, I didn't read anyones posts, just looked at the pretty graph so I wasn't commenting on anything someone in particular was saying - tired after a long work saturday.
I gotcha, I didn't mean to sound as defensive as it did. I pretty much agree with what you're saying, but it just goes to such how much more we need education.
Hungary Jack wrote:I would guess that the logic behind the "rich people create jobs" argument is that their savings provide a good chunk of the capital required to start new businesses and fund the expansion of growing ones.
But he's right. Given that consumer behavior drives roughly 70% of our GDP, a healthy consuming middle class is going to drive the bulk of economic consumption that occurs.
Right. The point is that those "rich people" who have their savings to start new business and fund expanding ones are sitting on cash reserves right now and not expanding or starting new businesses. Why? Cause consumers are paying down debt and trying to stay afloat while many are under or unemployed. If we want a healthy consuming middle class we unfortunately need 'safety' nets like food-stamps, unemployment, middle class/payroll tax cuts to allow those people to buy crap.
AdmiralKird wrote:Sorry vin, I didn't read anyones posts, just looked at the pretty graph so I wasn't commenting on anything someone in particular was saying - tired after a long work saturday.
I gotcha, I didn't mean to sound as defensive as it did. I pretty much agree with what you're saying, but it just goes to such how much more we need education.
Hungary Jack wrote:I would guess that the logic behind the "rich people create jobs" argument is that their savings provide a good chunk of the capital required to start new businesses and fund the expansion of growing ones.
But he's right. Given that consumer behavior drives roughly 70% of our GDP, a healthy consuming middle class is going to drive the bulk of economic consumption that occurs.
Right. The point is that those "rich people" who have their savings to start new business and fund expanding ones are sitting on cash reserves right now and not expanding or starting new businesses. Why? Cause consumers are paying down debt and trying to stay afloat while many are under or unemployed. If we want a healthy consuming middle class we unfortunately need 'safety' nets like food-stamps, unemployment, middle class/payroll tax cuts to allow those people to buy crap.
We should cut sales tax for rich people to zero. Then they'll start buying boats, minks, wine fridges, monogrammed shirts, Birkin bags, and beluga platters, injecting the economy with a jolt of consumer spending.
AdmiralKird wrote:Sorry vin, I didn't read anyones posts, just looked at the pretty graph so I wasn't commenting on anything someone in particular was saying - tired after a long work saturday.
I gotcha, I didn't mean to sound as defensive as it did. I pretty much agree with what you're saying, but it just goes to such how much more we need education.
Hungary Jack wrote:I would guess that the logic behind the "rich people create jobs" argument is that their savings provide a good chunk of the capital required to start new businesses and fund the expansion of growing ones.
But he's right. Given that consumer behavior drives roughly 70% of our GDP, a healthy consuming middle class is going to drive the bulk of economic consumption that occurs.
Right. The point is that those "rich people" who have their savings to start new business and fund expanding ones are sitting on cash reserves right now and not expanding or starting new businesses. Why? Cause consumers are paying down debt and trying to stay afloat while many are under or unemployed. If we want a healthy consuming middle class we unfortunately need 'safety' nets like food-stamps, unemployment, middle class/payroll tax cuts to allow those people to buy crap.
We should cut sales tax for rich people to zero. Then they'll start buying boats, minks, wine fridges, monogrammed shirts, Birkin bags, and beluga platters, injecting the economy with a jolt of consumer spending.
This is called Dick Trickle economics or something like that.
AdmiralKird wrote:About the line workers, I'm not sure there's much you can do there. As GDP increases line workers probably won't increase in income. Foremost, you've got companies investing in machines that can autonomously do that work for less. Thus the demand for line workers decreases, supply of workers increases, and the average wage doesn't increase in accordance with national GDP. So where does that money go?
Since the company's competitors are doing the same thing, the surplus should go to the consumer in the form of lower prices. Somewhat perversely, this shrinks GDP.
Well its a tradeoff, some of it goes to the consumers, some to the company, the amount depends on the competitiveness of the market along with the company's aggressiveness. Some will want to drive out competitors, others just want to increase shareholder's wealth. Plus a CEO is viewed by the board as how good he or she is at increasing their wealth more-so than unrealized market share gains.
