Author Topic: Is the Unequal Distribution of Wealth in the United States Bad for Business?  (Read 24435 times)

shotgunwilly

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I have never seen a "hot" label on a cup of coffee.  I don't think that there is a federal law requiring this type of labeling.

I have no problem reigning in bureaucratic "luxuries."  What are your examples of overreaching by the IRS, EPA, GSA, and/or the VA?

Uhh.. say what? Have you EVER ordered and held a cup of coffee?  As far as a law, I don't believe there is one requiring the labeling.  More as a liability release.

prof61820

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I have never seen a "hot" label on a cup of coffee.  I don't think that there is a federal law requiring this type of labeling.

I have no problem reigning in bureaucratic "luxuries."  What are your examples of overreaching by the IRS, EPA, GSA, and/or the VA?

Uhh.. say what? Have you EVER ordered and held a cup of coffee?  As far as a law, I don't believe there is one requiring the labeling.  More as a liability release.

Well, thanks in part to this site, I do purchase coffee at stores a lot less.  I'll look at the cups the next time I'm in a Starbuck's, Caribou, etc.  but in my part of the country these labels are not prevalent (or at least do not stand out).  That said, if a "hot" label is voluntary - and simply placed on a cup by a business in an attempt to avoid liability in a particular state - I'm not sure how that can be used as an example of a federal law that defies common sense?

Luck better Skill

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I have no problem reigning in bureaucratic "luxuries."  What are your examples of overreaching by the IRS, EPA, GSA, and/or the VA?

  The EPA regulations have classified sand as a toxin/hazardous substance for businesses.  Under law if Lowe's spills a bag of sand in the store you are required to wear a HAZMAT suit to sweep up the spill.  There are scores of anti common sense laws.  Steve Jobs wanted to bring iPhone manufacturing back to the USA but the regulations for factories are so complicated it is not possible.
  We need simple clear laws.

Luck better Skill

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  I'd be interested to know what it is that your parents taught you about the Federal government and why you don't "trust" the Federal government or believe that it can "help" you or your family.

  First I want to agree many of the things government does helps people.  What under-minds government is the actions of the government.
  Example:  In the news recently the Veterans Affairs had offices that were created off record list to get bonuses but also prevented veterans access to medical care.  At best this is depraved indifference.  We all know that years from now some official report will slap some wrist.  However if someone you loved died or suffered for lack of medical care you will never have warm fuzzies about the Federal Government again. 
  There was no government plot to deny medical care to vets.  There is just indifference.

johnhenry

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Here's an excerpt from a great essay relevant to this thread:

Quote
Government deficits, the money supply, and GDP are abstractions that obscure the issues of power and distribution of wealth that are the consequence of a given political system. These abstractions make no sense as ends in themselves. A public deficit just means that a sovereign has spent money into the economy that it hasn’t taxed back. It doesn’t say whether that money was spent on bombs or schools or pure graft. A country can have a high GDP because a small subset of the population sells tons of luxury goods and financial instruments to each other while everyone else starves. Ultimately, what matters is the quality and distribution of resources.

Full Essay Here:
http://thenewinquiry.com/essays/the-world-according-to-modern-monetary-theory/

hybrid

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"Blessed are the yachtmakers, for they shall inherit the wealth...."

Isn't that in the Rand Bible somewhere?

Daisy

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My answer to the topic question is yes! Just look to Latin America for numerous examples. It sows the seeds for discontent and revolutions.

I'm not sure what the best solution is, but some things in the US need to be addressed (by the government and/or naturally by the market):

- reduce crony capitalism
- encourage small business growth
- stop bailing out the mega-corps
- awareness in society to support ethical companies (such as Whole Foods where the top execs only get paid a certain factor more than the smallest income)
- reduce tax shelters and/or simplify taxes

Probably other things too.
« Last Edit: July 03, 2014, 10:29:39 AM by Daisy »

greaper007

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In keeping with our meritocracy beliefs, why not create policies that make it easier for people to get ahead on their own?   I think terms like income redistribution are way too loaded for a normal conversation.    We do need to make it easier for people to be more successful than their parents, if they want to.    Especially in the lower socioeconomic groups.

Reform higher ed so that it's cheaper for the student and more likely to result in a job with middle class wages.   

Create policies that encourage people to delay childbirth and increase education  (I think free birth control is a great idea, in fact I'd encourage paying high risk groups to take birth control until about 25).

Provide low cost or free childcare along with subsidies for people to actually spend time with their children when they're young.  (Happy children grow into healthy adults that don't drag down the system).

Provide lower cost mental healthcare.    I really do think most people's economic problems are related to mental health problems, trauma, etc.     Cheaper than prisons.

Very rich people (and those of us on this forum that are generally in the top 5%) should look at getting in front of this problem.   A few tweaks here and there and everyone's happy.    If you let it go too far you're generally not going to like the knee jerk reaction that ensues.

Luck better Skill

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My answer to the topic question is yes! Just look to Latin America for numerous examples. It sows the seeds for discontent and revolutions.

I'm not sure what the best solution is, but some things in the US need to be addressed (by the government and/or naturally by the market):

- reduce crony capitalism
- encourage small business growth
- stop bailing out the mega-corps
- awareness in society to support ethical companies (such as Whole Foods where the top execs only get paid a certain factor more than the smallest income)
- reduce tax shelters and/or simplify taxes

Probably other things too.

good points.

TrulyStashin

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In keeping with our meritocracy beliefs, why not create policies that make it easier for people to get ahead on their own?   I think terms like income redistribution are way too loaded for a normal conversation.    We do need to make it easier for people to be more successful than their parents, if they want to.    Especially in the lower socioeconomic groups.

Reform higher ed so that it's cheaper for the student and more likely to result in a job with middle class wages.   

Create policies that encourage people to delay childbirth and increase education  (I think free birth control is a great idea, in fact I'd encourage paying high risk groups to take birth control until about 25).

Provide low cost or free childcare along with subsidies for people to actually spend time with their children when they're young.  (Happy children grow into healthy adults that don't drag down the system).

Provide lower cost mental healthcare.    I really do think most people's economic problems are related to mental health problems, trauma, etc.     Cheaper than prisons.

Very rich people (and those of us on this forum that are generally in the top 5%) should look at getting in front of this problem.   A few tweaks here and there and everyone's happy.    If you let it go too far you're generally not going to like the knee jerk reaction that ensues.

+1  The trouble is, doing all of this requires funding and that means "redistribution of wealth" which few people seem to see the value of anymore. 

And we rarely talk about the hidden taxes that have gone up significantly on middle and working-class families.  To wit, in Virginia, in the 1980's our public universities got about 50% of their annual budget from the state.  Now, even our most prestigious colleges/ universities get only about 13% of their annual budget from the state.  The result is that Virginians, as a whole, carry less of the burden of educating our citizens with the end result that more of the cost has been shifted to students and their families.  It's a hidden tax hike on those who can least afford it.  The affluent can handle it.  Others can't and that hurts everyone.

Example:

At William & Mary, in 1985, full-time, in-state annual tuition was $1,223.00  Adjusted for inflation, in 2014 dollars that would be $2704.00.

What's the actual tuition/ fees at W & M for the fall of 2013?  $7731.00    https://www.wm.edu/offices/financialoperations/sa/tuition/fall2013/index.php


Virginia's income tax rate is the same now as it was in 1985 (5.7%).  I'd like to see us fund our universities at the 50% level again and I'd be willing to pay more income tax to do it.  How much more is up for discussion, but more seems to be in order.

GuitarStv

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I have no problem reigning in bureaucratic "luxuries."  What are your examples of overreaching by the IRS, EPA, GSA, and/or the VA?

  The EPA regulations have classified sand as a toxin/hazardous substance for businesses.  Under law if Lowe's spills a bag of sand in the store you are required to wear a HAZMAT suit to sweep up the spill.  There are scores of anti common sense laws.  Steve Jobs wanted to bring iPhone manufacturing back to the USA but the regulations for factories are so complicated it is not possible.
  We need simple clear laws.

Got a source for that extraordinary claim about sand?



The only thing on the EPA website I could find related to sand was http://www.epa.gov/osw/conserve/imr/foundry/index.htm . . . and it refers to sand used in metal casting at foundries.  And they have this to say about it "EPA has found that spent foundry sands produced by iron, steel, and aluminum foundries are rarely hazardous."

Luck better Skill

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I have no problem reigning in bureaucratic "luxuries."  What are your examples of overreaching by the IRS, EPA, GSA, and/or the VA?

  The EPA regulations have classified sand as a toxin/hazardous substance for businesses.  Under law if Lowe's spills a bag of sand in the store you are required to wear a HAZMAT suit to sweep up the spill.  There are scores of anti common sense laws.  Steve Jobs wanted to bring iPhone manufacturing back to the USA but the regulations for factories are so complicated it is not possible.
  We need simple clear laws.

Got a source for that extraordinary claim about sand?



The only thing on the EPA website I could find related to sand was http://www.epa.gov/osw/conserve/imr/foundry/index.htm . . . and it refers to sand used in metal casting at foundries.  And they have this to say about it "EPA has found that spent foundry sands produced by iron, steel, and aluminum foundries are rarely hazardous."

I remember it being in the book, "Death of Common Sense".  I would have to look up the books research.  The reference in the book was to a brick making company.  Lowe's is my reference.

Luck better Skill

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Virginia's income tax rate is the same now as it was in 1985 (5.7%).  I'd like to see us fund our universities at the 50% level again and I'd be willing to pay more income tax to do it.  How much more is up for discussion, but more seems to be in order.

  Higher education is an item I am not willing to see more taxes go to.  I see too much volcano's of waste at universities and colleges.  University presidents need to set their house in order first before asking tax payers to foot a bill for services most will never use.  Little over a year ago I was at at fundraiser for UVA, the goal was like 200 million dollars for the sports programs.  The gentlemen beside me joked, "we could provide clean drinking water for sub-Saharan Africa or go for the BCS championship?"
  K-12 gets support.  Secondary needs to step up on its own.

TrulyStashin

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Virginia's income tax rate is the same now as it was in 1985 (5.7%).  I'd like to see us fund our universities at the 50% level again and I'd be willing to pay more income tax to do it.  How much more is up for discussion, but more seems to be in order.

  Higher education is an item I am not willing to see more taxes go to.  I see too much volcano's of waste at universities and colleges.  University presidents need to set their house in order first before asking tax payers to foot a bill for services most will never use.  Little over a year ago I was at at fundraiser for UVA, the goal was like 200 million dollars for the sports programs.  The gentlemen beside me joked, "we could provide clean drinking water for sub-Saharan Africa or go for the BCS championship?"
  K-12 gets support.  Secondary needs to step up on its own.

I hear you on that but we could prioritize giving extra funding to outstanding schools such as W & M or Mary Washington (no sports program worth mentioning at either) and community colleges or junior colleges.   We could set metrics for measuring efficiency and waste and reward schools that performed well with more public funding.  There are targeted ways to boost funding for schools that emphasize education and we should pursue that.

Chuck

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Inequality is irrelevant when the vast, overwhelming majority of people can afford to house and feed themselves.

It become a laughable topic when that same overwhelming majority can afford an automobile, iphone, cable, internet, eating out... I could go on.

A double-cheeseburger from McDonalds has 440 calories. Earning enough money to buy one, if you make the minimum wage, takes approx. 11 minutes.

"Inequality" doesn't matter so long as basic needs can be met. Starvation does not exist in this country, and homelessness is extremely rare (and only exists so far as we have a backwards way of dealing with mental health issues, completely separate from wealth distribution).

All I hear is a bunch of people whining about how someone, somewhere, has luxuries and goods that they don't have immediate access to... and I find it impossible to give a shit.
« Last Edit: July 03, 2014, 02:55:23 PM by Chuck »

greaper007

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Virginia's income tax rate is the same now as it was in 1985 (5.7%).  I'd like to see us fund our universities at the 50% level again and I'd be willing to pay more income tax to do it.  How much more is up for discussion, but more seems to be in order.

  Higher education is an item I am not willing to see more taxes go to.  I see too much volcano's of waste at universities and colleges.  University presidents need to set their house in order first before asking tax payers to foot a bill for services most will never use.  Little over a year ago I was at at fundraiser for UVA, the goal was like 200 million dollars for the sports programs.  The gentlemen beside me joked, "we could provide clean drinking water for sub-Saharan Africa or go for the BCS championship?"
  K-12 gets support.  Secondary needs to step up on its own.

We could decouple things like sports teams, fancy dorms and unions from public funding.    Spin the football team off as a self supporting entity and have students pay extra for a fancy dorm room.    Get universities back to the basics of education and research.

One of the big issues with the "volcano of waste" is that school have to compete and be cool places to go.    If they instead existed as a place that residents attended because it was an affordable option for higher education, they could be a little more plain and still get the job done.     Let the private universities be glitzy, much like public k-12, I think most people would choose the free or cheap option without regard to how pretty the facility is.

greaper007

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...What's the actual tuition/ fees at W & M for the fall of 2013?  $7731.00    https://www.wm.edu/offices/financialoperations/sa/tuition/fall2013/index.php...

The sad thing is that $7731.00 is a fantastically low amount for tuition.    I was paying around $9500 a year for tuition/fees at an Ohio state school in 2001.

grantmeaname

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We need simple clear laws.
simplify taxes
Nobody can agree on what the simple clear laws should be, or what a simple tax system entails. It's superficially appealing to say "let's make the laws change such that government waste is less, the bureaucracy is easier to navigate, or the law makes more sense", but it's a totally meaningless statement. Citizens A and B won't be able to agree on "simple clear laws" about even the most simple of topics, so it's hardly much of a solution to inequality to declare that the law should be simpler. Not to mention that neither of you have made a real argument for how simplifying the law would even affect the issue at hand.

None of that is to jump down your throats or disagree with the notion that the law shouldn't be needlessly complex, of course. It just seems like every thread like this entails somebody saying "the law should get less complex" as their preferred path to implementation, and it gets the conversation nowhere.

greaper007

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Inequality is irrelevant when the vast, overwhelming majority of people can afford to house and feed themselves.

It become a laughable topic when that same overwhelming majority can afford an automobile, iphone, cable, internet, eating out... I could go on.

A double-cheeseburger from McDonalds has 440 calories. Earning enough money to buy one, if you make the minimum wage, takes approx. 11 minutes.

"Inequality" doesn't matter so long as basic needs can be met. Starvation does not exist in this country, and homelessness is extremely rare (and only exists so far as we have a backwards way of dealing with mental health issues, completely separate from wealth distribution).

All I hear is a bunch of people whining about how someone, somewhere, has luxuries and goods that they don't have immediate access to... and I find it impossible to give a shit.

The problem of course is that people can't really afford those things even if they have them.   What has changed is cheap, easy consumer debt.   So even if mortgages are cleaned up, most people on the lower end of the spectrum are playing a shell game to afford their luxury items.    Thus they're not really seeing the true economic picture on a daily basis.

Unequal distribution isn't just liberal hot air, it's well supported by historical trends.    Real wages have fallen while wealth has been concentrated to fewer and fewer people.    There's lots of reasons for it, from tax policy to a fundamental change in what generates wealth and globalization.   

I don't think there will be a riot in the streets because of rich people right now.    But if we continue this trend there could be problems if and when the next financial catastrophe hits.  People that can't afford their basic needs could turn violent when they see rich people profiting on their misery.    Again, there's reams of historical examples that illustrate this situation.

Daisy

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We need simple clear laws.
simplify taxes
Nobody can agree on what the simple clear laws should be, or what a simple tax system entails. It's superficially appealing to say "let's make the laws change such that government waste is less, the bureaucracy is easier to navigate, or the law makes more sense", but it's a totally meaningless statement. Citizens A and B won't be able to agree on "simple clear laws" about even the most simple of topics, so it's hardly much of a solution to inequality to declare that the law should be simpler. Not to mention that neither of you have made a real argument for how simplifying the law would even affect the issue at hand.None of that is to jump down your throats or disagree with the notion that the law shouldn't be needlessly complex, of course. It just seems like every thread like this entails somebody saying "the law should get less complex" as their preferred path to implementation, and it gets the conversation nowhere.

Whoa there...sorry for not writing a dissertation on tax law in my original post. I usually avoid any of the political topics on internet forums because it's usually a fruitless exercise to try and convince anyone of anything.

I contributed to this topic because I live in south Florida and am surrounded by people from all parts of Latin America, so I am very familiar with the effects of a society marked by a small group of rich people controlling the government and allowing misery on the rest of the population. Not only is that not a fair society, but it does lead to unrest and violence.

So my comment on simplifying tax laws is more along the lines of removing access to tax shelters and tax evasion strategies usually employed by the rich who have the money to hire accountants to do their taxes and can actually benefit from these complex laws and loopholes. It may surprise you to hear, but I think the 401k's and other retirement accounts fall into this category as well, not just the bank accounts in the Cayman Islands. Why should I as a high income earner be able to shelter my highest marginal rate income from taxes? It makes no sense but it's the system we have so you have to play the game because everyone else is.

So the rich get richer because the tax laws benefit them. You could say the rich lobby for these complexities. Rich can be people or big corporations.

Oh well, I'd usually rather eat my own vomit than read, interpret, abide by complex tax laws - so a girl can dream...

401k's, Roth 401k's, Traditional IRAs, Roth IRAs, 529's, 403b's, HSAs, FSAs, ACA subsidies, RMDs...yada yada yada. And I don't even know the corporate end. Why do we need this complexity? I love simplicity and my simplistic mind goes into convulsions thinking about it all. I guess it keeps a lot of people employed (accountants, lawyers) but it all seems so unnecessary. But I also love a good optimization game, so looking at it that way is the only way to stay sane.

Another reason to not vote for any lawyers for Congress or President (please don't flame me on this lawyers out there...). ;-)
« Last Edit: July 03, 2014, 10:37:08 PM by Daisy »

Luck better Skill

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We need simple clear laws.
simplify taxes
Nobody can agree on what the simple clear laws should be, or what a simple tax system entails. It's superficially appealing to say "let's make the laws change such that government waste is less, the bureaucracy is easier to navigate, or the law makes more sense", but it's a totally meaningless statement. Citizens A and B won't be able to agree on "simple clear laws" about even the most simple of topics, so it's hardly much of a solution to inequality to declare that the law should be simpler. Not to mention that neither of you have made a real argument for how simplifying the law would even affect the issue at hand.

None of that is to jump down your throats or disagree with the notion that the law shouldn't be needlessly complex, of course. It just seems like every thread like this entails somebody saying "the law should get less complex" as their preferred path to implementation, and it gets the conversation nowhere.

  Grantmeaname good points.  Getting everyone to agree on a law is different from understanding a law.  People may not like a speed limit of 25 in a school zone but there is clear comprehension of what is the speed limit.
  I will add that if I read a law to a high school students then give a 10 question multiple choice quiz if they get 9 or more correct answers the law is clear.  There may be a few laws in the nations that are murky.

Luck better Skill

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Virginia's income tax rate is the same now as it was in 1985 (5.7%).  I'd like to see us fund our universities at the 50% level again and I'd be willing to pay more income tax to do it.  How much more is up for discussion, but more seems to be in order.

  Higher education is an item I am not willing to see more taxes go to.  I see too much volcano's of waste at universities and colleges.  University presidents need to set their house in order first before asking tax payers to foot a bill for services most will never use.  Little over a year ago I was at at fundraiser for UVA, the goal was like 200 million dollars for the sports programs.  The gentlemen beside me joked, "we could provide clean drinking water for sub-Saharan Africa or go for the BCS championship?"
  K-12 gets support.  Secondary needs to step up on its own.

I hear you on that but we could prioritize giving extra funding to outstanding schools such as W & M or Mary Washington (no sports program worth mentioning at either) and community colleges or junior colleges.   We could set metrics for measuring efficiency and waste and reward schools that performed well with more public funding.  There are targeted ways to boost funding for schools that emphasize education and we should pursue that.

I could support some sort of review for funds.  I am against the blank checks or equal checks for all state universities cause it is easy to spend money.

hybrid

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I've skimmed this discussion, so apologies if this is a duplication of effort.

Wealth is water behind the dam. Eventually it gets released, and where that water goes is fundamental to the discussion. If you are asking me if unequal distribution of wealth is bad for business, I would first ask which business. If you build luxury items like yachts or sell fine jewelry, then certainly having a clientele with lots of money available to indulge those tastes is desirable. And yet I think that would rub a great many people the wrong way. Are 100 foot yachts really the best ways to channel wealth?

Wealth is eventually going to fund something, whether it be luxury items, schools, a bloated bureaucracy, foreign wars, whatever. So no, unequal distribution of wealth is not bad for business as long as the water does not stay trapped behind the dam for too long (like what we have with businesses hoarding their cash reserves because of perceived uncertainty in the market). How that wealth is eventually spent is the far more interesting question. Occasionally I drive a section of Richmond (River Road) that goes on for several miles through opulent neighborhoods, and it never fails to impress upon me just how much wealth there is in this nation. I also bike to work from a pretty nice neighborhood through working class Richmond, so I see the other side as well.

If it were me, I would like to see a much greater focus on our infrastructure, because that infrastructure will be good for business in the long run. Businesses need talented, educated, and motivated employees and I don't think our current trend of pooling wealth further and further into the hands of a relative few advances that cause. it's a very complicated subject, but I can summarize it this way. When capital gains taxes were cut from 20% to 15% at the beginning of the century I didn't buy the conservative mantra about how making the wealthy even wealthier creates a tide that lifts all boats, and a full 13 years later I have yet to see that tide come in. Quite the opposite in fact.   

ChrisLansing

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I think all "classes" have increased reliance on the government to solve problems, resulting in the inequality we see today. Consolidating power in the federal government just makes it that much easier for immoral wealthy people to influence policy with their power.

+1 to this.  I was raised to never trust "the man" and that "I'm from the government, I'm here to help." is just about the worst thing you want to hear. 

I was not raised this way and my experiences with the federal government have been mostly positive.  For example, my service in the US Army helped pay for college and graduate school.  I have a passport that I renew every 10 years rather efficiently.  The IRS regulations are not easy but manageable with a little effort.  My parents are happy with their Social Security and Medicare they receive and I sleep well knowing that they have additional retirement income and their major medical costs will be covered.  I have been to many National Parks and I've never had a bad experience.  Our federal highway system gets me to and from work, vacations and trips to visit friends and relatives.  I'd be interested to know what it is that your parents taught you about the Federal government and why you don't "trust" the Federal government or believe that it can "help" you or your family.

OK, I'll give you the GI Bill, and Passports, and SSI, and Medicare, and National Parks, and Highways, but besides that, what has the Federal Govt. ever done for you?   

Someone (I'm too lazy to go back and give proper attribution to a screen name) already suggested the answer - to go back to the policies of the '50s -'70s.    IOWs higher taxes on the wealthy.     
« Last Edit: July 07, 2014, 03:29:04 PM by ChrisLansing »

greaper007

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If it were me, I would like to see a much greater focus on our infrastructure, because that infrastructure will be good for business in the long run. Businesses need talented, educated, and motivated employees and I don't think our current trend of pooling wealth further and further into the hands of a relative few advances that cause. it's a very complicated subject, but I can summarize it this way. When capital gains taxes were cut from 20% to 15% at the beginning of the century I didn't buy the conservative mantra about how making the wealthy even wealthier creates a tide that lifts all boats, and a full 13 years later I have yet to see that tide come in. Quite the opposite in fact.


Yes, supply side economics have a fantastic marketing department but I've yet to see anything pan out long term in the last 30 years.   

Honestly though, does anyone see this trend ending without a much more liberal supreme court than the one that currently exists?   With things like corporate personhood, vastly inflated wealth is something that will continue to grow in spite of even the elites' opinion.     Massive corporations like GE exist basically as robots that function solely to increase corporate profits.   I really think that decision is going to hurt everyone at some point, even the elite.      Considering that Roberts has another 20-35 years at the helm, I don't see a major shift in these issues anytime soon.

chasesfish

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I recently ran across this article in Politico:

http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014.html#ixzz36DWuRToX

Here's an interesting quote: "What sets me apart, I think, is a tolerance for risk and an intuition about what will happen in the future. Seeing where things are headed is the essence of entrepreneurship. And what do I see in our future now?  I see pitchforks."

1.  Has the United States distribution of wealth become too unequal to support its consumer driven economy?

2.  If yes, what should the United States do to remedy this problem so our economy will remain strong?

Happy 4th of July!

I would argue with the premise of the story:  Is the inequality of income and wealth a bad thing or a problem?  All of these stories are written as if there's a better alternative to capitalism.  100 years ago the United States and Argentina were the same size economies.  One took the direction of capitalism, one went the direction of statism.  Who has a higher standard of living?  The state controlled countries also have a large unequal distribution of "wealth", but that wealth is political power. 

I would also be curious about the definition of "social mobility" - I'd have to find the studies, but the US generally has the most 1st generation millionaires in the world.   

Luck better Skill

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I would argue with the premise of the story:  Is the inequality of income and wealth a bad thing or a problem?  All of these stories are written as if there's a better alternative to capitalism.  100 years ago the United States and Argentina were the same size economies.  One took the direction of capitalism, one went the direction of statism.  Who has a higher standard of living?  The state controlled countries also have a large unequal distribution of "wealth", but that wealth is political power. 

I would also be curious about the definition of "social mobility" - I'd have to find the studies, but the US generally has the most 1st generation millionaires in the world.

chasesfish, all things in moderation.  I think most of us are not against capitalism and free markets.  But taken to the extreme all things are bad.  The point being made is History repeats class warfare/revolutions at a tipping point when too much wealth is held by too few.  To rephrase the question:  do you think we are close are far form that revolution tipping point?
  I think we are far from pitchforks.  Most have very comfortable lives.  I also see where corporations given special advantages by the government keeps our unemployment high.  It is not wise to business compete with deep pockets that have government help.
 

Jennifer in Ottawa

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I recently ran across this article in Politico:

http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014.html#ixzz36DWuRToX

Here's an interesting quote: "What sets me apart, I think, is a tolerance for risk and an intuition about what will happen in the future. Seeing where things are headed is the essence of entrepreneurship. And what do I see in our future now?  I see pitchforks."

1.  Has the United States distribution of wealth become too unequal to support its consumer driven economy?

2.  If yes, what should the United States do to remedy this problem so our economy will remain strong?

Happy 4th of July!

That was a really good read, and I thank you for posting the link.

It pleases me that someone out there 'gets it'.  I've often wondered why more business owners don't.  How do they expect to keep earning money, if no one has any?  If jobs keep getting outsourced to other countries, if temporary foreign workers keep getting brought in and sending their earnings home, if wages stagnate and don't keep up with inflation, then who precisely is buying? 

anisotropy

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weee another one of these! i will not participate in this tread, but let me grab some brisket and drinks, and watch the fireworks :)

Yeehaw!!! (that's my cow-boy impersonation in honor of Calgary Stampede, also I am feeling the hurt today from the market)

grantmeaname

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I also see where corporations given special advantages by the government keeps our unemployment high.
You think 6.1% unemployment is high? (Or are you in Greece and you didn't update your location from Virginia?)

Luck better Skill

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I also see where corporations given special advantages by the government keeps our unemployment high.
You think 6.1% unemployment is high? (Or are you in Greece and you didn't update your location from Virginia?)

  Add in those who have dropped off the unemployment count and the scores I know who are underemployed and yes we have a employment problem.  Half the teenagers I know looking cannot find jobs, even fast food.  A colleagues work is to help college grads get unpaid intern jobs so they have something to put on a resume in hopes of getting a paid job.
  We are not as bad as Greece.  But unchecked that is the direction we are drifting.  We are not moving quick, just drifting there.  At the Federal level is gridlock, only a few states or cities are showing promise.  The scary part is Richmond, Va. is doing well compared to much of the nation.

Daisy

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I also see where corporations given special advantages by the government keeps our unemployment high.
You think 6.1% unemployment is high? (Or are you in Greece and you didn't update your location from Virginia?)

  Add in those who have dropped off the unemployment count and the scores I know who are underemployed and yes we have a employment problem.  Half the teenagers I know looking cannot find jobs, even fast food.  A colleagues work is to help college grads get unpaid intern jobs so they have something to put on a resume in hopes of getting a paid job.
  We are not as bad as Greece.  But unchecked that is the direction we are drifting.  We are not moving quick, just drifting there.  At the Federal level is gridlock, only a few states or cities are showing promise.  The scary part is Richmond, Va. is doing well compared to much of the nation.

I understand, in theory, the idea of underemployment. It's funny because my new-to-college niece was mentioning this. She was lamenting the 25% unemployment rate for recent college grads. So I told her that meant that 75% were employed and she should be one of those. Then she mentioned that some of those 75% are actually underemployed. She's thinking of studying something that might not be that marketable but it's something she's really interested in...which is fine, but she should know what she's getting into.

I don't remember anyone in my parents' generation or actually my generation using this term in the past (I'm in my mid-40s).

What's the difference between underemployment today and just graduating in a bad market, like I did in the early 90s? Is anyone really entitled to anything in our society? Just because you studied something doesn't mean you're going to work in that field. Maybe you didn't study something in demand at the time. Maybe you need to move to a better job market.

I know plenty of people that started out their life in this country "underemployed". They figured out how to survive and thrive and didn't always get what they wanted. These were immigrants.

This term is starting to irk me...unless someone can explain it better. Are all of these underemployed expecting the perfect job to just spring into life without having to adapt to their environment?

I kind of liken this to my plans for FIRE. Sure, it would be wonderful to hit my goals soon, but if either an unexpected expense arises or the markets tank or whatever, I fully realize my plans may not come to fruition as I want and I need to adapt to the new situation. I'm not entitled to FIRE either.
« Last Edit: July 08, 2014, 04:55:08 PM by Daisy »

greaper007

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It does matter because it shows how real wages in many areas have stagnated or fallen while things like college for your niece have skyrocketed in price.   It's especially troubling for young grads that many large companies are now substituting entry level positions with unpaid internships.    It's pretty difficult to get by as a recent grad as it is without help from your parents.   When you have to go to a job that doesn't pay you in order to actually get a job it's no wonder so many young people live with their parents.

Beyond that, you could say that anyone who doesn't make enough money has no one to blame but themselves.   They should have gone into medical school, finance, computer science, engineering...    Then again, I'd imagine you wouldn't be comfortable with having me as the pilot on your plane on the days that I only slept 4 hours because I had to drive an hour and a half to work on minimum crew rest.    You see I worked for a company that only paid me $17,000 a year as a first officer (a whoping $42,000 as a capt) and based me in White Plains NY.   Luckily my wife had a job...in Hartford, so I drove in everyday, often very fatigued.   

This eventually caught up to them when we had a plane crash in Buffalo.    The crew was commuting from the other side of the country because they couldn't afford to live in Newark on our measly salary.    There were obviously other contributing factors, but as someone that's flown a plane while being very fatigued I can understand how someone makes horrible mistakes as a result.

Really though, a lot of it is troubling because it shows what we value.   I'd imagine that the field you niece wants to go into is one that actually adds value to society, unlike some of the high paying fields (banking).    It's a shame that we don't pay school teachers as well as financiers.

Daisy

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It does matter because it shows how real wages in many areas have stagnated or fallen while things like college for your niece have skyrocketed in price.   It's especially troubling for young grads that many large companies are now substituting entry level positions with unpaid internships.    It's pretty difficult to get by as a recent grad as it is without help from your parents.   When you have to go to a job that doesn't pay you in order to actually get a job it's no wonder so many young people live with their parents.

I agree with you that these unpaid internships are abominable. I've heard of it a lot in the legal field. I haven't heard it used much in the technical fields. I'm not sure why the difference.

This eventually caught up to them when we had a plane crash in Buffalo.    The crew was commuting from the other side of the country because they couldn't afford to live in Newark on our measly salary.    There were obviously other contributing factors, but as someone that's flown a plane while being very fatigued I can understand how someone makes horrible mistakes as a result.

Yeah I remember that crash. I think it was a low-cost airline that was undercutting pay to their staff and the accident was attributed to tired pilots. So sad...

There are a lot of unscrupulous companies out there. I'm not sure what this has to do with underemployment though.

Really though, a lot of it is troubling because it shows what we value.   I'd imagine that the field you niece wants to go into is one that actually adds value to society, unlike some of the high paying fields (banking).    It's a shame that we don't pay school teachers as well as financiers.

She wants to study history and maybe get the degree in international relations. I think the international relations part should be pretty marketable in the corporate world. But she's the one that mentioned the underemployment thing so maybe she's worried about what kind of jobs she can get after college. I've suggested she go to the career office at school and take a look at who's hiring.

I also have a cousin that recently graduated college with a degree in biology. He was on the 6 or 7 year plan. I assume he partied a lot and that's what took him so long. He now works at a yogurt shop. His grandmother asked me to try and get him a job at my company. I work in software! I told her he should go to his college's career office and get interviews in his field. People need to look at what they are studying and try to match it up with a job. Unless you are at college for the pure love of learning (nothing wrong with that), once you graduate you have to get a job.

I guess what I am trying to say is that there is a certain reality to the job market out there. There is a also a larger part of our society going to college these days. Just because you study something in college doesn't mean you will get a perfect job match to your degree.

There are some fields where I can understand what underemployment means. Like a law school grad that can only get a job as a paralegal. Maybe too many people are going to law school these days when the job market can't handle those number of grads. That's just the reality. If the jobs aren't there, you either change your degree or change your job expectations after college.

There are other degrees, I guess more in the liberal arts, where I don't know how you would define underemployed. What kind of job does an English or history major "deserve"? I think these are great subjects to learn about, so don't misinterpret what I am trying to say, but some of those majors don't have a clear cut path to a profession. You could say you graduated and aren't making as much as you thought you would, but you have to work your way through the system.

I just don't think anyone is born entitled to a certain job and the use of this term implies that you are entitled to a certain job. There have been many recessions and global economic changes throughout history. It just seems like this current generation in college thinks this is somehow a special period different from the past and they are entitled to certain jobs just because they got a degree in something. I mentioned to my niece that the job market was also horrible when I graduated in the early 90s.
« Last Edit: July 09, 2014, 12:26:40 AM by Daisy »

Luck better Skill

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Daisy,
  I am not saying people are entitled to jobs.
  As I define underemployment:  it is wanting to work 40 hours a week but not able to find that many hours of work.  Some would say underemployed is having lost a higher paying job and now working for less.  If you are getting 40 hours you are not underemployed in my book.
  Most the underemployed I know do not have college degrees.  Most are contractors, many in the construction fields.  Despite efforts to retrain or acquire new skills there is a reduced demand.
  They do not qualify for unemployment because they have some work or are self employed, yet cannot find enough work.  The frugal ones are surviving.  For the others it is ugly.
  For bean counters this distorts the statistics.  If I had 100 full time employees but now only need 50 I can cut to 20 hours a week.  I did not fire/layoff anyone, but all 100 may need second jobs.
  When you only look at a printed statistic number without understanding how that number is calculated it distorts your perception.  One cool thing my statistic's teacher show me was how to take the same set of data but by how I present the data I can make you draw different conclusions.
  So the unemployment number for the USA is at what 6.1%, but in reality of what workers are facing is different.

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I think the point being missed is what is "UNEQUAL" ?

Is it unequal for those who work more and or take more risk to have more? I think not

Luck better Skill

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I think the point being missed is what is "UNEQUAL" ?

Is it unequal for those who work more and or take more risk to have more? I think not

  I don't fault anyone for taking risk and making more.  Bill Gates, Mark Zuckerberg are great poster children, good for them. 
  The poster child on the other side is Walmart.  Walmart uses it vast wealth to abuse capitalism and people. 
  Do you remember about reading about the Triangle Shirtwaist Factory fire in 1911?  Locked fire exit doors caused 146 deaths.  Those same unsafe working conditions exist today in Bangladesh making garments for Walmart.  100 years later Walmart is relearning a lesson that is illegal in the Western nations.
 

http://en.wikipedia.org/wiki/Triangle_Shirtwaist_Factory_fire
 
 

anisotropy

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not just bangladesh, similiar working conditions exist worldwide. and walmart is not their only customer, everyone is doing it.

our "first world society" requires people in third world countries to be exploited for our benefit, simply because there's not enough to go around for everyone. as mmm frequently reminds us, even the poor among us are still incredibly rich by global standards. fixing the problem with "fair-trade"? lol so the factory workers are supposed to be content with say 50 a day just because we told them it's fair?

we are competing against each other for resources, intraspecific competition! adapt for die out, such is the cold and chilling law of life.

omg i cant believe i ate my own words and participated in this thread, i apologize for that. I think i will start a new tread asking people's opinions about global warming.

greaper007

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It does matter because it shows how real wages in many areas have stagnated or fallen while things like college for your niece have skyrocketed in price.   It's especially troubling for young grads that many large companies are now substituting entry level positions with unpaid internships.    It's pretty difficult to get by as a recent grad as it is without help from your parents.   When you have to go to a job that doesn't pay you in order to actually get a job it's no wonder so many young people live with their parents.

I agree with you that these unpaid internships are abominable. I've heard of it a lot in the legal field. I haven't heard it used much in the technical fields. I'm not sure why the difference.

This eventually caught up to them when we had a plane crash in Buffalo.    The crew was commuting from the other side of the country because they couldn't afford to live in Newark on our measly salary.    There were obviously other contributing factors, but as someone that's flown a plane while being very fatigued I can understand how someone makes horrible mistakes as a result.

Yeah I remember that crash. I think it was a low-cost airline that was undercutting pay to their staff and the accident was attributed to tired pilots. So sad...

There are a lot of unscrupulous companies out there. I'm not sure what this has to do with underemployment though.

Really though, a lot of it is troubling because it shows what we value.   I'd imagine that the field you niece wants to go into is one that actually adds value to society, unlike some of the high paying fields (banking).    It's a shame that we don't pay school teachers as well as financiers.

She wants to study history and maybe get the degree in international relations. I think the international relations part should be pretty marketable in the corporate world. But she's the one that mentioned the underemployment thing so maybe she's worried about what kind of jobs she can get after college. I've suggested she go to the career office at school and take a look at who's hiring.

I also have a cousin that recently graduated college with a degree in biology. He was on the 6 or 7 year plan. I assume he partied a lot and that's what took him so long. He now works at a yogurt shop. His grandmother asked me to try and get him a job at my company. I work in software! I told her he should go to his college's career office and get interviews in his field. People need to look at what they are studying and try to match it up with a job. Unless you are at college for the pure love of learning (nothing wrong with that), once you graduate you have to get a job.

I guess what I am trying to say is that there is a certain reality to the job market out there. There is a also a larger part of our society going to college these days. Just because you study something in college doesn't mean you will get a perfect job match to your degree.

There are some fields where I can understand what underemployment means. Like a law school grad that can only get a job as a paralegal. Maybe too many people are going to law school these days when the job market can't handle those number of grads. That's just the reality. If the jobs aren't there, you either change your degree or change your job expectations after college.

There are other degrees, I guess more in the liberal arts, where I don't know how you would define underemployed. What kind of job does an English or history major "deserve"? I think these are great subjects to learn about, so don't misinterpret what I am trying to say, but some of those majors don't have a clear cut path to a profession. You could say you graduated and aren't making as much as you thought you would, but you have to work your way through the system.

I just don't think anyone is born entitled to a certain job and the use of this term implies that you are entitled to a certain job. There have been many recessions and global economic changes throughout history. It just seems like this current generation in college thinks this is somehow a special period different from the past and they are entitled to certain jobs just because they got a degree in something. I mentioned to my niece that the job market was also horrible when I graduated in the early 90s.

One, it wasn't exactly a low cost airline.   I flew for that company and if you bought a ticket on US Airways or United (legacy carriers) there's a good chance we would be doing the regional lift.    My dad on the other hand flys for the original low cost carrier and makes in excess of $300k a year...    This sort of treatment wasn't limited to one company either.     Regional carriers provide a very large percentage of the domestic and even international lift in this country.      When I was flying, none of them paid more than $21,000 a year for for an entry level position, and it often took in excess of 5 years to break $30,000.    I happened to fly for a really bad one because I wanted a quick upgrade to hopefully get to a decent airline where I could possibly make what I'd consider a living wage for the profession.

That sort of underemployment directly affects you and your loved ones when they step onto a plane where the crew isn't rested because they can't afford to live in their base or pay for a hotel room to commute in the night before a trip.   I used to sleep in my car to try to get 6 hours sleep before a trip instead of 4.    I give the airline example because that's what I'm familiar with, but it's far from the only industry that eats its young.     It's also one of the reasons that we had such a slow recovery following the economic downturn.    Young people buying houses and consumer goods after college should be one of the main things driving the economy.    Low pay means they're not.   That's why underemployment should worry you.

As far as college degrees go, I have a history degree and I was an airline pilot.   I'd probably be in the 6 figures right now if I hadn't left to be a stay at home dad 5 years ago.    My dad has an English degree, he flew F-14s and has something like 40,000 hours on 737s, he'll retire in two years with more than a 5 million dollar nut.    My wife was a psychology undergrad, she owns her own consulting firm and makes a 6 figure salary.    I also have friends with technical degrees that deliver pizzas or work in soul crushing jobs where they pray for an occasional furlough, some also love the work.   

I'm not a big fan of the college as a technical school thing.    I really think the point of higher education is to create an intellectual electorate that has strong critical thinking and reasoning skills along with a broad understanding of many disciplines.   I think a liberal arts education will serve you better in life in general than a technical education even if the technical education pays more initially.     My history degree had very little to do with actually learning chronological events or even historical events.    Instead, history beyond the 200 level was about taking an enormous amount of information and pairing it down into an argument backed up with facts and presented in a rigorous format.    I would generally write 200-400 pages per class per semester.   I also took classes in many other disciplines at the 200 and 300 level.    I found classes like social psychology to be invaluable to understanding people's motivations on a daily basis.

I'd tell your niece to study what she enjoys, there's less chance of failure that way.    You should also encourage her to do a lot of research now to find out what she can do with her degree beyond the obvious answers of teacher or grad school.    There are plenty of people who have high positions with nothing more than a liberal arts degree in a non-related discipline.    Seek these people out, look for campus talks, they're often very receptive to questioning.    I remember I went to presentation from a hollywood agent and casting agent at my school in rural Ohio.    It was fascinating and when I asked how I could do what he did, he gave me a systematic approach that would lead someone to his position.

No unitaskers allowed!

Daisy

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I think there is a difference between underpaid and underemployed. Underemployed implies you are either working part-time when you want full-time, or you aren't using all of your skill sets. Luck Better Skill mentioned it above as well.
http://www.thefreedictionary.com/underemployed

One, it wasn't exactly a low cost airline.   I flew for that company and if you bought a ticket on US Airways or United (legacy carriers) there's a good chance we would be doing the regional lift.    My dad on the other hand flys for the original low cost carrier and makes in excess of $300k a year...    This sort of treatment wasn't limited to one company either.     Regional carriers provide a very large percentage of the domestic and even international lift in this country.      When I was flying, none of them paid more than $21,000 a year for for an entry level position, and it often took in excess of 5 years to break $30,000.    I happened to fly for a really bad one because I wanted a quick upgrade to hopefully get to a decent airline where I could possibly make what I'd consider a living wage for the profession.

That does seem like really low pay for a pilot. Based on the definition above, I call this underpaid, not underemployed.

I give the airline example because that's what I'm familiar with, but it's far from the only industry that eats its young.     It's also one of the reasons that we had such a slow recovery following the economic downturn.    Young people buying houses and consumer goods after college should be one of the main things driving the economy.    Low pay means they're not.   That's why underemployment should worry you.

Is this any different from the past? I graduated college and had a good job, but couldn't buy a house until about 5 years later, and that was with a great salary. If I had an average salary I would have had to wait longer. And that was with putting down 10% on my first house in a higher interest rate environment - which is different from the current 3-5% you can get away with now.

That's what I am saying, what makes the current environment so different from past recessionary environments?

As far as college degrees go, I have a history degree and I was an airline pilot.   I'd probably be in the 6 figures right now if I hadn't left to be a stay at home dad 5 years ago.    My dad has an English degree, he flew F-14s and has something like 40,000 hours on 737s, he'll retire in two years with more than a 5 million dollar nut.    My wife was a psychology undergrad, she owns her own consulting firm and makes a 6 figure salary.    I also have friends with technical degrees that deliver pizzas or work in soul crushing jobs where they pray for an occasional furlough, some also love the work.   

I'm not a big fan of the college as a technical school thing.    I really think the point of higher education is to create an intellectual electorate that has strong critical thinking and reasoning skills along with a broad understanding of many disciplines.   I think a liberal arts education will serve you better in life in general than a technical education even if the technical education pays more initially.     My history degree had very little to do with actually learning chronological events or even historical events.    Instead, history beyond the 200 level was about taking an enormous amount of information and pairing it down into an argument backed up with facts and presented in a rigorous format.    I would generally write 200-400 pages per class per semester.   I also took classes in many other disciplines at the 200 and 300 level.    I found classes like social psychology to be invaluable to understanding people's motivations on a daily basis.

I'm not on this thread to discuss the virtues of liberal arts vs. technical degrees. I'm just wondering what a liberal arts major thinks they "deserve" as far as a job vs. the reality in the job market. Because it's this discrepency that leads to the concept of underemployment based on not utilizing all of your skills. It's such a subjective determination to call yourself underemployed in this case.

And I don't know the piloting industry, but I would imagine the highest paid pilots are paid that for a reason. I know many of them have Air Force piloting backgrounds and such.

I liken it to someone playing baseball or basketball in college. Do they deserve to play in the major leagues just because of their play in college? Are they underemployed if they are in the minor leagues after college? There are only a limited amount of slots in the big leagues and they get paid more. I agree that the pay difference is excessive and ridiculous, but the concept is the same.

I have an MBA degree, but am neither the CEO of a company nor in upper management. Am I underemployed as well? Now, granted, I have no interest in these positions but I'm not so sure in the current market I could get those positions even if I wanted them.

Are some people "overemployed" because they never got a college degree, yet run businesses and make a lot of money? Examples like Steve Jobs, Mark Zuckerberg, Bill Gates, Jeff Bezos, etc.

I'd tell your niece to study what she enjoys, there's less chance of failure that way.    You should also encourage her to do a lot of research now to find out what she can do with her degree beyond the obvious answers of teacher or grad school.    There are plenty of people who have high positions with nothing more than a liberal arts degree in a non-related discipline.    Seek these people out, look for campus talks, they're often very receptive to questioning.    I remember I went to presentation from a hollywood agent and casting agent at my school in rural Ohio.    It was fascinating and when I asked how I could do what he did, he gave me a systematic approach that would lead someone to his position.

That is great advice! I want her to have a realistic expectation of what to get out of her degree and not be so pessimistic of the job market. She is actually a great student so she should be able to do well in whatever she sets her heart to.
« Last Edit: July 09, 2014, 03:25:55 PM by Daisy »

grantmeaname

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One, it wasn't exactly a low cost airline.   I flew for that company and if you bought a ticket on US Airways or United (legacy carriers) there's a good chance we would be doing the regional lift.    My dad on the other hand flys for the original low cost carrier and makes in excess of $300k a year...    This sort of treatment wasn't limited to one company either.     Regional carriers provide a very large percentage of the domestic and even international lift in this country.      When I was flying, none of them paid more than $21,000 a year for for an entry level position, and it often took in excess of 5 years to break $30,000.    I happened to fly for a really bad one because I wanted a quick upgrade to hopefully get to a decent airline where I could possibly make what I'd consider a living wage for the profession.
That does seem like really low pay for a pilot. Based on the definition above, I call this underpaid, not underemployed.
If $17,000 is the rate the tquilibrates the number of qualified people willing to work as pilots and the number of pilot jobs it makes sense for airlines to offer, who are you to say it's too low? I mean, yes, it's not a big number, but it makes economic sense.

chasesfish

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I would argue with the premise of the story:  Is the inequality of income and wealth a bad thing or a problem?  All of these stories are written as if there's a better alternative to capitalism.  100 years ago the United States and Argentina were the same size economies.  One took the direction of capitalism, one went the direction of statism.  Who has a higher standard of living?  The state controlled countries also have a large unequal distribution of "wealth", but that wealth is political power. 

I would also be curious about the definition of "social mobility" - I'd have to find the studies, but the US generally has the most 1st generation millionaires in the world.

chasesfish, all things in moderation.  I think most of us are not against capitalism and free markets.  But taken to the extreme all things are bad.  The point being made is History repeats class warfare/revolutions at a tipping point when too much wealth is held by too few.  To rephrase the question:  do you think we are close are far form that revolution tipping point?
  I think we are far from pitchforks.  Most have very comfortable lives.  I also see where corporations given special advantages by the government keeps our unemployment high.  It is not wise to business compete with deep pockets that have government help.
 

I don't believe we are at that tipping point, but think the path to that hell is lined with good intentions.  You need entrepreneurism, innovation, and the opportunities it creates to bring people out of poverty.  These are the wealth creators.f

My personal opinion is the biggest issue we have is the wealth creators are still hesitant to make investments and take risk.   There are tons of reasons for this and both political sides share the blame.  People will take their ideology, point to an issue, then use their ideology to say why it's wrong and propose their solutions.  I'll refrain from going further on that.

I don't believe the gap between the rich and the poor is the issue, I see it as a result of accumulation of two long term problems, a horribly low labor participation rate and a retiring demographic with no income or savings.   A large block of retired people with no assets on social security and pension income slant the numbers. 



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greaper007

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One, it wasn't exactly a low cost airline.   I flew for that company and if you bought a ticket on US Airways or United (legacy carriers) there's a good chance we would be doing the regional lift.    My dad on the other hand flys for the original low cost carrier and makes in excess of $300k a year...    This sort of treatment wasn't limited to one company either.     Regional carriers provide a very large percentage of the domestic and even international lift in this country.      When I was flying, none of them paid more than $21,000 a year for for an entry level position, and it often took in excess of 5 years to break $30,000.    I happened to fly for a really bad one because I wanted a quick upgrade to hopefully get to a decent airline where I could possibly make what I'd consider a living wage for the profession.
That does seem like really low pay for a pilot. Based on the definition above, I call this underpaid, not underemployed.
If $17,000 is the rate the tquilibrates the number of qualified people willing to work as pilots and the number of pilot jobs it makes sense for airlines to offer, who are you to say it's too low? I mean, yes, it's not a big number, but it makes economic sense.

That's great in a vacuum, but do you want to get on a plane where the pilots had to commute in and sleep under a table in the pilot lounge?    I couldn't get out of philly commuting home one night, the only spot left where I could sleep was under a table, that's how widespread this problem is.   How ready would you be to deal with a V1 Cut, navigate through a fast moving line of thunderstorms, or try to baby a plane onto the runway that was carrying a half inch of ice because you hit freezing rain?   Would you want to put your children on that plane?

The other problem was that we were really scraping the bottom of the barrel for some of the applicants.    Don't get me wrong, the vast majority of people were professionals and very good.    Still, I had an occasion where as a Captain I had to grab the controls from the first officer in the landing flare and yeager the plane back on to the runway while landing in heavy snow with a stiff crosswind.   

There's a lot of reasons for the low pay beyond simple economics.    You can blame the railway labor act that basically makes it impossible for pilots to strike.    The main pilot union, ALPA, also didn't really put that much effort into anyone but their star players.   Either way, the low pay is bad for everyone.    Not just the people that earn it.   

greaper007

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I think there is a difference between underpaid and underemployed. Underemployed implies you are either working part-time when you want full-time, or you aren't using all of your skill sets. Luck Better Skill mentioned it above as well.
http://www.thefreedictionary.com/underemployed

One, it wasn't exactly a low cost airline.   I flew for that company and if you bought a ticket on US Airways or United (legacy carriers) there's a good chance we would be doing the regional lift.    My dad on the other hand flys for the original low cost carrier and makes in excess of $300k a year...    This sort of treatment wasn't limited to one company either.     Regional carriers provide a very large percentage of the domestic and even international lift in this country.      When I was flying, none of them paid more than $21,000 a year for for an entry level position, and it often took in excess of 5 years to break $30,000.    I happened to fly for a really bad one because I wanted a quick upgrade to hopefully get to a decent airline where I could possibly make what I'd consider a living wage for the profession.

That does seem like really low pay for a pilot. Based on the definition above, I call this underpaid, not underemployed.

I give the airline example because that's what I'm familiar with, but it's far from the only industry that eats its young.     It's also one of the reasons that we had such a slow recovery following the economic downturn.    Young people buying houses and consumer goods after college should be one of the main things driving the economy.    Low pay means they're not.   That's why underemployment should worry you.

Is this any different from the past? I graduated college and had a good job, but couldn't buy a house until about 5 years later, and that was with a great salary. If I had an average salary I would have had to wait longer. And that was with putting down 10% on my first house in a higher interest rate environment - which is different from the current 3-5% you can get away with now.

That's what I am saying, what makes the current environment so different from past recessionary environments?

As far as college degrees go, I have a history degree and I was an airline pilot.   I'd probably be in the 6 figures right now if I hadn't left to be a stay at home dad 5 years ago.    My dad has an English degree, he flew F-14s and has something like 40,000 hours on 737s, he'll retire in two years with more than a 5 million dollar nut.    My wife was a psychology undergrad, she owns her own consulting firm and makes a 6 figure salary.    I also have friends with technical degrees that deliver pizzas or work in soul crushing jobs where they pray for an occasional furlough, some also love the work.   

I'm not a big fan of the college as a technical school thing.    I really think the point of higher education is to create an intellectual electorate that has strong critical thinking and reasoning skills along with a broad understanding of many disciplines.   I think a liberal arts education will serve you better in life in general than a technical education even if the technical education pays more initially.     My history degree had very little to do with actually learning chronological events or even historical events.    Instead, history beyond the 200 level was about taking an enormous amount of information and pairing it down into an argument backed up with facts and presented in a rigorous format.    I would generally write 200-400 pages per class per semester.   I also took classes in many other disciplines at the 200 and 300 level.    I found classes like social psychology to be invaluable to understanding people's motivations on a daily basis.

I'm not on this thread to discuss the virtues of liberal arts vs. technical degrees. I'm just wondering what a liberal arts major thinks they "deserve" as far as a job vs. the reality in the job market. Because it's this discrepency that leads to the concept of underemployment based on not utilizing all of your skills. It's such a subjective determination to call yourself underemployed in this case.

And I don't know the piloting industry, but I would imagine the highest paid pilots are paid that for a reason. I know many of them have Air Force piloting backgrounds and such.

I liken it to someone playing baseball or basketball in college. Do they deserve to play in the major leagues just because of their play in college? Are they underemployed if they are in the minor leagues after college? There are only a limited amount of slots in the big leagues and they get paid more. I agree that the pay difference is excessive and ridiculous, but the concept is the same.

I have an MBA degree, but am neither the CEO of a company nor in upper management. Am I underemployed as well? Now, granted, I have no interest in these positions but I'm not so sure in the current market I could get those positions even if I wanted them.

Are some people "overemployed" because they never got a college degree, yet run businesses and make a lot of money? Examples like Steve Jobs, Mark Zuckerberg, Bill Gates, Jeff Bezos, etc.

I'd tell your niece to study what she enjoys, there's less chance of failure that way.    You should also encourage her to do a lot of research now to find out what she can do with her degree beyond the obvious answers of teacher or grad school.    There are plenty of people who have high positions with nothing more than a liberal arts degree in a non-related discipline.    Seek these people out, look for campus talks, they're often very receptive to questioning.    I remember I went to presentation from a hollywood agent and casting agent at my school in rural Ohio.    It was fascinating and when I asked how I could do what he did, he gave me a systematic approach that would lead someone to his position.

That is great advice! I want her to have a realistic expectation of what to get out of her degree and not be so pessimistic of the job market. She is actually a great student so she should be able to do well in whatever she sets her heart to.

I don't really care so much about what the highest paid people make.   I think it's great that they make fantastic salaries and I always aspired to be in their positions.    I care more about people being able to make a living wage with their chosen profession.    I don't really differentiate between underemployment and being underpaid here.    If you can work part time and make a living wage ($30-$40k as a college grad, you have loans to pay after all) then you're not really underemployed in my book.    If you have to work as an intern or full time at a wage under $30k, you're underemployed.

I would say that the big difference between your graduating class and the current graduating class is student loans.   I would venture that you paid about half as much as a currently graduating student paid in loans.    Throw under or unemployment into that mix and you have a heavy burden to start your life off with.   

Which brings us back to the tipping point argument.    When people do what they were told they had to do to get ahead, and spend lots of money to do it and it doesn't work, they get very angry.    We can argue with the logic but it seems to be the reality.

Daisy

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I don't really care so much about what the highest paid people make.   I think it's great that they make fantastic salaries and I always aspired to be in their positions.    I care more about people being able to make a living wage with their chosen profession.    I don't really differentiate between underemployment and being underpaid here.    If you can work part time and make a living wage ($30-$40k as a college grad, you have loans to pay after all) then you're not really underemployed in my book.    If you have to work as an intern or full time at a wage under $30k, you're underemployed.

OK, I guess we will just agree to disagree on the definition. But even a living wage is subjective, depending on the COL in your area, what you consider essential, etc. Back when I was growing up we didn't have cell phones, my parents refused to pay for cable, and we hardly ever ate out.

I would say that the big difference between your graduating class and the current graduating class is student loans.   I would venture that you paid about half as much as a currently graduating student paid in loans.    Throw under or unemployment into that mix and you have a heavy burden to start your life off with.   

Not really relevant to this topic, but I was blessed/rewarded-for-hard-work/lucky to have never really paid for my undergraduate or two graduate degrees.

How did I do that? Almost a full ride academic merit scholarship to a pricey private college for undergrad, pursued and applied for a fellowship for a masters in engineering (because I graduated in a bad market with minimal jobs), and got my company to pay for my MBA (while working full time). I actually got paid to do the masters in engineering as my fellowship included a nice stipend.

I also worked part-time during the school year, full-time in the summers, and my parents made me live at home even though my scholarship included some payment for living on campus. They said I'd have to pay my room and board if I moved to the university which was only 10 minutes from their house.

This has definitely given me a leg up on saving for FIRE, no doubt.

EDIT: I wouldn't have gotten the graduate degrees if I had to pay for them myself or go into debt. I just don't think it necessarily makes a difference in my field. But I can't turn down being paid to go to school!

Which brings us back to the tipping point argument.    When people do what they were told they had to do to get ahead, and spend lots of money to do it and it doesn't work, they get very angry.    We can argue with the logic but it seems to be the reality.

Can't argue with that. A lot of expectations have been drilled into this generation when the reality is quite different. It sets them up for disappointment and feeling they deserve a certain job, a house right after graduation, etc.

But I also see some entitlement issues. Although all of my siblings also worked part-time during college, my nieces and nephews seem to be a little more pampered and don't seem to have to work while going to school. No one forced me to do it...it's just what we all did.
« Last Edit: July 09, 2014, 10:14:12 PM by Daisy »

greaper007

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I don't really care so much about what the highest paid people make.   I think it's great that they make fantastic salaries and I always aspired to be in their positions.    I care more about people being able to make a living wage with their chosen profession.    I don't really differentiate between underemployment and being underpaid here.    If you can work part time and make a living wage ($30-$40k as a college grad, you have loans to pay after all) then you're not really underemployed in my book.    If you have to work as an intern or full time at a wage under $30k, you're underemployed.

OK, I guess we will just agree to disagree on the definition. But even a living wage is subjective, depending on the COL in your area, what you consider essential, etc. Back when I was growing up we didn't have cell phones, my parents refused to pay for cable, and we hardly ever ate out.

I would say that the big difference between your graduating class and the current graduating class is student loans.   I would venture that you paid about half as much as a currently graduating student paid in loans.    Throw under or unemployment into that mix and you have a heavy burden to start your life off with.   

Not really relevant to this topic, but I was blessed/rewarded-for-hard-work/lucky to have never really paid for my undergraduate or two graduate degrees.

How did I do that? Almost a full ride academic merit scholarship to a pricey private college for undergrad, pursued and applied for a fellowship for a masters in engineering (because I graduated in a bad market with minimal jobs), and got my company to pay for my MBA (while working full time). I actually got paid to do the masters in engineering as my fellowship included a nice stipend.

I also worked part-time during the school year, full-time in the summers, and my parents made me live at home even though my scholarship included some payment for living on campus. They said I'd have to pay my room and board if I moved to the university which was only 10 minutes from their house.

This has definitely given me a leg up on saving for FIRE, no doubt.

EDIT: I wouldn't have gotten the graduate degrees if I had to pay for them myself or go into debt. I just don't think it necessarily makes a difference in my field. But I can't turn down being paid to go to school!

Which brings us back to the tipping point argument.    When people do what they were told they had to do to get ahead, and spend lots of money to do it and it doesn't work, they get very angry.    We can argue with the logic but it seems to be the reality.

Can't argue with that. A lot of expectations have been drilled into this generation when the reality is quite different. It sets them up for disappointment and feeling they deserve a certain job, a house right after graduation, etc.

But I also see some entitlement issues. Although all of my siblings also worked part-time during college, my nieces and nephews seem to be a little more pampered and don't seem to have to work while going to school. No one forced me to do it...it's just what we all did.

A living wage isn't that subjective.   Can you pay for housing, food and the essentials that you need for a particular job and area.    That changes based on what you do and where you live.   For many jobs a cellphone is essential, I wouldn't have been able to troubleshoot mx problems on a plane without one.    I don't think I'd include luxury items in a living wage though.    Again, I don't really think it's possible to live in NYC on $17,000 a year, especially if you have a family.     That's what the pilots in that crash were told to do and I think it led directly to that crash.

It's great that you earned a full ride, but I think we can agree that the vast majority of students won't.   Even many smart people don't have the resources or family know how to help them apply for these competitive scholarships.    Most of us and our children are going to have to pay our own way.     So yes, a student today is probably paying at least double for their education and not receiving the same job offers that your class was offered.

I don't like the idea of entitlement, or this generation is weaker and more pampered.    It's a cop out we use to make ourselves feel better.    You'll probably recall the fundamental attribution error from your undergrad social psychology class.    Essentially, a person's environment has a much bigger effect on their behavior than individual choices do.    I know plenty of teens that work.   Sure, some kids are lazy or pampered by their parents but I think most stories about lazy millennials are rehashes from lazy gen x'ers, lazy baby boomers and so on.      Soon enough, millenials will be writing stories about how the new generation isn't doing what they did.    You also have to remember that teens are now competing with adults for many traditional teen jobs.    Check out who's working the counter at the local McDonalds, it's generally someone over the age of 25.
   
I don't think it's really about entitlement.    The world has changed and the only jobs that really pay a middle class wage are for college grads or skilled labor.     I worked construction during college and often wondered if it would have been better just to be an electrician or plumber, but many professionals I know wouldn't be able to hack it in those jobs.    They just don't have physical abilities and mechanical aptitude (and some of them are engineers...).     If corporations want to continue to receive things like corporate welfare they're going to have to give back to the system with decent jobs with real wages, or there could be a tipping point.

Daisy

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It's great that you earned a full ride, but I think we can agree that the vast majority of students won't.   Even many smart people don't have the resources or family know how to help them apply for these competitive scholarships.    Most of us and our children are going to have to pay our own way.     So yes, a student today is probably paying at least double for their education and not receiving the same job offers that your class was offered.

I don't like the idea of entitlement, or this generation is weaker and more pampered.    It's a cop out we use to make ourselves feel better.    You'll probably recall the fundamental attribution error from your undergrad social psychology class.    Essentially, a person's environment has a much bigger effect on their behavior than individual choices do.    I know plenty of teens that work.   Sure, some kids are lazy or pampered by their parents but I think most stories about lazy millennials are rehashes from lazy gen x'ers, lazy baby boomers and so on.      Soon enough, millenials will be writing stories about how the new generation isn't doing what they did.    You also have to remember that teens are now competing with adults for many traditional teen jobs.    Check out who's working the counter at the local McDonalds, it's generally someone over the age of 25.
   
I don't think it's really about entitlement.    The world has changed and the only jobs that really pay a middle class wage are for college grads or skilled labor.     I worked construction during college and often wondered if it would have been better just to be an electrician or plumber, but many professionals I know wouldn't be able to hack it in those jobs.    They just don't have physical abilities and mechanical aptitude (and some of them are engineers...).     If corporations want to continue to receive things like corporate welfare they're going to have to give back to the system with decent jobs with real wages, or there could be a tipping point.

I do agree the US economy and job market is changing these days. But I contend that economic change has always occurred throughout history. No need to whine about it. Learn about, accept it, and adapt to the changes. What else can you do? Everything’s becoming much more global these days and the US worker is competing with the whole world now.

To the topic of this thread…the middle class is getting squeezed and the super rich continue to get even richer and abuse their power at times and can use their governmental influence to hurt the little guy, the small business, their workers. They can just as easily lay you off and hire someone to do your same job in another country. It’s happening in the industry I work in. So I realize this, and it’s one of the main drivers of my push to FIRE. As a mid-40 year old (I’m not THAT old, BTW), I realize my employability in technology is not the same as someone like you just starting out. So I am taking steps now to protect myself from unemployability.

I can complain all I want, but I realize my parents and grandparents had it much tougher than I have. I probably come at this from a different perspective than others on this forum from the US as my parents are immigrants and moved to the US as adults. My grandparents left their home country after WW1 to the “new world” since there were a lot of economic issues in their country. They had to come over on a ship that took three months and never got to see their families again. They were in the lower middle class in their new country, where my parents were born. My father was born just before the Great Depression. He tells us that he and his two brothers and parents lived in a one bedroom apartment and shared two bathrooms in the building with others. My father didn’t go to high school, but somehow worked his way up a little and paid his way through college in his country. But he was  a freak in his family because no one went to college. On my mom’s side, only one of five went to college, and that was after he moved to the US. Anyways, they were working their way to the middle class in their country and then a revolution occurred and they left. They came to the US with hardly any money and a new language. They paid the way for other family members to come to the US. A common activity while I was growing up was going to the airport to pick up yet another relative immigrating to the US.

So yeah, I heard all of these stories growing up and I knew I had it good in my youth compared to them. Actually, we’ve had it pretty good in our cushy middle class life in the US.

As far as the college scholarship, my parents did not know the US college system at all so it was up to us to figure it out. No one helped me (well probably my brothers) with college applications, essays, applying for scholarships or fellowships. I do notice that this next generation gets more help from their parents. My brother knew all of the applications his kids were filling out and reminded them of deadlines, etc. That was unheard of in my peers growing up.
« Last Edit: July 10, 2014, 11:40:32 AM by Daisy »

hybrid

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I also see where corporations given special advantages by the government keeps our unemployment high.
You think 6.1% unemployment is high? (Or are you in Greece and you didn't update your location from Virginia?)

No, 6.1% unemployment isn't all that high, but the number doesn't tell the full story. A large number of people have simply dropped out of the work force and aren't counted in that statistic. Employment numbers in the US have only recently returned to 2008 levels. For some folks finding a job in their given field (rather than schlepping pizza, which is a job after all) remains difficult. Spouse of a coworker got caught up in IT layoffs and has been looking for 18 months to no avail (long story there, but a good example all the same). She does not count as unemployed at this point mostly because she has all but given up.

A recent stat I stumbled upon that I thought was a great example of not getting the complete picture was this one. In an NFL football game the Chicago Bears and the Washington Redskins both managed 17 first downs over the course of the game. Sounds competitive, right? It was the most lopsided game in NFL history, Da Bears won 73-0 in the 1940 Championship game. Take that Brazil, my beloved Redskins say you've got nothing on them.....

http://en.wikipedia.org/wiki/1940_NFL_Championship_Game
« Last Edit: July 10, 2014, 02:30:07 PM by hybrid »

 

Wow, a phone plan for fifteen bucks!