Chart of the day

Posted: 24 April 2015 in Uncategorized
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airbus-income

This is what the three-class seating on an Airbus A330-300 would look like if it were reconfigured to represent the distribution of income in the United States:

In Air Gini’s three-class layout, some things look familiar and some things are a bit different. Economy Class makes up just under eighty percent of the passengers. Passengers seated there correspond to everyone who makes less than about $97,000 a year. Their share of total income in the US is just below fifty percent, and thus so is their share of the seating space. On the regular airline it was about fifty eight percent, so for these working stiffs the new arrangement is even more cramped than on our ordinary international flight. Economy Class passengers on Air Gini should expect less overhead bin space and more passive-aggressive interactions with the guy in front of them who insists on reclining his seat.

Up with the managers, meanwhile, things have become more compressed, too. Business Class travelers are just over eighteen percent of passengers, but now they get only fifteen percent of the space. That’s obviously still much better than Economy class, but it’s down from the thirty percent or so they had in the original plane. These fliers are almost all in the top quintile: in real-life terms, they correspond to everyone from just below the 80th percentile of the US income distribution up to just above the 96th percentile. Roughly, that’s households making between $97,000 and $280,000 a year. Yet many of them feel a little angry about how little space they have. Strange though it seems, some of those in the seats closest to the front of their section even feel somewhat poor—at least by comparison to those a bit further up the plane. Air Gini understands their situation and compensates them with a complimentary in-flight snack.

What has happened to make Business Class more cramped? The answer is to be found in Ruling Class. Sorry, I mean, First Class. On Air Gini, those eight most-valued passengers—three and a half percent of those on board—get thirty five percent of the available seating space. That’s a lot of legroom. So much, in fact, that as First Class passengers have spread out to take up the first third of the plane, Air Gini has been forced to replace the luxurious Business Class seats in the real-life configuration with still-comfortable but noticeably smaller chairs.

Not to worry, though. Air Gini’s eight First Class passengers can really enjoy themselves, which is the important thing. And yet, even here at the head of the aircraft, Air Gini’s layout hints that inequality may extend all the way up to the flight deck. Two of the first class seats are close to the front of Business Class, and behind a bulkhead. Awkward. Those passengers make about $300,000 a year. The passenger in the very front row, meanwhile, makes a hell of a lot more than that and has even more room to relax in than his peers. All things considered, you have to wonder exactly who is flying this plane—and more importantly, perhaps, who owns it.

Travel days

Posted: 24 April 2015 in Uncategorized
Tags: ,

Adkins_PC

A few travel days ahead. So, no posts until I return. . .

163050_600

Special mention

ferryman balloons

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, a cook in the U.S. Senate cafeteria, explains why he went on strike with hundreds of other federal contract workers in the nation’s capital today.

Every day, I serve food to some of the most powerful people on earth, including many of the senators who are running for president: I’m a cook for the federal contractor that runs the US Senate cafeteria. But today, they’ll have to get their meals from someone else’s hands, because I’m on strike.

I am walking off my job because I want the presidential hopefuls to know that I live in poverty. Many senators canvas the country giving speeches about creating “opportunity” for workers and helping our kids achieve the “American dream” – most don’t seem to notice or care that workers in their own building are struggling to survive.

I’m a single father and I only make $12 an hour; I had to take a second job at a grocery store to make ends meet. But even though I work seven days a week – putting in 70 hours between my two jobs – I can’t manage to pay the rent, buy school supplies for my kids or even put food on the table. I hate to admit it, but I have to use food stamps so that my kids don’t go to bed hungry.

I’ve done everything that politicians say you need to do to get ahead and stay ahead: I work hard and play by the rules; I even graduated from college and worked as a substitute teacher for five years. But I got laid-off and I now I’m stuck trying to make ends meet with dead-end service jobs.

A National Employment Law Project survey of federal contract workers [pdf] found that, of the workers they interviewed, 74 percent of these workers earned under $10 per hour; nearly 60 percent received no job benefits; and 14 percent are forced to rely on foods stamps to make ends meet.

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Special mention

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decline

Finally, attention is being paid to how much workers have been hammered over the course of the last couple of decades.

Neil Irwin, based on a report from the Hamilton Project [pdf], focuses on workers with less education (with either no high school diploma or with a high school degree or perhaps some college). And for good reason. As a result of a double shift—a shift away from manufacturing and other jobs that once offered higher pay to lower-paying food service, cleaning and groundskeeping jobs and, simultaneously, the fact that pay levels are declining in almost all of the fields that employ less-educated workers (so even those who have held onto jobs as manufacturers, operators and laborers are making less than they did a generation ago)—less-educated American workers saw a dramatic deterioration in their real wages from 1990 to 2013: a decrease of 20 and 13 percent in median wages for the respective groups of men and a decrease in 11.7 percent for women without a high school diploma (and only a 3.2 percent increase for women with a high school degree or some college).

Clearly, the majority of American workers (69 percent of men and 64 percent of women age 30-45) are being left far behind.

But so are more-educated U.S. workers. While they’ve seen their wages rise in real terms over the same period (6.5 percent for men with a bachelor’s degree, 12.8 percent for those with an advanced degree, and even more for women: 12.8 percent and 21.2 percent, respectively), it is still the case that their wages have not kept up with the enormous increase we’ve seen at the very top: 56 percent (which is the gain in average real income, with capital gains, of the top 1 percent from 1990 to 2013)!

chart

So, even though there are clear differences in the path for workers with different levels of education, their respective gains and losses over the past 23 years pale in comparison with the real winners: the tiny group at the top.

Update

The endpoints data probably also misses the fact that the wages of more-educated workers have stagnated since 2000. See these numbers from the Economic Policy Institute.

employment gap

Mainstream economists have, it seems, rediscovered what we’ve known since at least the middle of the nineteenth century: capitalism produces a relative surplus population of unemployed and unemployed workers. And that surplus of labor puts downward pressure on workers’ wages.

Back then it was called the “industrial reserve army.” I have referred to it since 2010 as the “reserve army of the underemployed.” David G. Blanchflower and Andrew T. Levin now point to the same phenomenon in terms of the “employment gap,” that is, the combination of conventional unemployment (individuals who did have a job, are now not working at all, and are actively searching for a job), underemployment (that is, people working part time who want a full-time job), and hidden unemployment (people who are not actively searching but who would rejoin the workforce if the job market were stronger).

What Blanchflower and Levin find is instructive.

First, the conventional unemployment rate has not served as an accurate reflection of the evolution of labor market slack.

it is evident that the U.S. economic recovery remains far from complete in spite of apparently reassuring recent signals from the conventional unemployment rate. Indeed, while the unemployment gap has become quite small, the incidence of underemployment remains elevated and the size of the labor force remains well below CBO’s assessment of its potential. In particular, the employment gap currently stands at 1.9 percent, suggesting that the “true” unemployment rate (including underemployment and hidden unemployment) should be viewed as around 71⁄2 percent. Gauged in human terms, the current magnitude of the employment shortfall is equivalent to about 3.3 million full-time jobs.

Second, in recent years, wage growth has been pushed down by a combination of the unemployment rate, the nonparticipation rate, and the underemployment rate. In particular,

we suspect that the wage curve is relatively flat at elevated levels of labor market slack, i.e., a decline in slack does not generate any significant wage pressures as long as the level of slack remains large. As noted above, our benchmark analysis indicates that the true unemployment rate is currently around 71⁄2 percent—a notable decline from its peak of more than 10 percent but still well above its longer-run normal level of around 5 percent. Thus, the shape of the wage curve can explain why nominal wage growth has remained stagnant at around 2 percent over the past few years even as the employment gap has diminished substantially. Moreover, our interpretation suggests that nominal wages will not begin to accelerate until labor market slack diminishes substantially further and and the true unemployment rate approaches its longer-run normal level of around 5 percent.

In other words, what Blanchflower and Levin have discovered is that there is a large relative surplus population of workers and that the existence of such a reserve army has a dampening effect on workers’ wages.

Now, all they need to do is discover a third component of what we’ve known since the Mohr wrote back in 1867: “The labouring population therefore produces, along with the accumulation of capital produced by it, the means by which it itself is made relatively superfluous, is turned into a relative surplus population; and it does this to an always increasing extent. This is a law of population peculiar to the capitalist mode of production”