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Thursday I posted my thoughts on the GINI rating and how it pertains to income here in America.  In that post, my main thrust was the fact that GINI, as reported when comparing national income disparity rankings, was comparing household incomes.  Not the incomes of individuals, but of households.

And I think that’s important.  As I demonstrated in that post, taking these two families:

  • Family A making $60,000 a year
  • Family B making $70,000 a year

Looks to be fairly equitable.  But now let’s consider that family A and family B get divorced, created 4 households out of two.  Then the breakdown looks like this:

  • Family A making $0 a year
  • Family B making $28,000 a year
  • Family C making $32,000 a year
  • Family D making $70,000 a year

THIS looks to be dramatically different.  However, the same four families in the second picture are the individual household represented in the first picture.  Remarkable, yes?

So, how do things look in real life?  Let’s take a look at the US Census Bureau’s Current Population Survey for 2010:

Descriptor Lowest Fifth Second Fifth Third Fifth Fourth Fifth Highest Fifth
Family Households 9,411 13,969 16,162 18,543 20,528
% 12 17.8 20.6 23.6 26.1
Married Couples 4,037 8,521 11,587 15,270 18,621
% 7 14.7 20 26.3 32.1
No Earners 14,805 7,037 3,327 1,496 722
% 54.1 25.7 12.1 5.5 2.6
One Earner 7,845 12,474 11,488 7,853 5,263
% 17.5 27.8 25.6 17.5 11.7
Two Earners 1,020 3,790 7,702 11,700 13,258
% 2.7 10.1 20.6 31.2 35.4
Three Earners 55 379 1,040 2,112 3,119
% 0.8 5.6 15.5 31.5 46.5
Four Earners 5 58 180 577 1,377
% 0.2 2.6 8.2 26.2 62.7
Aggregate Earners 10,240 21,940 31,595 41,125 48,338

The data is remarkable.  Let’s go through it bit by bit.

First, the “Fifths” listed at the top is earnings by quintile.  That is, the poorest 20% is the “Lowest Fifth” while the richest 20% is the “Highest Fifth”.

Now then, the data:

Households that are “families” is a massive indicator of income.As the percentage of families in each fifth increases, so does the wealth.  The same goes for married couples.  The top fifth has nearly 5x the number of married couples as the bottom fifth.  Seems that family is important in wealth creation.

Family aside, the powerful statistic that I took away was the number of earners in a household.  And what I found matches exactly with the phenomenon I described in my earlier post.

Of the households in the bottom fifth, more than HALF don’t have a single wage earner in the household.  More than half.  While the top 20% has only 2.6% of households that don’t qualify as a wage earner.

Further, if you look at the “Lowest Fifth” as a column and march down, you’ll see that fewer and fewer of those households have the described number of earners.  Starting at the top, this segment of the population has 54% of households with 0 wage earners.  While at the bottom, it has but .2% of the households with 4 wage earners.  The exact opposite is true of the “Highest Fifth”.

In short, it would seem that as a household has more wage earners, that household moves from one of the fifths to another.  And to the extent that this is true, look at the last line; aggregate earners.

The “Lowest Fifth” has 10,240 members.  The fifth that earns twice as much money as the lowest fifth has twice as many wage earners.  The fifth that makes three times as much as the lowest fifth has three times as many wage earners.  The fourth has four times as many wage earners.  And the highest has five times the number of wage earners.

This is true almost to the exact number.

The data presented above tells me that we don’t have an income disparity issue.  We have a family structure issue.  If you take a single wage earner in a household and compare that household to one with 4 wage earners, it should be no surprise which of the two households makes more money.

And lest there be any doubt.  The “Highest Fifth”?  They are some working sums -o- beetches.  Fully 62.7% of those households have FOUR wage earners.  This is not the lazy rich that the OWS and the ((% make them out to be.

A few days ago I posted a story about OWS protestors in LA who realized that their protest camp was being infiltrated by imposters and homeless:

Anyway, this nicely frames this nugget:

Homeless transplants from the city’s Skid Row have set up their tents within the larger tent city. No violence has been reported, but protest organizers are attempting to discourage people who are only at the encampment for the amenities.

I smiled and said, “Welcome to the 53%!”

Now, to be very clear, I do NOT think the OWS crowd is obligated to serve food and provide shelter for people who are not members in their group.  The people who are organizing any individual movement and group is working hard, I am sure.  However, what they are protesting subjects them to a degree of tolerance that would not otherwise be applied to other organizations.

See, the 99% feel that other people in the world should labor for their direct benefit.  These people honestly feel that they deserve a “living wage”, free college and healthcare.  Gone is the concept that any and all of these things require that an individual, somewhere-anywhere, labor for the benefit of the 99% and not themselves.

This is, of course, crazy and no one really supports it.

See, what’s happening is that protesters have organized into roles.  One of those roles is to cook and prepare meals for the other protesters, in theory, so that they can focus on other tasks that are required.  Perhaps this is park cleaning, garbage removal, sign making and library tending.  This makes sense.  Just like in life, specialization of tasks is more efficient and better serves the community.

However, because of the nature of the camps, homeless and other non-protesters are coming for the meals.  And the folks who are contributing are getting fed up; they are tired of supporting those who don’t contribute in other ways.

Again, no one supports requiring people to labor for those who don’t contribute.

And the proof that no one supports it is the fact that those protesting for just such that condition are opposed to that condition when they are the ones being asked to contribute money and labor.

Hat tip Boortz.

To show they mean business, the kitchen staff refused to serve any food for two hours yesterday in order to meet with organizers to air their grievances, sources said.

The Assembly announced the three-day menu crackdown announced earlier in the day — insisting everybody would be fed something during that period.

Some protesters threatened that the high-end meals could be cut off completely if the vagrants and criminals don’t disperse.

Unhappiness with their unwelcome guests was apparent throughout the day.

“We need to limit the amount of food we’re putting out” to curb the influx of derelicts, said Rafael Moreno, a kitchen volunteer.

See, they understand.  They GET it.  And when faced with the prospect of laboring for those who don’t contribute in a meaningful way, they react by reducing the “welfare” they provide to “vagrants”.  Further, these people understand the power of incentives.  They know that if they put out more and more “stuff” they will get more and more “derelicts”.  The reverse seems to be obvious.  Reduce the quality of the “stuff” and the “derelicts” go away.

I so do love the free market.

There’s an old joke:

While speaking with a friend’s daughter, I asked what she wanted to be when she grew up.

Marcia proudly announced, “I want to be President!”

This caused her parents, both of whom are liberal Democrats, to beam with pride.

I then inquired, “If you become President, what is the first thing you would do?”

Marcia replied, “I would give houses to all homeless people.”

“That is a worthy goal,” I said, “but you don’t have to wait until you’re President to do that.  You know our dog, Poco?  Well, he likes to poop in our backyard and I have to clean that up.  I’ll pay you $5 a week if you’ll do that for me.  Then I’ll then take you to see a homeless man up there by the grocery store so you can give him the money to help him buy a home.”

Marcia looked at me and asked, “Why don’t you ask him to clean up the poop himself?”

I smiled and said, “Welcome to the Republican Party.”

I laughed out loud, really, when I came across the real life version of this:

PORTLAND, Ore. (AP) — When “Occupy Wall Street” protesters took over two parks in Portland’s soggy downtown, they pitched 300 tents and offered free food, medical care and shelter to anyone. They weren’t just building, like so many of their brethren across the nation, a community to protest what they see as corporate greed.

They also created an ideal place for the homeless. Some were already living in the parks, while others were drawn from elsewhere to the encampment’s open doors.

I think this gets a little fuzzy.  I say that because I think there are dangers when personal obligations mingle with State obligations.  See, this is where the Left is able to effectively hammer the Right.  See, it is ABSOLUTELY our personal responsibility to perform charitable work for those of us less well off.  However, that same responsibility does not exist for the government.

Anyway, this nicely frames this nugget:

Homeless transplants from the city’s Skid Row have set up their tents within the larger tent city. No violence has been reported, but protest organizers are attempting to discourage people who are only at the encampment for the amenities.

I smiled and said, “Welcome to the 53%!”

All of us are trying to figure out this #OWS stuff and  how it impacts us.  The opinions ranges from one of skepticism and disgust to respect and admiration.  Clearly the movement is having an impact.

My personal reaction to the movement is one of disdain.  It’s my understanding that these folks are upset that 1% of the people control more than 1% of the wealth.  That the remaining 99% of the population is somehow getting screwed.  To be sure, there is some version of protest that speaks to the very elite rich manipulating the “system” to their advantage in a way that endangers our economic fabric, but I firmly believe these people to be few and far between.

What we are seeing is a bunch of folks upset that there are rich people.  Or rather, who have more money than they have.  But is that the real picture?

Let’s take a look at the top 1%:

I sit in an interesting chair in the financial services industry. Our clients largely fall into the top 1%, have a net worth of $5,000,000 or above, and if working make over $300,000 per year. My observations on the sources of their wealth and concerns come from my professional and social activities within this group.

…a family enters the top 1% or so today with somewhere around $300k to $400k in pre-tax annual income and over $1.2M in net worth.

Okay, so that’s a lot of money.  A TON of money.  I can remember a time when earning that kind of money was stupid.  In fact, earning that kinda money for me is STILL stupid.

But let’s go further:

The 99th to 99.5th percentiles largely include physicians, attorneys, upper middle management, and small business people who have done well….

The net worth for those in the lower half of the top 1% is usually achieved after decades of education, hard work, saving and investing as a professional or small business person.

Decades.  Hard work. Saving.  Investing.

Decades.  That is, these folks didn’t “come into” this money, they earned it.  EARNED it.  By working, risking and sacrificing.  THAT is the lower half of the 1%.  Which means that we are now talking about the top half of the 1%.

The whole read is fascinating.  But I’ll leave you with what the author leaves us with:

I could go on and on, but the bottom line is this: A highly complex set of laws and exemptions from laws and taxes has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes. They have real power and real wealth. Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%.

I think this is true.  I am willing to believe that the top 0.01% of Americans have much if not all of the power and influence in this country.  Which, by the way, turns out to be about 32,243 people.  And we’re not really talking about people, we’re talking about families.  So it could be half that.

If the cost of 99.99% of us living like relative kings is having 16,000 of us live lives that we can only dream of?  Well, hell, I’m willing to pay that.

Don’t ever forget.  Ever.  That we have a life that would have been the envy of the richest people of the world just 50 years ago.  Imagine what the world’s wealthiest would have paid for what we now see as everyday convenience.