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Although executives and managers lead the way, in large part, the answer is doctors. See the chart below.
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Tags: 1%, Inequality
Many economists have lamented that income inequality has grown over recent decades. Although it is true that wage inequality has increased, compensation inequality may not have. When I mention “compensation inequality,” I refer to the total package of compensation that a worker receives. This includes wages, health insurance, 401(k) benefits, and other non-wage forms of compensation. In previous posts, I have mentioned that once health insurance is taken into account, inequality may in fact be shrinking.
A recent NBER working paper by Burkhauser and Simon (2010) also shows that inquality is in fact decreasing once one taking into account health insurance costs. This chart provides information on changes in income and total income between 1995 and 2008. Income includes only raw wages, but “total income” also takes into account workers compensation in the form of health insurance. The authors use this evidence to claim that “…ignoring the value of health insurance coverage will substantially understate the level of economic well being of Americans and its upward trend and overstate the level of inequality and its upward trend.”
Tags: Health Insurance, Income, Inequality, Wages
Many economists have noted that wage growth has not kept up with overall economic growth over the past few decades. We observe widening wage inequality since the 1970s. Are workers getting poorer relative to the owners of capital? Is a communist revolution needed to equalize the playing field?
Economist Martin Feldstein thinks not.
“Feldstein concludes that…measurement mistakes have led some analysts to conclude that the rise in labor income has not kept up with the growth in productivity. The first is a focus on wages rather than total compensation: because of the rise in fringe benefits and other non-cash payments [such as health insurance], wages have not risen as rapidly as total compensation. Feldstein feels it is important to compare the productivity rise with the increase in total compensation rather than the increase in the narrower measure of just wages and salaries.”
Since health insurance costs have been increasing more than inflation over time, overall employee compensation has risen at about historical rates. Of the compensation workers receive, however, a larger and larger percentage is going towards health insurance. This is especially true for low income workers. This is a point I made in a post in January 2007.
Tags: Employee Benefits, Inequality, Labor Economics, Wages
Income inequality has generally increased since the 1970s. Even for researchers who find that income inequality has Does this mean that happiness inequality has also increased? An NBER working paper by Betsey Stevenson and Justin Wolfers claims that this is not the case. Below is the a portion of the abstract.
While there has been no increase in aggregate happiness, inequality in happiness has fallen substantially since the 1970s. There have been large changes in the level of happiness across groups: Two-thirds of the black-white happiness gap has been eroded, and the gender happiness gap has disappeared entirely. Paralleling changes in the income distribution, differences in happiness by education have widened substantially…Juxtaposing these changes with large rises in income inequality suggests an important role for non-pecuniary factors in shaping the well-being distribution.
Tags: Happiness, Inequality
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