Almost Classical

My wife and I have been in the top ten percent off and on for a few years. We've even made it, briefly, into the top five percent. And, like most people in those "upper-class" categories, we quickly fell back out of the top tier of households.  Why is that?  For one thing, high incomes tend to be temporary "blips" related to "good years" for some professions. The highest earners are not salaried workers with steady, predictable incomes. Instead, the highest earners are glorified freelancers: doctors, lawyers, consultants, and other specialists.  Some years are great for professionals. You might have an unusual number of surgeries if you're a doctor. Maybe you win a windfall case if you're a lawyer. A consultant lands one great contract. The money flows in for that year and you stash some away. Because, as the upper-middle knows, that one year is pretty rare.  Eleven percent, slightly more than one out of every ten adults in the...

Being "smart" (or at least hard-working with the opportunity to learn) matters, regardless of the economic class into which you are born. As even the most progressive, class-conscious scholars have found, a college education (in the STEM fields, ideally) at a good school corresponds well to later economic success.  A year ago, The Atlantic featured this story: Would You Rather Be Born Smart or Rich? http://www.theatlantic.com/business/archive/2013/12/would-you-rather-be-born-smart-or-rich/281828/ JORDAN WEISSMANN DEC 2 2013, 12:17 PM ET A recent Brookings paper gives reasons for optimism. Over the long term, it finds, smart kids earn more than rich kids. But sadly, there's a big catch. The Brookings paper looked at the relationship between brains, motivation, and economic mobility among a group of youth the government began tracking in 1979. Here's the executive summary: If they were bright and driven, poor kids stood a decent chance of becoming upper-midd...

My wife and I are fortunate, and we are hard working. Which of these traits should be first? I cannot answer with certainty. We moved to our current home in 2011 for what seemed like a perfect job. It wasn't. Yet, I was "lucky" because we ended up in a region with several great universities, a wonderful performing arts community, and many other benefits. These institutions, however, require that you be prepared to take advantage of their existence. I worked hard for my doctorate, and my wife worked hard for her master's degree. We prepared ourselves for opportunities, when they might appear. Only a few years ago, we had nothing. We lost everything and I received the earned income tax credit (EITC), which I still believe was odd, since I didn't request it. I read a study that claimed in simulations, with everyone starting equal, the successful outside the simulation end up successful in the game. The theory is, that some people just rise to the top, even...

The rich are not "smarter" as the following headline suggests — but they do attend elite universities and major in the more demanding academic fields. When this article appeared in May, I was winding down my first year at an elite institution, in its business school. If many of my students are destined for wealth, is it because they are smarter, more gifted, harder working, born to the right families? What is it that takes someone from the middle-class (or nothing) to extreme wealth? The rich are different—they're smarter, study says http://m.cnbc.com/us_news/101679720 —By CNBC's Robert Frank. CNBC.com | May 16, 2014 | 11:12 AM EDT Economist Paul Krugman recently wrote that the multibillion-dollar salaries of top hedge fund managers proved that education plays little role in the growing wealth gap. The rich get rich, he said, because of the "runaway financial system" and investors making money from money. "Modern inequality isn't about gra...

I dislike the notion of a "minimum wage" but recognize that it isn't about to be abolished. And, there is the sad reality that many companies don't recognize that employees are the value behind any business or non-profit. Organizations are their people. My first problem with the national minimum wage is that any nationwide standard ignores the cost of living variations from region to region. Beyond that, we have issues of how to set a minimum wage, how to index it to inflation, and many other complicated issues. If you set rates by region, would you also have regional inflation indices? What about tiered minimums, based on age or other variables? There are already odd exemptions to the minimum wage, namely in the dining industry. Should there be a full-time minimum wage apart from a part-time minimum? How many people working 40-hour weeks earn the minimum wage? If they do earn the minimum, for how long do they earn this before their first raises? How long before...

This is both depressing and, sadly, understandable. Poll: Most say redistribute wealth - Kevin Robillard - POLITICO.com Nearly 6 in 10 Americans say wealth is distributed unfairly in the United States, and a majority want the federal government to play Robin Hood to fix the problem, according to a poll released Thursday.  Only 33 percent of Americans think the current distribution of wealth in this country is fair, according to the Gallup Poll, while 59 percent say it is not. Fifty-two percent said the United States should redistribute wealth through heavy taxes on the rich, while 45 percent disagreed. What is "fair" income distribution? How can the government make things "fair" when most of the elected leaders (and many of the bureaucrats) are in the upper-class? States with high taxes on the highest income earners, such as New York and California, have cities with some of the greatest wealth gaps. If the most "progressive" places cannot make thi...

There have been a great many blog posts and columns written since President Obama spoke on July 13, 2012. Many of his defenders have tried to "correct" any confusion about what his words meant, arguing that his statements were misinterpreted by the press and taken out of context by opponents. As Charles Krauthammer rhetorically asks, "Did the state make you great?" http://www.washingtonpost.com/opinions/charles-krauthammer-did-the-state-make-you-great/2012/07/19/gJQAbZOiwW_story.html The problem for Pres. Obama and his supporters is that his argument is deeply flawed. We do succeed with the help of friends, family, church, non-profit organizations, and, yes, government (generally of the local variety). But, many people have the exact same access to all these various supports… yet some succeed and some fail. Also, a simple point of fact: government is the people, not something outside and above the people. Without successful people paying taxes, there would b...

As a university professor, I obviously believe in the value of higher education. However, I also remind my students that education alone is only part of the equation when you seek entry into the elite circles of our nation or any culture. In any system, the elites end up together. The problem for the United States is that we aren't supposed to be governed exclusively by Harvard or Yale graduates. We are supposed to reject the Cambridge and Oxford model of British leadership and definitely be "better" than the supposedly merit-based system of the French. The French system openly resists the "lower classes" by refusing to consider personal backgrounds in admissions. While I don't embrace affirmative action quotas, trying to block qualified candidates from the middle and lower classes is absurd. The Conference of Grandes Ecoles, leaders of the 23 leading French universities, continues to resist orders from Pres. Sarkozy to admit at least 30 percent of stude...

If everyone earned no less than $30,000 and no more than $50,000 a year, we'd have far greater "mobility" between classes. So argues the chattering class, most of whom occupy the evil top one percent. No, that's not what they are saying and writing, but they are complaining that the United States has less social mobility than other nations. The problem? Those nations have less mobility because they have artificial floors and social limits on how far people can climb. To which nation was the U.S. compared by the New York Times? Denmark. American men born in the bottom quintile are more likely to stay there than the Danish, according to a study of earnings across generations. — http://www.nytimes.com/interactive/2012/01/04/us/comparing-economic-mobility.html?ref=us Denmark? Compare education attainment. Compare the makeup of the society, including such factors as immigration and emigration. This is a strange comparison. Denmark, unlike the United States, is inc...

There are some tidbits in this column worth exploring when I have a bit more time. Rich America, Poor America - The Daily Beast Niall Ferguson uses the publication of Charles Murray's Coming Apart as a starting point for an analysis of the left-right divide on the causes and cures for income disparity in the United States. Ferguson begins with a clear summary of the problem. There is no question families are drifting further apart at the extremes of the income scale. This is not a 1 percent versus the 99 percent issue, it is most extreme at the top 0.01% and the bottom 10% according to most economists. The bottom is falling, skewing averages, and the top is… well, read for yourself: Adjusted for inflation, the income of the average American male has essentially flatlined since the 1970s, according to figures from the Census Bureau. The income of the bottom quarter of U.S. families has actually fallen. It’s been a different story for the rich.  According to rece...

I've been reading a lot about the end of the American Dream. Class mobility? A myth. The idea that hard work and good choices lead to success? A lie meant to placate the masses. Yet, as I've written before, there is ample evidence that hard work, a stable family, and some relatively simple choices do lead people in the middle class. See: http://almostclassical.blogspot.com/2011/03/wealth-disparity-myths-and-realistic.html As I wrote in that post: 86% of the wealthiest households are married couples. 20% of the poorest households feature a married couple. $56,000 is the median income for a person with a bachelor's degree. $19,000 is the median income for someone without a high school diploma. $36,000 is the median income for someone with a two-year college degree or technical certification. The basic formula for reaching the upper-middle class (or better): get a degree, get married (and stay married), exercise, and avoid "bad" habits (smoking, drugs,...