(Roughly) Daily

Posts Tagged ‘income

Rich and richer…

click image above, or here, for larger interactive version

One can use the interactive chart above (which is based on income tax data, and is adjusted for inflation to 2008 dollars) to see how average incomes in the U.S. have grown as between any two years from 1917 to 2008, and how that change was divided as between the richest 10% of the population and the remaining 90%.

The Wall Street Journal reports today that

A newly resilient U.S. economy is poised to expand this year at its fastest pace since 2003, thanks in part to brisk spending by consumers and businesses.

In a new Wall Street Journal survey, many economists ratcheted up their growth forecasts because of recent reports suggesting a greater willingness to spend.

One wonders how…  indeed, one wonders how long the dynamic that’s defined the last two decades is sustainable in what is fundamentally a consumer-driven economy.

[TotH to @cshirky for the lead to the tool]

As we ponder the different kinds of heart we might celebrate on Valentine’s Day, we might recall that it was on this date in 1967 that Aretha Franklin recorded “Respect” (with her sisters Carolyn and Erma singing backup).  The tune had been written and recorded by Otis Redding two years earlier, and had done well on the R&B charts.  But Atlantic Records exec and producer Jerry Wexler thought that the song was especially suited to showcase Aretha’s vocal gifts, and had the potential to be a cross-over hit.  He was, of course, right on both counts.

“…what remains after one has forgotten everything he learned at school.”*

A guest post from Scenarios and Strategy (here, with an almanac entry)…

The Bureau of Labor Statistics reminds us that it’s smart to stay in school:

But as Calculated Risk reports, while unemployment among the best educated is still lowest, it’s increased as much in percentage terms for them during this current recession as for any other group.

click to enlarge

One notes that all four groups** were slow to rebound after the 2001 recession– not an encouraging reminder if one is hoping for a brisk employment-led, consumption-fueled recovery this time around.

But in some ways more striking is a difference we might expect, but that hasn’t yet emerged.  Calculated Risk:

I’d expect the unemployment rate to fall faster for workers with higher levels of education, since their skills are more transferable, than for workers with less education. I’d also expect the unemployment rate for workers with lower levels of education to stay elevated longer in this “recovery” because there is no building boom this time. Just a guess and it isn’t happening so far … currently the unemployment rate for the highest educated group is still increasing.

Clearly, from an individual’s point-of-view, it’s still smarter to get more education than less.  But the perturbations of past periods remind us that the gearing between between academic degrees and financial success isn’t always perfectly tight…  Indeed, those with sharply-defined professional credentials in fields– e.g, finance– that are unlikely even in the intermediate term (if ever) to recover their bubble-fueled growth rates, may find their advanced degrees at best unhelpful; at worst, downright prejudicial.

Economic recovery and growth will be driven to some large extent by innovation; that innovation will create new– and new kinds of– jobs.  Looking even just five years out, much less ten, one has to admit that it’s just not possible to predict what these emergent jobs, nor their requirements, will be.  (Consider, e.g., the hottest topic– and job category– in marketing/advertising these days: “social media marketing”…  which wasn’t even a glimmer a decade ago, and was just being born five year ago.)  This is a challenge for those new to the work force, who have to wrangle the product of their schooling and their personal experience into a shape that can fit the entry-level positions they seek.  It is a much bigger challenge for those  mid-career who find themselves needy of making a move:  these more mature folks have not only to learn new fields, they also have to re-direct the considerable momentum of perception and habit that characterized their old– and they have to do those things, usually, in ways that justify salaries way north of entry-level.

All of which underlines for your correspondent the extraordinary value of a liberal arts education.  When one is faced with a “working adulthood” that is one transitional challenge after another, no skill is more valuable than the capacity to adapt.  And no capability is more central to that adaptation than the ability effectively and efficiently to learn.

This is precisely what, at its core, a liberal arts education is about:  learning to learn.

There are many, many other reasons, rooted in personal and societal benefits, to pursue a liberal arts education, and top support a strong foundation of liberal arts in higher education.  But the lessons of the last couple of years– indeed, of the last several decades– suggest that the economic rationale is plenty strong as well…

And besides, it’s fun.

* “Education is what remains after one has forgotten everything he learned in school.”
- Albert Einstein

** To put these cohorts into perspective, the Census Bureau suggests that, of these folks “25 yrs. and over” (in 2008):
- 13.4% had less than a high school diploma.
- 31.2% were high school graduates, no college.
- 26.0% had some college or associate degree.
- 29.4% had a college degree or higher.

UPDATE:  Reader JK directs our attention to another treatment of the data, in the NY Times. As he suggests, even more dramatic.

As we revisit our course catalogues, we might recall that it was on this date in 1933 that Congress passed the Emergency Banking Act, the first major legislative step in Franklin Delano Roosevelt’s New Deal  program.  The sense of urgency was sufficiently high– four days earlier Roosevelt had declared a “Banking Holiday,” closing all of the nation’s banks– that most legislators passed the Act without even reading the single copy that was available for review.  The EBA gave the government authority to shutter insolvent banks; that, coupled with the Federal Reserve’s informal-but-explicit pledge to guarantee the deposits of banks allowed to reopen (de facto deposit insurance), eased the crisis of public confidence:  within two weeks of banks’ re-opening on March 13, Americans had re-deposited over half the cash they’d withdrawn and hoarded through the period of bank failures that marked the first chapter of the Great Depression.  Later that year, the (more considered and embracing) Banking Act of 1933 replaced the EBA, and established such lasting practices and institutions as the FDIC.

Roosevelt signing the Emergency Banking Act

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