The wealth gap between young and old people • Hacker News Board

Re: The wealth gap between young and old people

#51

Post by plonh » Fri, Jul 31, 2015, 7:51 AM UTC

TheOtherHobbes wrote: post #30

toomuchtodo wrote: post #12

Earlier quoted context omitted.

Don't forget wage stagnation over the last 40 years and the increased cost in college education (funded, yet again, by cheap credit backed by the federal government).

This. There's been a massive shift of wealth away from the middle classes. And college loans are just taxation by the back door - with the difference that instead of a graduate tax paid to the government, you pay a loan "tax" to the shareholders of the loan fund. In fact, taxation is increasingly privatised. Instead of paying taxes to government you pay a profit-surcharge on almost everything. This goes to corporate…

Dollars are illusory so they cannot rot. The government can always stimulate actual productivity by printing dollars to pass around.

Re: The wealth gap between young and old people

#52

Post by plonh » Fri, Jul 31, 2015, 7:53 AM UTC

refurb wrote: post #46

toomuchtodo wrote: post #37

Earlier quoted context omitted.

What would you define as non-monetary compensation besides health care benefits (which increase so quickly you could consider those benefits to stagnate as well).

Pension, 401k match, stock options, disability insurance, tuition reimbursement, etc. If you look at median income levels, they have grown substantially over the last 30 years.

Stock options are not part of the median income. Tuition reimbursement is far less than govt subsidized education and even regular private education cost in the past. Higher benefitd mean nothing if they are directly routed to massively inflated prices that offset the benefits for the same value delivered.

Re: The wealth gap between young and old people

#53

Post by ZeroGravitas » Fri, Jul 31, 2015, 8:54 AM UTC

falcolas wrote: post #22

Speaking only for myself and my parents - the factor here has been land. They both inherited several hundred acres of farm and ranch land, and purchased some land in-town when it was (inflation adjusted) $90,000, and is now in the $2-3 million range. They're both terrible at saving, their combined income was never over 50% of what I'm currently making, yet they have both been retired and comfortably living off these…

One of the political ideas that's been bubbling along for a century or so is the "Land Value Tax". It's generally agreed that it's one of the best possible taxes by wonks. If a new generation of renters comes along it may finally get traction (though politically, since the old vote more, maybe not).

http://www.economist.com/blogs/freeexchange/2015/04/land-val...

Re: The wealth gap between young and old people

#54

Post by traviagio » Fri, Jul 31, 2015, 9:13 AM UTC

So living in expensive cities like NYC/SF and London when you are younger is also becoming impossible. But we still do it... Heaps of us.

Re: The wealth gap between young and old people

#55

Post by hussong » Fri, Jul 31, 2015, 11:05 AM UTC

mikeash wrote: post #44

toomuchtodo wrote: post #40

Earlier quoted context omitted.

> Why does that count employee social security contributions, but not employer contributions? Both ultimately come out of your paycheck. Employer contributions don't come out of your paycheck though; for the business, its a cost of doing business.

It's specifically a cost of labor. The business spends $X on you as an employee, and you receive $Y. The difference between X and Y is tax. The fact that some of the difference is technically removed before the money is transferred to you, and some of it is technically removed after the money is transferred, makes no difference in the end.

In Germany, the employer's contribution to social security is tax-free for the employee and is a fully deductible cost for the employer.

Other benefits (company car, apartment, fuel etc.) are subject to employee's income tax beyond a certain threshold.

Edit: Taking a step back, there is simply a fundamental difference between taxes and payments to social security / different insurances.

Re: The wealth gap between young and old people

#56

Post by gorena » Fri, Jul 31, 2015, 1:21 PM UTC

11thEarlOfMar wrote: post #11

A couple of factors that play into this over the last 100 years: The prevalence of credit cards that increase the amount of depreciating goods young people can buy, and the long-term power of 401(k) investing. Expanded consumer credit, and it's appurtenant high interest rate cost, would tend to keep young people less wealthy towards the last half of last century. As credit card debt skyrocketed, savings rates plummet…

As a young person, not sure I follow the credit card thing - I guess I can see how it extends my spending power by N% per dollar spent (where N is your rewards percent), but other than that, and it makes spending more convenient, but it's just a debit card with better protections and a longer interval before the money is withdrawn from my account. N is fairly small and it only applies to money spent, not money earned.

Re: The wealth gap between young and old people

#57

Post by ForHackernews » Fri, Jul 31, 2015, 3:57 PM UTC

jandrewrogers wrote: post #16

jtzhou wrote: post #7

Earlier quoted context omitted.

True, but there is definitely a lot of staying power in those currently of retirement age, kicking the can down the road, with a growing proportion of the population over age 65 (20% in 2020 versus 9% in 1970) receiving the benefits of Social Security and Medicare which are largely unfunded. There will have to be a number of cut-backs in retirement benefits for future retirees, including means-testing, removing the m…

The reason there is a maximum on Social Security contributions and no means testing is that it is strongly marketed politically as a universal retirement account. Many of the system's characteristic are designed to ensure this perception. You receive Social Security roughly proportional to your contribution. This positioning is very important to the political support because there is the pretense of having earned it.…

People are dumb and don't pay close attention. I say raise the contribution cap, but don't means test it. That way everyone is still "paying in" and "getting back" the way they are now, but the extraordinarily wealthy will pay in much more than they receive. The average voter will continue to see SS as something "earned" rather than the entitlement program it [already] is.

Re: The wealth gap between young and old people

#58

Post by refurb » Fri, Jul 31, 2015, 4:38 PM UTC

plonh wrote: post #52

refurb wrote: post #46

Earlier quoted context omitted.

Pension, 401k match, stock options, disability insurance, tuition reimbursement, etc. If you look at median income levels, they have grown substantially over the last 30 years.

Stock options are not part of the median income. Tuition reimbursement is far less than govt subsidized education and even regular private education cost in the past. Higher benefitd mean nothing if they are directly routed to massively inflated prices that offset the benefits for the same value delivered.

Stock options are not part of the median income.

I agree. What I'm saying is that average income might not have risen, but median income has. To suggest wages in general have stagnated isn't true.

Re: The wealth gap between young and old people

#59

Post by BrandonMarc » Fri, Jul 31, 2015, 4:49 PM UTC

One of the most important points that the paper makes is that everyone’s income and wealth tend to follow a kind of natural pattern during their life. [People under 40] haven’t been working for many years, so they don’t have an opportunity to save as much; they also need to make investments in things like education and new home ownership. [People in their 40's and 50's] have worked long enough they start to accumulate wealth rapidly.

I don't mean to SHOCK you, but did you know there's a massive age gap between young and old people? Also, an experience gap. Something Must Be Done About This!

Re: The wealth gap between young and old people

#60

Post by dragonwriter » Fri, Jul 31, 2015, 4:51 PM UTC

refurb wrote: post #46

toomuchtodo wrote: post #37

Earlier quoted context omitted.

What would you define as non-monetary compensation besides health care benefits (which increase so quickly you could consider those benefits to stagnate as well).

Pension, 401k match, stock options, disability insurance, tuition reimbursement, etc. If you look at median income levels, they have grown substantially over the last 30 years.

> If you look at median income levels, they have grown substantially over the last 30 years.

You have mean and median reversed. Mean inflation adjusted income has increased substantially, median inflation-adjusted income has declined. That's because the distribution of income has become more concentrated.