Much was made of the report yesterday showing a record inflation adjusted 5.2% gain in income last year, an impressive figure to be sure. That said like so many headlines the closer one looks at the details the worse it gets. The record 5.2% gain went largely to the lower income percentiles particularly those 60% and below, so far so good. That said all of the income gains went to urban areas as rural areas saw no income gain. Put another way urban income increased by a very substantial 7.2%, rural workers got nothing. While the gain is a huge step in the right direction earned income remains 1.6% below that seen in 2007 before the last crisis and more importantly 2.4% below the previous peak achieved in the late 90’s over 20-years ago. In fact, using Census data going back to 1967 we find that very nearly all of the income gains accrued went to the top 5%.
International Monetary Fund chairwoman Christine Lagarde facing corruption charges is out making the rounds discussing the evils of globalization with respect to developed economies joining the McKinsey Institute who also noted of late that globalization has been a disaster for workers in developed countries forced to compete with their developing country counterparts. This is one of the primary reasons wages have gone nowhere in 20-odd years. She went on to note that corporations were unaccountable, corruption was rife and that these items and others had fed record inequality leading to substantial social discontent, as it historically does.