Lets say that your first job out of College pays $13,000/year. What situation would you prefer to be in after 5 years?
Situation 1 - Earning $52,000/year
Situation 2 - Earning $100,000/year
If the US had low income inequality as countries like Japan, Finland, Sweden, German, etc... Situation 1 would show you rising from the bottom 20% of Americans to the top 20% of Americans. That's some great income mobility!
But, the US has high income inequality. You can be in situation 2, and still not be considered part of the top 20%. You would be a poor, disadvantaged person, in a country with low income mobility. Even though your income increased by over 600%, you would be considered better off in Situation 1 in a country with low income inequality.
I have scoured the internet, and nobody that I can find has done a study of income mobility that accounts for the differences in income inequality. In some countries you can triple your income to go from the bottom 20% to the top 20%. In the US, you have to multiply your income by 7 or 8 times to achieve the same feat.
So, the real question: Are you worse off in the US if you double your income from 20k to 40k, than you would be in Sweden if you doubled your income from 20k to 40k(equivalent dollars)?
Income mobility studies say yes. I say no. What do you say?
Truly interesting question.
Being in the highest income section has certain benefits in and of itself in a comparative sense, economies are becoming more globalized but within a country being able to invest more that others can is a personal economic advantage so the person with the largest comparative income has an advantage in this sense, so in that way the person earning 40 000 in Sweden is better off than the person earning 40 000 in the US because they are closer to being in the upper echelon of investment capability. Sorry, I think I have explained this poorly.
I do understand what you are saying, but I don't think it would be possible to measure the 'relative advantage' that you get from being in a higher quintile.
Would you say the person who makes 52k is better off than the person that makes 100k?
It really depends in so many ways, in New Zealand (which I am a semi citizen of) if I make 52 000 a year I also get free healthcare, a lot more in the area of workplace rights and privileges, etc. I also as I mentioned earlier have the relative wealth advantage not to mention that the college earlier discussed was essentially free and my living expenses were paid for me during that period etc. etc. Essentially I can't give a complete answer. The US's quality of life is in at #31 now though I believe... There is a lot more to being better off than raw wages.
See Josak, what I am doing is eliminating variables, so we can look at one concept, unadulterated. You are trying to complicate things to obscure the actual point.
All things equal, except for a country's income inequality, you could believe that the person making $100,000 is worse off than the person making $52,000. If you can't understand that, I don't know how to make it simpler.
That's why just looking at income mobility doesn't work. Nobody has any idea what it actually means.
As far as your other points, healthcare doesn't cost $50,000/year. The person is already out of college, so education doesn't matter. Purchase Power Parity in NZ is 32% higher, which means the $52,000 would actually be $39,000, compared to the US's $100,000.
And stop with the healthcare ranking crap. You know those rankings aren't correct, I've thoroughly shown why they aren't.
If you want to compare healthcare systems, I want to see a ranking that actually compares the efficacy of treatment of specific illnesses across countries. You won't do that though, because cancer is one of the few illnesses that has had that kind of study done, and the US ranked #1.
It is taking me a while to understand this, and so I want to try to rephrase it to see if I actually did grasp what you have asked.
In a low-income-inequality country, a move from $13,000/year straight out of college to $52,000/year five years later would be a move from the lowest 20% income bracket to the highest 20% income bracket in that country.
In a high-income-inequality country, a move from $13,000/year straight out of college to $100,000/year five years later would be a move from the lowest 20% income bracket to a higher bracket, but still nowhere near the highest 20% income bracket within that country. (But you don't specify the bracket.)
And, I believe you are implying, anything less than the highest 20% income bracket would be considered to be poor and disadvantaged. Is that possible?
It sounds like you are defining "success" or "wealth" only in terms of how one's improved status relates to the highest income bracket, rather than how it achieves the desires and goals of the person with the improved status. Am I correct?
I personally don't view wealth the same way, but I do agree that it is an interesting question.
EDIT: Actually, another important consideration (IMO) is the buying power of that income, aside from any percentage of increase.
Right. In this situation, that would put you in the second-highest 20%. However, if you just look at the person from an income-mobility standpoint, you would think they weren't doing as well. After all, they only went from the lowest to second-best, where the other person went from the lowest to the best.
I use sarcasm, my point is that it's stupid to consider income mobility this way, and compare countries. Why would anyone think the person making 100k, in the second-from-top bracket is worse off than the person making 52k, in the top bracket? When you see articles that say income mobility is higher in Europe than the US, that's what they are saying.
That's how all income mobility comparisons define success and wealth. I'm trying to show people that it's not a good way to look at the issue.
That's why I just used equivalent dollars. The US actually has the best average disposable income, adjusted for purchasing power.
Thanks for looking. I wish we could get people to look at what these studies mean, rather than just parroting the ill-conceived conclusions that the media(and study authors) often put out there.
If I graduated from college, I wouldn't be interested in a job. So, the rest of your post is meaningless.
I would prefer to be doing what I am doing, (a) working for myself instead of working for someone else and (b) your income options are meaningless because they are simply too low in expectations with 5 years of growth.
But, do try to have fun with this. I'm pretty sure someone will come along and have their arguments.
Well, I wouldn't prefer a job either, but that's beside the point.
I'm fairly expecting this to be largely ignored, and a few people to come in and state that 'income mobility is low in the US, here is a news article to prove it'.
The ironic part that will keep me laughing, is all the uproar over the critical thinking issue. We can't have people taking away our critical thinking, but heavens, let's not try to think critically either.
I find it more on point than most realize, but it's okay if you don't see it as the point.
I would prefer people to use Critical Thinking than not. But, then again, I'm also of the understanding that Critical Thinking is necessary to make the next evolutionary step in consciousness, which will bring about Integrated Thinking.
It just shows that the amount of distortion and misinformation out there seems to be doing the damage it was meant to do, while others who do possess Critical Thinking hamper those who don't understand that they are suppose to think Critically. Many people don't possess the ability to think Critically because it was never taught to them in the first place.
I think you need to look at quality of life and buying power.
How much does $52K in Sweden actually buy in in terms of my life vs. $100K in the US?
How many hours a week do I have to work to earn that salary?
Can I live comfortably?
Can I afford to live in the house I want in the city or neighborhood I want?
Can I afford to have a family and have my spouse stay home if s/he wants to?
Can I afford daycare for my kid (I know, 5 years out of college might be a little soon for starting a family, but its possible)?
Can I afford food, clothing, transportation?
Can I afford vacations?
Does the income I earn translate into the same quality of life in both places?
I know you are wanting to compare only one dimension, high income inequality and low income inequality. But I think "income" itself is sort of meaningless without giving it some context.
It's fine to look at those things MM. Notice that your questions have nothing to do with income mobility, they are about purchasing power.
Income mobility is mostly harmful. You don't need to use it to answer your questions.
The whole thread is to show that I.M. doesn't work. That's all.
As to your questions, Sweden is like NZ. What you get for 39k in the US, you have to spend 52k in Sweden(USD, PPP)
So essentially, $52k USD spent in Sweden, or $133,000 USD spent in the US.
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