Increasing inequality in the distribution of earnings has become one of those stylized facts that everyone “knows.” The nightly news reminds viewers that ordinary workers have not fared well in the labor market over the last 25 years, while corporate executives have. Many professional economists and a recent CBO report have supported this view as well. While it is true that the cash explicitly paid to employees has become more unequal over the last generation, the…more benign explanation for the change in cash compensation over a generation is the dramatic increase in health insurance costs. …inequality in total compensation has not increased because the fixed costs of health insurance are a much larger percentage of the total compensation of lower-earnings workers. Burkhauser and Simon explore this explanation. They add the value of employer-provided health insurance as well as Medicaid and Medicare to the pre-tax, post-cash-transfer household income data and find that the bottom three income deciles actually exhibit higher growth than the top seven deciles from 1995 to 2008. …Warshawsky makes a similar discovery. Using unpublished BLS total compensation data, including employer health insurance expenditures, from 1999 to 2006, he finds that the growth in compensation by earnings decile (from the 30th to the 99th) averages 35 percent, with 41 percent growth at the 30th percentile (workers earning $10–$14 an hour) and only 35.8 percent growth at the 99th percentile (workers earning $59–$80 an hour).
Translating all this into simple English, it turns out that the rich are getting richer slower than the rest of us are getting richer.
Read the rest here.
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Yea all those people at McD’s and Walmart are just rolling in the complete health and dental.
Additionally 7% increase in 30k clearly is greater than a 1% increase in 1mil.
Please, do you know why the journals they are quoting are in house? Because they are hacks.
To clarify, unless a journal is published, peer reviewed and all the data and methodology is published you can bet that it is made up or misleading as that is the convention for ALL economics research these days (as in it is the first thing you learn in an undergraduate research course).
TJWP, really, you should slow down. Your default setting for any research that presents an outcome to which you disagree is to lob ad hominems or even better, to make a strawman argument.(if the research is not peer reviewed then it is not legitimate).
Case in point- the linked article clearly provides references. With a couple of clicks and a copy/paste into google, you will have both articles, with their corresponding data and methodology.
Here- let me make it easy for you. Perhaps your university will get you a free copy of the research from the National Bureau of Economic Research.
“Can the Rapid Growth in the Cost of Employer-Provided Health Benefits Explain the Observed Increase in Earnings Inequality?”
by Mark J. Warshawsky. September 2011. SSRN #1932381.
“Measuring the Impact of Health Insurance on Levels and Trends in Inequality,” by Richard V. Burkhauser and Kosali I. Simon. March
2010. NBER #15811.
Seems like an undergraduate research course would have covered all of this.
“he finds that the growth in compensation by earnings decile (from the 30th to the 99th) averages 35 percent, with 41 percent growth at the 30th percentile (workers earning $10–$14 an hour) and only 35.8 percent growth at the 99th percentile (workers earning $59–$80 an hour).”
I believe you can calculate what those percentages work out to as well as me.
And from Can the Rapid Growth in the Cost of Employer-Provided Health Benefits Explain the Observed Increase in Earnings Inequality?:
“Let’s say that compensation (which is made up of earnings and benefits) grows at a certain common rate across workers over time at all compensation levels owing to, say, overall labor productivity improvements and that the market for labor services is competitive. Let’s also posit that health care benefit costs are the same dollar amount per worker at any point in time regardless of the worker’s level of compensation and are evenly and widely provided to workers”
“health insurance in particular increased from $1.18 an hour to $2.05 an hour, or almost 74 percent!”
So the assumption they are basing their ‘research’ on is that all workers have health insurance coverage. Is that a realistic assumption? By their own admission no.
“From 1999 through 2006, access to (and provision of) health insurance to workers did not change much. According to the Kaiser Foundation in 1999, 79 percent of private industry workers had access to health insurance (and 62 percent chose to be covered). In 2006, 78 percent of private sector workers had access (and 59 percent chose to be covered).”
Additionally if YOU bothered to read the papers you will notice they cite using “unreleased data from SSA” which they do not provide.
TJ, let start with your strawman, since you seem insistent on presenting it. You wrote, “Additionally if YOU bothered to read the papers you will notice they cite using “unreleased data from SSA” which they do not provide.”
This is your attempt to make the research illegitimate. Your strawman is if they are not providing data, then the research is not valid.
While I can understand why you choose to stick with this particular fallacy, what is so silly about the whole affair is that THE DATA IS PUBLISHED IN THE PAPER. That’s right, the data is right there for you to evaluate. Are you willing to imply that because the Social Security Administration did not publish the data themselves, but rather, one of their advisers (Warshawsky) published it, that the data is invalid? Maybe you are willing to make such a stretch.
So in point of fact, you are wrong. The data is provided. Perhaps if you had read…nah, I’ll leave it alone.
As for you other point. You wrote, “So the assumption they are basing their ‘research’ on is that all workers have health insurance coverage. Is that a realistic assumption? By their own admission no.”
Again, the answer to that issue is in the article. Since you’ve read the article you must have just missed it.
“The lower bottom panel of Table 2 shows our estimates of the actual earnings at various percentiles in the distribution of earnings. We start at the thirtieth percentile because workers earning less than the dollar amount indicated presumably include many young workers still attached to their parents’ homes or in college, older workers already largely, but not completely, retired, part-time workers whose spouses work full-time, workers largely dependent on government welfare and other benefit programs, and so on.”
Now that your strawman is exposed and I’ve shown you how the authors handled the one substantive point you’ve managed to make, perhaps you’ll find there is some merit in the conclusions.