Salary Is A Trap Quotes

After the September 11th tragedy in New York City, people began to tell others what their loved ones, who had been trapped in the twin towers in New York, had said to them in frantic telephone conversations or email messages. Those who received calls from mobile phones from the doomed planes also told their stories. Some re-listened to messages left on answerphones. And as they shared their experiences, it was immediately evident that the same three words kept coming up time and time again. Those words did not refer to size of salary or bonuses, nor to the type of car recently purchased or expensive holidays taken. No. Lovers said them to lovers, husbands to wives, friends to friends and parents to kids: ‘I love you.’ ‘Tell Suzanne, I love her.

Moreover, these changes occurred when most American households actually found their real incomes stagnant or declining. Median household income for the last four decades is shown in the chart above. But this graph, disturbing as it is, conceals a far worse reality. The top 10 percent did much better than everyone else; if you remove them, the numbers change dramatically. Economic analysis has found that “only the top 10 percent of the income distribution had real compensation growth equal to or above . . . productivity growth.”14 In fact, most gains went to the top 1 percent, while people in the bottom 90 percent either had declining household incomes or were able to increase their family incomes only by working longer hours. The productivity of workers continued to grow, particularly with the Internet revolution that began in the mid-1990s. But the benefits of productivity growth went almost entirely into the incomes of the top 1 percent and into corporate profits, both of which have grown to record highs as a fraction of GNP. In 2010 and 2011 corporate profits accounted for over 14 percent of total GNP, a historical record. In contrast, the share of US GNP paid as wages and salaries is at a historical low and has not kept pace with inflation since 2006.15 As I was working on this manuscript in late 2011, the US Census Bureau published the income statistics for 2010, when the US recovery officially began. The national poverty rate rose to 15.1 percent, its highest level in nearly twenty years; median household income declined by 2.3 percent. This decline, however, was very unequally distributed. The top tenth experienced a 1 percent decline; the bottom tenth, already desperately poor, saw its income decline 12 percent. America’s median household income peaked in 1999; by 2010 it had declined 7 percent. Average hourly income, which corrects for the number of hours worked, has barely changed in the last thirty years. Ranked by income equality, the US is now ninety-fifth in the world, just behind Nigeria, Iran, Cameroon, and the Ivory Coast. The UK has mimicked the US; even countries with low levels of inequality—including Denmark and Sweden—have seen an increasing gap since the crisis. This is not a distinguished record. And it’s not a statistical fluke. There is now a true, increasingly permanent underclass living in near-subsistence conditions in many wealthy states. There are now tens of millions of people in the US alone whose condition is little better than many people in much poorer nations. If you add up lifetime urban ghetto residents, illegal immigrants, migrant farm-workers, those whose criminal convictions sharply limit their ability to find work, those actually in prison, those with chronic drug-abuse problems, crippled veterans of America’s recently botched wars, children in foster care, the homeless, the long-term unemployed, and other severely disadvantaged groups, you get to tens of millions of people trapped in very harsh, very unfair conditions, in what is supposedly the wealthiest, fairest society on earth. At any given time, there are over two million people in US prisons; over ten million Americans have felony records and have served prison time for non-traffic offences. Many millions more now must work very long hours, and very hard, at minimum-wage jobs in agriculture, retailing, cleaning, and other low-wage service industries. Several million have been unemployed for years, exhausting their savings and morale. Twenty or thirty years ago, many of these people would have had—and some did have—high-wage jobs in manufacturing or construction. No more. But in addition to growing inequalities in income and wealth, America exhibits

Lenin’s and Stalin’s form of communism is gone, yet its trappings have been expropriated by mega-corporations. We have companies featuring central planning by troikas, mission statements crafted by apparatchiks, five-year plans, no right to choose leaders in companies, no democracy in the workplace, a clear distinction between intelligentsia and peasants (top CEOs make 152 times the median salary and enjoy company dachas, jets, and limos), and state monitoring (time clocks, dress codes, drug screening, “employee assistance” plans, e-mail monitoring, no smoking, and other personal conduct rules, as well as family-life audits).

And indeed today as it struggles with its financial crisis, the central issue in Greek politics remains resentment of the influence of Brussels, Germany, the International Monetary Fund, and other external actors, which are seen as pulling strings behind the back of a weak Greek government. Although there is considerable distrust of government in American political culture, by contrast, the basic legitimacy of democratic institutions runs very deep. Distrust of government is related to the Greek inability to collect taxes. Americans loudly proclaim their dislike of taxes, but when Congress mandates a tax, the government is energetic in enforcement. Moreover, international surveys suggest that levels of tax compliance are reasonably high in the United States; higher, certainly, than most European countries on the Mediterranean. Tax evasion in Greece is widespread, with restaurants requiring cash payments, doctors declaring poverty-line salaries, and unreported swimming pools owned by asset-hiding citizens dotting the Athenian landscape. By one account, Greece’s shadow economy—unreported income hidden from the tax authorities—constitutes 29.6 percent of total GDP.24 A second factor has to do with the late arrival of capitalism in Greece. The United States was an early industrializer; the private sector and entrepreneurship remained the main occupations of most Americans. Greece urbanized and took on other trappings of a modern society early on, but it failed to build a strong base of industrial employment. In the absence of entrepreneurial opportunities, Greeks sought jobs in the state sector, and politicians seeking to mobilize votes were happy to oblige. Moreover, the Greek pattern of urbanization in which whole villages moved from the countryside preserved intact rural patronage networks, networks that industry-based development tended to dissolve.

A closer look at still more refined educational elites amplifies this pattern. BAs from even modestly higher-ranked schools boost incomes by 10 to 40 percent more than BAs from lower-ranked schools and nearly double the rate of return on the tuition. Super-elite BAs generate still greater income boosts, more than doubling the gains produced by an average BA, and the top incomes from super-elite schools more than triple the incomes of the top earners with average BAs. (The highest-paid 10 percent of Harvard graduates average salaries of $250,000 just six years after graduation.) A recent broader survey reports—incredibly—that nearly 50 percent of America’s corporate leaders, 60 percent of its financial leaders, and 50 percent of its highest government officials attended only twelve universities.

For many of us, one of the easiest mistakes to make is to focus on trying to over-satisfy the tangible trappings of professional success in the mistaken belief that those things will make us happy. Better salaries. A more prestigious title. A nicer office. They are, after all, what our friends and family see as signs that we have 'made it' professionally.

Labor income now figures prominently even at the very sharpest peak of the distribution. Eight of the ten richest Americans today owe their wealth not to inheritance or to returns on inherited capital but rather to compensation earned through entrepreneurial or managerial labor, paid in the form of founder’s stock or partnership shares. A slightly broader view reveals that the Forbes list of the four hundred richest Americans has also seen its center of gravity shift away from people who owe their wealth to inherited capital and toward those whose wealth stems (originally) from their own labor. Whereas in the early 1980s, only four in ten of the Forbes 400 were predominantly “self-made,” today nearly seven in ten are. And whereas in 1984, purely inherited fortunes outnumbered purely self-made ones in the list by a factor of ten to one, by 2014, purely self-made fortunes had come to outnumber purely inherited ones. Indeed, the share of the four hundred top incomes attributable specifically to salaries grew by half between 1961 and 2007, and the share going to people with no college education fell by over two-thirds between 1982 and 2011. The shift toward labor income at the very top has been sufficiently pronounced to change the balance of industries in which the super-rich acquire their fortunes. In the inaugural 1982 version of the Forbes list, 15.5 percent of the people on the list owed their wealth to capital-intensive manufacturing, and only 9 percent came from labor-intensive finance. By 2012, only 3.8 percent of the list came from manufacturing and a full 24 percent from finance.

Labor also dominates stories of elite income at the next rung down. Although only three hedge fund managers took home over $1 billion in 2017, more than twenty-five took home $100 million or more, and $10 million incomes are so common that they do not make the papers. Even only modestly elite finance workers now receive huge paydays. According to one survey, a portfolio manager at a midsized hedge fund makes on average $2.4 million, and average Wall Street bonuses exploded from roughly $14,000 in 1985 to more than $180,000 in 2017, a year in which the average total salary for New York City’s 175,000 securities industry workers reached over $420,000. These sums reflect the fact that a typical investment bank disburses roughly half of its revenues after interest paid to its professional workers (making it a better three decades to be an elite banker than to be an owner of bank stocks). Elite managers in the real economy also do well. CEO incomes—the wages paid to top managerial labor—regularly reach seven figures; indeed, the average 2017 income of the CEO of an S&P 500 company was nearly $14 million. In a typical recent year the total compensation paid to the five highest-paid employees of each S&P 1500 firm (7,500 workers overall) might amount to 10 percent of S&P 1500 firms’ collective profits. These workers do not own the assets—the portfolios or the companies—that they manage. Their incomes constitute wages paid for managerial labor rather than a return on invested capital. The enormous paydays reflect what prominent business analysts recently called a war between talent and capital—a war that talent is winning.

These jobs are new—direct creations of meritocracy. Historically, the private sector did not value managerial and professional skills, and the state (which required such skills) faced effectively no private competition for elite labor. Into the early twentieth century, top civil servants were paid ten or even twenty times the median wage. And even at midcentury, elite government incomes remained roughly equivalent to their private-sector counterparts. In 1969, a congressperson was paid more than he might make as a lobbyist, a federal judge received perhaps half what he might have commanded at a law firm, and the secretary of the treasury was paid a salary that was smaller than but broadly comparable to what he might have made in finance. The best-educated and most skilled workers therefore naturally gravitated toward government or other public jobs (as when subsequent sons, deprived by primogeniture of inherited lands, joined the military or the clergy), simply because they had no better (or even credible) private alternatives. This kept regulators ahead of the people whom they regulated and helped the state effectively to govern even its richest subjects.