Feb

2

Talk about a biased study where if you get to the top 1% of course you're growth was way up but if you are in the bottom, you ended up way down. A regression fallacy designed to create egalitarianism and agrarianism. Could have been financed by the forces of collectivism.

"1450% Income Growth Is What You Need to Join the 1%":

By Gail Degeorge (Bloomberg Business) — New research shows that not only are rich Americans making more money than you, they're also making money faster than you. A lot faster.

"Average earnings growth over the life cycle varies strongly with the level of lifetime earnings: the median individual by lifetime earnings experiences an earnings growth of 38 percent from ages 25 to 55, whereas for individuals in the 95th percentile, this figure is 230 percent," according to a paper published in January by the National Bureau of Economic Research, by four authors including one at the Federal Reserve Bank of New York. "For those in the 99th percentile, this figure is almost 1,500 percent."

For those in that top 1 percent, that means going from making about $50,000 when you're 25 to about $750,000 when you're 55, said Fatih Guvenen of the University of Minnesota, one of the study's authors.

"Every year, the median worker between ages 25-55 experiences 1 percent annual growth," he said in an interview. "For the top 1 percent, it's about 9 percent per year. And because of compounding, their incomes grow by 15 fold." Age also makes a difference — and the early years really count.

"Across the board, the bulk of earnings growth happens during the first decade," according to the study, which drew on a sample size of more than 200 million men between ages 25 and 60 from 1978 to 2010.

Meanwhile, momentum in earnings growth slows as workers age. For those older than 45, the only groups with earnings growth on average were those in the top 2 percent.

The research also showed that the richer or older someone is, the harder they can fall. Earnings shocks that workers encounter are usually harmful and become "more severe as individuals get older or their earnings increase (or both)," the paper said. This is because earnings growth slows as workers age, and there's an increasing risk of having a sharp fall in income after the age of 45. 


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