This started out as a draft of a note for Senator Mark Warner, one of the Democratic Party brain trust working on the 2020 campaign strategy. Thinking before the pandemic was that the campaign would focus on a return to normalcy. Post-pandemic, it is clear that many elements of national resiliency need a major overhaul.
Our government has suffered from two things, potentially related. First, one of our national political parties has been using a strategy of divide and conquer to keep power to itself for oligarchical purposes. This includes campaigns based on fear of them.
Second, our social programs were developed individually in this hostile environment to treat symptoms rather than in support of essential governmental and civic resiliency objectives.
At every point on our journey to our current resiliency system, one party waged a two pronged fear campaign — fear of communism or now socialism, whatever that is, and fear that they, people not like us, might get something that we didn’t or cause us harm more directly.
The resulting difficulty of passing coherent legislation has led to a patchwork of well-intentioned but buggy programs. This patchwork is full of gaps and special cases making it difficult for the patchwork to support maintenance of national resiliency and unable to support many of us whose occupations do not permit a secure standard of living. For these purposes, a secure standard of living includes safe housing, essential health care for chronic and acute diseases and trauma, retirement security, and economic during earned income interruptions.
This post makes the argument that we need to take a step back, change our policy from one of aiding individuals ad hoc to one of achieving a resilient government and society that can survive foreseeable challenges by aiding individuals in a holistic fashion. It is largely about keeping domino chains from topping.
Our Congress’s response to the 2020 COVID-19 outbreak has been largely ad hoc. In spite of Congress’s “best” efforts, it has largely missed the mark by slow delivery of ad hoc relief measures that treat individual economic effects of the pandemic. The economy is far too complex for such a strategy to be successful.
Rather relief needs to enter the economy at the same points from which economic activity originates and flow through the economic networks that service normal transactions. Where possible, relief should permit the individual transactions that would occur if isolation measures were not in place. Normal emergent flows would support most of the economy.
This article considers the characteristics that promote societal resilience. How we go about achieving these characteristics is a complex undertaking that will emerge a bit at a time. Much of what we need already exists but needs refinement and protection from schemers. But essential elements of individual and familial security require an overhaul and processes that now require legislative action need to become automatic.
This post grew out of research I did to prepare a discussion about income in the United States for my church’s discussion group. As I prepared the presentation materials for the opening of discussion, I learned quite a bit about how fortunate I was and how things fit together. This post is based on the following references.
Income, Poverty, and Health Insurance Coverage in the United States: 2012, United States Censure Bureau Report P60-245, 2013.
An understanding of this information is important to making both personal and public policy decisions.
Standard of living
How much income does it take to support an individual or household in the United States? I was surprised to learn these figures. Unfortunately, I’ve forgotten the source so take these as 2013 thumb rules
$30,000 individual self-sufficiency possible
$40,000 individual savings for retirement and set backs
$10,000 per additional member of the household.
The $30,000 figure represents the income needed to live independently and provides basic housing, transportation for work, food security, and basic health care in the absence of chronic diseases or injury.
The $40,000 figure represents savings for retirement and for maintenance of reserves to meet minor health emergencies, out of work contingencies, save to replace a vehicle, etc.
The $10,000 figure represents the incremental cost of adding an additional non-working resident to the household. Thus, a single head of household with 2 children requires $50,000 for a basic standard of living and $60,000 for a secure standard of living. For a two parent household, raise these figures to $60,000 and $70,000.
Individual Income Distribution
This figure shows the Census Bureau’s 2012 estimate of individual income density in the US. The bar height is proportional to the number of individuals in a $2500 band, for example from $40,000 to $42,999. Normalizing by the total number of people surveyed gives an estimate of the probability density function of income levels in the US.
There are some inconvenient truths here.
The distribution is not Gaussian
The distribution is bottom weighted
The distribution is noisy
There are high-low income band pairs, cause unknown
The important thing to take away is how income is distributed. A large swath of young (< 15) are counted as zero income. The median individual income of about $40,000 is well below the middle of the range considered in the survey ($50,000). Household income has a similar distribution with the median income being $51,000.
Because the data is gnarly, it is helpful to think of it by percentiles as shown by the figure below.
The figure shows some of the more important income bands. A percentile boundary represents the fraction of the population making less than that income level. For example, the tenth percentile tells us that 10 percent of the population earns less than $10,500. One quarter of us earn less than $22,500. One third of us earn between $30,000 and $62,500. Similarly, one quarter of us earn more than $77,000 and one fifth of us earn more than $92,000. Our doctors and dentists earn more than do 98 percent of us. The top 1.5% of income earners make more than $167,000 and to leave the 99% requires an income greater than $350,000.
Income and Standard of Living
Let’s interpret the income figures in terms of standard of living. Most importantly, the bottom 1/3 of us do not have the income to live independently. The middle 1/3 of us range from struggling to get by to independent with some savings. A 90th percentile income, although statistically wealthy, is not practically wealthy and requires careful choices of housing, automobiles, children’s education, etc.
Occupation and Income
The table above shows median income for commonly encountered occupations. Median income is that income level dividing the occupation into two equal sized groups. Half make less than median and half make more. In choosing occupations from the reference, I was careful to choose occupations we commonly interact with. So barbers, auto mechanics, plumbers, waiters, cooks, janitors, dentists, surgeons, etc are all present as are some glamorous occupations like airline pilot.
Race and Income
The table above shows median household income by racial group. Just the facts, no opinions and no rewarming of racial stereotypes. But half of black and Hispanic households are struggling as are maybe half of all households.
Age and Income
This figure shows median income by age group taking the 10 year slices commonly used.
Implications for Markets
Other than the racial disparities, skill, experience, and the emergent nature of economic system behavior go a long way toward explaining these data. Broadly consumed goods and services must be either inexpensive or subsidized. For example, we all need our hair cut. To be affordable places an upper bound on the fees for this service and the earnings in the profession. The providers of this service don’t have a lot of pricing power because half of their market earns less than $40,000.
The data show that the keys to upward mobility are educational attainment and experience in our profession, trade or occupation. But demand for services sets limits on upward mobility. First, we can’t all be rock stars or brain surgeons. The demand is not there. As the data shows, the most important thing we can do is to finish high school. After that, we can attend a trade school, apprentice in a trade, or attend college to acquire professional knowledge and gain experience in our profession being attentive to changes in demand for our services.
Implications for policy
The data suggest a few implications for public policy
Tax where there is money to be had, that is the top quartile.
Services in broad demand must be inexpensive or subsidised
Goods in broad demand must be inexpensive or subsidised
Jobs are demand driven. Subsidizing the bottom 1/3 of us produces demand for goods and services. Subsidizing the top 1% produces speculation or savings.
And a few implications for personal choices.
Education affords access to an occupation, trade, or profession that is in demand and pays well.
Choose occupations, trades, or professions for which demand is growing or under-served.
Choose occupations, trades, or professions that pay well
Be attentive to changes in demand for your occupation, trade, or profession and follow demand.
April 1’st Unitarian Church of Norfolk service was a lay service conducted by the youth group. Their theme was making the world a better place one small act at a time. No sixties grandiosity, just ten’s pragmatism — do the doable, it will matter to this one. The youth carried this theme through the service beautifully in all of its elements. One, Eric Vick, is a budding singer songwriter who killed the following original work.
why make a change?
Why do anything?
That’s all i hear coming out of this world
why make a change?
it won’t do anything.
the worlds as crummy as it’ll ever get
that’s all i hear when i walk down the streets,
that’s all i hear when i turn on the news.
this is what we say, to the world.
you can’t save them all, well what about just one.
which one is good enough, which one deserves it.
i can’t save them all, but I’ll go ahead with it.
I’ll choose this one, and know its worth it.
Negativity, shouldn’t slow us down
we are the molders and builders of earth
our thoughts provoke, and sway their minds
what would you say if i told you one thing?
one small change could do, great things.
One Thing copyright by Eric Vick, used by permission. Eric Vick Hampton Roads teen, not the Eric Vick at myspace.com.
This service closed to a standing ovation and was easily the best since my return to UCN in June 2010. Bravo Zulu teens.