In stark contrast to prior decades, low-wage workers experienced dramatically fast real wage growth between 2019 and 2023, but many workers continue to suffer from grossly inadequate wages and middle-wage workers face significant gaps across demographic groups.
The problem with looking at things from a percentage stance is it can mask a growing disparity in income.
Try throwing these into a compounded interest calculator.
30,000 @ 10%
100,000 @ 5%
Compounded annually
Now eventually the lower starting point surpasses the higher one, but it takes about 25 years of consistent gains of double the higher starting one. That’s all assuming zero contributions to the principal over time, but someone starting off with more likely also has more loose cash to put into an investment. This is where the often mentioned part of giving breaks to the wealthy does nothing because they just invest it where the poor spend it on needs comes in.
Wages and investments aren’t a perfect match, but math is math. An interesting side note, if the higher starting pay where to put in $1000 / month which is way less than the difference between 100K and 30K per year, the end result is that they now have more than the lower starting one at the end of 50 years.
The problem with looking at things from a percentage stance is it can mask a growing disparity in income.
Try throwing these into a compounded interest calculator.
30,000 @ 10% 100,000 @ 5% Compounded annually
Now eventually the lower starting point surpasses the higher one, but it takes about 25 years of consistent gains of double the higher starting one. That’s all assuming zero contributions to the principal over time, but someone starting off with more likely also has more loose cash to put into an investment. This is where the often mentioned part of giving breaks to the wealthy does nothing because they just invest it where the poor spend it on needs comes in.
Wages and investments aren’t a perfect match, but math is math. An interesting side note, if the higher starting pay where to put in $1000 / month which is way less than the difference between 100K and 30K per year, the end result is that they now have more than the lower starting one at the end of 50 years.
I think it would have been good to not only have the absolute numbers, but also the numbers for changes in wealth and debt too.