Meanwhile, the long awaited equilibration between manufacturing labor costs here and abroad has begun -- the Times reports a drop of almost 50% in hourly compensation for new workers at Caterpillar (and other midwestern manufacturers) versus what older "grandfathered" workers are making (about $20 per hour including benefits, versus about $40 in the good old pre-globalization days). Equilibration can hurt!
On a related note (via Economistsview), Krugman emphasizes that the main beneficiaries of the new economy are a tiny elite of super-rich -- it's not just manufacturing workers losing out, average white collar compensation is stagnant as well. I'm going to check in with some of my financier friends to see whether they wouldn't mind sharing some of the gains from globalization with me ;-)
So who are the winners from rising inequality? ... A new research paper by Ian Dew-Becker and Robert Gordon ... gives the details. Between 1972 and 2001 the wage and salary income of Americans at the 90th percentile of the income distribution rose only ... about 1 percent per year. So being in the top 10 percent of the income distribution, like being a college graduate, wasn't a ticket to big income gains.
But income at the 99th percentile rose 87 percent; income at the 99.9th percentile rose 181 percent; and income at the 99.99th percentile rose 497 percent. No, that's not a misprint. Just to give you a sense of who we're talking about: ... the 99th percentile will correspond to an income of $402,306, and the 99.9th percentile to an income of $1,672,726. The ... 99.99th percentile [is] probably well over $6 million a year. ...