Attaboy

I’ve now been working in the Washington D.C. area for more than two months. My job, thankfully, is completely non-political, and most of the people with whom I work don’t seem all that interested in getting lathered up over the coming nominations or elections. Occasionally, discussions of a local hot issue pop up around the cubicles, including recent news like the D.C. gun ban and the crackdown in illegals in Prince William County.

I also avoid reading the newspapers or watching a lot of local news, not because i’m disinterested in this community, but because I’m feeling pretty good about life right now, and I don’t want the news to erode my optimism.

Unfortunately, I read something on the way to work yesterday that boiled my blood enough to come out of hiding. The article was in a free mini-newspaper distributed outside the Metro stations each morning. I usually grab one for the crossword puzzle, to limber up the old gray matter during the ride to the Pentagon. The train was pulling out of the Arlington Cemetery station, and I was idly paging through the paper when I found this article.

My first thought was to find out more about the Center on Budget and Policy Priorities, as I was convinced it was probably some left-wing socialist think tank that spends its days rearranging statistics to fit its anti-capitalist arguments, followed by a mass faxing of its latest “report” to every lazy news person on the Rolodex. I don’t get the sense that the people running CBPP are a bunch of wild-eyed fanatics, since the C.V.s on some of their staff are pretty impressive.

Nevertheless, I don’t really have an argument with them personally, or even politically. My complaint about stories like this is that, once again, some self-important group of thinkers has decided to raise the guilt levels of a large percentage of the local, hard-working, productive segment of D.C. society. Naturally, the Examiner made sure to include the requisite photo of the poor, downtrodden “mostly homeless” woman, camped out in close proximity to the well-dressed woman walking along with her shopping bag. I’m a little surprised that the photo didn’t have a closer focus on the bag, to show that the non-homeless woman shops at some place the “mostly homeless” woman would never be able to enter.

The story is filled with a number of statistical anomalies that demonstrate that while it’s great to be “rich,” it really sucks to be poor. For example:

The households in the top 5 percent in the District have annual incomes that are more than 26 times that of the bottom 20 percent, the study showed. D.C. was not ranked against states in the report, but if it were, it would top the list of states with the largest income gap, followed by New York.

The article is a volley shot in the class wars, aimed right at the broadsides of the so-called “wealthy.” They don’t stop with just the District area. A few sentences later, they go after America as a unit. Please note the description of the less-fortunate in the second part of the quote below:

In the United States as a whole, the wealthiest have an average income more than seven times greater than the lowest-earning households.

“The top group has disproportionately been helped by the expansion of the economy while middle-class and working people have really just barely beaten inflation,” said Neil Bergsman, director of the Maryland Budget and Tax Policy Institute.

Please note the carefully-chosen terminology:

• “the top group” — that’s you, if you make more than $100,000 per year…you’re considered, on average, one of the “richest” in the region;
• “disproportionately been helped by the expansion of the economy” — what does that mean? That those of us who earn higher incomes just sat around, watching the economy “expand” and lighting cigars with the $100 bills that floated down from “expansion” heaven? Last time I looked, I was working pretty damned hard to make the money I do. Not to mention the 650-mile separation from my wife and my home, and the fact that I have to maintain a second residence of sorts to work where I do. I’m not complaining about my situation - I have to go where the jobs and the money are. But nothing I have earned was handed to me through some magical “expansion.”
• “middle-class and working people” — I suppose that by today’s standards, based on my current household income, my wife and I are no longer considered “middle class” by some. But I can assure you of one thing: Kelly and I and every person we know intimately is as much of a working person as any of these alleged less-fortunates that this policy group is lamenting. Everyone I know busts their asses to make a buck, to make ends meet, to provide for their families. And, no, I don’t feel guilty about making more than other “working persons.”

Let’s examine income level and inflation for a moment, since the CBPP believes this is a big issue in American income gaps. I was under the impression that, until very recently, the inflation rate in the U.S. was, for all intents, relatively flat. I know the recent rise in oil prices heats inflation up, but people who earn more feel the rise in overall costs just as much as those on the other end of the “gap.” But there’s one thing these analysts don’t seem to be considering.

I’m in the IT business. I could work literally anywhere in the world, as the need for my skill set is practically universal. When my federal job was eliminated in 2006, I was earning about $68,000 per year, after 20-plus years of federal service. If I wanted, I could have remained in Jacksonville and probably earned something close to that in a private-sector job. I also could have taken another federal job in another part of the country, at the same pay grade. But we would have had to move and my wife would have had to find a new job. We chose not to do that. To work somewhere else required that I find a position that would pay me enough to maintain my financial responsibilities at home, while earning enough to live on the remote economy. In summary, I needed to be able to afford to keep two homes.

One of the advantages I have, in addition to my IT skills and experience, is a high-level security clearance. This valuable attribute helps make someone like me attractive to companies in the D.C. Metro area — all those federal contractors providing services to nearly every agency you can imagine. Were my current employer looking to fill my position, they would have to foot the bill for a background investigation for a non-cleared candidate. That’s time-consuming and expensive — as much as $50,000 — and unless you’re working directly for the government, the contracting firm has to pay that expense. So when someone like me comes along with a current clearance in place, they’re often willing to wave a nice salary offer to get that person’s services.

The other issue is the cost of living. All one needs to do is look comparatively at the cost of housing in Northern Virginia (where I currently work) and Northeast Florida (where my home is located). My home in a Jacksonville suburb was appraised at $265,000 in April of 2007. I would imagine that the appraised value today might be 10-15% lower, based on the current market “crisis.” The same-sized home (four bedroom, two bath, 2100 square feet, garage, decent-sized fenced lot, in a cul-de-sac) would likely fetch $500,000 to $600,000 minimum in the NOVA or Maryland/D.C. areas. I read a recent article on the foreclosure rate in the local counties. There are pockets of foreclosures out in the western regions, many of them homes purchased by immigrants who came to the area for jobs and took advantage of ARMs and interest-only mortgages. But in the so-called “wealthier” counties, the home value news is far more positive:

In those areas (McLean, Great Falls, Vienna, Oakton, Fairfax Station and most postal areas of Northern Virginia,), prices have dipped slightly, remained stable or, in some cases, increased. Average sale prices in some Arlington County neighborhoods have risen 7 percent in the past year, and one McLean neighborhood’s average price has increased 13 percent.

Now all of this means that it’s ain’t cheap to live up here. I’m renting a place that I share with another person, and in May, I’m moving into a house that I will share with the owner and another person. Gas is expensive here, as it is nearly everywhere. The rise in fuel has increased the cost nearly everything in the stores, to some degree. Mass transit here makes traveling easier on people and the environment, but it’s not free. And the good people of Arlington, Fairfax, Loundon and Prince William Counties, as well as folks in the District and in the adjoining areas of Maryland, are taxed far higher than most other areas of America. Nothing here is free. Everything has a price, and it’s usually high.

People who live on the “upper end” of the CBPPs income gap understand it just as much and work just as hard to keep it at bay as those on the other end.

What I find particularly outrageous about the article is an assumption made by one CBPP staffer on just how the alleged super-wealthy folks of this area earned their money:

Elizabeth McNichol, a senior fellow at the Center on Budget and Policy Priorities, said families at the top of the earnings picture are excelling financially because of growth in the stock market. Meanwhile a surge in generally lower-paying, service-sector jobs are accounting for the swing on the other end.

Huh?

Let’s use some logic here. Assume that I’m a guy who has a job. I contribute to a retirement plan through my employer, who perhaps matches my contribution. The money is in a series of equity-based funds, and over time, the common stock indexes rise in value, which my funds mimic by also rising in value. Some years are good. Some are spectacular. I also experience the occasional setback. But over the long term, my investments grow, allowing me to experience a better life after retirement. I believe this is what I’m supposed to be doing with my money - saving and investing it for growth so I won’t be a burden on my daughter or society in my advanced years.

I can only do this if I have something with which to invest. Which means I have to have income, logically followed by the need for employment. The fact that I make a higher income than those on the other end of the economic scale is not the issue. I’m sacrificing the use of that higher income today so that I have something to live on years from now, after I decide to retire.

If you allow Ms. McNichol’s statement above to sway you, you believe that people with higher incomes just sit around watching their money grow in the stock market, while the “poor” have to work these lower-paying jobs. The implication is that the “stock market rich” aren’t working, just investing. How does she think those investments get there?

I don’t know about most of you, but I’ve been working very hard for a very long time, often at jobs I didn’t particularly like, just to get the point where I am today. If I want to invest some of what I make in instruments that increase in value, I’m not going to feel guilty about it. I’m sorry some people are poor. Had I magical powers, I’d wave my hand and we’d all have everything we needed financially. But I can’t. I’m one guy, working at one job, trying to make sure my family has what they need, now and in the future.

So what’s the solution to this income gap problem? I can think of a couple of solid ideas, but the CBPP analysts, naturally, come up with the usual worthless suspects:

Bergsman said the statistics point to a desperate need for the state to streamline and extend unemployment insurance as well as keep support programs in place even as officials struggle to balance the budget.

Translation: the government should fix it, and if we need to raise taxes, so be it.

Why do these people believe that extending unemployment is one way to solve the problem? Could any of you live in the D.C. metro area on unemployment benefits? Even in the poorest sections of this region, I can’t imagine someone keeping up a household (rent, food, gas, utilities, medical, etc.) on an unemployment check. Even if this was possible, how many people are going to even bother finding new employment as long as they’re milking from the government’s breast? I work in a high-tech industry, and I have to go to where the money is. What makes me any different from anyone else looking for work, no matter what it is?

Extending unemployment also places a burden on the working classes, wealthy or otherwise. The unemployed aren’t working, so they are no longer contributing to unemployment insurance plans as many working folks do. Someone is going to have to cough up the money to extend the unemployment payments to those people who aren’t working, and since the various governments don’t create any revenue, the burden eventually falls on the taxpayer. Ditto with keeping “support programs” in place. My uneducated guess is that the reason budgets are stretched is because of those “support programs” that have wiped out most of the resources. Again, when the money runs short and the municipalities inch towards the red, the only ones left holding the bag are the taxpayers.

So in a roundabout fashion, this report is pointing the finger at the achievers in this country. In spite of the fact that as recently as CY2003, the top 5% of wage earners paid nearly 55% of all income taxes, you are being made to feel that you’re not doing enough for the lower end of the economic scale, while you sit back and play idle rich and day-trade your way to the top. Note the word I used: feel. Those that make these kinds of arguments want this to tweak your feelings, while avoiding logic and reality. Guilt is the operative emotion here; you’re supposed to now feel bad that you’re doing so much better than those in lower economic situations. You don’t have any answers to these problems, but if this makes you feel bad, the report’s preparers succeed in their mission.

Well, don’t feel bad. Don’t feel guilty. Continue to do everything you can to make your lives better, economically. The fact that there are some people who manage to achieve greater things says as much about those who can’t or won’t than about those who will and do. I know there are situations in which people can do little or nothing about their economic conditions, but there are still far more avenues of opportunity in this country than anywhere else in the world. Even the man or woman who’s chosen work is to do nothing but invest their money for profit still have to work at it to succeed. Those people risk everything they have and spend countless hours doing research to find that profitable venture. Do such people deserved to be viewed in a negative light because they’re not working in a convenience store or cleaning offices for a living?

This are the same arguments that groups like the CBPP have made for years. Yet none of the ideas they propose ever seems to pull some people out of the economic mire. They just lay on the guilt, decade after decade, and never find a solution to this problem.

I’m not buying the guilt argument. Neither should you.