Don’t Cry for Me, Little People

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The ESRI’s Autumn commentary (full commentary available on November 21st) was just one big writedown for 2011. From the three months previous, they revised downwards the following:

GDP: from 2.7 to 2.2 percent

GNP: from 2.2 to 2.0 percent

Employment: from -2,000 jobs to -10,000 jobs

Consumer spending: from 1.5 to 1 percent

Investment:  from 2.2 to -3.2 percent (turning positive back into negative)

Unemployment:  from 13 percent to 13.5 percent

I could go on but you get the idea.  Down, down, down.  Even aggregate wages – revised downwards from -1.2 to -1.7 percent.  This reflects not only the fall in employment but a potential average wage cut of 1 percent.

But you will be happy to know there is one category that is growing – and growing strongly:  income from self-employment, capital, rent and interest.  Yes, these folk will be doing quite nicely.  The ESRI has revised upwards incomes from non-wage sources, and what a revision: from 22.5 to 29.2 percent.

That’s right. Those lucky enough to take their income through these sources will see their income rise by over 29 percent on average.

Now before you go thinking – well, maybe a lot low and average income self-employed are turning a corner – just hold that thought. The EU-SILC provides a breakdown from these income sources.  In 2008, 42 percent of all income from self-employment, capital gains, etc. went to the top 10% households. In 2003, this concentration was less than 40 percent.  In other words, this income became more concentrated during this period.

So don’t be surprised if we find that high-income groups are doing better than the rest of us, 29 percent better at least. There are many more tears to be shed before this crisis is over.  Don’t waste them on those who don’t need them.

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