https://www.nytimes.com/2026/08/05/business/bessent-wage-gap.html
Despite data to the contrary, the Treasury Secretary made the case that the K-shaped economy no longer exists.
“I got sick of hearing about this K-shaped economy,” Mr. Bessent said on CNBC on Tuesday. “I can say here definitively, the K-shaped economy is over.”
Yeah. My confidence in the above statement is zero.
Super ridiculous. From the linked article -
“The Treasury secretary said that the economy is now no longer K-shaped but is forming the letter “C” — with wage gains among the bottom quarter of earners starting to outpace gains among the top fourth of earners. Dismissing downbeat consumer sentiment as a function of misinformation about the economy, Mr. Bessent said that Americans would soon start experiencing relief as a result of the tax cuts that Republicans enacted last year, a message he and other administration officials have been delivering for months.”
It’s forming the letter “C”? I don’t even know what that means. I think he has his H crammed up his A.
Wage gains of the bottom 25% of earners is lagging, income inequality is widening. Inflation is also taking a bite outta the minimal wage gains. Liars gonna lie.
Companies continue to report lower consumer sales. McDonald’s just had disappointment on latest value menu. Papa John’s and others. People are eating out less.
The data seems to show the bottom leg of the K is still hurting. We would like to see recovery but I would not count on it. I notice price increases at Walmart. Probably due to rising oil prices. We hope temporary but I will be surprised to see Walmart do price cuts.
Yes, tech stocks and especially AI spending continues to drive the economy. Travel stocks seem to be holding up well. First to trim in a recession. Upper leg of the K continues to spend. But volumes down in the lower leg has to impact upper leg spending too. Earnings are expected to slow as lower leg families cut their luxury spending.
Related:
Las Vegas saw about 3.1 million fewer visitors last year, a 7.5% falloff, the steepest decrease outside of the pandemic period since the Las Vegas Convention and Visitors Authority (LVCVA) began tracking the data in 1970, with unemployment in the state remaining among the highest nationwide at 5.1% as of June, according to the Bureau of Labor Statistics.
Market at ATH; corporations hitting record non-recession revenue growth, while Vegas suffering their worst decrease in 30 years (not counting the pandemic).
Seems pretty K-shaped.
A Bank of America Institute report showed a narrowing of the wage-growth gap between low- and high-earners, as well as signals of a labor market gaining strength.
The wage-growth gap between lower- and higher-income workers shrank considerably in June, driven mostly by a sharp rise in what lower-income households put in the bank after taxes.
Bank of America Institute Senior Economist David Tinsley said lower-income households’ wage growth hit 4.1% last month, on a three-month moving average. That’s up from about 1.5% at the start of the year.
At the same time, upper-income wage growth cooled to 4.2%, while middle-income wage growth came in at 3.4%…
“It’s not the higher-income guys coming down,” he [Senior Economist David Tinsley] said. “It’s really lower-income guys accelerating.”
DB2
Would you rather have 7% of $50,000, or 2% of $200,000?
Wage growth rates have little impact on income inequality.
But that isn’t the question here. There has always been (and always will be) income inequality. The question in recent years is: will the growth rates in different parts of the economy still enable it to grow or will it slip into recession?
DB2
Welp, when lower wage earners have most of their gains gobbled up by inflation, and we’re at the lowest share of income allocated to labor…then it seems self-evident.
https://www.axios.com/2026/08/06/ai-boom-labor-workers-income
Things are far from rainbows and unicorns.
“Every time some new income statistics come out, two predictable fallacies follow in their wake: 1) The rich are getting richer, while the poor are falling behind, and 2) the real income of American families has not risen significantly for years.
An absolute majority of the people who were in the bottom 20 percent in 1975 have also been in the top 20 percent at some time since then. Most Americans don’t stay put in any income bracket. At different times, they are both “rich” and “poor” — as these terms are recklessly thrown around in the media. Most of those who are called “the rich” are just middle-class people whose taxes the politicians avoid cutting by giving them that name.
There are of course some people who remain permanently in the bottom 20 percent. But such people constitute less than one percent of the American population, according to data published by the Federal Reserve Bank of Dallas in its 1995 annual report. Perhaps the intelligentsia and the politicians have been too busy waxing indignant to be bothered by anything so mundane as facts.
Alarmists are not talking about real flesh and blood people. They are talking about abstract categories like the top or bottom 10 percent or 20 percent of families or households. So long as all incomes are not identical, there will always be top and bottom 10 percents or 20 percents or any other percents. But these abstract categories do not contain the same people over time.
Behind both the statistics on inequality that are spotlighted and the statistics on ever-changing personal incomes that are ignored is the simple fact that people just starting out in their careers usually do not make as much money as they will later, after they have had years of experience.
Who should be surprised that 60-year-olds have higher incomes and more wealth than 30-year-olds? Moreover, that was also true 30 years ago, when today’s 60-year-olds were just 30. But these are not different classes of people. They are the same people at different stages of their lives.
At some times and places, there have been whole classes of people who lived permanently in poverty or in luxury. But, in the United States today, the percentage of Americans who fit either description does not reach beyond single digits.
It is one thing to be concerned about the fate of flesh and blood human beings. It is something very different to create alarms about statistical relationships between abstract categories.” - Sowell
Yes. U.S. workers’ share of national income has steadily fallen for 75 years, and their loss has accelerated over the last twenty: https://fred.stlouisfed.org/series/PRS85006173
The recent jobs report shows 23,000 fewer new jobs as compared to a predicted increase of 83,000 new jobs.
And the May and June reports, touted as good news by some here when they came out, have been revised downward by more than 100,000.
I have come to expect a steady diet of highly touted jobs reports followed by downward revisions.
And the good news that the unemployment rate has dropped to 4.1 percent … is followed by ‘because nearly one million more people stopped looking for jobs.’
Decline of income mobility.
Chetty used a series of maps and charts to reveal the dramatic decline in upward mobility in the U.S. (especially for kids in low-income families), the factors that are the strongest determinants of economic mobility, and how these findings can be used to guide policy changes that can improve mobility.
he has shown that while more than 90% of children born in 1940 went on to earn more than their parents did — a cornerstone assumption of the American dream — children born in the middle of the 1980s only have a 50-50 chance of doing better than their parents.
Because mobility decreases with age, it is not surprising that population aging lowers the average mobility rate. Perhaps more surprising is the finding from a 2017 report that U.S. states with relatively more older workers (ages 40-59) have lower mobility rates at every age.6
It is also possible that the benefits of moving have decreased. In particular, wage differences across U.S. regions appear to have narrowed, as noted in a 2017 paper.7 The paper emphasizes that wage differences for specific jobs — as opposed to average wage differences — typically induce moves: People move to increase the salaries they can receive for the jobs that they can do, rather than because of overall wage differences between regions. Their evidence suggests, however, that wages now vary less across locations even within detailed job groupings, reducing the incentive to move.
Of course there will always be income inequality and wealth inequality. Those of us who are concerned about extreme inequality aren’t necessarily advocating that everyone should be equal. Growing gaps in income and wealth inequality are not good for our economy, nor our society.
Sowell is an expert fact denying truth twister.
The richer are getting richer. If you squint, you can see the little yellow sliver at the bottom. Seems like they’re falling behind.
I guess “significantly” is in the eye of the beholder. Compensation growth is lagging productivity gains…by a lot. Maybe Sowell just has low expectations.
Thank you for providing data to support your statement.
That’s more compelling than political talking points
Here’s a picture of it.
Gives an idea of returns on capital versus returns on labor.
Ronald Reagan was elected President in 1980.
As Sowell points out, it is statistically irrelevant. Further, most people are moving from one income level to another over time. Additionally, it’s a very small % of the population that remains poor. The absolute difference in wealth is a great political talking point and gets people ginned up with envy. It matters little in terms of someone’s ability to apply themselves and succeed and says nothing about the opportunity to do so.
More importantly, even if it was something to be addressed, what is an acceptable difference and how would you even achieve and maintain it? I guess you could take it and give it out according to one’s needs. However, I’ve seen how that played out.
Can you show some data?
Quoting Sowell is not evidence.
Others here are showing actual data, you’re just quoting a person with a known bias.
If income mobility and inequality are all well and dandy, why is the US population so politically restless?
The data here ( US Income Mobility ) shows intergenerational income mobility, both absolute and relative, trending down (and by quite a lot) since the cohort of people born in 1940.
It really took off in the late 1990’s.
NAFTA during Clinton years.
Brooksley Born warning about derivatives was ignored and Glass-Steagall was
repealed
See my August 7th post on this thread about the decline of income mobility.
Remember what Goebbels said about a lie.
and
Means that the gap continues to widen, not narrow. It is just not widening by as much as it was before.
