# IS Wall Street the main cause of U.S. income/wealth inequality? **URL:** \ **Category:** Great Debates\ **Created:** [February 12, 2016, 1:45pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926 "2016-02-12T13:45:17Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [February 12, 2016, 9:26pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/41 "2016-02-12T21:26:46Z")
Why would you even need a citation? It is tautologically true that one becomes rich by spending less than one earns. **msmith537** ’s point was that the earning side is the important part, not the frugal spending side. Sam Walton would be a billionaire even if he lived like MC Hammer. ---
**Author:** ![HurricaneDitka](https://avatars.discourse-cdn.com/v4/letter/h/96bed5/32.png) [@HurricaneDitka](https://boards.straightdope.com/u/HurricaneDitka)\ **Post date:** [February 12, 2016, 11:17pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/42 "2016-02-12T23:17:45Z")
> [@D\_Anconia](#): > > That’s the purpose of a (for profit) corporation. What is your alternative? Your username makes this post even more awesome. ---
**Author:** ![HurricaneDitka](https://avatars.discourse-cdn.com/v4/letter/h/96bed5/32.png) [@HurricaneDitka](https://boards.straightdope.com/u/HurricaneDitka)\ **Post date:** [February 12, 2016, 11:28pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/43 "2016-02-12T23:28:43Z")
> [@msmith537](#): > > When people talk about “rich” they are not talking about middle managers and executives making six figures and worth a million dollars, mostly tied up in their house and 401k. They are talking about a self perpetuating class of super-wealthy bankers, hedge fund managers, venture capitalists, CEOs, and corporate board members and who control vast amounts of capital and actively work to enact legislation and other policies to increase their wealth at the expense of the middle and working class. When I hear “the 1%” and things like that, it’s exactly those middle managers and executives making six figures with a net worth of $1M or $2M that I think of. I think about it like this: there are 300+ million Americans today. The wealthiest 1% means a little more than 3 million Americans. Sure there are a handful of Waltons and Bill Gates at the very pinnacle worth many Billions, and there are a fair number of people worth tens or hundreds of millions, but most of those 3 million Americans in “the wealthiest 1%” are guys like Shodan. Maybe 80% or 90% of “the wealthiest 1%” are what I think of as typical millionaires: people who saved a lot, didn’t buy new vehicles or extravagant lifestyles, but have now saved up a nice nest egg that seems well-situated to see them through a comfortable retirement. Those people aren’t my enemies. They didn’t steal from me (neither did Sam Walton or Bill Gates for that matter). They don’t deserve to have their legs cut out from under them just because the average American would rather have the latest iPhone than save for retirement. I admire the Shodan’s of the nation. I aspire to be like him one day. ---
**Author:** ![lance\_strongarm](https://avatars.discourse-cdn.com/v4/letter/l/87869e/32.png) [@lance\_strongarm](https://boards.straightdope.com/u/lance_strongarm)\ **Post date:** [February 12, 2016, 11:38pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/44 "2016-02-12T23:38:57Z")
> [@XT](#): > > There are certainly millions of Americans…10’s of millions actually, who COULD take advantage of a 401K program but don’t. I’m unconvinced that all or even most of them couldn’t, however. I get your point, but I wasn’t really talking about personal investing, I was talking about the millions of families whose wages are low and not getting higher who can’t save or invest a significant amount. And I wasn’t really talking about me. I’ve put money in 401ks. > [@](#): > > And I love it when some of my cow-orkers say exactly the same thing to me You probably don’t work in a place where the wages are really low and aren’t going up, like millions of people do. Those are the people I’m talking about. But the fact that we are talking about 401ks and people having to contribute to them, rather than pensions that had guaranteed benefits and no employee contribution and are now nearly extinct, supports my overall point. ---
**Author:** ![lance\_strongarm](https://avatars.discourse-cdn.com/v4/letter/l/87869e/32.png) [@lance\_strongarm](https://boards.straightdope.com/u/lance_strongarm)\ **Post date:** [February 12, 2016, 11:42pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/45 "2016-02-12T23:42:04Z")
> [@Shodan](#): > > [The average hourly wage in 1964 in constant dollars was $19.18 in 1964, and is $20.67 now](http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-wages-have-barely-budged-for-decades/). This is wages only - it does not take into account the increase in value of non-wage benefits. > > Regards, > Shodan You have to exclude the top 10 percent. When you do that. Wages are basically flat. And a wage increase of about 1.50 in 50 years is pretty lame anyway. ---
**Author:** ![lance\_strongarm](https://avatars.discourse-cdn.com/v4/letter/l/87869e/32.png) [@lance\_strongarm](https://boards.straightdope.com/u/lance_strongarm)\ **Post date:** [February 12, 2016, 11:43pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/46 "2016-02-12T23:43:04Z")
> [@HurricaneDitka](#): > > I aspire to be like him one day. And that’s the problem - you have a much worse chance of reaching that goal than in the past. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [February 13, 2016, 12:00am UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/47 "2016-02-13T00:00:14Z")
> [@lance\_strongarm](#): > > I get your point, but I wasn’t really talking about personal investing, I was talking about the millions of families whose wages are low and not getting higher who can’t save or invest a significant amount. And I wasn’t really talking about me. I’ve put money in 401ks. > > You probably don’t work in a place where the wages are really low and aren’t going up, like millions of people do. Those are the people I’m talking about. > > But the fact that we are talking about 401ks and people having to contribute to them, rather than pensions that had guaranteed benefits and no employee contribution and are now nearly extinct, supports my overall point. There is a pretty good reason they went extinct…unfunded retirements where the employee has no skin in the game often fail in the long term. I work for a state government (I know you figured I was some fat cat engineer, but I’ve been a government employee since the dot com bust :p), and in my state contributions to the retirement fund are mandatory…we HAVE to give 11% off the top (the state then matches that, and there is a 5 year vesting process). They don’t ask, they just take it. Now, not only am I good with that but it’s one of the main reasons I actually went to work for these guys (I also put in the max in the government equivalent program to the 401K). In the end, I KNOW my retirement will be there. Along with my own investments (I did 401K to the max in every job it was available since it was basically introduced) and my Social Security I’ll actually have to worry about making more than I do now when I retire, and how to adjust my burn rate so I don’t get hammered with additional taxes. YMMV, but wishing we’d be back to the good old days when companies paid everything to the retirement fund and it was ‘free’ to employees is just wasted effort…and in the end, people who relied on that ‘free’ retirement ended up getting screwed when US labor became uncompetitive at those higher loaded costs and the jobs were either discontinued, moved to cheaper labor areas in the US or to foreign countries or rendered obsolete due to automation. ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [February 13, 2016, 12:07am UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/48 "2016-02-13T00:07:30Z")
> [@Shodan](#): > > … I would need to see a cite that most families are unable to accumulate any wealth if they have a child who attends college … “Any” was admittedly a bit hyperbolic. But recognize that “family” means net to the family. 2015 saw college graduates [the most indebted ever](http://blogs.wsj.com/economics/2015/05/08/congratulations-class-of-2015-youre-the-most-indebted-ever-for-now/). > [@](#): > > Even adjusted for inflation, that’s still more than twice the amount borrowers had to pay back two decades earlier. … Parents also are kicking in a big share of college costs. Mr. Kantrowitz’s analysis shows that among parents taking out loans to pay for a child’s education, average debt crept up to $30,867 this year from $29,684 in 2014. About 17% of graduates have parents with loans out on their behalf. > > All together, total education debt–including federal and private education loans–will tally nearly $68 billion this year for graduates with a bachelor’s degree and their parents, Mr. Kantrowitz estimates, a more than 10-fold increase since 1994. … Note that about [38%](http://www.infoplease.com/ipa/A0908742.html) of spaces in 4-year programs are not in public schools. If your family has some wealth then more gets taken away but [everyone feels the pain](http://www.usnews.com/news/blogs/data-mine/2014/09/22/is-the-college-admissions-bubble-about-to-burst). > [@](#): > > After discounting for grants, the cost of college has increased for families at all income levels. For those with high income, the cost for one year of college increased from $20,000 to $26,000 from the 1999-2000 year to the 2011-2012 year. For low income families it increased from $11,000 to $14,000. The average net price for all groups increased by 24 percent in that period. The cost of a college education is 12 times higher than it was a generation ago … Even with many parents not only using up savings but taking on debt to pay for college record numbers of young adults have record amounts of [college debt for years afterwards](http://www.pewsocialtrends.org/2014/05/14/section-1-student-debt-and-overall-economic-well-being/), with significant negative impacts on the ability to accumulate wealth. > [@Pew](#): > > 37% of households headed by an adult under age 40 have outstanding student debt obligations (including loans in deferment as well as those currently being paid off), the highest share on record. … Among the college educated, those lacking student debt had a median wealth of $64,700 in 2010.4 By comparison those owing student debt had a median wealth of only $8,700. Among households headed by a young adult without a bachelor’s degree, those with no student debt had a median net worth of $10,900, while those with student debt had about a tenth of that ($1,200). > > In sum, student debtors have very similar incomes but much lower net worth than households not owing student debt. … > > … By a number of benchmarks, young student debtors appear to be experiencing greater financial stress than comparable households lacking education debt. Anecdotally I can tell you as the parent of four kids, two through college, one in process, one in High School, my income high enough that other than the partial merit scholarship options mine pay full frieght … I have been saving in the 529s and otherwise since they were tiny, have a professional’s income, and it is a stretch. If it is a stretch for me I can only imagine how it is without a professional’s income. ---
**Author:** ![HurricaneDitka](https://avatars.discourse-cdn.com/v4/letter/h/96bed5/32.png) [@HurricaneDitka](https://boards.straightdope.com/u/HurricaneDitka)\ **Post date:** [February 13, 2016, 12:08am UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/49 "2016-02-13T00:08:26Z")
> [@lance\_strongarm](#): > > The bottom 90% of the income distribution has been stagnant or dropping for the last three decades. That’s not some, that’s most. > > But that’s always been true. So how did wages rise for 100 years before? How did we create the middle class? I haven’t really followed income distribution or wage growth because it’s not been a terribly important issue to me, but the average American’s life has gotten significantly better in the last three decades: [ul] [li]The homes we live in now are bigger and better than they were 30 years ago (1535 square feet in 1975 compared to 2,169 square feet in 2010, [cite](https://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf)).[/li][li]The healthcare we receive is more advanced and keeps us healthier and living longer (life expectancy in 1975 was 72.6 and in 2010 it was 78.7, [cite](http://www.cdc.gov/nchs/data/hus/2011/022.pdf)).[/li][li]technology is more available than ever. In 1975, the Internet and cell phones didn’t even exist, now most of us have a computer at home and high-speed internet access ([cite](https://www.census.gov/history/pdf/2013comp-internet.pdf)) and 64% of adults own a smartphone ([cite](http://www.pewinternet.org/2015/04/01/chapter-one-a-portrait-of-smartphone-ownership/))[/li][li]crime rates are down ([cite](http://www.disastercenter.com/crime/uscrime.htm))[/li] [/ul] By just about every material measures I can think of, the average American is significantly better-off today than 30 years ago. ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [February 13, 2016, 12:34am UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/50 "2016-02-13T00:34:51Z")
> [@Robot\_Arm](#): > > … We seem to have a cultural belief these days that those who do certain jobs (manufacturing, engineering, customer service) are fungible. … > > That said, does “Wall Street” refer just to the traders at the NYSE, equity investors in general, decision makers at the nation’s financial institutions, or boards of directors (elected by the major shareholders) and executives of large companies? Sanders may just be using the term as a shorthand for “those who have manipulated the system to promote inequality”, in which case the answer to the OP is “yes”. Some jobs are more fungible than others but most are to some degree, including, as pointed out otherwise to your post, executives. Yes highly inflated premiums are paid for the perceived best executive talent wherever it is found. Sanders himself is quite clear: it is the complete business model of Wall Street that is based on fraud, not just a few who have manipulated the system and his proposed tax is a tax on all transactions. That said it is clear that in fact income and wealth inequality (not exactly the same things) have mostly benefited [the 0.1%, really the top 0.01%](http://www.slate.com/blogs/moneybox/2014/12/31/best_graph_of_2014_the_rise_and_rise_of_top_0_1.html), not the 1%. I am not sure what to think about a financial transaction tax. It is not a new idea and one is supposed to launch in the EU sometime this year. If it is of the same magnitude as the EU’s it could indeed both raise significant funds, decrease volatility, and tax the 0.01% the most while sparing the long term investors from any significant impact. ---
**Author:** ![lance\_strongarm](https://avatars.discourse-cdn.com/v4/letter/l/87869e/32.png) [@lance\_strongarm](https://boards.straightdope.com/u/lance_strongarm)\ **Post date:** [February 13, 2016, 1:06am UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/51 "2016-02-13T01:06:25Z")
> [@XT](#): > > There is a pretty good reason they went extinct…unfunded retirements where the employee has no skin in the game often fail in the long term. Oh, come on. They failed because 401ks are cheaper to provide and shift all the risk to the worker. > [@](#): > > In the end, I KNOW my retirement will be there. Do you? Is a 401k gauranteed by the government like pensions are? > [@](#): > > YMMV, but wishing we’d be back to the good old days when companies paid everything to the retirement fund and it was ‘free’ to employees is just wasted effort…and in the end, people who relied on that ‘free’ retirement ended up getting screwed when US labor became uncompetitive at those higher loaded costs and the jobs were either discontinued, moved to cheaper labor areas in the US or to foreign countries or rendered obsolete due to automation. Yeah, but now that pensions are gone, those jobs are back, right? ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [February 13, 2016, 3:46am UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/52 "2016-02-13T03:46:16Z")
Can I ask the panel here to specifically address the impacts of “free” public college for all if it could magically occur and be funded by similar magical means. That’s about 62% of available 4 year college spots becoming free. Impact number one: much more competition to get in as many who currently choose to attend a private school would not choose to do so given the choice of free. Likely many private colleges and universities would collapse, excepting of course the very high prestige ones. Some who currently can afford public university education would not qualify against the greater competition but could not afford private college costs. Free does not mean one gets in or completes. Sweden, Denmark, and the Netherlands all have [lower college completion rates](http://www.valuecolleges.com/collegecosts/) than does the U.S. ---
**Author:** ![Pearl\_Clutching\_Provocateur](https://avatars.discourse-cdn.com/v4/letter/p/c68b51/32.png) [@Pearl\_Clutching\_Provocateur](https://boards.straightdope.com/u/Pearl_Clutching_Provocateur)\ **Post date:** [February 13, 2016, 1:26pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/53 "2016-02-13T13:26:51Z")
I’m not sure what the big deal about making college free is. You still have the costs of transportation, housing, food, and beer money. Public colleges are currently heavily subsidized already. I’d like to see more hybrid / apprenticeship forms of education combined with learning through the Internet. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [February 13, 2016, 2:45pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/54 "2016-02-13T14:45:52Z")
> [@Richard\_Parker](#): > > Why would you even need a citation? It is tautologically true that one becomes rich by spending less than one earns. > > **msmith537** ’s point was that the earning side is the important part, not the frugal spending side. Sam Walton would be a billionaire even if he lived like MC Hammer. No, he wouldn’t. The financial model doesn’t change if you spend more than you make. Now if you meant to say Sam Walton would still be wealthy if he spent the same amount as MC Hammer that would be true but MC Hammer would still be rich if he spent what I spent. Therefore, Sam Walton would still be wealthy because he budgeted his money. My parents came out of the Great Depression. Their level of poverty had very little safety net compared to the financial downturns that followed. Their lifestyle was much more austere because of this and they lived comfortably because of this. By comfortable I mean a house and food on the table. They were never wealthy. They accomplished this by budgeting their money. My father built his first house. He carpooled to work. They rarely ate out. He repaired every item in the house from the family TV to the car. He did this with a high school education and a ridiculously basic set of tools. My mother ran the house. She cooked, cleaned and most importantly raised her family. We were taught the skills needed to survive. Poverty is a non-skill. It’s the result of adult care-givers whose only skill is the ability to procreate. It has little basis in wealth or the lack of it. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [February 13, 2016, 3:10pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/55 "2016-02-13T15:10:39Z")
> [@msmith537](#): > > When people talk about “rich” they are not talking about middle managers and executives making six figures and worth a million dollars, mostly tied up in their house and 401k. They are talking about a self perpetuating class of super-wealthy bankers, hedge fund managers, venture capitalists, CEOs, and corporate board members and who control vast amounts of capital and actively work to enact legislation and other policies to increase their wealth at the expense of the middle and working class. I doubt it. If they do, then they’re using a very misleading term. Those are the 0.1% or maybe even 0.01%. The mega-rich, to use I term I don’t particularly like. Surely the folks in the 5% are rich, and those the ones you mention in your first sentence. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [February 13, 2016, 3:24pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/56 "2016-02-13T15:24:52Z")
> [@Pearl\_Clutching\_Provocateur](#): > > I’m not sure what the big deal about making college free is. Because it costs money and we’re 19 trillion dollars in debt. We’re passed kicking the can down the road. We’re now lobbing financial hand grenades at the next generation. making college free doesn’t cut the cost of education. In fact, it removes any financial incentive by colleges to reduce costs. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [February 13, 2016, 5:25pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/57 "2016-02-13T17:25:22Z")
[QUOTE=lance strongarm] Oh, come on. They failed because 401ks are cheaper to provide and shift all the risk to the worker. [/QUOTE] As I said, my work has a pension, so patently this is not the case. What’s different is, again, that our pension isn’t unfunded…every employee has skin in the game. > [@](#): > > Do you? Is a 401k gauranteed by the government like pensions are? How did those unfunded pensions work out? Doesn’t look very good to me. My 401Ks performed very well, and the money market funds I rolled them into have as well. Is it guaranteed? No…nothing in life really is if you look at the fine print except death and taxes. But I’m diversified enough that, unless the entire economy goes completely tits up I will have a retirement when I want it. If the entire economy does go tits up then I seriously doubt your old school ‘guaranteed’ pension will be there either. > [@](#): > > Yeah, but now that pensions are gone, those jobs are back, right? Probably too late for that now. Companies who do manufacturing in the US use automation heavily now, so the days of those semi and unskilled good manufacturing jobs making good salaries and good benefits are probably gone for good. Oh, they still need workers, but they are very vertically skilled and specialist labor…and there are always shortages of those folks, which is why they command better salaries and benefits. But there are far fewer of those jobs in the manufacturing sectors because of that reliance on automation and expert systems, and that is unlikely to ever change. In fact, my WAG is that we’ll see automation continue to make inroads into many service sectors in the coming years, further displacing workers in those sectors…and that a push for higher minimum wage will probably prompt many companies to accelerate this trend and automate further. I’ve noticed, for instance, that every single grocery store in my town now has automated checkout lanes. It used to just be the really big Walmart, but they all have them now, and several of the stores are dedicating over half of their check out lane space to automated checkouts now…meaning that they now have one employee to watch the maybe 10 or even 20 machines, whereas in the past you’d need clerks and baggers for those lanes. Same goes for restaurants…more and more have WiFi kiosks where customers can order drinks, appetizers, deserts and even regular food anytime, plus pay when they want to leave. We are just at the tip of the ice berg on this, but it’s the trend, and I won’t be surprised to see every restaurant and maybe every fast food place with something like this in the next 5 years. It’s an unstoppable trend at this point, so even if we tried to reverse things and eliminate the minimum wage or whatever it’s too late to save those kinds of jobs. No idea what that will all mean for my kids generation or their kids wrt what work they will be doing. All I can say is that we’ve gone through all of this stuff multiple times in history and when technology has disrupted labor sectors in the past there have always been new things that people to move too that uses that idled labor, and there are hints at what that might be even today. But those old jobs? They aren’t ever coming back, no. ---
**Author:** ![lance\_strongarm](https://avatars.discourse-cdn.com/v4/letter/l/87869e/32.png) [@lance\_strongarm](https://boards.straightdope.com/u/lance_strongarm)\ **Post date:** [February 13, 2016, 7:16pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/58 "2016-02-13T19:16:32Z")
> [@XT](#): > > As I said, my work has a pension, so patently this is not the case. What’s different is, again, that our pension isn’t unfunded…every employee has skin in the game. A 401k is not a pension, if that’s what you meant. But I think I just misunderstood you. You may be lucky enough to have a pension, but most workers today don’t have pensions. Having “skin in the game” is completely irrelevant. A pension works better than a 401k, even without employee contributions. > [@](#): > > How did those unfunded pensions work out? Doesn’t look very good to me. Really? You’re saying its the pension’s fault that employers failed to fund them? That was the employers screwing their workers, before they screwed them more by dumping pension altogether for 401ks! > [@](#): > > My 401Ks performed very well, and the money market funds I rolled them into have as well. Is it guaranteed? No…nothing in life really is if you look at the fine print except death and taxes. True, but a pension is guaranteed in the technical sense - it has a defined benefit that doesn’t drop if the stock market drops, and if it were to fail entirely, the Pension Benefit Guaranty Corporation would bail out the workers. There’s no 401k Benefit Guaranty Corp. > [@](#): > > But I’m diversified enough that, unless the entire economy goes completely tits up I will have a retirement when I want it. If the entire economy does go tits up then I seriously doubt your old school ‘guaranteed’ pension will be there either. Sure, disaster can happen, but 401ks will suffer first. Ask any financial advisor and they’ll tell you a pension beats a 401k. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [February 13, 2016, 7:35pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/59 "2016-02-13T19:35:00Z")
[QUOTE=lance strongarm] A 401k is not a pension, if that’s what you meant. But I think I just misunderstood you. [/QUOTE] I work for a state government…we have a pension. I formerly had 401Ks and I’ve rolled those into other things. In addition I additionally contribute to a 457 plan. Just clarifying. The majority of my retirement will be coming from these investments btw, not my pension. > [@](#): > > You may be lucky enough to have a pension, but most workers today don’t have pensions. No, they don’t. They do have access to other things, such as IRAs or 401K plans. No, they aren’t pensions, but they still exist. > [@](#): > > Having “skin in the game” is completely irrelevant. A pension works better than a 401k, even without employee contributions. I disagree. Pensions don’t work better than 401Ks across the board. Many unfunded pensions where employees didn’t have skin in the game have proved disastrous to the employees who thought they had something only to find out they don’t. This has happened to both public (government) workers pensions and private industry pensions as well. > [@](#): > > Really? You’re saying its the pension’s fault that employers failed to fund them? Fault? I think it’s a flaw in those plans that employees aren’t contributing and thus can and have been screwed when the company or government agency is strapped for cash and decides they can’t fund it all anymore and thus cut back. > [@](#): > > That was the employers screwing their workers, before they screwed them more by dumping pension altogether for 401ks! I disagree with this assessment and also your assertion that this is where 401Ks came from. > [@](#): > > True, but a pension is guaranteed in the technical sense - it has a defined benefit that doesn’t drop if the stock market drops, and if it were to fail entirely, the Pension Benefit Guaranty Corporation would bail out the workers. There’s no 401k Benefit Guaranty Corp. Tell that to all the folks who lost their pensions when things changed. Like I said, this has happened to both public and private pensions. > [@](#): > > Sure, disaster can happen, but 401ks will suffer first. Uhuh. In the 30+ years I was involved in the plans it hasn’t happened yet. By the same token, many private and public pensions have folded. So, not sure what you are basing this off of. But I can see you have serious reservations and issues with the 401K program, which tells me a lot as to why you can’t possibly find any funds at all in your budget to join. Personally, I think it’s foolish, but different strokes for different folks. At least, hopefully, your fallback plan that IS funded (a.k.a. Social Security) will be there for you in the end so you have something. Guess we shall see who is better off come retirement. > [@](#): > > Ask any financial advisor and they’ll tell you a pension beats a 401k. My financial adviser says ‘diversity is the key’, and that your across the board statement is ludicrous. I’m speaking to her right now in fact. 😛 My road map to retirement is pretty solid. How about yours? In any case, do what you like…we have strayed pretty far from the original topic of the thread so I’m going to leave it there wrt the quasi-hijack. To recap wrt to the topic, I don’t think that Wall Street is the ‘main cause of U.S. income/wealth inequality’, and I think Sanders is a nut…basically the equivalent of the various RW Republican circus candidates. The only up side is that while the Dems have one left wing loony nutter running, the Republicans have a whole clown car full, and at least the Dems have a sane candidate to counter balance things…and one I can vote for. There isn’t anyone on the Republican side I’d trust to wash my car. ---
**Author:** ![lance\_strongarm](https://avatars.discourse-cdn.com/v4/letter/l/87869e/32.png) [@lance\_strongarm](https://boards.straightdope.com/u/lance_strongarm)\ **Post date:** [February 13, 2016, 8:17pm UTC](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926/60 "2016-02-13T20:17:45Z")
401ks are more risky. That’s the bottom line. No guarantee or insurance backing them, no defined benefit, and you might contribute more. And back to the larger point, which is that many workers don’t have the spare cash to contribute their “skin in the game” in the first place. [Previous page](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926.md?page=2) [Next page](https://boards.straightdope.com/t/is-wall-street-the-main-cause-of-u-s-income-wealth-inequality/745926.md?page=4)