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Tuesday, August 22, 2006
 
Comparing Baseball Salaries to Income Inequality in the United States

Kevin Drum of Washington Monthly (probably my favorite non-sports blog) has a very interesting post on growing income inequalities in the United States, as he uses the growth of baseball salaries to explain his position (which, in sum, is that while aggregate wealth keeps increasing in the U.S., the rich and powerful have the greatest access to it, so they take most of it):
[I]t's not just the top 20% who have gained relative to the bottom 80%, it's also the top 1% who have gained relative to the 10% just below them. Do we really believe that the top 1% have an enormous educational advantage compared to the top 10%? And that this gap has increased over the past 50 years?

Consider professional baseball. Today's top players routinely sign contracts that pay them $5 million a year. A-Rod signed one that paid more than $10 million. But 50 years ago, the highest paid player earned about $300,000 (in inflation-adjusted terms). Why the 30x increase?

It's certainly not because A-Rod is relatively more valuable to the Yankees' pennant chances today than, say, Mickey Mantle or Roger Maris were in their day. Rather, what's happened is that there's fantastically more money sloshing around in professional baseball than in the past thanks to skyrocketing TV, radio, and merchandise sales. More money means higher salaries.

But that's not automatic, of course. There's another piece to the baseball puzzle: in 1966 the baseball players union hired Marvin Miller, a former negotiator for the U.S. steel workers, to head their organization. In 1972 they went on strike, and ten years later the reserve clause was history, free agency was in full swing, and player salaries were going through the roof. This is not a coincidence.

Similarly, the broader economy has grown enormously in the past few decades, but without a Marvin Miller on their side almost none of this growing pile of money has gone to middle class workers. And this, I believe, is the root cause of skyrocketing income inequality: economic growth combined with stagnating median wages has produced a colossal amount of extra money sloshing around in the system, and it has to go somewhere. And since the rich and powerful run the system, where else is it going to go but to the rich and powerful? They aren't going to dole it out to the less fortunate out of the goodness of their hearts, after all.

Alright, I'll admit it: I inserted the A-Rod picture above, which depicts his infamous and feeble attempt to knock the ball out of Bronson Arroyo's glove in Game 6 of the 2004 American League Championship Series (sorry, the Yankees' five game sweep of the Sox this past weekend still has me aggravated). But going back to Drum's post, he mentions Marvin Miller. Miller as you know, was a labor economist who served as executive director of the MLBPA from 1966 to 1982. During that time, and as Drum notes, he radically improved the rights and earning capacities of the baseball labor force.

So is Drum right: Does our country's middle class lack a "Marvin Miller type figure," and does that in part explain why so many in the "middle class" seem worse off than the "middle class" of years ago? I suppose some might describe Ralph Nader as the Marvin Miller of the middle class, although Nader, while influential, has not been in charge. What do you think?





12 Comments:

First, wages of the middle class are dependent upon labor market forces, not how much $$ is being made by employers. Second, today's middle class is much more spoiled, and spends way more, than the middle class of the 60's. Today's middle class buys a brand new car every 3 years, refuses to car pool when gas is over $3.00/gal, and buys a new plasma t.v. to replace their existing t.v. that doesn't need replacement. To use this analogy to baseball, fans continue to fuel the sports industry, including players' salaries, by continuing to purchase $50.00 game tickets, $7.00 beers, $4.00 hot dogs, hats, jerseys, cable t.v. packages -- the list is endless. But the good news is that the companies profiting from all of this spending are doing well and thus need to keep people employed and hire more people. Hence, the unemployment rate has remained relatively low.

Blogger Rick Karcher -- 8/22/2006 10:09 PM  


Comparing Marvin Miller and Ralph Nader should be anathema to any serious baseball fan. Marvin Miller belongs in the MLB Hall of Fame for his actions that changed the course of the game. Ralph Nader is a "johnny-one-note" who has only one message:


Anything done by any corporation at any time and in any context is evil.


Please don't try to compare these two men in the sporting firmament. It doesn't work.

It would be equally ridiculous to try to say that Marvin Miller had the same impact on automobile safety in the US as did Ralph Nader's book, "Unsafe At Any Speed".

Anonymous Jack Finarelli -- 8/22/2006 10:09 PM  


"and does that in part explain why so many in the "middle class" seem worse off than the "middle class" of years ago?"

Why do you think this is true? The middle classes are likely much better off.

Anonymous Anonymous -- 8/22/2006 10:15 PM  


You guys above can spout b.s. statistics all you want. If you are in the middle class right now, you know it's a struggle. Things are much worse for the middle class than in the 80s. Life with the Internet and X-Box doesn't make life better when you've got crazy bills for college tuition and health care, which many employers don't provide anymore, or if they do, they provide crappy health care coverage.

Kevin Drum is right. We do need a Marvin Miller.

Anonymous Anonymous -- 8/22/2006 10:25 PM  


I'm no economist, but I expect much of the middle class believes they're better off than previous generations, even though they aren't. Part of the reason for this is that the middle class has accepted the high costs of, for example, health care, as simply a part of life. Same might be said for carrying heavy debt: that's just the way it goes these days. So while previous comments may be correct in saying that the middle class spoils itself or is "better off" in material terms, objectively I think it's fair to say that today's middle class simply doesn't recognize how much better things could be. And that's where a Marvin Miller would come in.

Blogger Matthew Saunders -- 8/23/2006 9:48 AM  


Matthew,

I'm no economist either, but I agree with you in the sense that there are some necessities in life that have increased in costs over the year, such as healthcare, and that is in many respects out of our control or "just a part of life" as you suggest (but I suppose some could argue that we demand the very best healthcare and that's why it costs so much but that's another debate entirely).

I disagree with you that increased debt is "a part of life". This is a choice that is made based upon spending habits. The average size home today is much larger than the avg. size home from the 1960's, and the average size family is smaller today than it was back then -- go figure

Blogger Rick Karcher -- 8/23/2006 11:46 AM  


I think the Nader comparison is apropos to the extent that the middle class is a whole heckuva lot less likely to die as a direct result of companies not giving a crap. So he had an effect, but it did not involve wages. Miller, of course, had a number of advantages that no middle-class-hero will ever have, most importantly the ability to directly talk to every single person he represented, and a unified front.

And, wow Rick...bitter much? "Spoiled" middle class? Jeez.

Anonymous Collin -- 8/23/2006 1:20 PM  


I agree that the middle class (I'm a card carrying member) is not better off. The salary for my job has risen 100% in 20 years. However, the cost of a new car 300%, a house from $30,000 to $300,000 and so on.

Twenty years ago a middle class person could afford a season ticket. No longer these days.

Blogger BLAZER PROPHET -- 8/23/2006 2:11 PM  


I definitely have to agree with Rick on this one in that the middle classers who complain put themselves in the position to complain. The comments reference increased housing prices, college tuition bills, increased health care costs. These are all direct results of increased housing sizes, the fact everyone goes to college now and fancy new health care gizmos. If you wanted to go back to 50’s standards and not have expensive drugs you could do it, if you don’t want to pay tuition prices then you could (and be like a vast majority of Americans who didn’t go to college then), and you could buy a smaller house (in 1950 the average size was under 1000 sq. ft) and not be victim of “escalating costs”. What has happened is escalating expectations. Oh and for the seasons tickets, how bought you take the 50 bucks you spend on cable a month now (that didn’t exist 50 years ago) and put it towards seasons tickets $600 will get you tickets at many a venue (not all) for the whole season.

As for Marvin Miller, while I appreciate his work in getting players paid more as in comparison to what was coming in. I like to favor someone like Bowie Kuhn who actually promoted/allowed the teams to compete against each other for players more so than previous regimes. It was under his watch that the first million dollar player, Nolan Ryan in 1979, took place. This is well after 300,000 salaries of the 50’s and only 27 years ago. I also hold something against Miller because I feel like he left Curt Flood out to dry.

Blogger B.C. Barnes -- 8/24/2006 12:17 PM  


B.C., did you actually laud Kuhn in connection with a player getting a big payday? Kuhn and Miller were diametrically opposed on everything. I'm almost certain Kuhn was not happy with Ryan's million dollar coup, because the owners were barking in his ear about escalating player salaries.

To get back to the original question, our political system seems to generate only wealthy politicians, perhaps because large campaign contributions are a significant factor in winning races. That tends to leave the middle classes out in the cold.

However, I'm not sure it is possible to have a Marvin Miller equivalent for society as a whole. We label a group "middle class" but they certainly are not as well-defined a constituency as Marvin Miller was working with. It is too much to expect for one person to represent the middle class.

Instead, the system needs to be retrofitted to better represent society at all economic levels.

Blogger ChapelHeel -- 8/24/2006 1:49 PM  


Couple things, B.C. First, the increased cost of things v. increased greediness in wanting those things is not really the point Drum is making. They're ancillary points. The central argument is about wages. Period. Whether the comments have referenced increased prices or not does not address the central isse (which, again, is wages).

Second, even following you down the path of arguing about expenses, rather than wages, and even spotting you the house size argument...you're still not really making much of an argument. Do you seriously think that an answer to tuition costs is not to send your kid to college? It is not people's expectations that have changed in this department -- it's the economy's expectations, employer's expectations.

As for health care, I think you've gotta drive a long way on a hard road to find anyone who's looked into the issue with anything more than the most superficial eye who'll agree with you that the rising costs of health care per family is due to "fancy new health care gizmos." Jeebus. That's too silly to even argue with. It's the kinda thing you just have to stand back and admire -- like a snake with two heads or something.

Wait, reading your post again, I think that you're ironically making fun of Rick. Sorry for being dense.

Anonymous Collin -- 8/24/2006 3:11 PM  


Rollie says...
Back in the days when I played I was making around $27,000 a year playing for the A's when we won the world Series three years in a row. After the 74 season and World Series MVP good old Cahrlie gave me a raise to $60,000. compare those numbers with what the guys make today and I think something is totally gone crazy. the bottom line is if the genreal public, TV and Radio and all these big spending corporations support these high prices...who would say no?

As a side note if you want to read what I think check out www.rolliesfollies.blogspot.com and if you want to watch me on a video talk about stuff just like this check out www.rolliesfollies.com. I'm sure I can still entertain you.

Blogger Rollie Fingers -- 8/27/2006 1:04 PM  


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