Photo Credit: We Are the 99 Percent
AS THE OCCUPY WALL STREET movement gains steam and 68 percent of millionaires, according to The Wall Street Journal, now say that they actually support more taxes on their earnings, a recent article in Scientific American implies a retreat on the idea of increasing taxes on the nation’s top earners, in a key sector. While a vast majority of the one percent — despite our currently personally beneficial tax situation — feels that a country in need should have those most able of it to pitch-in just a bit more, there has been a surprising attitudinal adjustment with working-class Americans.
In the article “The Last Place Paradox,” Scientific American reporters Ilyana Kuziemko and Michael I. Norton, Ivy League business school professors who co-authored a paper of the same title, found that among the nation’s blue collar, support for income redistribution (taxes) fell, marking this odd shift of millionaires, generally, approving to be taxed, while potential beneficiaries of such taxes believing it is unfair to tax them. Between 2008 and 2010 — the most recent years of data available — support for such measures actually “plummeted.”
My first inclination was to presume that the drop was due to the demagoguery of President Obama as a “socialist re-distributor” by his opponents on the right, but that presumption does not square with who is primarily in fundamental opposition to the government addressing large-scale income inequality; our have-nots in this winner take all system.
While the working-class is a demographic that is known to vote against its general interests, and those actions are thought to be an expression of their aspiration – for example, voting for policies that favor the wealthy, because they innately believe that they will be the wealthy someday, or their kids will be — it turns out that their motivations in regards to flagging support for re-distribution efforts, is actually motivated by a fear of being met at the same economic rung, or lapped, by those below them.
Our recent research suggests that, far from being surprised that many working-class individuals would oppose redistribution, we might actually expect their opposition to rise during times of turmoil – despite the fact that redistribution appears to be in their economic interest. Our work suggests that people exhibit a fundamental loathing for being near or in last place – what we call “last place aversion.” This fear can lead people near the bottom of the income distribution to oppose redistribution because it might allow people at the very bottom to catch up with them or even leapfrog past them.
How does last-place aversion play out with regard to redistribution? In our surveys, we asked Americans whether they supported an increase to the minimum wage, currently $7.25 per hour. Those making $7.25 or below were very likely to support the increase – after all, they would be immediate beneficiaries. In addition, people making substantially more than $7.25 were also fairly positive towards the increase. Which group was the most opposed? Those making just above the minimum wage, between $7.26 and $8.25. We might expect people who make just below and just above $7.25 to have similar lifestyles and policy attitudes – but in this case, while those making below $7.25 would benefit if the minimum wage were raised to, say, $8.25, those making just above $7.25 would run the risk of falling into a tie for last place.
The writers replicated this finding in lab tests where an artificial income distribution was created and subjects are shown their position within it, and where each rank is separated by just $1.00 USD. The subjects were then given $2.00 USD to either give to those below them in the distribution or above them, meaning giving to those below them would make those recipients jump past them in position, relative to the scale. While most gave the money to those below them, regardless of those recipients jumping their position, those in the penultimate (or second-to-last) and would thus become the lowest in the income distribution, were the least likely of all to give to those below them.
While these finding are not necessarily indicative of how things actually work in America, because of a number of factors, but primarily that it’s not always certain that everyone knows their position on the economic scale, as seems to be the case, since most Americans consistently identify themselves as “middle class,” it is an important finding that provides some very strong explanations as to why the G.O.P. is undeniably successful in attracting blue-collar workers, beyond just their economic aspirations to be wealthy. And beyond that, as said by the writers, this experiment and its finding portends a key effective strategy on the part of the Occupy Wall Street movement, because instead of dividing the income distribution among several strata, which would then produce potential supporters of the cause competing against each other, it focuses on one large group versus another, smaller group. As the writers said:
Framing the issue this way focuses the attention of people at the bottom of the distribution on those at the top – rather than on each other – and implicitly suggests that anyone not in the top 1 percent (“them”) is one of “us.” While it is too soon to tell if OWS has staying power, their rhetoric has the potential to reframe the discussion on redistribution and inequality.
Read “The Last Place Paradox” at Scientific American [Here]