Thursday, March 29, 2007

Income Inequality Increases for MLB - Who Cares?

Increasing income inequality gets a lot of attentions these days, see today's NY Times article Income Gap Is Widening, Data Shows: "Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000 — receiving their largest share of national income since 1928, analysis of newly released tax data shows."

What if the statement read "Income inequality among professional baseball players grew significantly in 2006, with the top 1 percent of professional baseball players — those with incomes of more than $16,000,000 — receiving their largest share of total MLB payroll income since 1928, analysis of newly released payroll data shows." Would anybody be that concerned? Would anybody care?

Using the USA Today Database for MLB salaries going back to 1988, I am able to show in the chart above that income inequality has increased significantly from 1988 to 2006. For example, in 1988, the top 25% of professional baseball players earned 63.55% of all baseball income, and by 2006 the share of income of the top 25% of ballplayers was 72.04% of all income. The share of the bottom 50% fell from 12.33% in 1988 to only 8.04% in 2006.

Suppose that the income share of the top 1% of professional ballplayers at 6.70% of all baseball income in 2006 was the highest since 1928. Questions:

1. Would that increasing income inequality for professional baseball players matter?

2. If increasing income inequality among highly-paid professional athletes doesn't matter, why should it matter for the general population?


At 3/29/2007 7:20 PM, Anonymous Anonymous said...

If I was one of in the 99% of the ballplayers it would matter to me..

Just as it should 99% of the Americans that are not in the top 1%.

Also if it did not matter - then would people strive as hard to succeed and become the 1% - wouldn't that be worse ;-).


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