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?

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