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October 31, 2021

The secret fear of some 'Occupy' protestors

Remarkably, the world’s “Occupy” protests haven’t lost steam – look, “Occupy Wall Street” might even be its own trademark soon – but what, really, is the uprising about?

Stock-photo-13934902-hands-upAs pissed-off consumers continue their marches in Montreal and otherwise, it appears, at least, that the revolt is aimed at a simple redistribution of wealth. The rich make too much, the poor make too little – let’s spread things around a bit.

But according to two Ivy League professors, there is a surprising psychological element lying deep within the minds of some protesters.

Namely, that many lower-income earners actually oppose income redistribution for fear of making the least money among their peers.

We’ll explain.

*Bing: How many people have turned out to the ‘Occupy’ protests?

So, if we understand that income redistribution would be the inexact process of raising what the lowest-paid worker earns and diminishing what the highest-paid worker earns (in the popular lexicon du jour, “the one per cent”), some are suggesting there is worry among certain salary groups about increasing the pay of the poorest.

According to the research of Ilyana Kuziemko and Michael I. Norton, professors at Princeton and Harvard, respectively, those earning just above what the lowest-income groups make might secretly oppose padding the salaries of those falling below them on the wealth chart.

The two economists call it “last-place aversion.” In their words:

“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 an 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.”

Would you be worried about being leapfrogged, perhaps, by Canadians earning just below you on the wage scale? Courtesy colleague Gordon Powers, plug in your income on this Maclean’s calculator and see where your salary ranks compared to the rest of the country.

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...