Society's Off-Income Gains, Racing's Opportunity Lost

We read a lot about income inequality in the web world in 2020, and much of what we read is correct. But, as we often see in the web world, looking a little deeper we can learn a few important things.

From the late 70's to today, real wages for the lower rung of workers has stagnated in real terms (it's almost flat), but what's not taken into account is prosperity. Today we receive things above wages we did not receive 40 years ago - benefits like group health and life insurance plans, child care, transportation benefits, moving costs paid leave, profit sharing, employee discounts and more - totalling up to 40% of our salary.

In addition, virtually everything we buy today costs less. In terms of hours worked, household goods are 81% cheaper than in 1960.

What this means is that in the aggregate we're better off today, because these benefits are real. We can live better lives than you and I did if we grew up in the 60's or 70's.

In horse racing, let's look at the purse growth since 1988. It's up close to a double, but with inflation, about a double since '88, like wages, it's flat.

But, like total wages, total purses only tell part of the story.

Horse racing has also received tremendous benefits, off book. They don't have to inject capital into earning dollars because billions have been given from slot machines. Racetracks don't have to fight for a customer in New York or Toronto because it was afforded a carve out to offer their product track by track, across state and country lines. In 2006 it was given a monopoly on online wagering.

In addition, while the number of racetracks and race dates dropped, total variable costs to run the business also fell. New capital didn't come from selling stock or issuing debentures, but from the retained earnings from slots.

These are elements that any business or individual would kill for. 

While many live better lives because of profit sharing, pensions, cheap stoves or dishwashers and a hundred other things our parents were not afforded, no one can say racing is living a better life. In fact, we read a racingisdead-racingisnotdead hashtag fight on the twitter extolling just that.

Humanity has progressed with stagnating wages because it evolved, and although you and I aren't Bill Gates, we embraced the advantages given to us. Racing, in my view, has not evolved; it has not embraced what it's been given. I believe it's the single biggest failing of the business.

Have a nice Tuesday everyone.

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