In December of 2013, President Obama spoke to the nation and indicated that the dream of economic mobility is breaking down and the growing income gap is a “defining challenge of our time.” The President vowed to focus the last three years of his presidency addressing the discrepancy and a rapidly growing deficit of opportunity that he said is a bigger threat than the fiscal deficit. President Obama said increasing income inequality is more pronounced in the United States than other countries and that Americans should be offended that a child born into poverty has such a hard time escaping it. He said “it should compel us to action. We’re a better country than this.”

It has been more than 9 months since President Obama made these statements and made his vow. It sounds to me like a very important issue. President Obama did not and has not, to my knowledge, provided more clarity regarding his this issue and his vow. What exactly is the objective as it relates to income inequality and disparity in incomes? I can only assume that President Obama is indicating that in America (and around the world), fewer and fewer people earn more and more and more people earn less. Is he indicating that the goal of his focus is for every person to earn the same, ultimately? He did not indicate if some level of discrepancy is acceptable? What about accounting for differences in behavior and capability when we look at differences? Are differences in inputs important in the analysis of differences in outcomes? This issue of income inequality usually includes a citation of the distribution of incomes in the broadest definitional sense but it rarely accounts for or references the differences in inputs (hours worked, education, ingenuity, research, capital investment, risk taking, luck, etc.) that can influence differences in income levels.

With most objectives, we have to define the issue and define the goals. With any process, we have to start somewhere. The United States is a big country and people in our country face many differences. I decided to focus on one income earning segment of our economy to highlight some real questions and issues that arise when we seek clarity regarding this issue of differences in incomes. It is clear to me that one of the best representative sectors of our economy, with respect to income differential, is professional basketball in the United States. More specifically the National Basketball Association (including it’s main major league and it’s developmental league.) Since President Obama points to broad income distribution statistics, without differentiating, we can assume that the income differences in the NBA (and other professional sports) are impacting, to some degree, the overall income differential in our country which referred to by President Obama when he identifies the issue.

The maximum salary for a D-League NBA player is under $30,000 with daily per diem and living expenses paid in addition. NBA players who are under contract and on the rosters of teams in the major league also receive a per diem pay but the average salary in the NBA (excluding the D league) for the 2014-15 season is $4,935,593. The top NBA Salary for the 2014-15 season is $23,500,000 for Kobe Bryant. The maximum NBA development league player salary is just more than ½ of 1% of the average NBA salary. The maximum NBA development league player salary is just 12.8% of 1% (.128%) the top NBA salary. The top 30 (7.73%) NBA players earn $528.46 million or 27.6% of the total NBA wages. The bottom 100 (25.8% ) of NBA players earn $100.32 million or 5.24% of the total NBA wages. Clearly the income distribution statistics for the NBA indicate that there is a major discrepancy and that there is a significant income gap (and that is just when considering NBA employees that are players.) If we were to look at professional basketball compensation including the concession employees, marketing staff, janitorial and facilities maintenance staff, etc., we would likely identify an even bigger discrepancy or gap in incomes. According to President Obama, this is an issue that needs to be addressed in a broad sense, so why not start with professional sports like the NBA. Next we can look at the film industry and the discrepancy between the average annual salary of Tom Hanks and the ticket taker or popcorn popper behind the concession counter.

Is it fair that Kobe Bryant earns 695.61 times what the maximum player in the NBA development league makes? Is there a plausible explanation or is there a defensible reason for this difference? When income gap statistics are quoted there is no qualification or differentiation so the inference is that all people are comparable and that the differences are a problem. What about the unemployed basketball players that aspire to be NBA players? Should we include the unemployed NBA players in this analysis? Are there differences between Kobe Bryant and the maximum salaried developmental league player that would cause us to account for the differences as actual being fair or justified. If the answer is yes, meaning that there are reasons for the differences that justify the differences, then is it possible that much of the differences in earnings of all American’s is explainable and justifiable? How do we know if we really have differences in incomes for all people that are not accounted for as due to differences in efforts, differences in risks taken, differences of investment of time or capital, differences in talent or differences in ingenuity?

President Obama does not begin to address all of the potentially valid and acceptable reasons why people may have different incomes. I would start by pointing out to President Obama the substantial differences for professional basketball players, professional athletes, professional sports employees, movie industry actors and other movie industry workers and ask him to tell us what he would propose to do to promote a shrinking of that discrepancy or gap so that earnings are more evenly distributed? I would ask him if he believes that the average developmental player deserves to make the same amount as Kobe Bryant. I would ask him if the ticket taker deserves to make the same as Tom Hanks? If his answer is no, then he has to admit that there may be a plausible and acceptable reason for vast disparity or discrepancy in incomes and that consequently we need to accept, in a free society, different results.

The compensation distribution in professional sports and the movie industry, especially if you consider all employees in professional sports and the movie industry, is substantially skewed. If we were to look at this issue across our nation segment by segment (or even door to door), would we be able to show the American people that differences in incomes are simply a byproduct of differences in people in a free society? Would we show the American people that differences in choices, differences in risk acceptance, differences in effort, differences in ability, differences in behaviors, differences in supply and demand for individual skills and abilities, differences in willingness to save and be thrifty, differences in investment of amount of time or capital, and other differences among many more are responsible for income differences? Would we show the American people that accepting freedom of choice for American’s is not exclusive of the requirement to accept different outcomes and different rewards?