more on poverty and working class USA

16 Apr

from state of working America:

The top 10% of the income distribution has claimed almost two-thirds of the gains to overall incomes since 1979, with the top 1% alone claiming 38.7% of overall gains.

http://www.stateofworkingamerica.org/charts/view/10

Over the last three decades, inequality has grown by almost all measures. Historically, while those at the top of the income distribution have enjoyed far higher average incomes than everybody else, the gap between the top and the bottom has grown enormously in recent years, driven both by slowdowns in income growth at the bottom and middle, and rapid acceleration of income growth at the top. In addition, there has been a further pulling apart even within uppermost reaches of the income scale, as the richest of the rich have seen significantly faster gains than the merely affluent. These outcomes are true when measured by family income, by wages, and by wealth. Clear disparities exist between racial and ethnic groups, and they have also grown over time in the form of higher poverty rates and larger wealth gaps. Furthermore, access to “good jobs”—those not only with decent wages, but also access to pensions and health insurance—is far lower among the lower income andnon-white groups, and the gulf between access to such benefits is growing over time.

This fragmenting of income growth has been accompanied by other fissures—for example, those at the bottom of the income distribution are not only less likely to get ahead financially, but they have also been left behind when it comes to recent gains to overall life expectancy. In the past three decades, it has been impossible to answer the basic question of “how’s the economy doing” without first specifying for whom.

http://www.stateofworkingamerica.org/articles/view/7 FeatureInequalityNext Page:PovertyIncome inequality The top 10% of the income distribution has claimed almost two-thirds of the gains to overall incomes since 1979, with the top 1% alone claiming 38.7% of overall gains.

Excel data | Go to chart

The stunning growth of income inequality in the U.S. economy that characterized the last 30 years was not always the norm. Between 1947 and 1973, economic growth was both rapid and distributed equally across income classes. The poorest 20% of families saw growth at least as fast as the richest 20% of families, and everybody in between experienced similar rates of income growth. Since then, growth in average living standards has unambiguously slowed. Between 1973 and 1995, growth in productivity, or how much income can be generated in each hour of work, collapsed to less than half the rate that characterized the previous quarter century. Since 1995, productivity growth has risen sharply, but it remains well below the progress that prevailed between 1947 and 1973.

FeatureInequalityNext Page:PovertyIncome inequality The top 10% of the income distribution has claimed almost two-thirds of the gains to overall incomes since 1979, with the top 1% alone claiming 38.7% of overall gains.

Excel data | Go to chart

The stunning growth of income inequality in the U.S. economy that characterized the last 30 years was not always the norm. Between 1947 and 1973, economic growth was both rapid and distributed equally across income classes. The poorest 20% of families saw growth at least as fast as the richest 20% of families, and everybody in between experienced similar rates of income growth. Since then, growth in average living standards has unambiguously slowed. Between 1973 and 1995, growth in productivity, or how much income can be generated in each hour of work, collapsed to less than half the rate that characterized the previous quarter century. Since 1995, productivity growth has risen sharply, but it remains well below the progress that prevailed between 1947 and 1973.

Excel data | Go to chart

And, as shown in the above charts, this slower growth has been accompanied by a dramatic rise in inequality. The growth of typical families’ incomes, which once mirrored overall productivity growth, began flattening in the late 1970s, falling far behind productivity growth. The poorest families saw their real income actually shrink, while income growth increased notably higher up the income scale.

The chart above shows how increases at the top squeeze growth in the middle. The lines show actual growth in median family incomes as well as the growth that would have prevailed had there been no increase in inequality over the period—that is, if all incomes had growth at the overall average rate. Had this happened, the median family today would have incomes $9,220 higher.

This chart represents the amount of overall national income the bottom 99.5% of the population has to share. All but the top one-half of one percent (0.5%) of the U.S. population receives 83.1% of all household income, an amount that has shrunk over 10% since 1973. In essence, it is like the bottom 99.5% of the population had incomes cut by 10%, simply as a result of the growth in inequality over that time.

Incomes and wages are not the only places we find staggering inequality. Wealth—also called net worth, measured as assets less liabilities—is skewed heavily, not only to the rich, but to the richest of the rich. Starting with the bottom fifth of the wealth distribution is a group that has negative wealth (in other words, on average, the least wealthy 20% of people in this country owe more than the value of their assets). From there, wealth increases dramatically by wealth class. By any measure, household wealth is far higher for whites than blacks. Within each group, comparing the median—i.e., the mid-point of the wealth distribution—with average wealth illustrates just how skewed the wealth distribution is. A relatively small number of people with very high wealth at the top pull the overall average upward, often masking the far lower wealth of the typical household.

Mobility Inequality means that some income earners claim a larger slice of the pie than others. Some might argue that this is less of a problem in and of itself if everyone has an equal shot at winding up at the top. Some even claim that this is the essence of the American dream: that regardless of where you began, if you work hard, you can have all the opportunities to succeed.

Unfortunately, income mobility—movement between income classes—is less common than purveyors of the American dream would have you believe. If all it took was high test scores to get ahead, then no matter what your income, you would have an equal opportunity to graduate from college. The data tell another story. This chart shows that high-income students who have low test scores are more likely to graduate from college than low-income students with high test scores.

Mobility is more restricted for some groups than others. African Americans who start out in the bottom 25% of the income distribution are nearly twice as likely to stay there than whites. And, whites are more than 10 times more likely to make it to the top 25% of the income distribution than blacks.

FeatureInequalityMobility Inequality means that some income earners claim a larger slice of the pie than others. Some might argue that this is less of a problem in and of itself if everyone has an equal shot at winding up at the top. Some even claim that this is the essence of the American dream: that regardless of where you began, if you work hard, you can have all the opportunities to succeed.

Unfortunately, income mobility—movement between income classes—is less common than purveyors of the American dream would have you believe. If all it took was high test scores to get ahead, then no matter what your income, you would have an equal opportunity to graduate from college. The data tell another story. This chart shows that high-income students who have low test scores are more likely to graduate from college than low-income students with high test scores.

Excel data | Go to chart

Mobility is more restricted for some groups than others. African Americans who start out in the bottom 25% of the income distribution are nearly twice as likely to stay there than whites. And, whites are more than 10 times more likely to make it to the top 25% of the income distribution than blacks.

Excel data | Go to chart

This version of the American dream is actually less common in the United States than in many peer nations. This chart shows the relationship between a son’s earnings and his father’s earnings. A far higher portion of a son’s earnings in the United States can be explained by his father’s earnings, illustrating once again the relatively low income mobility found in this country.

Even gains in life expectancy have been unequal in recent decades. The bottom half of the earnings distribution has seen gains of less than two years, while those in the top half have seen gains of 6.5 years.

CEOs have always made much more money than the workers they supervise, but the last three decades have seen this ratio explode.

Poverty Growing inequality has helped sever the link between the economy’s overall growth and how that growth helped reduce poverty. If the relationship between overall GDP growth and poverty that prevailed between 1959 and 1973 had continued, the poverty rate would have been driven to zero by the late 1980s. But as this chart shows, economic growth was not shared broadly after 1973, and gains in the fight against poverty changed course and became losses.

Even in the best of times, the poverty rate for African Americans and Hispanics is always at least twice as high as that of non-Hispanic whites. However, the full-employment period between 1996 and 2000 reduced poverty to the greatest degree among groups that historically needed this relief the most. This chart testifies to the ability of a strong economy to reach people across the entire economic distribution, underscoring the fact that poverty in the United States reacts to and can be improved by a strong job market.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: