INCOME INEQUALITY
AND THE STATUS OF THE LOWER INCOME PERSONS
beginning draft, if you want completion sooner, let me know.
What we are looking for here are statistics that can help us determine what the problems might be and what the causes are, so that we can determine some possible strategies to remedy the situation. The problem, I think, is that some people are too poor and need to be helped and some people can't earn enough, and some people do not engage in work (68.4% of householders). Until we separate out the statistics, instead of using conglomerated statistics, we cannot make as meaningful an analysis.
As David Brooks points out there are really three sets of problems or factors affecting the incomes and wealth
1. What causes the concentration of wealth at the top
2. Middle class stagnation
3. What is happening in the lower 20 or 40 percent.
The problem is not "inequality", but people not having enough to get by, unless one assumes that the rich are stealing from the poor in a zero-sum game, where one person can only win by taking away something from another person, instead of looking at the whole pie growing. In terms of real income, people in the lower percentiles have not lost ground over time but they have essentially flattened since 1979. The primary causes appear to be
1. globalization (so unskilled labor is paid less in the US, because of the competition of lower wage workers in other countries)
2. technology (where fewer unskilled workers are needed, where they can be done electronically or by machines; this also lowers demand for unskilled workers, which lowers wages)
3. the increase in single parent households (one person makes less than two persons), which is exacerbated by the increase in out of wedlock births (from to )
4. the decline of company-wide medical and pension benefits.
The individuals who are in the bottom 20% will change over time, as they go from young and unskilled to older and more skilled. , an absolute majority of Americans in the bottom 20% make it into the top 20% over the course of approximately 17 years.
The bottom 20% of income earners on average work less than 15 hours a week
In Wikipedia, it is pointed out that the standard comparison by quintiles of household income: the size of a household is not commonly taken into account in such measures may distort any analysis of fluctuations within or among the household income categories, and may render direct comparisons between quintiles difficult or even impossible.
The bottom 20 percent of households contains 39 million people, while the top 20 percent contains 64 million. Comparing households is comparing apples and oranges.
Real income per capita has risen 50 percent over the same span of time when household income has remained virtually unchanged. How is this possible?
Because households are getting smaller.
In the graph in this piece on Income Inequality, the author lays out the detail behind the household incomes.
If you compare earners per household between the lowest fifth and the highest fifth, it is .42 compared to 1.97, almost 5 times as many.
Single parent families or singles as a percentage: 83% to 21.6%
Ages in the highest fifth are significantly older (people who are very young earn less than experienced workers)
In the lowest fifth 17.4% worked full-time and 68% did not work, while in the highest fifth it was, respectively, 77.2% and 13.3%.
Education also varied significantly.
The "have" and "have-nots" are not different people, just people at different stages of their lives. Experience, time, and age must be factored into any income analysis. Young people have fewer skills and earn less; older people have more skills and earn more. Incomes increase over time.
An absolute majority of the people who were in the bottom 20 percent in 1975 have also been in the top 20 percent at some time since then. Most Americans don't stay put in any income bracket. At different times, they are both "rich" and "poor" -- as these terms are recklessly thrown around in the media. Most of those who are called "the rich" are just middle-class people whose taxes the politicians avoid cutting by giving them that name.
There are of course some people who remain permanently in the bottom 20 percent. But such people constitute less than one percent of the American population, according to data published by the Federal Reserve Bank of Dallas in its 1995 annual report.
the painfully poor 3.5%
