Tag Archives: income inequality

New Census Bureau data on median household income

Permanent musical accompaniment to this post: Party Like It’s 1999.

The median income for U.S. households is now slightly higher than what the median income was for households . . . in 1999. Americans are finally making more money than we were in 1999:

Adjusted for inflation, median household income rose to $59,039, which is up 3.2 percent from 2015 to 2016, according to Census Bureau statistics. The previous highest median income, the Associated Press reported, was $58,665, which was recorded in 1999.

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It took 18 years, but the American median income is finally back to where it was before the 2001 recession.

The report covers the final year of the Obama administration, in which poverty rates also decreased from 13.5 percent to 12.7 percent. In real numbers, that’s a drop of 2.5 million people, according to USA Today. The number represent the first time since the recession that the rate wasn’t higher than levels prior to the recession.

In a year filled with debate on health care, the amount of Americans who have health insurance increased by 900,000 to 28.1 million, and the percentage of Americans not covered by insurance dropped from 9.1 percent to 8.8 percent.

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Jared Bernstein: The whys of increasing inequality

I posted about this chart last week, Inequality in One Chart, and our “usual suspects” posted their utterly nonsensical defenses of faith based supply-side “trickle down” GOP economics in the comments.

Today, economist Jared Bernstein weighs in at the Washington Post, The whys of increasing inequality: A graphical portrait:

The graph below, based on the work of economists Gabriel Zucman, Thomas Piketty and Emmanuel Saez, has been receiving considerable attention since it appeared in the New York Times last week. It shows the rate of annual income growth for adults at each percentile in the income distribution — from those who have the lowest incomes to those who have the highest incomes — over two time periods: the mid-1940s to 1980, and 1980 to 2014. Over the first period, post-tax income growth was fastest at the bottom, about 2 percent per year for the “middle class” (the 40th to the 80th percentiles), and a little slower among the wealthy.

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The growth pattern over the second 34-year period looks very different: The richer you were, the faster you got ahead. Incomes grew less than 1 percent for the bottom 50 percent and less than 2 percent for the next 45 percent. They then took off for the richest Americans, with the growth rate for the richest adults ending up about six times that of those in the middle.

The chart is a clear, intuitive way to show the increase in income inequality over the past few decades, and an important reminder that growth for the rich cannot be expected to trickle down to everyone else.

But it doesn’t show why inequality has grown. What explains this portentous change, one that has had profound effects on our society, our living standards, and our politics?

In fact, there are many perps, each of which is captured in the “Inequality’s Causes” slide below. They do, however, share a theme: Many of the factors that enforced a more equitable distribution of growth in the earlier period have been eroded. Moreover, that erosion is neither an accident nor the benign outcome of natural economic evolution. It is often the result of policies that have reduced workers’ bargaining power and supported the upward redistribution of growth.

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Inequality in One Chart

David Leonhardt of the New York Times reports on the latest research from Thomas Piketty, Emmanuel Saez and Gabriel Zucman. Our Broken Economy, in One Simple Chart:

Many Americans can’t remember anything other than an economy with skyrocketing inequality, in which living standards for most Americans are stagnating and the rich are pulling away. It feels inevitable.

But it’s not.

A well-known team of inequality researchers — Thomas Piketty, Emmanuel Saez and Gabriel Zucman — has been getting some attention recently for a chart it produced. It shows the change in income between 1980 and 2014 for every point on the distribution, and it neatly summarizes the recent soaring of inequality.

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The line on the chart (which we have recreated as the red line above) resembles a classic hockey-stick graph. It’s mostly flat and close to zero, before spiking upward at the end. That spike shows that the very affluent, and only the very affluent, have received significant raises in recent decades.

This line captures the rise in inequality better than any other chart or simple summary that I’ve seen. So I went to the economists with a request: Could they produce versions of their chart for years before 1980, to capture the income trends following World War II. You are looking at the result here. [Interactive graphic – see the article.]

The message is straightforward. Only a few decades ago, the middle class and the poor weren’t just receiving healthy raises. Their take-home pay was rising even more rapidly, in percentage terms, than the pay of the rich.

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‘The 62’ control more wealth than 3.5 billion people

“Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate,” a new Oxfam study finds. The Atlantic reports, The World’s Wealthiest 62 People Have as Much Money as the Poorest 3.5 Billion:

Income-InequalityWealth just keeps growing for the 62 richest people in the world. Collectively, this ultra-wealthy group controls $1.76 trillion, which is about the cumulative worth of the poorer half of the world’s population, or around 3.5 billion people. And since 2010, wealth has become more and more concentrated in favor of the richest of the rich while those on the lower rungs of the economic ladder have seen their positions worsen, according to a new report from Oxfam International.

The wealth of the richest 62 people grew by more than half a trillion dollars in that last half-decade, while the wealth of the poorest 50 percent of people globally decreased by more than $1 trillion during the same period. “Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate,” the study finds.

The Wealth of the Rich Keeps Climbing

Oxfam

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Rising wage inequality: the wedge between productivity and worker’s wages

The New York Times’ Paul Krugman blog today cites the most recent report by Josh Bivens and Larry Mishel on the productivity-pay gap.  Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay: Why It Matters and Why It’s Real:

Income-InequalityWage stagnation experienced by the vast majority of American workers has emerged as a central issue in economic policy debates, with candidates and leaders of both parties noting its importance. This is a welcome development because it means that economic inequality has become a focus of attention and that policymakers are seeing the connection between wage stagnation and inequality. Put simply, wage stagnation is how the rise in inequality has damaged the vast majority of American workers.

The Economic Policy Institute’s earlier paper, Raising America’s Pay: Why It’s Our Central Economic Policy Challenge, presented a thorough analysis of income and wage trends, documented rising wage inequality, and provided strong evidence that wage stagnation is largely the result of policy choices that boosted the bargaining power of those with the most wealth and power (Bivens et al. 2014). As we argued, better policy choices, made with low- and moderate-wage earners in mind, can lead to more widespread wage growth and strengthen and expand the middle class.

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Wealth inequality is distorting how Americans think about the problem

monopolybOne of the right-wing talking points I see pop up with more frequency is the use of “liberal envy” of the wealthy elite Plutocrats who rule over us as the reason for issues like income and wealth inequality.

Liberals are just “envious” of the über-rich top one-percent and that is why they want to tax the rich more, so we are told.

This talking point only makes sense if one is a member of the privileged one percent. It’s a safe bet that most, if not all of you, are not.

Neil Irwin, who was a Washington Post columnist and the economics editor of its “Wonkblog” before moving over to The New York Times as a senior economic correspondent and writing for “The Upshot” column a year ago, recently wrote Why Americans Don’t Want to Soak the Rich:

With rising income inequality in the United States, you might expect more and more people to conclude that it’s time to soak the rich. Here’s a puzzle, though: Over the last several decades, close to the opposite has happened.

Since the 1970s, middle-class incomes have been stagnant in inflation-adjusted terms, while the wealthy have done very well; inequality of wealth and income has risen.

Over that same period, though, Americans’ views on whether the government should work to redistribute income — to tax the rich, for example, and funnel the proceeds to the poor and working class — have, depending on which survey answers you look at, either been little changed, or shifted toward greater skepticism about redistribution.

In other words, Americans’ desire to soak the rich has diminished even as the rich have more wealth available that could, theoretically, be soaked.

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