Browsing the archives for the inequality tag.

A weak tide, that’s not lifting all boats: median household income in the Unites States then and now

Economy, Uncategorized, US Economy

From 1984-1986 up through 2010-2012, the US Census Bureau maintained three-year average data on median household incomes by state, as part of its Annual Social and Economic Supplement. To see how even, or uneven, the growth in that median income has been from state to state, I decided to take that first and last data point and compare the changes. Which states progressed the most – and which the least?

The result is this chart ‒ you’ll need click to enlarge, otherwise you won’t see much (and here is the data as PDF). Size of the bubbles represents 2010 population size.

Chart: Median household income by state, in 1984-1986 and 2010-2012

Click to enlarge: Median household income by state then and now

My interest in this data related primarily to the discussions about stagnating middle class wages in the US; over the years I’ve seen the subject come up time and again that especially male, middle or working class individuals, and most especially those working in manufacturing, are hardly or no better off now than they were in the mid- or late 1970s. This US Census Bureau data set about median household incomes doesn’t quite confirm that, but the national growth it does show, in inflation-adjusted dollars, between 1984-1986 and 2010-2012 is hardly impressive: an anemic 6.2% in 26 years. In addition it should probably be kept in mind that the data set only starts out after the depression of the early 1980s and some 5 years of Ronald Reagan’s administration, which coincided with a rapid increase in income inequality.

The list of the states with the lowest median household income in 2010-2012 was not surprising: starting at the bottom, it’s Mississippi, Arkansas, Louisiana, Kentucky, Tennessee and South Carolina. Montana has the lowest median household income outside the South, whereas West Virginia, perhaps surprisingly, is only the ninth-poorest state by this measure.

The comparison with the ranking and proportions 26 years earlier yields some surprises. In no fewer than six states, the median household income was higher then, than it is now. In an additional five states, the median household income in 2010-12 is at most $1000 higher (in 2012 CPI-U-RS adjusted dollars). These near-dozen states include:

  • Three midwestern states with lots of (former) industry, as you’d expect: Ohio, Michigan and Indiana. Ohio suffered the deepest cuts of the Lower 48, with a median household income that was 7.9% lower in 2010-12 than in 1984-86. Michigan, too, ended up with an actual decrease in median household incomes.
  • Three states in the southwest: California, Nevada and Arizona. Maybe the influx of Latino immigrants, many of whom now survive on low wages, is dragging the median down? Nevada now has a lower median household income than in the mid-80s.
  • Two states in the Deep South (Louisiana and South Carolina); as well as Kansas, Alaska, and Hawaii. Alaska was down the most of all states, actually, though even now it still ranks in the top 10.

The states where median wages in 2010-12 were at least $8,000 higher than 26 years earlier include:

  • In the BosWash corridor, New Hampshire and Maryland. Those two states have ended up with the highest median wages of the country (booming exurbs?). But the largest growth of all the U.S., at +$15,714 and +35.1%, was in Washington DC, which has transformed unrecognizably since Marion Barry’s glory days and the crack epidemic.
  • North Dakota ‒ location of a remarkable oil boom ‒ has seen the nation’s second largest growth in median household income: +$12,385 or +28.6%. Nearby Wyoming also benefits from its flourishing extractive industries, as well as the growth in tourism. (In comparison, it’s striking that Alaska’s median income is down by so much, considering that it’s another state whose economy is disproportionally dependent on oil, gas and mining.)
  • Elsewhere in the Upper Midwest, however, South Dakota, Nebraska and Iowa also all saw well above-average growth in median household incomes. I’m grasping for explanations here, but maybe that has involved the tail end of the long process in which small family farms died out (and the farmers’ sons and daughters moved to the city) and were replaced by large-scale, prosperous agro-industrial farms?
  • Washington state (Microsoft, Boeing, Amazon and/or Starbucks?) … as well as West-Virginia. Which surprised me. West-Virginia had the second-lowest median wages of the nation in ’84-86, ahead of only Mississippi; now it has the ninth-lowest, higher than states like Montana and Tennessee.

The above visualization is the result of generating a bubble chart within Google Spreadsheets, and then processing it in GIMP to add the diagonal line and labels, as well as to pull apart the labels for individual states where the Google chart had superimposed them over each other.

For an automatically generated alternative, I also tried using TableauPublic, and the resulting chart looks a lot more sleek: Median Household Income by State, 1984-196 vs. 2010-2012. It lacks explanatory labeling and a diagonal line to help you orient yourself though. The program is free, but if you’re using it for the first time it takes a bit of figuring out ‒ you’re really going to need the instructions. Once you get a grasp on the basics, though, a chart like this is extremely easy to create.

I found maps a little more complicated to make in TableauPublic, especially compared with using the “geomap” option when creating charts in Google Spreadsheets. But since the Google Geomap won’t show on this blog, I did it anyway. Here are the maps showing the data on median household income by state in 1984-1986, in 2010-2012, and the difference between those two years. I’m afraid Alaska and Hawaii got cut off (another reason to prefer Google Spreadsheets’ geomap, where they are neatly scaled and repositioned to fit into a simple U.S. view), though you should still be able to use the zoom functions to reveal them.

Comparing the maps, it seems to me that the contrast between the BosWash corridor and the surrounding country has grown only more pronounced. You can clearly see the relative decline of the industrial Midwest. The South remains the worst off, as the TableauPublic bubble chart illustrates well too, though the poorest Southern states are also the ones that have caught up with the others the most – with states like Alabama, Tennessee and West-Virginia catching up with the Carolinas and Louisiana. The West remains a bit of a patchwork, meanwhile, with Colorado, Utah and Wyoming, blessed with higher median household incomes, putting some distance between themselves and Montana, Nevada, Arizona and New Mexico.

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Bennet’s been there

Culture, Politics, US culture, US Politics

The New Yorker is a pricey purchase here in Central Europe, but every so often I make it anyway, because its in-depth reportage is often unparalleled. One such piece of reportage I still vividly remember one or two years later dealt with valiant efforts to reform the education system in Denver. Nominally, at least. In truth, it was a both heart-wrenching and challenging panorama of how deep the roots are of the inequality of educational opportunity, and the problems of poverty, exclusion and ghettoisation that underlie it.

Even as the article covered chunks of policy debate, it didn’t get abstract and made you feel the human challenges involved. It resonated with personal experience, and I felt like forcing people to read it. Foremost those with glib answers about poverty and how people should just get themselves to work and pull themselves up by their bootstraps. It sounds stupid when you try to explain that even just getting yourself to another part of town for a job or better school can be an insurmountable obstacle if you’re – well, fill in your cliché – on the outside. But this article made you feel it.

Reading it you couldn’t help identifying with the Schools Superintendent who was trying so strenuously to make sense of it all, and to undertake a daunting effort, from the ground up, to make changes that would spread the benefits of education beyond the middle class.

Michael Bennet with family and, behind him, Governor Ritter. (Image used under CC license from Jeffrey Beall)

Michael Bennet with family and, behind him, Governor Ritter. (Image used under CC license from Jeffrey Beall)

Well, that Superintendent, Michael Bennet, last week was selected by Colorado Governor Ritter to take Ken Salazar’s seat in the Senate.

All I know about him is that New Yorker article. Taniel at Campaign Diaries, however, explains that “Bennet looks to be among the most centrists of Ritter’s potential choices” and that “Ritter himself emphasized Bennet’s centrist politics, describing him with the “postpartisan” terminology that has become the cloak of the ideological center.” Practical, pragmatic, not dogmatic, that kind of thing.

Bennet himself pledged to follow in Salazar’s “bootsteps”, which are distinctly conservative for a Democrat. In short, the Bennet pick will “be frustrating progressives”, and he might oppose card check. Not exactly encouraging stuff.

And yet I can’t help feeling happy about the pick. Such is the power of good journalism. Happy except, of course, for the fact that the man will now no longer be heading Denver’s school system. When one of the major problems with the efforts there have been to improve the school system is inconsistency. The lack of follow-through: a burst of activity as the latest reform model is implemented, and just as effects start moving some of the intractable problems, a change in regime or a new model. Maybe you should make Schools Superintendent as prestigious a position as US Senator …

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“What a Progressive President Might Say”: How will Obama match up?

Politics, US Politics

I didn’t have any spare online time the last week or so, so I’m no longer current on the latest transition news. This was a good find just before, however. After it was confirmed that Melody Barnes would be the Director of the White House Domestic Policy Council under President Obama, TNR The Stump dug up a link to an op-ed she wrote in January 2007 for the WaPo — which was framed as the State of the Union address a progressive president might give.

She gives fashion advice too.

She gives fashion advice too. Not kidding - the Washingtonian profiled her as one of "Ten Well Dressed Women".

Most striking about the piece is just how on message she already was for what would become the framing of Obama’s candidacy and presidency. No wonder she was picked for a top post.

Most encouraging is how she placed escalating income inequality right at the top of domestic policy priorities. What’s hopeful in particular is the way she presented it as the container issue through which other domestic policy questions are framed. Tackling the rapidly increasing concentration of resources in the hands of the few is not just a question of upping the minimum wage. It’s the basic challenge of socio-economic policy that major social issues like education and health care all tie back into.

The acknowledgment of this in Barnes’ piece does warm the progressive heart – both the urgency with which she posits the issue and the ability (and political will) to contextualise pressing sectoral issues like health insurance as more than just individual issues that have come up. Implicit is the understanding of these issues as part of a broader failure of the market economy, or at least of the lurch toward an ever less regulated market economy since the eighties.

A somewhat disappointing part of the piece is the contrast between the paragraphs on Iraq and health care. In both cases, the general diagnosis is solid. For Iraq, however, there is an unambiguous plan of withdrawal. On health care, on the other hand, it’s mostly what’s not mentioned that’s interesting. What to do about the uninsured? Who should ensure them? A state program or private insurers? If a state program, one that’s open to all, or just those without coverage now? Funded how? And if private insurers, how would they be compelled to do it? What about mandates?

A State of the Union obviously doesn’t need to dig way into the details, and a brief op-ed posturing as one cannot possibly do so. But some idea of what path of action she was imagining would have been instructive, especially since her portfolio will include health care and education.

The same goes for energy. The op-ed raises all the right points, but it’s wildly vague on courses of action and priorities. While the paragraph on science underneath includes a pointed reference to embryonic cell research, there’s nothing in the way of even a general approach (say, cap and trade) here.

Still, the fact that one of the top domestic policy advisors to President Obama actually authored an op-ed specifically imagining a progressive presidency is definitely encouraging. Barnes comes from the Center for American Progress, which might calm some nerves about the lack of progressive Obama appointments. The post she will fill is potentially a very powerful one. Now the only question is, what kind of influence will she be able to exert?

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Spread the wealth? What Americans think

Economy, Politics, Presidential Elections, US Economy, US Elections, US Politics

In my post, after the third presidential debate, about McCain’s efforts to make “spreading the wealth around” sound like the most ominous thing, I quoted Ezra Klein as saying that “for most folks, spreading the wealth around probably seems like a good idea” right now.

This is correct, Brian Schaffner of the CCPS argued yesterday at his new home on pollster.com. Taking as lead how the ABC/WaPo poll hasn’t shown any movement this month on the question which candidate is trusted more on the question of taxes, he digs up data showing so from a 2003 survey conducted by NPR, the Kaiser Family Foundation and the Kennedy School of Government.

Moreover, in case you’re feeling doubtful about those sponsors, the same thing is largely confirmed by Gallup data, which the polling firm’s in-depth look at the issue on Thursday revealed.

Schaffner argues that the McCain camp’s insistence that Obama’s proposal to raise taxes on the top 5% of income-earners smacks of class struggle and socialism doesn’t drill into much of a popular perception. It isn’t surprising “that McCain hasn’t gotten much traction by criticizing the fact that Obama wants to increase taxes for high income Americans,” Schaffner writes, because the 2003 survey actually showed that most Americans believe “high income people pay less than their fair share”. Over 60% of Independents, over 70% of Democrats and even a plurality of Republicans  agreed. Barely over 10% of independents and some 30% of Republicans, on the other hand, thought that high income people “pay more than their fair share”:

The Gallup polling data doesn’t directly address the question whether wealthy Americans pay enough taxes, but it does show a majority of Americans believing that “the distribution of money and wealth in this country” isn’t “fair”. Throughout intermittent polls in the last twenty-odd years, an ample majority opined that wealth should be “more evenly distributed among a larger percentage of the people,” while just 27-37% believed that the current distribution is fair:

Two details strike me in this graph. The opinion that “spreading the wealth around” seems like a good idea isn’t just something that’s coming up “right now”, in the face of a financial crisis; it’s actually been pretty consistent through the years. But there’s two kinds of variations over time.

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Sometimes a chart is worth 1,000 words

Economy, Politics, US Economy, US Politics

This one comes via Kevin Drum at Mother Jones:

GDP growth vs. median wage stagnation

Yes – between the beginning of 2002 and the end of 2006, the United States GDP grew by over 15% – while the median wage flatlined, not going up by a single percent. In short, the country got ever richer – but the middle class saw nothing of that wealth. It was pocketed in its entirety by the wealthiest, with an assist from the tax cuts that the Bush administration heavily slanted in their favour.

Are there any recent historic precedents of such a disconnect, in which double-digit national economic growth was not accompanied by any improvement whatsoever for the average American? Was it this bad under Reagan, or Thatcher?

Pondering these numbers, Drum approvingly quotes an article by Joe Klein on Time’s blog Swampland: “We have had 30 years of class warfare, in which the wealthy strip-mined the middle class.” He adds:

For three decades we’ve artificially kept middle class wage increases far below the growth rate of the economy, and this trend has been even more pronounced over the past eight years. This has created an enormous pool of extra money that’s been — yes — strip mined and redirected to the rich, and fixing this is Barack Obama’s biggest and longest-term challenge.

If we restore the normal growth of middle class wages, it provides a sustainable consumer base for the entire economy; it reduces the demand for endless credit card debt; it brings down income inequality naturally; and it goes a long way toward keeping the financial sector under control and reining in Wall Street salaries without putting in place a bunch of artificial (and probably fruitless) regulations. [..] Stop the strip mining and economic vigor will follow. It’s at the core of everything.

UPDATE: Lane Kenworthy, a Professor of Sociology and Political Science at the University of Arizona, had a blog post earlier this month that traces the trend further back, to the Reagan era: Slow Income Growth for Middle America (h/t to A2K user Hawkeye). The pattern is pretty devastating – and he’s got a telling graph too:

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Spread the wealth around!

Debates, Media / journalism, Politics, Presidential Elections, US Economy, US Elections, US Politics

One of the oddest features about Wednesday’s debate was John McCain’s repeated, dismissive references to how Obama wants to “spread the wealth around”. McCain repeated that line no less than nine times, each time derisively, and nine times is a lot in a debate like this. In comparison, he mentioned “education” six times, and “health insurance” three times (which Obama mentioned ten times).

(By the way, if you’re looking for Wordles of the two candidates’ words during the debate, like the ones I made for the second debate, check out these ones that Flickr user spudart made.)

I was actually looking whether there was a YouTube video splicing together all his “spread the wealth around” lines. Because if I knew how to edit videos, I’d make one. I mean, just go to the wonderful NYT interactive election debates tool, type in “spread” in the neat search box above the coloured bars, and use the forward and play buttons to the right to switch between all the references. It’s wonderfully bizarre. (OK, maybe you have to be a geek.)

M J M

Wages have stagnated for a decade .. For most folks, spreading the wealth probably seems like a good idea. (Image used under CC license from Flickr user M J M)

The weird thing about these invocations is that, as Noam Scheiber pointed out, he “repeatedly invoked Obama’s line about ‘spreading the wealth around’ without explaining what makes it so offensive (beyond his own menacing tone).” As Scheiber adds, “it didn’t strike me as self-evidently damning.” Right. I mean, God forbid anyone would want to spread the wealth – give other people a shot at it too. As Ezra Klein adds, “Median wages have stagnated for a decade … For most folks, spreading the wealth around probably seems like a good idea.”

McCain got the quote from Obama’s answer to “Joe the Plumber” (who isn’t actually a licensed plumber, doesn’t actually make $250,000 and wouldn’t have to pay higher taxes under Obama’s plan even if he did buy that company), when they met during a campaign stop. It’s worth watching the whole answer Obama gave. There’s nothing particular controversial in his answer as a whole, and the “spreading the wealth” line came in the context of giving people who are where Joe was earlier in his life tax cuts so they would be helped making it too. But as Campaign Diaries points out, the McCain campaign wants you to see the line as “code words for socialism”.

The thing is that McCain didn’t actually bother to make that argument in the debate. He appeared to think that just repeating the line would make people go, “oh yeah, that’s terrible – spreading the wealth around, how can he say such a thing – he must be a socialist”. This equation strikes me as typically one of those things that only works within the bubble. Maybe because for most people, a $250,000 income is so far removed from their world, they can’t even imagine. After all, it’s just the top 3% who earns that much. It’s five times the median household income, and eight times the median individual income.

It is not far removed, however, from the lives of those reporting on politics for us. For network TV reporters, for pundits and politicians, for anchormen and talk show hosts, it’s not that much. They do know people who make that much, because they are often among the top earners in America themselves. So for them, it hits close to home. And because pundits and anchormen hang out with other pundits and anchormen, their view of what is normal is warped – for a striking example see the video below the fold. And this has serious consequences for the opportunities to market liberal economic policies.

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