Category Archives: Income Inequality/Gap

Income Stratification among Occupational Classes in the United States

Source: Xiang Zhou, Geoffrey T Wodtke, Social Forces, Vol, 97 no. 3, March 2019
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From the abstract:
Stratification and inequality are among the most central concepts in sociology, and although related, they are fundamentally distinct: inequality refers to the extent to which resources are distributed unevenly across individuals or between population subgroups, whereas stratification refers to the extent to which population subgroups occupy distinct hierarchical layers within an overall resource distribution. Despite the centrality of stratification in theories of class structure, prior empirical studies have focused exclusively on measures of inequality, which do not accurately capture the degree of class stratification and suffer from a variety of methodological limitations. In this paper, we employ a novel rank-based index of stratification to measure the degree to which occupational classes inhabit distinct, non-overlapping, and hierarchically arranged layers in the distribution of personal market income. The stratification index is nonparametric, both scale and translation invariant, and independent of the level of inequality. Based on this index, our results show that the US income distribution is highly stratified by occupational class and that the degree of class stratification increased substantially from 1980 to 2016. Moreover, we find that this trend is almost entirely due to growing stratification among aggregate occupational classes rather than among the disaggregate occupations nested within them. Finally, a set of counterfactual analyses indicate that the rise of occupational class stratification is driven by increases in the income returns to education, deunionization, and deindustrialization, although the relative importance of these factors varies by gender.

Why wealth equality remains out of reach for black Americans

Source: Darrick Hamilton, Trevon Logan, The Conversation, February 28, 2019

Black History Month has become the time to reflect on all the progress black Americans have made, but the sobering reality is that when it comes to wealth – the paramount indicator of economic security – there has been virtually no progress in the last 50 years.

Based on data from the Federal Reserve’s Survey of Consumer Finance, the typical black family has only 10 cents for every dollar held by the typical white family.

While there is no magic bullet for racism, access to wealth, and the security to pass it down from one generation to the next, would go a long way toward changing the economic trajectory for blacks.

As researchers who study historical and contemporary racial inequality, we mostly conceive of wealth as a maker of success, but its true value is functional: the independence and economic security that it provides…..

The ‘Hidden Mechanisms’ That Help Those Born Rich to Excel in Elite Jobs

Source: Joe Pinsker, The Atlantic, February 26, 2019

When two sociologists interviewed highly paid architects, TV producers, actors, and accountants, they encountered work cultures that favor the already affluent. ….

Over the past five years, the sociologists Daniel Laurison and Sam Friedman have uncovered a striking, consistent pattern in data about England’s workforce: Not only are people born into working-class families far less likely than those born wealthy to get an elite job—but they also, on average, earn 16 percent less in the same fields of work.

Laurison and Friedman dug further into the data, but statistical analyses could only get them so far. So they immersed themselves in the cultures of modern workplaces, speaking with workers—around 175 in all—in four prestigious professional settings: a TV-broadcasting company, a multinational accounting firm, an architecture firm, and the world of self-employed actors.

The result of this research is Laurison and Friedman’s new book, The Class Ceiling: Why It Pays to Be Privileged, which shows how the customs of elite workplaces can favor those who grew up wealthier. The authors describe a series of “hidden mechanisms”—such as unwritten codes of office behavior and informal systems of professional advancement—that benefit the already affluent while disadvantaging those with working-class backgrounds. ….

…. Laurison: I think that a lot of people, on some level what they think they’re doing when they sponsor young co-workers is spotting talent—they called it “talent-mapping” in the accounting firm we studied. But a lot of people we talked to were also able to reflect and say, “Part of why I was excited about that person, probably, is because they reminded me of a younger version of myself.” The word we use in sociology is homophily—people like people who are like themselves.

One of the big ideas of the book, for me, is it’s really hard for any given individual in any given situation to fully parse what’s actual talent or intelligence or merit, and what’s, Gosh, that person reminds me of me, or I feel an affinity for them because we can talk about skiing or our trips to the Bahamas. Part of it is also that what your criteria are for a good worker often comes from what you think makes you a good worker.

Pinsker: In the workplaces you studied, who tended to lose out in these systems of sponsorship?

Laurison: In three of the four fields we studied, it was poor and working-class people, and also women and people of color. There are lots of axes along which homophily can cloud senior people’s judgment about who’s meritorious. ….

Women in the One Percent: Gender Dynamics in Top Income Positions

Source: Jill E. Yavorsky, Lisa A. Keister, Yue Qian, Michael Nau, American Sociological Review, OnlineFirst, February 8, 2019
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From the abstract:
A growing body of research documents the importance of studying households in the top one percent of U.S. income distribution because they control enormous resources. However, little is known about whose income—men’s or women’s—is primarily responsible for pushing households into the one percent and whether women have individual pathways to earning one percent status based on their income. Using the 1995 to 2016 Surveys of Consumer Finances, we analyze gender income patterns in the one percent. Results show that women’s income is sufficient for one percent status in only 1 in 20 of all elite households. Although self-employment and higher education increase the likelihood that women will personally earn sufficient income for one percent status, marrying a man with good income prospects is a woman’s main route to the one percent. In contrast, men’s one percent status is most closely associated with their own characteristics (self-employment and higher education). Importantly, the gender gap in personally earning one percent income has not narrowed since the mid- to late-1990s, indicating another area in which gender progress has stalled. This research suggests that men retain most of the primary breadwinning positions in top income households and that a financial glass ceiling remains firmly intact at the one percent level.

Global Wealth Inequality

Source: Gabriel Zucman, National Bureau of Economic Research, NBER Working Paper No. 25462, January 2019
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From the abstract:
This article reviews the recent literature on the dynamics of global wealth inequality. I first reconcile available estimates of wealth inequality in the United States. Both surveys and tax data show that wealth inequality has increased dramatically since the 1980s, with a top 1% wealth share around 40% in 2016 vs. 25–30% in the 1980s. Second, I discuss the fast growing literature on wealth inequality across the world. Evidence points towards a rise in global wealth concentration: for China, Europe, and the United States combined, the top 1% wealth share has increased from 28% in 1980 to 33% today, while the bottom 75% share hovered around 10%. Recent studies, however, may under-estimate the level and rise of inequality, as financial globalization makes it increasingly hard to measure wealth at the top. I discuss how new data sources (leaks from financial institutions, tax amnesties, and macroeconomic statistics of tax havens) can be leveraged to better capture the wealth of the rich

African-Americans’ economic setbacks from the Great Recession are ongoing – and could be repeated

Source: Vincent Adejumo, The Conversation, February 5, 2019

The financial crisis of 2009, the worst since the Great Depression, was hard on all Americans. But arguably no group felt its sting more than African-Americans, who were already the most economically and financially vulnerable segment of the population going into it.

Even today, a decade since the Great Recession hit, blacks still haven’t fully recovered and remain in a precarious financial condition. What’s worse, Wall Street and policymakers are beginning to worry another downturn may be on the horizon. ….

Towards an AI Economy That Works for All

Source: Stephen Herzenberg, Keystone Research Center, February 2019

From the summary:
This is the first report of a Keystone Research Center project on the “Future of Work.” The aim is to identify public policies that could help ensure that the application and diffusion of artificial intelligence (AI) over the next several decades fosters an economy in which Americans generally thrive. The project is motivated, in part, by concern that the opposite could occur: that AI will exacerbate the already high levels of income and wealth inequality in the United States. Our most important conclusion is that AI need not make our inequalities more severe. Creative public policies could lead to an AI economy “that works for the many, not just the few.”

The study design has been informed by the two principal authors’ experience at the one-time Office of Technology Assessment (OTA) of the US Congress. To guide the undertaking and provide feedback on its products, we recruited an advisory panel of nationally recognized academics and representatives of think tanks and the corporate, labor, and non-profit sectors. The project methodology combines interviews with technology experts, policy analysis, synthesis of research literature and, still to come, sectoral studies.

This first report contains three main parts. (1) Following an introduction, Sections II-IV contain an analysis of AI’s likely impacts through the lens of technology. Section II reviews past impacts of innovations including robotics and information technology on the economy and jobs. Section III looks at AI itself, how it does and does not go beyond previous technologies and substitute for human capacities and intelligence. Section IV explores the difficulties of predicting AI’s job impacts. (2) Section V, “The Plight of the American Worker,” considers the labor market context in which AI systems will spread and the roots of the economic inequality from which the nation suffers. (3) Section VI surveys policies that could influence inequality and the distribution of the benefits of productivity growth as AI spreads.

Related:
Press Release

Martin Luther King Jr., union man

Source: Peter Cole, The Conversation, January 18, 2019

If Martin Luther King Jr. still lived, he’d probably tell people to join unions.

King understood racial equality was inextricably linked to economics. He asked, “What good does it do to be able to eat at a lunch counter if you can’t buy a hamburger?”

Those disadvantages have persisted. Today, for instance, the wealth of the average white family is more than 20 times that of a black one.

King’s solution was unionism…..

Related:
Economic justice was always part of MLK Jr.’s message
Source: Peter Kelley, Futurity, January 20, 2019

Labor rights and economic justice were always part of Dr. Martin Luther King Jr.’s progressive message, historian Michael Honey reminds us in a new book.

The book, To the Promised Land: Martin Luther King and the Fight for Economic Justice, (W.W. Norton, 2018) came out April 3—the day before the 50-year anniversary of King’s assassination. ….

When King Was Dangerous
Source: Alex Gourevitch, Jacobin, January 21, 2019

Martin Luther King Jr is remembered as a person of conscience who only carefully broke unjust laws. But his militant challenges to state authority place him in a much different tradition: radical labor activism.

Treading Water: The Current Challenges of Women’s Work

Source: Shilpa Phadke and Diana Boesch, Center for American Progress, January 18, 2019

…. This column reviews how women’s work is segmented and undervalued; how workers at the margins—such as domestic workers, farm laborers, part-time workers, and gig economy workers—face persistent barriers and inequality; and how policymakers must prioritize centering workers’ voices and holistic needs and experiences as they craft meaningful economic policy. While this column does not detail the myriad ways in which women often struggle to maintain their economic security to the detriment of their health, it is important to emphasize that women do not live their lives in silos, and access to a range of programs and policies, such as comprehensive reproductive health services, as well as access to affordable education and skills-based learning, are critical to women’s economic success. ….