Category Archives: Income Inequality/Gap

Moral Economies or Hidden Talents? A Longitudinal Analysis of Union Decline and Wage Inequality, 1973–2015

Source: Tom VanHeuvelen, Social Forces, Advance Access, Published: May 30, 2018
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From the abstract:
The decline of labor unions in the United States has been central to the rise of wage inequality since the early 1970s. Recently, sociologists have noted that unionization influences inequality through both direct and indirect pathways, reconciled with the concept of the moral economy, broadly shared norms of fairness institutionalized in market rules and customs that can reduce inequality in pay. While the theory of the moral economy has been resonant in the stratification literature, few have held it to empirical scrutiny. The current study assesses how selection bias from unobserved worker-level heterogeneity influences the associations between unionization and wage attainment and dispersion. To do so, I merge data from the Current Population Survey to 33 waves of longitudinal data from the Panel Study of Income Dynamics. Using combinations of variance function regression models, fixed-effects regression models, and dynamic panel models, I find that the magnitudes of associations tend to be reduced by around half after accounting for unobserved heterogeneity. Yet, more critically, the pathways linking unions and wage inequality via the moral economy prove to be remarkably robust to all tests cast upon them. Results highlight the fundamental importance of labor power resources for the contemporary rise of inequality. They provide a micro-level foundation for theories linking unionization and stratification. They identify the importance of union decline for rising earnings volatility. And they provide implications for the fallout of economic well-being for workers following antiunion policy change. Additional theoretical and policy implications are discussed.

Unions and Inequality Over the Twentieth Century: New Evidence from Survey Data

Source: Henry S. Farber, Daniel Herbst, Ilyana Kuziemko, Suresh Naidu, NBER Working Paper No. 24587, May 2018
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From the abstract:
It is well-documented that, since at least the early twentieth century, U.S. income inequality has varied inversely with union density. But moving beyond this aggregate relationship has proven difficult, in part because of the absence of micro-level data on union membership prior to 1973. We develop a new source of micro-data on union membership, opinion polls primarily from Gallup (N ≈ 980, 000), to look at the effects of unions on inequality from 1936 to the present. First, we present a new time series of household union membership from this period. Second, we use these data to show that, throughout this period, union density is inversely correlated with the relative skill of union members. When density was at its peak in the 1950s and 1960s, union members were relatively less-skilled, whereas today and in the pre-World War II period, union members are equally skilled as non-members. Third, we estimate union household income premiums over this same period, finding that despite large changes in union density and selection, the premium holds steady, at roughly 15–20 log points, over the past eighty years. Finally, we present a number of direct results that, across a variety of identifying assumptions, suggest unions have had a significant, equalizing effect on the income distribution over our long sample period.

Related:
There Is Power in a Union
Source: Mike Konczal, The Nation, May 23, 2018

A new study overturns economic orthodoxy and shows that unions reduce inequality.
unions keep inequality in check

Women’s Earnings Lower in Most Occupations

Source: Amy Newcomb, U.S. Census Bureau, May 2018

Women continue to earn less than men in nearly all occupations, but this is more pronounced in fields that predominantly employ men and in professions with a comparable mix of men and women. The largest pay gap is within the finance and sales professions.

Overall, women are also more likely to be employed in lower-paying jobs.

Women's Earnings By Occupation

The data highlighted above comes from a recently released detailed table from the American Community Survey. It looks at the gender pay gap for more than 300 occupations. ….

As Wisconsin’s and Minnesota’s lawmakers took divergent paths, so did their economies – Since 2010, Minnesota’s economy has performed far better for working families than Wisconsin’s

Source: David Cooper, Economic Policy Institute, May 8, 2018

From the summary:
Since the 2010 election of Governor Scott Walker in Wisconsin and Governor Mark Dayton in Minnesota, lawmakers in these two neighboring states have enacted vastly different policy agendas. Governor Walker and the Wisconsin state legislature have pursued a highly conservative agenda centered on cutting taxes, shrinking government, and weakening unions. In contrast, Minnesota under Governor Dayton has enacted a slate of progressive priorities: raising the minimum wage, strengthening safety net programs and labor standards, and boosting public investments in infrastructure and education, financed through higher taxes (largely on the wealthy).

Because of the proximity and many similarities of these two states, comparing economic performance in the Badger State (WI) versus the Gopher State (MN) provides a compelling case study for assessing which agenda leads to better outcomes for working people and their families. Now, seven years removed from when each governor took office, there is ample data to assess which state’s economy—and by extension, which set of policies—delivered more for the welfare of its residents. The results could not be more clear: by virtually every available measure, Minnesota’s recovery has outperformed Wisconsin’s.

The following report describes how Minnesota’s and Wisconsin’s economies have performed since 2010 on a host of key dimensions, and discusses the policy decisions that influenced or drove those outcomes.

Key findings include:
– Job growth since December 2010 has been markedly stronger in Minnesota than Wisconsin, with Minnesota experiencing 11.0 percent growth in total nonfarm employment, compared with only 7.9 percent growth in Wisconsin. Minnesota’s job growth was better than Wisconsin’s in the overall private sector (12.5 percent vs. 9.7 percent) and in higher-wage industries, such as construction (38.6 percent vs. 26.0 percent) and education and health care (17.3 percent vs. 11.0 percent).

– From 2010 to 2017, wages grew faster in Minnesota than in Wisconsin at every decile in the wage distribution. Low-wage workers experienced much stronger growth in Minnesota than Wisconsin, with inflation-adjusted wages at the 10th and 20th percentile rising by 8.6 percent and 9.7 percent, respectively, in Minnesota vs. 6.3 percent and 6.4 percent in Wisconsin.

– Gender wage gaps also shrank more in Minnesota than in Wisconsin. From 2010 to 2017, women’s median wage as a share of men’s median wage rose by 3.0 percentage points in Minnesota, and by 1.5 percentage points in Wisconsin.

– Median household income in Minnesota grew by 7.2 percent from 2010 to 2016. In Wisconsin, it grew by 5.1 percent over the same period. Median family income exhibited a similar pattern, growing 8.5 percent in Minnesota compared with 6.4 percent in Wisconsin.

– Minnesota made greater progress than Wisconsin in reducing overall poverty, child poverty, and poverty as measured under the Census Bureau’s Supplemental Poverty Measure. As of 2016, the overall poverty rate in Wisconsin as measured in the American Community Survey (11.8 percent) was still roughly as high as the poverty rate in Minnesota at its peak in the wake of the Great Recession (11.9 percent, in 2011).

– Minnesota residents were more likely to have health insurance than their counterparts in Wisconsin, with stronger insurance take-up of both public and private health insurance since 2010.

– From 2010 to 2017, Minnesota has had stronger overall economic growth (12.8 percent vs. 10.1 percent), stronger growth per worker (3.4 percent vs. 2.7 percent), and stronger population growth (5.1 percent vs. 1.9 percent) than Wisconsin. In fact, over the whole period—as well as in the most recent year—more people have been moving out of Wisconsin to other states than have been moving in from elsewhere in the U.S. The same is not true of Minnesota.

Millionaires Average Annual Tax Cut in North Carolina Is Comparable to Average Teacher’s Salary

Source: Meg Wiehe, Institute on Taxation and Economic Policy, Press Release, May 11, 2018

….The misplaced priorities are evident: The recent tax cuts will provide the state’s millionaires with an average annual tax cut of more than $45,000, which is nearly as much as the average teacher’s annual salary of about $50,000…..

Older industrial cities are key to addressing rising regional inequality

Source: Alan Berube and Cecile Murray, Brookings Institution, April 23, 2018

The United States is about to enter its 10th year of economic expansion, dating back to the end of the Great Recession in June 2009. Job growth is robust, the unemployment rate is low, and median household income is at an all-time high.

Yet there remains a strong sense, punctuated by the results of the 2016 presidential election, that many parts of the country have been left behind in the rising tide.

Regional inequality is on the rise
The evidence backs this up. Almost four in five urban areas nationwide had household incomes in 2016 at least 5 percent lower than their levels in 1999. Many of the hardest-hit communities were small to mid-sized areas throughout the Midwest, Northeast, and Southeast still feeling the effects of long-run industrial decline…..

Income Mobility Charts for Girls, Asian-Americans and Other Groups. Or Make Your Own.

Source: Emily Badger, Claire Cain Miller, Adam Pearce, Kevin Quealy, New York Times, March 27, 2018

Last week we wrote about a sweeping new study of income inequality, which followed 20 million children in the United States and showed how their adult incomes varied by race and gender. The research was based on data about virtually all Americans now in their late 30s. This first animated chart illustrates one of the study’s main findings: White boys who grow up rich are likely to remain that way, while black boys raised in similarly wealthy households are more likely to fall to the bottom than stay at the top in their own adult households.

The Worst States for Women’s Lifetime Wage Gap

Source: Jasmine Tucker, National Women’s Law Center, April 10, 2018

Families depend on women’s wages now more than ever. But a woman working full time, year round is typically paid just 80 cents for every dollar her male counterpart is paid. This gap, which persists by educational attainment and occupation, amounts to a loss of $10,086 per year for the typical woman working full time, year round, and today, April 10th, is the day her pay catches up to men’s in 2017 alone.

For a typical woman, this wage gap adds up to a staggering loss of $403,440 over a lifetime of work. And depending on a woman’s race or ethnicity and where she lives, the situation can be much, much worse.
Here are the worst states for women’s earnings losses over a lifetime…..

The Economic Status of Women in the States

Source: Julie Anderson, Jennifer Clark, Institute for Women’s Policy Research, Fact Sheet, IWPR# R532, March 2018

From the summary:
This Fact Sheet presents findings from analysis of the Employment & Earnings Index and Poverty & Opportunity Index of The Status of Women in the States series, a comprehensive project that presents and analyzes data for all 50 states and the District of Columbia. The state grades, rankings, and data provided on these two measures of women’s economic status provide critical information to identify areas of progress for women in states across the nation and pinpoint where additional improvements are still needed. The state-by-state grades are based on composite indices first developed by the Institute for Women’s Policy Research in 1996. For a complete discussion of data sources and methodology, and to find fact sheets on the economic status of women in each state, please visit the interactive Status of Women in the States website at statusofwomendata.org.

Related:
The Economic Status of Women in the U.S.: What Has Changed in the Last 20 – 40 Years
Source: Heidi Hartmann, Institute for Women’s Policy Research, Presentation, March 28, 2018