Category Archives: Income Inequality/Gap

Residual Wage Inequality and Immigration in the USA and the UK

Source: Cinzia Rienzo, LABOUR, Vol. 28, Issue 3, 2014
(subscription required)

From the abstract:
This paper assesses the effects of immigration on the increasing residual wage inequality in the USA and UK from 1994 to 2008. It does so by using an extension of the Lemieux (2006) methodology, whereby counterfactual residual variances are constructed to account not only for composition effects (changes in education‐experience of the workforce), but also for increasing immigration in the labour force. The empirical analysis reveals that residual wage inequality is higher among immigrants than among natives. However, increase in immigration does not seem to represent the major force behind the increase in residual wage inequality for the USA and for the UK.

Global income distribution : from the fall of the Berlin Wall to the great recession

Source: Christoph Lakner, Branko Milanovic, World Bank, Development Research Group, Poverty and Inequality Team, Policy Research Working Paper, no. WPS 6719, December 2013

From the summary:
The paper presents a newly compiled and improved database of national household surveys between 1988 and 2008. In 2008, the global Gini index is around 70.5 percent having declined by approximately 2 Gini points over this twenty year period. When it is adjusted for the likely under-reporting of top incomes in surveys by using the gap between national accounts consumption and survey means in combination with a Pareto-type imputation of the upper tail, the estimate is a much higher global Gini of almost 76 percent. With such an adjustment the downward trend in the Gini almost disappears. Tracking the evolution of individual country-deciles shows the underlying elements that drive the changes in the global distribution: China has graduated from the bottom ranks, modifying the overall shape of the global income distribution in the process and creating an important global “median” class that has transformed a twin-peaked 1988 global distribution into an almost single-peaked one now. The “winners” were country-deciles that in 1988 were around the median of the global income distribution, 90 percent of whom in terms of population are from Asia. The “losers” were the country-deciles that in 1988 were around the 85th percentile of the global income distribution, almost 90 percent of whom in terms of population are from mature economies.

Wealth Levels, Wealth Inequality, and the Great Recession

Source: Fabian T. Pfeffer, Sheldon H. Danziger, and Robert F. Schoeni, Russell Sage Foundation, Recession Brief, June 2014

From the abstract:
In a new Recession Brief for the Recession Trends initiative, Fabian T. Pfeffer (University of Michigan), RSF president Sheldon Danziger, and Robert F. Schoeni (University of Michigan) explore the extent to which the Great Recession altered the level and distribution of American families’ wealth, looking at the period between 2007 and 2013. While the Recession had a major impact on the net worth of families across the socioeconomic spectrum, it disproportionately affected households at the bottom of the wealth distribution. These households lost the largest share of their total wealth. As a result, wealth inequality in the US has been significantly exacerbated since the onset of the Recession. As of the end of 2013, the authors note that there have been few signs of significant recovery from the downturn….

Underpaid, Overloaded, and Overrepresented: Findings from NWLC’s New Report on Women in Low-Wage Jobs

Source: Joan Entmacher, Lauren Frohlich, Katherine Gallagher Robbins, Emily Martin, and Liz Watson, National Women’s Law Center, July 2014

From the press release:
These are some of the findings in National Women’s Law Center’s new report Underpaid & Overloaded: Women in Low-Wage Jobs, which analyzes the low-wage workforce (people working in jobs that pay $10.10 per hour or less). The report is full of new data, which you can also explore in our new interactive graphic and map. It also has solutions for how we can lighten the load for low-wage workers. …

Women’s shares of the low-wage workforce are larger than men’s, even though women’s shares of the workforce overall are almost always similar to or smaller than men’s:
∙ Women with some college or an associate’s degree make up double the share of the low-wage workforce as their male counterparts (22 percent v. 10 percent), even though their shares of the overall workforce are similar (15 percent v. 14 percent).
∙ Women 50 and older make up more than three times as large a share of the low-wage workforce as men 50 and older (17 percent v. 5 percent)—even though their shares of the overall workforce are similar (16 percent v. 17 percent).
∙ Mothers make up 3.5 times as large a share of the low-wage workforce as fathers (21 percent v. 6 percent), even though their shares of the overall workforce are similar (16 percent v. 17 percent).

Women’s shares of the low-wage workforce are almost always larger than their shares of the overall workforce. For men, this is rarely true:
∙ Women with only a high school degree are 24 percent of the low-wage workforce, double their share of the overall workforce (12 percent). Men with only a high school degree are underrepresented in the low-wage workforce: they are 12 percent of the low-wage workforce, 0.8 times their share of the overall workforce (15 percent).
∙ The only group of women that is underrepresented in the low-wage workforce is women with bachelor’s degrees or higher: they are 5 percent of the low-wage workforce, about one-third of their share of the overall workforce (17 percent). However, men with a bachelor’s degree or higher are even more underrepresented in the low-wage workforce: they are 3 percent of the low-wage workforce, one-fifth of their share of the overall workforce (18 percent).
∙ In contrast, only a few groups of men, including men without a high school degree, young men (age 16-24), and Hispanic men are overrepresented in the low-wage workforce compared to their share of the overall workforce — and even in these groups, men are overrepresented to a lesser extent than their female counterparts.

Women in the low-wage workforce aren’t necessarily who you think they are:
∙ Nearly four out of five have at least a high school degree; more than four in ten have some college or more.
∙ Half work full time.
∙ Close to one-third are mothers — and 40 percent of them have family incomes below $25,000.
∙ More than one-quarter are age 50 and older — about the same share of the female low-wage workforce as women age 16 to 24.
∙ Nearly half are women of color. ….

Public Sector Unions and the Poor

Source: Jake Rosenfeld, OnLabor Blog, Guest Post, July 22, 2014

…Of the ten states with the highest public sector unionization rates, seven have poverty rates below or at the national average. Of the ten states with the lowest public sector unionization rates, meanwhile, seven have above-average poverty levels. Is this decisive evidence that strong public sector unions cause lower poverty? Of course not. But it’s certainly not the pattern one would expect to see if public sector unions increased the cost and reduced the availability of services to the poor. Other research is more dispositive: in a comprehensive statistical examination of what causes household poverty in the U.S., sociologist David Brady and his colleagues find that two key predictors of lower poverty is state-level unionization and working in the public sector. … Additional research points to the critical role public sector expansion and public sector unionization have on reducing racial inequality. Andrew Strom highlighted the historic Civil Rights drive to organize sanitation workers in Memphis. The connections between government unionization and African-Americans extend well beyond that campaign. … Recent privatization of governmental services has hurt African-American workers more than others, helping to reverse hard-fought gains. ….
When Unionization Disappears: State-Level Unionization and Working Poverty in the United States
Source: David Brady, Regina S. Baker, and Ryan Finnigan, American Sociological Review, Vol. 78 no. 5, October 2013 (subscription required)

What Do We Really Know About Racial Inequality? Labor Markets, Politics, and the Historical Basis of Black Economic Fortunes
Source: William Sites, Virginia Parks, Politics & Society, Vol. 39 no. 1, March 2011

Public Sector Unions — Some History and Economics
Source: Andrew Strom, OnLabor Blog, Guest Post, July 18, 2014
(subscription required)

Privatization and Racial Inequality

Source: Vincent J. Roscigno, George Wilson, Contexts, Vol. 13 no. 1, Winter 2014

New York’s “Poor Doors”: A Next City Explainer

Source: Ariella Cohen, Next City, July 22, 2014

Why do I keep seeing headlines about a “poor door”?
The term is quite literal. It refers to a second entrance in a luxury condo building for tenants living in units reserved for lower-income renters. It has become shorthand for segregation of people based on how much rent they can pay…. But what raises the hackles of critics is the fact that the developers building separate entrances for two classes of residents are receiving subsidies for the affordable units through an inclusionary housing program intended to create mixed-income communities. These developers are receiving lucrative tax abatements in exchange for the creation of affordable units and sometimes, like at One Riverside Park, also receiving a valuable floor area bonus in exchange for units. In the case of One Riverside, Extell is selling that floor area bonus for a profit to a developer looking to build nearby….. Plus, the two-class entrances is part of a larger trend of segregating buildings by rent levels; in a growing number of mixed-income buildings, owners are barring rent-stabilized tenants from using amenities open to their more affluent neighbors. In one Upper West Side building called Stonehenge Village, tenants weren’t allowed to pay extra to use the gym on the lobby level even after local pols intervened on behalf of tenants and public advocate Letitia James filed a discrimination complaint….

The Wage Growth Gap for Recent College Grads

Source: Bart Hobijn and Leila Bengali, Federal Reserve Bank of San Francisco, Economic Letter, July 21, 2014

Median starting wages of recent college graduates have not kept pace with median earnings for all workers over the past six years. This type of gap in wage growth also appeared after the 2001 recession and closed only late in the subsequent labor market recovery. However the wage gap in the current recovery is substantially larger and has lasted longer than in the past. The larger gap represents slow growth in starting salaries for graduates, rather than a shift in types of jobs, and reflects continued weakness in the demand for labor overall.

The most- and least-unequal counties

Source: Economist, June 7, 2014
(subscription required)

The places in America that are as equal as Norway or as unequal as South Africa …

When asked about income inequality, Judge Skeet Jones of Loving County was, at first, quizzical. The topic, it seemed, had never come up before. But on hearing how the Gini index is calculated and how this dusty corner of west Texas scores, the judge (county chief executive) became intrigued. Loving County (pictured) is the most equal county in America. Its Gini score, at 0.21 (where zero is perfect equality and 1 means one fellow has all the income) beats Norway’s (see chart). That makes sense, agreed Mr Jones. Many of Loving County’s workers have the same employer—the county itself. The poverty rate is far lower than the statewide or national figures, and by the judge’s count, only four residents are unemployed….

…At the other extreme is Louisiana’s East Carroll Parish, which is about 800 miles away from Loving County, although the states border one another. East Carroll Parish is America’s least-equal county. It is about as unequal as South Africa, with a Gini score of 0.65. This is largely because nearly half of its 7,500 residents are poor.

Before the civil war, black slaves toiled in cotton plantations in the area. Today, agriculture is still the main industry, but the parish also has a small hospital and a handful of lawyers and other professionals. White people make up about a third of the population, and they do well enough. African-Americans in East Carroll are poorer, less educated and less likely to be employed. There are very few immigrants in the area. De jure segregation ended two generations ago, but the county’s only public high school is still 99% black. White families prefer a private school, which has the Rebel as its mascot….

Millennial Movements: Occupy Wall Street and the Dreamers

Source: Ruth Milkman, Dissent Magazine, Vol. 61 no. 3, Summer 2014

… Occupiers and Dreamers alike are sharply critical of the political establishment, Obama included, and of the explosive growth in inequality since the 1970s. Both movements use the tactics of civil disobedience and direct action, including occupations of public spaces. Both support racial and gender equality and LGBT rights. Both movements also rely heavily on social media, as Millennials famously do in every aspect of their lives.

But despite their many similarities, Occupiers and Dreamers also differ in some key respects. One is demographic: white males were overrepresented among Occupy activists. Although many women and people of color were involved, they were less numerous and less visible. By contrast, the Dreamers are disproportionately led by Latina and Asian women, and nearly all participants are people of color.

The two movements also differ in their discursive strategies. The Dreamers made extensive use of storytelling as they built their movement. Occupiers occasionally told stories as well, but their main public narrative targeted class inequality and “the 1 percent.”

Finally, the two movements featured different organizational structures. The Dreamers used conventional political organizations and methods of decision making and had identifiable leaders. But Occupy rejected traditional structures in favor of “participatory democracy” and making all decisions by consensus. While Occupy shunned immediate demands, the Dreamers focus on specific policies, like in-state tuition rates for undocumented students as well as the DREAM Act itself.

The activism of both groups reflects the demographic makeup of Millennials and their economic prospects. They are more racially and ethnically diverse than any previous generation: about 43 percent are non-white (Latinos are the largest and fastest growing group). And they are the most highly educated generation in U.S. history: a third of Millennials over age twenty-six have a four-year college degree or more. But they have paid a high price for this achievement: two-thirds of recent college graduates have outstanding student debt, averaging $27,000….