Category Archives: Income Inequality/Gap

Pathways to the Middle Class: Ensuring Greater Upward Mobility for All Americans

Source: Hugh Price, Amy Liu, Rebecca Sohmer, Brookings Institution, Opportunity 08, August 2007

Middle-class prosperity is the cornerstone of the American Dream. Americans believe that through hard work and education families can enter the middle class and keep on climbing. However, recent evidence shows that, even with a rebounding U.S. economy, working and middle-class families are struggling more than in decades past, and upward economic mobility may not be continuing, even for those who work hard and play by society’s rules. Moreover, the road to middle-class prosperity is even rockier for minorities. Several time-honored pathways that lead to the middle class are postsecondary education, good jobs, living in viable neighborhoods, personal financial prudence, and entrepreneurship. This paper focuses on all but the last of these pathways of opportunity.

See also:
Fact Sheet

Income Inequality

Source: NOW, PBS, Show 332, Airdate 8-10-2007

In America, the top one-tenth of one percent of earners makes about the same money per year collectively as the millions of Americans in the bottom fifty percent combined. This is putting a tight squeeze on the middle class, while leaving millions of others in the cold. This week, David Brancaccio talks with Pulitzer prize-winning financial reporter David Cay Johnston, as well as author and advocate Beth Shuman about the state of our country’s vast income divide and how it’s hurting those just trying to make ends meet.
Related stories:
2005 Incomes, on Average, Still Below 2000 Peak
Source: David Cay Johnston, New York Times, August 21, 2007

New IRS Data Pegs Cost of Special Low Tax Rates on Capital Gains
and Dividends at $92 Billion in 2005 Alone -Three-Quarters of the Tax Cuts Went to Best-Off 0.6 Percent

Source: Steve Wamhoff, Citizens for Tax Justice, August 10, 2007

Coming Up Short: Resurrection Health Care’s Distorted Pay Priorities

Source: Council 31, American Federation of State, County and Municipal Employees (AFSCME), July 2007

From press release:
Council 31 of the American Federation of State, County and Municipal Employees (AFSCME) have issued a new report documenting low wage levels that keep patient-support staff art Resurrection Health Care hospitals mired in poverty and unable to support their families. Resurrection Health Care (RHC) is the second largest non-profit hospital system in the Chicago metropolitan area. It encompasses eight hospitals, as well as nursing homes, home health services, and outpatient clinics.

Entitled Coming Up Short: Resurrection Health Care’s Distorted Pay Priorities, the report depicts a starkly skewed pay structure in which the compensation of RHC hospital executives significantly exceeds national norms while the meager wages of patient-support staff (housekeepers, laundry and food service workers) fall far short of self-sufficiency standards in the Chicago area.

Performance Pay and Wage Inequality

Source: Thomas Lemieux, W. Bentley MacLeod, Daniel Parent, Institute for the Study of Labor, IZA DP No. 2850, June 2007

We document that an increasing fraction of jobs in the U.S. labor market explicitly pay workers for their performance using bonuses, commissions, or piece-rates. We find that compensation in performance-pay jobs is more closely tied to both observed (by the econometrician) and unobserved productive characteristics of workers. Moreover, the growing incidence of performance-pay can explain 24 percent of the growth in the variance of male wages between the late 1970s and the early 1990s, and accounts for nearly all of the top-end growth in wage dispersion (above the 80th percentile).

Inequality and Institutions in 20th Century America

Source: Frank S. Levy, Peter Temin, MIT Department of Economics Working Paper No. 07-17, May 1, 2007

abstract
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We provide a comprehensive view of widening income inequality in the United States contrasting conditions since 1980 with those in earlier postwar years. We argue that the income distribution in each period was strongly shaped by a set of economic institutions. The early postwar years were dominated by unions, a negotiating framework set in the Treaty of Detroit, progressive taxes, and a high minimum wage – all parts of a general government effort to broadly distribute the gains from growth. More recent years have been characterized by reversals in all these dimensions in an institutional pattern known as the Washington Consensus. Other explanations for income disparities including skill-biased technical change and international trade are seen as factors operating within this broader institutional story.

Framework for a New Safety Net for Low-Income Working Families

Source: Olivia Golden, Pamela Winston, Gregory Acs, Ajay Chaudry, Urban Institute, Paper 7, June 12, 2007

This paper for the Charles Stewart Mott Foundation conceptualizes a framework for a new safety net for low-income working families that is rooted in their most essential needs. It is organized around five key goals:

1. enabling parents to meet their family’s needs while working in lower-wage jobs,
2. helping families weather gaps in parental employment,
3. supporting parents’ job advancement,
4. helping parents combine work and child-rearing, and
5. improving children’s well-being and development.

The paper describes these families’ circumstances, discusses gaps in current safety-net programs, and explores possible alternative approaches to meeting families’ most pressing needs.

Economic Mobility: Is the American Dream Alive and Well?

Source: Isabel Sawhill of The Brookings Institution and John E. Morton of The Pew Charitable Trusts, Economic Mobility Project (Pew Charitable Trusts), 2007

From press release:
American men have less income than their fathers’ generation did at the same age, according to a new analysis released today by the Economic Mobility Project, an initiative of The Pew Charitable Trusts. Comprised of a Principals’ Group of experts from The American Enterprise Institute, The Brookings Institution, The Heritage Foundation, and The Urban Institute, the project seeks to investigate the health and status of economic mobility in America.

According to the report, men who were in their thirties in 1974 had median incomes of about $40,000, while men of the same age in 2004 had median incomes of about $35,000 (adjusted for inflation). Thus, as a group, income for this generation of men is, on average, 12 percent lower than those of their fathers’ generation. While factors other than cash income also contribute to economic mobility, these data challenge the two-century-old presumption that each successive generation will be better off than the one that came before. The findings rely on new analysis of U.S. Census Bureau data.

How Family Leave Laws Left Out Low-Income Workers

Source: Ann O’Leary, Berkeley Journal of Employment and Labor Law, Vol. 28 no. 1, 2007

Recent media attention has focused on professional women who have “opted out” of the paid labor market to care for their children. By contrast, the media has paid less attention to low-income women who have been required to “opt in” to the workforce over the past ten years as a result of the nation’s overhaul of the welfare system. As women’s overall workforce participation has increased, low-wage working women have become much less likely to have access to pregnancy and family leave than their professional counterparts. This article examines the historical and legal development of this disparity.

Mind If I Peek At Your Paycheck?

Source: Brian Hindo, Business Week, no. 4039, June 18, 2007

It still isn’t easy to find out how you stack up against your colleagues.

You probably know what the guy who sits next to you at work has for lunch every day, how often he calls his wife, how much money he bet on the Astros last weekend, maybe even how much his house is worth. But how much he makes for a living? That’s off limits. After all, there is possibly no matter more shrouded in secrecy, nor a riper topic for office gossip, than what everyone gets paid.

The Work, Family, and Equity Index – How Does the United States Measure Up?

Source: Jody Heymann, Alison Earle, and Jeffrey Hayes, Institute for Health and Social Policy and Project on Global Working Families, 2006

When it comes to ensuring decent working conditions for families, the latest research shows many U.S. public policies still lag dramatically behind all high-income countries, as well as many middle- and low-income countries. This report is based on updated and expanded research used in the first Work, Family, and Equity Index: Where Does the United States Stand Globally?, released in 2004.