Bridging the Income Gap

US: Americans underestimate wealth inequality

Via The Huffington Post: Americans Vastly Underestimate Wealth Inequality, Support 'More Equal Distribution Of Wealth': Study. Excerpt:

Americans vastly underestimate the degree of wealth inequality in America, and we believe that the distribution should be far more equitable than it actually is, according to a new study. 

Or, as the study's authors put it: "All demographic groups -- even those not usually associated with wealth redistribution such as Republicans and the wealthy -- desired a more equal distribution of wealth than the status quo." 

The report (pdf) "Building a Better America -- One Wealth Quintile At A Time" by Dan Ariely of Duke University and Michael I. Norton of Harvard Business School (hat tip to Paul Kedrosky), shows that across ideological, economic and gender groups, Americans thought the richest 20 percent of our society controlled about 59 percent of the wealth, while the real number is closer to 84 percent.

Inequality and child mortality in Brazil

Via the International Journal for Equity in Health: Sub-national assessment of inequality trends in neonatal and child mortality in Brazil. The abstract:

Objective Brazil's large socioeconomic inequalities together with the increase in neonatal mortality jeopardize the MDG-4 child mortality target by 2015. We measured inequality trends in neonatal and under five mortality across municipalities characterized by their socio-economic status in a period where major pro poor policies were implemented in Brazil to infer whether policies and interventions in newborn and child health have been successful in reaching the poor as well as the better off. 

Methods Using data from the 5,507 municipalities in 1991 and 2000, we developed accurate estimates of neonatal mortality at municipality level and used these data to investigate inequality trends in neonatal and under five mortality across municipalities characterized by socio-economic status. 

Results Child health policies and interventions have been more effective in reaching the better off than the worst off. Reduction of under five mortality at national level has been achieved by reducing the level of under five mortality among the better off. Poor municipalities suffer from worse newborn and child health than richer municipalities and the poor/rich gaps have increased. 

Conclusion Our analysis highlights the importance of monitoring progress on MDGs at sub-national level and measuring inequality gaps to accurately target health and inter-sectoral policies. Further efforts are required to improve the measurement and monitoring of trends in neonatal and under five mortality at sub-national level, particularly in developing countries and countries with large socioeconomic inequalities.

US: Census Bureau says poverty rate rose in 2009

Via The New York Times: Poverty Rate Rose Sharply in 2009, Says Census Bureau. Excerpt:

Forty-four million people in the United States, or one in seven residents, lived in poverty in 2009, an increase of 4 million from the year before, the Census Bureau reported on Thursday. 

The poverty rate climbed to 14.3 percent — the highest since 1994 — from 13.2 percent in 2008. The rise was steepest for children, with one in five residents under 18 living below the official poverty line, the bureau said. 

The report provides the most detailed picture yet of the impact of the recession and unemployment on incomes, especially at the bottom of the scale. It also found that the temporary increases in benefits in last year’s stimulus bill eased the burdens on millions of families. 

For a single adult in 2009, the poverty line was $10,830 in pretax cash income; for a family of four, $22,050. 

The number of residents without health insurance in 2009 climbed to 51 million, from 46 million in 2008. The share of children who were uninsured fell, though, reflecting an expansion of government health programs covering low-income children. The share of uninsured adults rose, as a long-term decline continued in the number who have private health insurance. Health experts expect the share of residents without health coverage to decline in coming years as the health care overhaul adopted by Congress in March begins to take effect. 

Government benefits like food stamps and tax credits, which can provide hundreds or even thousands of dollars in extra income, are not included in calculating whether a family’s income falls above or below the poverty line. But rises in the cost of housing, medical care or energy and the large regional difference in the cost of living are not taken into account either. 

By any measure, living on so little income is precarious, and some experts think that people who are getting by on as much as twice the official poverty line should nonetheless be considered poor. 

If the temporarily augmented food-stamp benefits and low-income tax credits were included as income, close to 8 million of those labeled as poor in the report would instead be just above the poverty line, the Census report estimated. 

At the same time, expanded unemployment benefits, which are considered cash income and included in the calculations, helped keep 3 million families above the line last year, the report said.

The Great Divergence: Why we can't blame income inequality on the post-1965 immigration surge

Via Slate, an important new series of articles: The Great Divergence: Why we can't blame income inequality on the post-1965 immigration surge. Excerpt:

Income inequality in the United States has not worsened steadily since 1915. It dropped a bit in the late teens, then started climbing again in the 1920s, reaching its peak just before the 1929 crash. 

The trend then reversed itself. Incomes started to become more equal in the 1930s and then became dramatically more equal in the 1940s. Income distribution remained roughly stable through the postwar economic boom of the 1950s and 1960s. Economic historians Claudia Goldin and Robert Margo have termed this midcentury era the "Great Compression." 

The deep nostalgia for that period felt by the World War II generation—the era of Life magazine and the bowling league—reflects something more than mere sentimentality. Assuming you were white, not of draft age, and Christian, there probably was no better time to belong to America's middle class. 

The Great Compression ended in the 1970s. Wages stagnated, inflation raged, and by the decade's end, income inequality had started to rise. Income inequality grew through the 1980s, slackened briefly at the end of the 1990s, and then resumed with a vengeance in the aughts. 

In his 2007 book The Conscience of a Liberal, the Nobel laureate, Princeton economist and New York Times columnist Paul Krugman labeled the post-1979 epoch the "Great Divergence." It's generally understood that we live in a time of growing income inequality, but "the ordinary person is not really aware of how big it is," Krugman told me. 

During the late 1980s and the late 1990s, the United States experienced two unprecedentedly long periods of sustained economic growth—the "seven fat years" and the " long boom." Yet from 1980 to 2005, more than 80 percent of total increase in Americans' income went to the top 1 percent. 

Economic growth was more sluggish in the aughts, but the decade saw productivity increase by about 20 percent. Yet virtually none of the increase translated into wage growth at middle and lower incomes, an outcome that left many economists scratching their heads.