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Race and Gender Cannot Explain Increasing Inequality September 14, 2010

Posted by Dwight Furrow in Current Events, Dwight Furrow's Posts, Uncategorized.
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As I have noted often on this blog, inequality—the Great Divergence—has increased rather dramatically in the U.S.

The question is why, a question Timothy Noah is attempting answer in his series of articles at Slate.

Most discussion about inequality in the United States focuses on race and gender. That makes sense, because our society has a conspicuous history of treating blacks differently from whites and women differently from men. Black/white and male/female inequality persist to this day. The median annual income for women working full time is 23 percent lower than for their male counterparts. The median annual income for black families is 38 percent lower than for their white counterparts. The extent to which these imbalances involve lingering racism and sexism or more complex matters of sociology and biology is a topic of much anguished and heated debate.

But we need not delve into that debate, because the Great Divergence can’t be blamed on either race or gender. To contribute to the growth in income inequality over the past three decades, the income gaps between women and men, and between blacks and whites, would have to have grown. They didn’t.

The black/white gap in median family income has stagnated; it’s a mere three percentage points smaller today than it was in 1979. This lack of progress is dismaying. So is the apparent trend that, during the current economic downturn, the black/white income gap widened somewhat. But the black/white income gap can’t be a contributing factor to the Great Divergence if it hasn’t grown over the past three decades. And even if it had grown, there would be a limit to how much impact it could have on the national income-inequality trend, because African-Americans constitute only 13 percent of the U.S. population.

Women constitute half the U.S. population, but they can’t be causing the Great Divergence because the male-female wage gap has shrunk by nearly half. Thirty years ago the median annual income for women working full-time was not 23 percent less than men’s, but 40 percent less. Most of these gains occurred in the 1980s and early 1990s; during the past five years they halted. But there’s every reason to believe the male-female income gap will continue to narrow in the future, if only because in the U.S. women are now better educated than men. Ever since the late 1990s female students have outnumbered male students at colleges and universities. The female-male ratio is currently 57 to 43, and the U.S. Department of Education expects that disparity to increase over the next decade.

Far from contributing to the Great Divergence, women have, to a remarkable degree, absented themselves from it.  […] during the past three decades, women have outperformed men at all education levels in the workforce. Both men and women have (in the aggregate) been moving out of moderately skilled jobs—secretary, retail sales representative, steelworker, etc.—women more rapidly than men. But women have been much more likely than men to shift upward into higher skilled jobs—from information technology engineer and personnel manager on up through various high-paying professions that require graduate degrees (doctor, lawyer, etc.).

These findings suggest that women’s relative gains in the workplace are not solely a You’ve-Come-a-Long-Way-Baby triumph of the feminist movement and individual pluck. They also reflect downward mobility among men.

And as Noah reports, conservative arguments that inequality is a product of single parents or the breakdown in the family also don’t wash.

But it would be difficult to attribute much of the Great Divergence to single parenthood, because it increased mostly before 1980, when the Great Divergence was just getting under way. By the early 1990s, the growth trend halted altogether, and though it resumed in the aughts the rate of growth was significantly slower.

Also, single parenthood isn’t as damaging economically as it was at the start of the Great Divergence. “That’s mostly because the percentage of women who are actually working who are single parents went up,” Jencks told me. In a January 2008 paper, three Harvard sociologists concluded that the two-thirds rise in income inequality among families with children from 1975 to 2005 could not be attributed to divorce and out-of-wedlock births. “Single parenthood increased inequality,” they conceded, “but the income gap was closed by mothers who entered the labor force.” One trend canceled the effects of another (at least in the aggregate).

So there is little evidence supporting either liberal or conservative arguments regarding increases in inequality.

book-section-book-cover2 Dwight Furrow is author of

Reviving the Left: The Need to Restore Liberal Values in America

For political commentary by Dwight Furrow visit: www.revivingliberalism.com

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The Myth of Equality September 9, 2010

Posted by Dwight Furrow in Dwight Furrow's Posts, Political Philosophy, politics, Uncategorized.
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In 1915, the richest 1% garnered 18% of the nations income, according to Timothy Noah, writing a serious of articles about inequality on Slate

This was the era in which the accumulated wealth of America’s richest families—the Rockefellers, the Vanderbilts, the Carnegies—helped prompt creation of the modern income tax, lest disparities in wealth turn the United States into a European-style aristocracy. The socialist movement was at its historic peak, a wave of anarchist bombings was terrorizing the nation’s industrialists, and President Woodrow Wilson’s attorney general, Alexander Palmer, would soon stage brutal raids on radicals of every stripe. In American history, there has never been a time when class warfare seemed more imminent.

[…] Today, the richest 1 percent account for 24 percent of the nation’s income. What caused this to happen?

Over the next couple weeks, Noah will try to explain this trend toward greater inequality. But getting the timeline right is essential for a coherent account.

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.

…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.

Why don’t we pay more attention to this increase in inequality?

One reason may be our enduring belief in social mobility. Economic inequality is less troubling if you live in a country where any child, no matter how humble his or her origins, can grow up to be president. In a survey of 27 nations conducted from 1998 to 2001, the country where the highest proportion agreed with the statement “people are rewarded for intelligence and skill” was, of course, the United States. (69 percent). But when it comes to real as opposed to imagined social mobility, surveys find less in the United States than in much of (what we consider) the class-bound Old World. France, Germany, Sweden, Denmark, Spain—not to mention some newer nations like Canada and Australia—are all places where your chances of rising from the bottom are better than they are in the land of Horatio Alger’s Ragged Dick.

Guyana, Nicaragua, and Venezuela, not to mention Germany, France, and the UK have income distributions more equal than ours, yet this seldom is a successful campaign issue. The myth of American commitment to equality dies hard.

If we are to get a handle on this issue, we will need to know the cause of the growing inequality—so I will be following Noah’s installments as he lays out the explanation.

book-section-book-cover2 Dwight Furrow is author of

Reviving the Left: The Need to Restore Liberal Values in America

For political commentary by Dwight Furrow visit: www.revivingliberalism.com