AEIdeas

The public policy blog of the American Enterprise Institute

Subscribe to the blog

Discussion: (25 comments)

  1. Mateen Elass

    Analysis in Summary point 5 needs to be corrected. It should say that more than 5 (not 7) times as many households in the bottom quintile included adults who did not work at all (68.2 percent) compared to top quintile households whose family members did not work (13.3 percent).

    Other than that, this is illuminating and helpful in countering the unsubstantiated party line that the income gap has grown disproportionately over the last 5 decades. Thank you.

    1. Frank Lee Speaking

      Actually, it doesn’t.

      First of all, there is absolutely no longitudinal analysis here. The data is all from 2010.

      Secondly, as others have pointed out, if you break out the 1% and really the .1%, you will find something different. That is where the gap is, not so much between the other 99.

  2. Max Singer

    Interesting. What happens if you do the quintile breakdown by each demographic group. E.g. high education, family working, middle age, etc.?

  3. Straw man.

    The OWS protesters aren’t concerned about growing inequality of the top quintile. They are concerned about the top 1%.

    1. or whatever percentile they need to feel really pissed off.

    2. Bingo… what a ridiculous post…. I haven’t seen a hole lot of OWS protestors carry signs saying we’re the 80%.

      In fact the massive increases of wealth confined to the top 0.1% amount to some significant 4-5% of the gross GDP…. THAT might explain a lot of the protestors concerns that have to do with real economic disfunction.

      But when you are paid to protect the fortunes of others via the AEI you have to say something and hope no one is paying attention.

      I read the title and knew right off not to expect much.

    3. Right on Neal…. the protestors aren’t carrying signs that say we are the 80%.

    4. Captain Profit

      The highest quintile doesn’t include the top 1%? Who knew?

      1. Frank Lee Speaking

        That’s not the point. The point is when you break out the top 1% or the top .1% you find something very different. They have become such massive outliers that they throw the scale off quite drastically, and the percentage increase in wealth (forget the income chart, that doesn’t even tell the full picture because the people at the very top don’t make the majority of their wealth through capital gains, which isn’t reported as income) is many times higher than even the top 5 or 10% let alone the bottom 90, even as the number of income earners per household falls.

        The whole analysis seems pretty dumb though. No family has .042 or 1.97 income earners. They have 0, 1, or 2. So if you want a real picture, you need to see what the percentage of each is for each quintile, and look at it over time. What you will find is that the gains by the bottom 99 are accompanied by having additional income earners (i.e. my grandmother never worked, but my mother does, and my grandparents were better off than my parents, even though my parents are still in the top 10%). Which means there is a very real argument for the quality of life going down even as the standard of living goes up.

        Far be it from this blog to show statistics that don’t fit the story it is trying to present though.

      2. Sure it does, but there is a big difference between the top 1% which has seen massive income growth, and the next 19% which has seen much smaller income growth.

    5. Actually most of them are upset about the deterioration and downsizing of the almost-elite to which they aspired to belong. They are upset that their overpriced degrees in the humanities have not secured them a position within the American nomenklatura:

      http://www.theatlantic.com/business/archive/2011/10/the-rage-of-the-almost-elite/247638/

      The rest are your usual consortium of insane communists, aging hippies, and perpetual malcontents, but I repeat myself.

  4. RobHolmes

    If you go over to Political Calculations (http://politicalcalculations.blogspot.com/2011/10/real-story-behind-rising-us-income.html)they do an analysis that shows that the Gini Coefficient for individual earners has remained essentially unchanged for the last 16 years. The Gini Coefficient for households has gone up, but they suspect (like Mark) that this is more a function of demographics than the rich getting richer.

  5. The top 1 percent are a somewhat different story, but not for the reasons these comments state. The top 1%’s incomes are very volatile and have become more volatile over the years: You don’t stay there for long. See Robert Frank, “The Wild Ride of the 1%”, Wall Street Journal (10/22/2011).

  6. If 21% of top-quintile households are single, how can the top quintile average 1.97 workers per household? Even if everyone in every household was employed, the best would be 1.79, wouldn’t it? Unless other generations are sharing the home while working, which seems unlikely.

    1. Think about it… You do not have to be married to live together. The category is marital status. If there was a third category that subdivided the single-parent/single it would be easier to see.

  7. Mark, I find your analysis incomplete. Demographic differences are relevant only to the degree they hold constant the differences in income inequality, which all studies show they do not. One need only look to median income which peaked in 1973 to understand that the average worker has not seen wage gains over the preceding generation and that median household income has increased due primarily to increased hours and labour participation of women.

    Everything you write in this paragraph must be completed by analysing how the quntiles relative demographics change. it is not enough to cite absolute demographic differences:

    “American households in the top income quintile have almost five times more family members working on average than the lowest quintile, and individuals in higher-income households are far more likely than lower-income households to be well-educated, married, and working full-time in their prime earning years. In contrast, individuals in low-income households are far more likely to be less-educated, working part-time, either very young or very old, and living in single-parent households.”

    Lastly, many of the articles cited in the Pethokoukis piece do indeed claim, contrayy to Jim, that income inequality has risen. See here:

    http://www.cjr.org/the_audit/aeis_myth_of_equality.php

    Bottom line: If you want to make an argument that specific extraneous variables have changed in two sample comparison groups, rendering comparison difficult, you must do one of two things: hold those values constant in one group or allow random variation – and re-run the assessment to make the analysis valid. Doing so reveals that income inequality has increased.

    You cannot argue that differences in those extraneous variables between groups accounts for the changes in the variable assessed without controlling for change over the period of time assessed. this is standard statistical analysis.

    1. Matt Harrison

      According to census bureau data median incomes for all persons increased 64% from $15,943 in 1994 to $26,197 in 2010

      Look about halfway down the page.
      1994
      http://pubdb3.census.gov/macro/031995/perinc/01_001.htm
      2010
      http://www.census.gov/hhes/www/cpstables/032011/perinc/new01_001.htm

  8. This is an apology for the culture of legalized theft in this country. It is a somewhat more subtle version of Herman Cain. The OWS movement will not evaporate.

    1. You are right. They will devour themselves. Bad people with bad ideas are always their own worst enemy.

  9. The Only Sane Person In The World

    Am I missing something, or does this chart mainly just show that the “bottom quintile” are the poorest because THEY DON’T HAVE JOBS?

  10. remington

    While the trends seem clear in this data as it is presented, the causation is more important, and impossible to determine from this. Does someone have a lower income because they are divorced (certainly) or is someone divorced because income was a stress in their marriage that caused it to split (which then exasperated the income level)? Education level is the only one that can be demonstrated to cause a difference in income level on average.

  11. In other words, character is destiny.

    People who are competent and make wise choices in life do well. People who are incompetent and make poor choices in life do not do well.

    Far from being a cause for moral outrage, this should be celebrated. Winners are rewarded and losers are punished. Best of all, it is the losers who punish themselves.

    The only thing that would make this arrangement more perfect is if the losers didn’t find time to breed.

    1. doug gray

      Or it could be that people who are lucky enough to do well in life like to feel that they are competent and have made wise choices, and that this is the difference between them and those who are unlucky. In other words, if you find yourself standing on third base, better check whether or not you were born there before you give yourself credit for hitting a triple.

  12. The 1% have gotten richer due to the policies of obama. Wall Street would like to thank him for letting them rape the American people.

  13. Plain Speak

    Looking at it the same way with body weight. Turns out I’m not as fat as I thought. Nowhere near the top 1%.

    The truth is, OWS is angry that the rich get richer. The quality of life in america, even amongst the bottom 5% is light years better than most other countries. They are complaining about a class they were never going to be a part of anyway. Did anyone think of Bill Gates any differently than they do now when he was worth only a quarter of what he’s worth now? Homeless people have cell phones. OWSers are banging on drums and playing guitars they bought with some kind of money. Money doesn’t buy happiness. Any good parent will teach you that. Money doesn’t buy good parents either. Good parenting……….hmmm I’d like to see the bottom 50% demos on that.

Comments are closed.

Sort By:

Refine Content:

Scholar

Additional Keywords:

Refine Results

or to save searches.

Open
Refine Content