Economic Mobility Report from Pew

Following up on the earlier post on whether rags to riches tales in America are just myths, note that the Pew Trusts have issued a short report on economic mobility.

Relevant excerpts on the background issues of American attitudes and statistics on the American distribution of wealth:

As the data in Figure 2 indicate, the Congressional Budget Office finds that between 1979 and 2004, the real after-tax income of the poorest one-fifth of Americans rose by 9 percent, that of the richest one-fifth by 69 percent, and that of the top 1 percent by 176 percent. Focusing on the familiar story of rising inequalities between CEOs and their employees yields figures that are perhaps even more striking. Between 1978 and 2005, CEO pay increased from 35 times to nearly 262 times the average worker’s pay.4 Said another way, by 2005, the typical CEO made more in an hour than a minimum-wage worker made in a month.
...
Perhaps driven by widening inequality and a concern about the fairness of the game, there is a tangible and growing sense of pessimism among the American public. In exit polls after the 2006 election, less than one- third of the voters said that they thought life would be better for the next generation.5 In another poll, over half of Americans surveyed thought that the American Dream is no longer attainable for the majority of their fellow citizens.6 Other polls suggest that Americans are increasingly worried that they will be able to maintain the standard of living they currently enjoy.7
...
In a March 2007 Pew Research Center poll, 73 percent of respondents — an 8 percentage increase since 2002 — agreed with the statement, “Today it’s really true that the rich just get richer while the poor just get poorer.”9
...
One thing is clear. A society with little or no absolute mobility is one in which for every winner there is a loser. It’s a zero sum game. And a society with little or no relative mobility is one in which class, family background or inherited wealth loom large. Equal opportunity is a mirage. Recalling the three hypothetical societies, it is easy to envision why, for these reasons, high levels of both absolute and relative mobility are desirable. Society should strive for both. But rates of growth in mature economies are often slower than they are in societies that are still developing, and this fact makes a focus on relative mobility of increasing importance.

The report also includes a graph which compares "The U.S. versus the world." Here are the percentages of people agreeing with statements that:

1. “People get rewarded for intelligence and skill”
US------------------------------------69%

Median response from
25 other countries-----------------39%


2. "People get rewarded for their efforts”

US------------------------------------61%

Median response from
25 other countries-----------------36%


3. Coming from a wealthy family is ‘essential’ or ‘very important’ to getting ahead”

US------------------------------------19%

Median response from
25 other countries-----------------28%

4. “Income differences in this [country] are too large”

US------------------------------------62%

Median response from
25 other countries-----------------85%


5. “It is the responsibility of government to reduce differences in income”

US------------------------------------33%

Median response from
25 other countries-----------------69%


Note however that presenting the "median" from the other countries can be misleading. Looking at the above, you could easily assume that the US opinion was drastically different than ALL the other 25 countries, when in reality some of the 25 countries expressed more extreme views than the US. The ranges of responses from individual countries, for example, ranged from 5%–69% on question 1. On question 2 the range was 5 to 64; on question 3 it was 10 to 61; on question 4 it was 62 to 98; and on question 5 it was 33 to 89.

Poverty, violence, and you

If you listen to the conservatives who constantly whine about any and all social programs, you'd get the idea that "poverty" was some abstract philosophical state that matters only in the context of a partisan discussion of economic and social policy. But poverty occurs in the real world, to real people. And violence tends to be pretty strongly associated with poverty, with the violence also also occurring in the real world to real people.

Not surprisingly, given the recent turn of "advanced" societies toward the right, with the obligatory blind eye toward poverty, there seems to be renewed medical interest in exploring the effect that poverty has on the health of the poor.

Here's a short review of what some recent studies have reported (an abstract of the study, if one exists, can be found on the National Library of Medicine web site's "PubMed" database.

In a study of New York City residents that began in 2002, the authors of Urban neighborhood poverty and the incidence of depression in a population-based cohort study, published in the Annals of Epidemiology (vol 17, No. 3, page 171) report that they found an independent association between socioeconomic status (SES) of a person's neighborhood and the likelihood of developing depression.

Another team of researchers undertook a study of 100 African American neonates whose families resided in low-income environments. In Parsing the relations between SES and stress reactivity: examining individual differences in neonatal stress response, published in the journal Infant Behavior & Development (vol 30, No. 1, page 134), the authors report that they found associations between infant behavior, measured by physiologic and behavioral response to being pricked in the heel, and the infant's score on the Neonatal Behavioral Assessment Scale, and "three domains of perinatal risk: socio-demographic, obstetrical complications, and maternal psychological factors during the perinatal period." They report that "Greater magnitude of perinatal risk was associated with both higher and lower than average neonatal stress reactivity."

Switching to an analysis of what relationship might exist between rates of childhood asthma and rates of violent assault in the community, the authors of The association between childhood asthma and community violence, Los Angeles County, 2000 , published in the journal Public Health Reports (vol 121, No. 6, page 720) found a statistically significant correlation between hospitalization rates for childhood asthma and community violence as measured by the rate of hospitalization for assault.

Finally, the article Social capital, socio-economic status and psychological distress among Australian adults, published in the journal Social Science & Medicine (vol 63, No. 10, page 2546), reports that "having trust in people, feeling safe in the community and having social reciprocity are associated with lower risk of mental health distress."

Poverty and violence are not, it seems, merely some abstract philosophical states that matter only in the context of some partisan discussion of economic and social policy (nor are poverty and violence unrelated to each other).

If both poverty and violence affect the physical and mental health of those who experience them, is there any doubt that the rest of society is affected in various adverse ways by this impact on the poor and violence-exposed?

Equally important, if poverty and violence beget physical and mental health problems, and those problems in turn beget more poverty and violence, how many generations of this spiral do you think it takes before a country ceases to even be "advanced?"

Do uncollected taxes grow as IRS employees dwindle?

That's the question raised by both the National Treasury Employees Union and Citizens for Tax Justice, according to an article in Federal Times.

Yesterday, the heads of those two organizations told reporters that:

• understaffing in many areas leaves the IRS unable to dent the $345 billion annual “tax gap” between owed and collected taxes/li>
  
  
• the proposed 2008 IRS budget of $11.1 billion is actually $546 million less than what was recommended by an independent IRS Oversight Board



• the IRS is failing to seek vast amounts of money in offshore tax havens



• the IRS policy now encourages agents to quickly close audits of large corporations.

According to the head of the Employees Union:

Short-changing this agency leads to out-of-whack enforcement. When the IRS doesn’t even ask for enough resources, it fails to direct resources toward the most complex cases and high-income taxpayers.

All of which goes to show that, while there's more than one way to skin a fat cat, there's also more than one way to save that fat cat's skin.

At last, true growth in America: severe poverty

The American Enterprise Institute, The Heritage Foundation, the Hoover Institution, and John Stossel all notwithstanding, it appears that maybe poverty in America just might be a (severe) problem after all. The McClatchey Newspapers report that:

The percentage of poor Americans who are living in severe poverty has reached a 32-year high, millions of working Americans are falling closer to the poverty line and the gulf between the nation's "haves" and "have-nots" continues to widen.

A McClatchy Newspapers analysis of 2005 census figures, the latest available, found that nearly 16 million Americans are living in deep or severe poverty. A family of four with two children and an annual income of less than $9,903 - half the federal poverty line - was considered severely poor in 2005. So were individuals who made less than $5,080 a year.

The McClatchy analysis found that the number of severely poor Americans grew by 26 percent from 2000 to 2005. That's 56 percent faster than the overall poverty population grew in the same period. McClatchy's review also found statistically significant increases in the percentage of the population in severe poverty in 65 of 215 large U.S. counties, and similar increases in 28 states. The review also suggested that the rise in severely poor residents isn't confined to large urban counties but extends to suburban and rural areas.

The plight of the severely poor is a distressing sidebar to an unusual economic expansion. Worker productivity has increased dramatically since the brief recession of 2001, but wages and job growth have lagged behind. At the same time, the share of national income going to corporate profits has dwarfed the amount going to wages and salaries. That helps explain why the median household income of working-age families, adjusted for inflation, has fallen for five straight years.

These and other factors have helped push 43 percent of the nation's 37 million poor people into deep poverty - the highest rate since at least 1975.

The share of poor Americans in deep poverty has climbed slowly but steadily over the last three decades. But since 2000, the number of severely poor has grown "more than any other segment of the population," according to a recent study in the American Journal of Preventive Medicine.

Okay, time for the right wing thinkers to spend another $100 million trying to spin this report away. I'm beginning to think that the money spend to distort the state of economic decay in the US may be the last thing keeping the whole damn structure from collapsing.

Why the growing income/wage gap? It's you, you uneducated fool!

Concerned about the growing divide between the rich and poor, between the well-paid and poorly-paid? Well, Fed chief Ben Bernanke has the solution: go get yourself a better education, you fool!

Speaking to the Omaha, Nebraska Chamber of Commerce, Bernanke said, according to Market Watch(emphasis added):

Education, not protectionism, is the best weapon in the fight against rising income-inequality...If we do not place some limits on the downside risks to individuals affected by economic change, the public at large might become less willing to accept the dynamism that is so essential to economic progress...The gap rose particularly rapidly through most of the 1980s, although it has continued to trend higher...I read the available evidence as favoring the view that the influence of globalization on inequality has been moderate and almost surely less important than the effects of skill-based technological change...As a result, erecting trade barriers to trade and investment would not be helpful, he said.

Bernanke made no conclusion on the issue of soaring CEO compensation, beyond noting that some economists tie it to the increased complexity of corporations, while others see it as a result of CEOs being in charge of their own pay.

Now isn't that really cute? The gap rose "particulalry rapidly" through the 1980s. So I guess we can spell the origin of "the gap" R E A G A N. Like so many other despicable traits of 21st century America.

But don't worry, that's the message Big Ben is trying to send here. It isn't that big bad globalization you've been hearing about from those nasty, pessimistic sources (like this one); it's just a little asymmetry between education and skills that are in demand. We'll solve it. Go back to sleep. A deep sleep. Count backward with me, from 100: 100...99...98...97...Reagan is a hero...96...95...gloablaization is good...94...93...your eyes are getting....blind.