Tag Archives: economics

Does Rising Inequality Threaten Future Economic Stability?

According to an article at the Wall Street Journal,  the average income for the bottom 90% of families fell by over 10% from 2002 – 2012 while the average income for families in all the top income groups grew.  The top 0.01% of families actually saw their average yearly income grow from a bit over $12 million to over $21 million over the same period.  And that is adjusted for inflation and without including capital gains.


What was most interesting about the article was its discussion of the dangers of this trend and the costs of reversing it.  In brief, the article noted that many financial analysts now worry that inequality has gotten big enough to threaten the future economic and political stability of the country.  At the same time, it also pointed out that doing anything about it will likely threaten profits.  As the article notes:

But if inequality has risen to a point in which investors need to be worried, any reversal might also hurt.

One reason U.S. corporate profit margins are at records is the share of revenue going to wages is so low. Another is companies are paying a smaller share of profits on taxes. An economy where income and wealth disparities are smaller might be healthier. It would also leave less money flowing to the bottom line, something that will grab fund managers’ attention.

Any bets how those in the financial community will evaluate future policy choices?

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

48% of U.S. Schoolchildren Live in Poverty

A new study has discovered that 48% of the nation’s 50 million public school students are in poverty, as measured by whether they qualify for free or reduced-priced lunches.  In 17 states, the majority of schoolchildren are poor.  Poverty rates are led by Mississippi, where 71% of children are in poverty.

These data represent a startling rise since 2000:


While the statistics are the worst for states in the South and the West, the percent increase in poor children was the highest in the Midwest (up 40% since 2001, compared to 33% in the South, 31% in the West, and 21% in the Northeast).  All, of course, extraordinary increases.

h/t @Miel_Machetes.  Cross-posted at Pacific Standard.

Lisa Wade is a professor of sociology at Occidental College and the author of Gender: Ideas, Interactions, Institutions, with Myra Marx Ferree. You can follow her on Twitter and Facebook.

The Weakest Economic Recovery Since World War II

The current economic recovery officially began June 2009 and is one of the weakest in the post-World War II period.  This is true by almost every indicator, except growth in profits.

One reason it has offered working people so little is the contraction of government spending and employment.  This may sound strange given the steady drumbeat of articles and speeches demanding a further retrenchment of government involvement in the economy, but the fact is that this drumbeat is masking the reality of the situation.

The figure shows the growth in real spending by federal, state, and local governments in the years before and after recessions.  The black line shows the average change in public spending over the six business cycles between 1948 and 1980.  Each blue line shows government spending for a different recent business cycle and the red line does the same for our current cycle.  As you can see, this expansionary period stands out for having the slowest growth in public spending.  In fact, in contrast to other recovery periods, public spending is actually declining.

government spending

According to Josh Bivens:

…public spending following the Great Recession is the slowest on record, and as of the second quarter of 2013 stood roughly 15 percent below what it would have been had it simply matched historical averages… if public spending since 2009 had matched typical business cycles, this spending would be roughly $550 billion higher today, and more than 5 million additional people would have jobs (and most of these would be in the private sector).

The basic stagnation in government spending has actually translated into a significant contraction in public employment.  This figure highlights just how serious the trend is by comparing public sector job growth in the current recovery to the three prior recovery periods.


As Josh Bivens and Heidi Shierholz explain:

…the public sector has shed 737,000 jobs since June 2009. However, this raw job-loss figure radically understates the drag of public-sector employment relative to how this sector has normally performed during economic recoveries… [P]ublic-sector employment should naturally grow as the overall population grows. Between 1989 and 2007, for example, the ratio of public employment to overall population was remarkably stable at roughly 7.3 public sector workers for each 100 members of the population. Today’s ratio is 6.9, and if it stood at the historic average of 7.3 instead, we would have 1.3 million more public sector jobs today.

In short, the challenge we face is not deciding between alternative ways to further shrink the public sector but rather of designing and building support for well financed public programs to restructure our economy and generate living wage jobs.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

Doing Gender with Wallets and Purses

I once heard a transgender woman give a talk about the process of socially transitioning to being recognized as a woman. She discussed various decisions she made in taking some final critical steps toward the social identity of woman.  She talked at length about her hair. She asked, “What kind of woman am I and how is my haircut going to indicate that?”  She talked about being preoccupied with her hair for a long time as she attempted to figure out a cut and style that “felt right.” But what struck me the most was her discussion of carrying a purse.

She said that getting used to carrying a purse everywhere was one of the more challenging elements of the transition.  If asked what I thought would be a significant everyday challenge if I were a woman, I don’t think purse would have been high on my list.  But, it was high on hers.  She discussed remembering to bring it, how to carry it, norms surrounding purse protection in public, but also more intimate details like: what belongs in a purse?

Purses and wallets are gendered spaces.  There’s nothing inherent in men’s and women’s constitutions that naturally recommends carrying money and belongings in different containers.  Like the use of urinals in men’s restrooms, wallets and purses are a way of producing understandings of gender difference rather than as a natural consequence of differences.

I got the idea for this post after reading Christena Nippert-Eng’s book, Islands of Privacy — a sociological study of privacy in everyday life.  One chapter deals specifically with wallets and purses.  In it, Nippert-Eng discusses one way she interviewed her participants about privacy.  She used participants’ wallets and purses as a means of getting them to think more critically about privacy.  Participants were asked to empty the contents of their wallets and purses and to form two piles with the contents: “more private” and “more public.”  As they sifted through the contents of their wallets and purses, they talked about why they carried what they carried as well as how and why they thought about it as public or private.

After collecting responses, she documented all of the contents and created categories and distinctions between objects based on how people thought about them as public or private.  One question that was clearly related to privacy was whether the objects were personally meaningful to the participant.  Invariably, objects defined as more personally meaningful were also considered more private.

Another question that routinely arose as participants made sense of the objects they carry around everyday was how damaging it might be for participants if a specific object was taken.  Based on this findings, she creates a useful table delineating participants concerns surrounding and understandings of the objects they carry with them (see left).


Just for clarification, there’s sort of a sliding scale of privacy going from most to least private as one proceeds from the bottom left cell to the top right cell.  Thus, items classified by participants in the lower left cell (1) are the most private objects.  Here, participants identified things like prescription medications, letters from friends, and a variety of personally meaningful objects that were thought of as completely private and carried only for the self.

Other items were still considered private, but “less private” than objects in cell 1 because they were shared selectively.  Consider cell 2.  While credit cards, bank cards, memberships, credit cards and money were all classified as “private,” individual’s also thought of them as “more public” than object in cell 1 because they were required to share these objects with institutions throughout their lives.

Similarly, some objects were thought of as “private,” but were also carried to share with certain others, such as photographs of children (cell 4).  Finally, items classified in the top right cell (3) are the most public objects in wallets and purses—carried for the self and, potentially, “anyone” else.  Items here include things like tissues, lip balm, money classified as “extra,” gum, breath mints, etc.

Objects from most of the cells exist in both wallets and purses, but not all of them.  The contents of cell 3 (containing the “most public” objects in wallets and purses) are inequitably distributed between wallets and purses.  As Nippert-Eng writes, “This is the one category of objects that is overwhelmingly absent for participants who carry only wallets, yet universally present for those who carry purses” (here: 130).  She also found that some of her participants only carried objects all fitting the same cell in the above table.  These participants — universally “wallet carriers” in her sample — carry only objects necessary for institutional transactions (cell 2).

This is, I believe, a wonderful analysis of one of the more subtle ways in which gender is accomplished in daily life. Certain objects are simply more likely to be carried in purses.  Interestingly, this class of “feminine” objects are also objects that play a critical role in social interactions.  Indeed, many of us are able to travel without these objects because we can “count on” purse-carriers as having them.  Things like packs of gum, tissues, breath mints and more might seem like inconsequential objects.  But, they play a crucial role in social interactions, and many of us count on purse-carriers to provide us with these objects when we are “in need.”  It’s an aspect of care work by which some (those carrying purses) care for others (those without purses).  And if they’re any good at it, the caring goes virtually unacknowledged, though potentially highly acknowledged when these objects are absent in purses.  Children routinely ask their mothers for objects they presume they’ll be carrying in their purses.  Indeed, these objects may be carried in anticipation of such requests.  It’s a small aspect of doing gender, but a significant element of social interactions and life.

When I was learning about interviewing and ethnography, I was told to always carry a pack of gum, a pack of cigarettes (something “lite”), and a lighter.  My professor told me, “It opens people up.  It’s a small gesture that comforts people–puts them at ease.”  These are the ways you might want people to feel if you’re asking them to “open up” for you.  I still remember my first foray into “the field.”  I bought my gum and cigarettes (objects I don’t typically carry) and the first thought I had was, “Where the heck am I going to keep these things?”  What I didn’t realize at the time was that I was asking an intensely gendered question.

Tristan Bridges is a sociologist of gender and sexuality at the College at Brockport (SUNY).  Dr. Bridges blogs about some of this research and more at Inequality by (Interior) Design.  You can follow him on twitter @tristanbphd.

U.S. Corporations are Hoarding Wealth at Highest Rate Since 1971

The dominant firms in the U.S. and other major capitalist counties are happily making profits, but they aren’t interested in investing them in new plants and equipment that increase productivity and create jobs.  Rather they prefer to use their earnings to acquire other firms, reward their managers and shareholders, or increase their holdings of cash and other financial assets.

The chart below, taken from a Michael Burke post in the Irish Left Review, shows trends in both U.S profits and investment .


As you can see the increase in profits (in orange) has swamped the increase in investment (in blue) over the relevant time period; in fact, investment in current dollars has actually been falling.

Looking at the ratio between these two variables helps us see even more clearly the growth in firm reluctance to channel profits into investment.  The investment ratio (investment/profits) was 62% in 1971, peaked at 69% in 1979, fell to 61% in 2000 and 56% in 2008, and dropped to an even lower 46% in 2012.

According to Burke,  if U.S. firms were simply to invest at the level they did in 1979, not even the peak, the increase in investment in the American economy would exceed $1.5 trillion, close to 10% of GDP.

The same dynamic is observable in the other main capitalist economies:

In 1995 the investment ratio in the Euro Area was 51.7% and by 2008 it was 53.2%. It fell to 47.1% in 2012. In Britain the investment ratio peaked at 76% in 1975 but by 2008 had fallen to 53%. In 2012 it was just 42.9% (OECD data).

So what are firms doing with their money? As Burke explains:

The uninvested portion of firms’ surplus essentially has only two destinations, either as a return to the holders of capital (both bondholders and shareholders), or is hoarded in the form of financial assets. In the case of the U.S. and other leading capitalist economies both phenomena have been observed. The nominal returns to capital have risen (even while the investment ratio has fallen) and financial assets including cash balances have also risen.

So, with firms seeing no privately profitable outlet for their funds, despite great societal needs, their owners appear content to reward themselves and sock away the rest in the financial system.  In many ways this turns out to be a self-reinforcing dynamic.  No wonder things are so bad for so many.

Cross-posted at Reports from the Economic Front.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

The Revenge Fantasy: Django Unchained vs. 12 Years a Slave

Many critics are praising 12 Years a Slave for its uncompromising honesty about slavery. It offers not one breath of romanticism about the ante-bellum South.  No Southern gentlemen getting all noble about honor and no Southern belles and their mammies affectionately reminiscing or any of that other Gone With the Wind crap, just an inhuman system. 12 Years depicts the sadism not only as personal (though the film does have its individual sadists) but as inherent in the system – essential, inescapable, and constant.

Now, Noah Berlatsky at The Atlantic points out something else about 12 Years as a movie, something most critics missed – its refusal to follow the usual feel-good cliche plot convention of American film:

If we were working with the logic of Glory or Django, Northup would have to regain his manhood by standing up to his attackers and besting them in combat.

Django Unchained is a revenge fantasy. In the typical version, our peaceful hero is just minding his own business when the bad guy or guys deliberately commit some terrible insult or offense, which then justifies the hero unleashing violence – often at cataclysmic levels – upon the baddies. One glance at the poster for Django, and you can pretty much guess most of the story.


It’s the comic-book adolescent fantasy – the nebbish that the other kids insult when they’re not just ignoring him but who then ducks into a phone booth or says his magic word and transforms himself into the avenging superhero to put the bad guys in their place.

This scenario sometimes seems to be the basis of U.S. foreign policy. An insult or slight, real or imaginary, becomes the justification for “retaliation” in the form of destroying a government or an entire country along with tens of thousands or hundreds of thousands of its people. It seems pretty easy to sell that idea to us Americans – maybe because the revenge-fantasy scenario is woven deeply into American culture –  and it’s only in retrospect that we wonder how Iraq or Vietnam ever happened.

Django Unchained and the rest are a special example of a more general story line much cherished in American movies: the notion that all problems – psychological, interpersonal, political, moral – can be resolved by a final competition, whether it’s a quick-draw shootout or a dance contest.  (I’ve sung this song before in this blog, most recently here after I saw Silver Linings Playbook.)

Berlatsky’s piece on 12 Years points out something else I hadn’t noticed but that the Charles Atlas ad makes obvious: it’s all about masculinity. Revenge is a dish served almost exclusively at the Y-chromosome table.  The women in the story play a peripheral role as observers of the main event – an audience the hero is aware of – or as prizes to be won or, infrequently, as the hero’s chief source of encouragement, though that role usually goes to a male buddy or coach.

But when a story jettisons the manly revenge theme, women can enter more freely and fully.

12 Years a Slave though, doesn’t present masculinity as a solution to slavery, and as a result it’s able to think about and care about women as people rather than as accessories or MacGuffins.

Scrapping the revenge theme can also broaden the story’s perspective from the personal to the political (i.e., the sociological):

 12 Years a Slave doesn’t see slavery as a trial that men must overcome on their way to being men, but as a systemic evil that leaves those in its grasp with no good choices.

From that perspective, the solution lies not merely in avenging evil acts and people but in changing the system and the assumptions underlying it, a much lengthier and more difficult task. After all, revenge is just as much an aspect of that system as are the insults and injustices it is meant to punish. When men start talking about their manhood or their honor, there’s going to be blood, death, and destruction – sometimes a little, more likely lots of it.

One other difference between the revenge fantasy and political reality: in real life results of revenge are often short-lived. Killing off an evildoer or two doesn’t do much to end the evil. In the movies, we don’t have to worry about that. After the climactic revenge scene and peaceful coda, the credits roll, and the house lights come up. The End. In real life though, we rarely see a such clear endings, and we should know better than to believe a sign that declares “Mission Accomplished.”

Cross-posted at Montclair SocioBlog.

Jay Livingston is the chair of the Sociology Department at Montclair State University. You can follow him at Montclair SocioBlog or on Twitter.

The Striking Rise in “Missing Workers”

The Federal Reserve Bank has said it will maintain its stimulus policy as long as the economy remains weak. One of its key indicators for the strength of the economy is the unemployment rate, which has been steadily falling for several years, from 10% in October 2009 to 7.3% in August 2013.  However, this decline in the official unemployment rate gives a misleading picture of economic conditions, at least as far as the labor market is concerned.

The reason, as the Economy Policy Institute explains, is because of the large number of “missing workers.”  These missing workers are…

…potential workers who, because of weak job opportunities, are neither employed nor actively seeking a job. In other words, these are people who would be either working or looking for work if job opportunities were significantly stronger. Because jobless workers are only counted as unemployed if they are actively seeking work, these “missing workers” are not reflected in the unemployment rate.

We are seeing many more missing workers now than in recent history.  The chart below shows the Economic Policy Institute estimate for the number of missing workers.

missing workers_Page_1

 The next chart compares the estimated unemployment rate including missing workers (in orange) with the official unemployment rate (in blue).

unemployment rates_Page_1

As you can see, while the official unemployment rate continues to decline, the corrected unemployment rate remains stuck at a rate above 10%. In other words labor market conditions remain dismal. And here we are only talking about employment.  If we consider the quality of the jobs being created, things are even worse.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

Economic Mobility and Education in the U.S. Today

The phrase “economic mobility” refers to the likelihood that a child will end up in the same or a different economic strata than their parent.  Education is usually cited as a key to improving economic well-being intergenerationally. Conversely, but often unstated, is the idea that if a child of college graduates doesn’t attend college, than they should perhaps do worse than their parents.

What does the data say?

The figure below is from the Pew Economic Mobility Project.  Along the horizontal axis is the parent’s household income quintile: economic strata broken up into fifths from the lowest (left) to highest (right).  The bars represent the adult child’s income for those who didn’t graduate from college (red) and those that did (blue).


Often we focus on the left side.  Does attending college help poor and working class Americans?  The answer is yes. Only 10% of children born into the bottom 20% of household incomes will grow up and stay in the bottom 20%, compared to almost half of people who don’t go to college.    It’s similar, if less stark, for those in the 2nd to bottom quintile.

But what about the rich kids?  I want to look at the right side.  Notice that a quarter of kids born into the top quintile stay there even if they don’t get a college degree.  Half of non-degree earning children will stay in the top 40% of income earners.

Among the richest kids who do go to college, about 50% will remain in the top quintile.  There are lots of reasons for this, but one is paternal connections.  One study found that a whopping 70% of sons of the 1% had worked for the same employer as their father.  I wonder how high that number would be if we added daddy’s friends?

In sum, it’s hard to go up from down below, but it’s also relatively easy to stay sitting pretty if you’re already way up there.

Via Matthew O’Brien at The Atlantic. Cross-posted at Pacific Standard.

Lisa Wade is a professor of sociology at Occidental College and the author of Gender: Ideas, Interactions, Institutions, with Myra Marx Ferree. You can follow her on Twitter and Facebook.