Our favorite economist, Martin Hart-Landsberg, has written a detailed account of what is causing the rise of income inequality around the world. Here I’d like to highlight just one of his really interesting observations.
While we usually think that rising income inequality is caused by the rich getting richer and the poor getting poorer, a more complex picture is emerging. The graph below plots the hourly wages of the 90th percentile (Americans who make more than 89% of the population) relative to the wages of the 50th percentile (the purple line) and the wages of the 50th compared to the 10th percentile (the dotted blue line).
In English: it asks how quickly the richest people (90th) are pulling away from the average person (50th) and how quickly the average person is pulling away from the poorest (10th). The answer? Income inequality has been increasing since the 70s but, since the late ’80s, rich people have continued pulling ahead of the average American, but the average American has not been gaining on the poor.
Another indicator that the middle class is shrinking is changes in the share of jobs that are low-, middle-, or high-paid. The next graph shows that, across a wide range of countries, high- and low-paying jobs are on the rise, but middle-paying jobs are on the decline. So, middle income jobs are disappearing, but there are more of both high- and low-income jobs.
Hart-Landsberg suggests that the reason for this shift in the economy involves the globalization of production. For more, visit Reports from the Economic Front.
Paraphrasing Donald Rumsfeld, there are things we know and things we don’t know, and things we know we don’t know, and things we don’t know we don’t know.
One thing many working people in American don’t know that they don’t know is how poor our social benefits are compare with those enjoyed by workers in other countries. No doubt one reason is the general media blackout about worker experiences in other countries. A case in point: vacation benefits.
The Center for Economic and Policy Research recently completed a study of vacation benefits in advanced capitalist economies. Here is what the authors found:
The United States is the only advanced economy in the world that does not guarantee its workers paid vacation. European countries establish legal rights to at least 20 days of paid vacation per year, with legal requirements of 25 and even 30 or more days in some countries. Australia and New Zealand both require employers to grant at least 20 vacation days per year; Canada and Japan mandate at least 10 paid days off. The gap between paid time off in the United States and the rest of the world is even larger if we include legally mandated paid holidays, where the United States offers none, but most of the rest of the world’s rich countries offer at least six paid holidays per year.
Even though paid vacations and holidays are not legally required in the United States, some employers do provide them to their workers. The table below shows the paid vacations and paid holidays offered in the U.S. private sector based on data from the 2012 National Compensation Survey. The first two columns show the percentage of private sector workers that receive paid leave, vacation and holidays. The next two columns show the average number of paid vacation and paid holidays provided to those employees that receive the relevant benefit. The last two columns show the average number of paid vacation and paid holidays for all private sector workers, meaning those that receive and those that do not receive the relevant benefits.
Thus, on average, private-sector workers in the United States receive ten days of paid vacation per year and six paid holidays. This total still leaves U.S. workers last in the rankings even when compared with the legal minimums highlighted above. And many employers in these other countries also offer more paid leave than legally required.
Moreover, several countries require additional paid leave for younger and older workers, additions that are also not included in the legal minimums highlighted above. For example, “in Switzerland, workers under the age of 30 who do volunteer work with young people are entitled to an additional five days of annual leave. Norway offers an additional week of vacation to workers over the age of 60.”
And some countries provide additional leave for workers with difficult schedules. For example, “Australia offers some shift workers an additional work week of leave. Austria offers workers with ‘heavy night work’ two to three extra days of leave, depending on how frequently they do this shift work, and an additional four days of leave after five years of shift work.”
Several countries offer additional paid leave for jury service, moving, getting married, or community or union work. For example, “French law guarantees unpaid leave for community work, including nine work days for representing an association and six months for projects of ‘international solidarity’ abroad and leave with partial salary for ‘individual training’ that is less than one year. Sweden requires employers to provide paid leave for workers fulfilling union duties.”
Austria, Belgium, Denmark, Greece, and Sweden even require employers to pay workers at a premium rate while they are on vacation.
There is more to say, but the point should be clear. Ignorance of experiences elsewhere has narrowed our own sense of possibilities.
As I speculated years ago (here and here), it may be hard for Americans to imagine a world where the law guarantees them at least 20 paid vacation days per year. But such a world exists. It’s called Europe.*
Americans are the lucky ones. As Mitt Romney has warned us “European-style benefits” would “poison the very spirit of America.” Niall Ferguson, who weighs in frequently on history and economics, contrasts America’s “Protestant work ethic” with what you find in Europe – an “atheist sloth ethic.”
The graph is a bit misleading. It shows only what the law requires of employers. Americans do get vacations. But here in America, how much vacation you get, or whether you get any at all, and whether it’s paid – that all depends on what you can negotiate with your employer.
Since American vacations depend on what the boss will grant, some people get more paid vacation, some get less, and some get none. So it might be useful to ask which sectors of our economy are beehives of the work ethic and which are sloughs of sloth. (Ferguson’s employer, for example, Harvard University, probably gives him three months off in the summer, plus a week or two or more in the winter between semesters, plus spring break, and maybe a few other days. I wonder how he would react if Harvard did away with these sloth-inducing policies.)
The Wall Street Journal recently (here) published a graph of BLS data on access to paid vacations; they break it up by industry near the bottom.
Those people who are cleaning your hotel room and serving your meals while you’re on vacation — only about one in four can get any paid vacation days. And at the other end, which economic sector is most indulgent of sloth among its workforce? Wall Street. Four out of five there get paid vacation.
How much paid vacation do we get? That depends on sector, but it also depends on length of service. As the Journal says,
Europeans also get more time off: usually a bare minimum of four weeks off a year. Most Americans have to stay in a job for 20 years to get that much, according to BLS data.
* The graph is from five years ago, but I doubt things have changed much. The US still has no federal or state laws requiring any paid vacation days.
The Supreme Court has ruled favorably on the legality of the Affordable Care Act. Actually, despite its name, the Act has more to do with extending and attempting to improve private health insurance coverage than it does with improving care or reducing its cost.
Unfortunately for us, the effort to improve our health care system has remained within bounds set by the needs of private health care providers and insurers. As President Obama made clear from the start of his push for health care reform, there would be no consideration of a universal system.
Critics of such a universal system are always quick to argue that only market forces driven by the private pursuit of profit can ensure an efficient health care system. Of course, in determining whether this is true, we need to recognize that efficiency is a complex term and that our health care system, like all systems, produces multiple outcomes. The most obvious ones are private profit as well as the quality and cost of the relevant health care.
In terms of private profit there can be no doubt that our health care system functions well. However, the story is quite different if we evaluate it in terms of quality and cost. The fact that we continue to embrace a private health care system makes clear which measures of efficiency are considered most important and by whom.
The following map shows the countries, colored green, that have adopted a universal health care system.
What’s astonishing is how cleanly the green and grey separate the developed nations from the developing, almost categorically. Nearly the entire developed world is colored, from Europe to the Asian powerhouses to South America’s southern cone to the Anglophone states of Australia, New Zealand, and Canada. The only developed outliers are a few still-troubled Balkan states, the Soviet-style autocracy of Belarus, and the U.S. of A., the richest nation in the world.
The handful of developing countries that provide universal access to health care include oil-rich Saudi Arabia and Oman, Latin success story Costa Rica, Kyrgyzstan, and, famously, Cuba, among a few others. A number of countries have attempted universal health care but failed, such as South Africa, which maintains a notoriously inefficient and troubled public plan to complement the private plans popular among middle- and upper-class citizens…
That brings us to another way that America is a big outlier on health care. The grey countries on this map tend to spend significantly less per capita on health care than do the green countries — except for the U.S., where the government spends way more on health care per person than do most countries with free, universal health care. This is also true of health care costs as a share of national GDP — in other words, how much of a country’s money goes into health care.
The OECD just published a major study on the health care systems of its 34 member nations. It found that:
Health spending accounted for 17.6% of GDP in the United States in 2010, down slightly from 2009 (17.7%) and by far the highest share in the OECD, and a full eight percentage points higher than the OECD average of 9.5%. Following the United States were the Netherlands (at 12.0% of GDP), and France and Germany (both at 11.6% of GDP).
The United States spent 8,233 USD on health per capita in 2010, two-and-a-half times more than the OECD average of 3,268 USD (adjusted for purchasing power parity). Following the United States were Norway and Switzerland which spent over 5,250 USD per capita. Americans spent more than twice as much as relatively rich European countries such as France, Sweden and the United Kingdom.
What does all of this mean in terms of health outcomes? According to the OECD report:
Most OECD countries have enjoyed large gains in life expectancy over the past decades. In the United States, life expectancy at birth increased by almost 9 years between 1960 and 2010, but this is less than the increase of over 15 years in Japan and over 11 years on average in OECD countries. As a result, while life expectancy in the United States used to be 1½ year above the OECD average in 1960, it is now, at 78.7 years in 2010, more than one year below the average of 79.8 years. Japan, Switzerland, Italy and Spain are the OECD countries with the highest life expectancy, exceeding 82 years.
One possible explanation for this lagging performance, highlighted in an earlier OECD report, is that the U.S. ranked 26th in terms of the number of practicing physicians relative to its population, 29th in terms of the number of doctor consultations per capita, 29th in terms of the number of hospital beds per capita, and 29th in terms of the average length of hospital stay. At the same time, the “U.S. health system does do a lot of interventions… it has a lot of expensive diagnostic equipment, which it uses a lot. And it does a lot of elective surgery — the sort of activities where it is not always clear cut about whether a particular intervention is necessary or not.”
Private health care providers and insurers are clear about how they measure health care efficiency. And as long as we rely on them to set the terms of the debate we will continue to suffer the consequences.
In a previous post I discussed how the U.S. became more religious in the 1950s, in part in response to its the Cold War enemies (atheist communists). In fact, the U.S. is among the most religious countries in the world. Using data from the International Social Survey Programme, Sociologist Tom Smith paints wildly different religious portraits of 28 nations (full text).
When asked whether they “know that God really exists and… have no doubt about it,” 61% of Americans say “yes.” Of the 28 nations studied, only four were more likely to say “yes” to this question: Poland, Israel, Chile, and the Philippines. Here’s how we look compared to similar countries:
Here’s all 28 in rank order (borrowed from LiveScience). Notice how wide the divergence is. In Japan, the least religious country according to this measure, only 4% say they have no doubt God exists. In The Philippines, 84% have no doubt.
% Have No Doubt God Exists:
Japan: 4.3 percent
East Germany: 7.8 percent
Czech Republic: 11.1
Great Britain: 16.8
The Netherlands: 21.2
New Zealand: 26.4
West Germany: 26.7
Northern Ireland: 45.6
United States: 60.6
The Philippines: 83.6
Americans are also particularly likely to believe in a “personal God,” one who is closely attentive to the lives of each and every person.
Quite interestingly, the U.S. is in the minority in that Americans tend to become increasingly religious as they age. In most countries, people become less religious over time. This graph (confusingly labeled), shows changes in DISbelief over the life course. The U.S. is the only country among these in which disbelief declines:
Lifetime Change in Religiosity (from increase in disbelief to increase in belief):
The Netherlands: -14.0
Great Britain: -10.1
Germany (East): -6.9
Czech Republic: -5.5
Germany (West): -5.4
New Zealand: -4.0
The Philippines: +0.8
Northern Ireland: +1.0
United States: +1.4
Rates of atheism — a strong disbelief in God — also vary tremendously. East Germany is the most atheist, with more than half of citizens claiming disbelief. The country is a stark contrast to the atheist among them, Poland and the U.S. (only 3% atheist), Chile and Cyprus (2%), and The Phillipines (1%).
East Germany: 52.1
Czech Republic: 39.9
The Netherlands: 19.7
Great Britain: 18.0
New Zealand: 12.6
West Germany: 10.3
Northern Ireland: 6.6
United States: 3.0
The Philippines: 0.7
As a post-9/11 American watching another election cycle, I can’t help but notice how so much of our rhetoric revolves — sometimes overtly and sometimes not — around people who are the wrong religion. Notably, Muslims. And yet, the U.S. and many Muslim countries are alike in being strongly religious, at least in comparison to the many strongly secular countries.
This is odd because stands in contrast to recent data on American attitudes. Within the U.S., people express much less tolerance for atheists than they do Muslims (homosexuals, African Americans, and immigrants). Weirdly, we think we have more in common with more secular nations like Great Britain than we do with countries like Pakistan or Saudi Arabia. In certain ways, the opposite might be true.
There is big trouble brewing in Europe. John Ross, in his blog Key Trends in the World Economy, highlights this brewing crisis in a series of charts, some of which I repost below.
This first chart shows the extent of the recovery from the recent economic crisis in the U.S., the EU, and Japan. While the U.S. GDP has finally regained its past business cycle peak, the same cannot be said for Europe (or Japan). As of the 3rd quarter 2011, EU GDP was still 1.7% below its previous business cycle peak. The Eurozone was 1.9% below.
Recent GDP estimates for the 4th quarter show European GDP once again contracting, which strongly suggests that the region is headed back into recession without having regained its previous business cycle peak. This development implies that Europe faces serious stagnationist pressures.
This chart looks at the growth record for the 5 largest European economies. Germany has regained its previous GDP peak. France is making progress toward that end. These two countries account for 36.2% of European GDP. However, things are quite different for the UK, Italy, and Spain. These three countries account for 34.7% of European GDP and not only do they each remain far below their respective previous GDP peaks, their economies are once again heading downward.
The third chart highlights the economic performance of the three countries which have received the most media attention because of fears that their governments will be unable to repay their respective debts. They are clearly in trouble, adding to the downward pressure on European GDP. However, despite all the attention paid to them, their combined economies are only one-eighth the size of the combined economies of the UK, Italy and Spain.
The next two charts highlight the fact that economic trends are also dire throughout much of Eastern Europe.
The take-away is that European economic problems are not limited to a few smaller countries. Some of the largest are also performing poorly and apparently headed back into recession without ever having regained their past business cycle peaks. It is hard to see Europe escaping recession. And it is hard to see the U.S., Asia, and Africa escaping the consequences.
How does the U.S. compare to other developed countries on measures of social justice? According to the New York Times, not very well. The visual below compares countries’ poverty rates, poverty prevention measures, income inequality, spending on pre-primary education, and citizen health. The “overall” rating is on the far left and the U.S. ranks 27th out of 31.
As we enter the last frenzied days of Christmas shopping, Dmitriy T.M. thought it was worth looking at international comparisons in spending on the holiday. The Economist posted a graph based on Gallup polls and other data sources about how much individuals in various countries in Europe, plus the U.S. and South Africa, plan to spend on Christmas shopping this year, plotted against national GDP. Overall, Christmas spending correlates with national wealth, with the Netherlands being a noticeable outlier (spending less than we’d expect) and Luxembourg in a spending league of its own: