economics

A while back I posted about a Pew study looking at long-term unemployment. About a third of those currently out of work have been unemployed for a year or longer.

That makes a recent video released by 60 Minutes Overtime particularly striking. The reporters discuss evidence of discrimination against the long-term unemployed, with employers particularly unwilling to hire those who have been out of a job for two years or more. Given the length and severity of the current recession, this leaves large numbers of jobless people facing the frustrating paradox that you often need a job to get a job, leaving them trapped:

In an earlier post we reviewed research by epidemiologists Richard Wilkinson and Kate Pickett showing that income inequality contributes to a whole host of negative outcomes, including higher rates of mental illness, drug use, obesity, infant death, imprisonment, and interpersonal trust.

In the six-minute video below, Kate Pickett talks about how more equal societies are kinder to each other, give more in foreign aid, are less status-conscious, consume less, and even recycle more.  Based on this, she argues that reducing inequality within societies is a good strategy towards addressing climate change.

How to increase equality? It turns out there are lots of options.

See Dr. Pickett making similar arguments as to why raising the average national income in developed countries doesn’t make people happier or enable them to live longer, why unequal societies are more violent, and how status inequality increases stress.

And see more about income inequality and national well-being at Equality Trust.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Cross-posted at Montclair SocioBlog.

This graph tracks the share of income going to the top 1% in seven countries.  It’s from a paper by two Swedish economists, Jesper Roine and Daniel Waldenström (pdf).”’

Cross-posted at Reports from the Economic Front.

The Great Recession ended in June 2009, which means we have been in economic expansion for almost 3 years.  Lately the news has been filled with reports of positive economic trends, but how seriously should we take these reports?

One indicator worth looking at is median household income (the red line below).  Unfortunately its trend suggests little reason for cheer. In January 2012, median household income was $50,020.  That was 5.4% lower than it was in June 2009.  Even worse, as the chart below reveals, after a brief uptick it headed back down again.

It is true that employment is finally growing, a development reflected in the decline in the unemployment rate (the blue line above).  Unfortunately, this has done little to boost wages.  In fact, real wages actually fell in 2011.  The first chart below highlights the downward turn.  The second chart reveals just how far per capita earnings remain below historical trend.

This situation helps to explain why growth has been so anemic.  As the Wall Street Journal wrote:

Many economists in the past few weeks have again reduced their estimates of growth.  The economy by many estimates is on track to grow at an annual rate of less than 2% in the first three months of 2012.  The economy expanded just 1.7% last year.  And since the final months of 2009, when unemployment peaked, the economy has expanded at a pretty paltry 2.5% annual rate.

Without a dramatic change in median household income, growth will remain slow and even the limited employment gains we currently celebrate will likely prove impossible to sustain.  Given the current political climate, it is hard to see how this expansion will be either long lasting or bring meaningful improvements in majority living and working conditions.

The Paris School of Economics has posted a database, compiled by Facundo Alvaredo, Tony Atkinson, Thomas Piketty, and Emmanuel Saez, of the distribution of top incomes in a number of nations, with more on the way. Using income tax records, they provide a quick glance at concentration of income among the wealthy over decades (and in some cases, data extends back over a century). As the authors point out, there are limitations to using tax info to measure inequality, so it’s important to be aware of the limitations of this data series. Most obviously, individuals may take steps to hide their income to evade taxes, and the very wealthy may be particularly able to do so through the use of tax havens, etc. Also, tax policies change, so what counts as “income” at one point might not at another. The authors also had to contend with differences in the taxation unit (households vs. individuals) in different countries to provide some level of comparability.

The database allows you to select a country, a time period, and a variable (top 5% income share, etc.), and get a table showing the results for all years in which data were available. Here, for instance, is part of the table for the share of income earned by the top 1% in Singapore:

Of course, this includes only data on income. In many countries, including the U.S., wealth (value of all assets) is significantly more concentrated than income.

Looking at the dataset, you can see patterns over time. For instance, here’s part of the data from the U.S. (notice there are time gaps between the end of each column and the beginning of the next–I was just grabbing some illustrative screencaps), showing how the percent of income earned by the top 0.1% decreased significantly starting in the 1940s, but began creeping up again by the late 1980s and has grown since then:

The site also allows you to create graphs. They provide a comparison of the share of income earned by the top 1% in 2005 in the U.S., Japan, Australia, and France, but you can look at data for individual nations:

It’s worth playing around a bit, but keeping in mind the caveats about what these data do and don’t tell us. Thanks to Shamus Khan for the tip!

Cross-posted at Family Inequality.

In 1994, Sara McLanahan and Gary Sandefur published, Growing Up With A Single Parent: What Hurts, What Helps. The growth of children living with only their mothers was — then as now — a matter of concern not only for children’s well-being, but for intergenerational mobility. One of their empirical conclusions was this:

For children living with a single parent and no stepparent, income is the single most important factor in accounting for their lower well-being as compared with children living with both parents. It accounts for as much as half of their disadvantage. Low parental involvement, supervision, and aspirations and greater residential mobility account for the rest.

The biggest problem, in other words, is economic. The other factors —  involvement, supervision, aspirations, mobility — are related to social class and the time poverty that economically-poor parents experience.

Examples

Here are some bivariate illustrations — that is, head-to-head comparisons of the difference between children of poor and non-poor versus single and married parents.

These are the “skill group” rankings by teachers of children by socioeconomic status (or SES, a composite of parents’ education, occupational prestige and income) versus race/ethnicity, gender and family structure. SES shows the widest spread in reading teachers’ group placement of first graders.

Source: Condron (2007)

Similarly, the poor/nonpoor difference is greater than the two-parent/single-parent difference in kindergarten entry scores:

Source: Early Childhood Longitudinal Study (2009)

Those are just two examples from early-childhood assessments. More importantly, here is the breakdown seen in a longitudinal study of children growing up. When women grow up to be mothers, their poverty level in childhood is more important than their family structure for predicting whether they will be in poverty themselves. The poverty difference is large, the family structure difference is not:

Source: Musik & Mare (2006)

This study included a more sophisticated set of multivariate analyses than this simple graph, but the author’s conclusion fits it:

Net of the correlation between poverty and family structure within a generation, the intergenerational transmission of poverty is significantly stronger than the intergenerational transmission of family structure, and neither childhood poverty nor family structure affects the other in adulthood.

That is, childhood poverty matters more.

Fewer single parents, or less poverty?

But if single parenthood and poverty are so closely related, some people say, we should spend hundreds of millions of dollars promoting marriage to help children avoid poverty (and other problems). That’s what the government has done, with money from the welfare budget. Even if it worked, which it apparently doesn’t, it’s only one approach. What about reducing poverty? And, more specifically, reducing the relative likelihood of poverty in single-parent families versus those with married parents. That is, address the poverty gap between the two groups, rather than the size of the two groups. This has the added advantage of not singling out one group — single mothers — for social stigmatization (of the kind I mentioned here). And, because it defines the problem as economic rather than moral, may make it easier to build public support for helping the poor.

Consider a recent paper by David Brady and Rebekah Burroway, which will be published in Demography. They analyzed the relative poverty of single mothers versus the total population — that is, what percentage had incomes below half the median (per person, after accounting for taxes and government transfers). Such a relative poverty measure is really a measure of inequality, but specifically inequality at the low end. (Regardless of how rich the rich are, it’s theoretically possible to have no one below half the median income). Here is my graph showing that result, with only the countries that have reliable sample sizes in the survey:

The Nordic countries have the lowest overall poverty rates. But in absolute terms their advantage is much bigger for single mothers. (The red line shows equal poverty rates for single mothers and the total population.) The US and UK have the largest difference in poverty rates between single mothers and overall poverty. That is, we have the largest poverty penalty for single motherhood. If the relative poverty rates for single mothers were lower in the US, we might spend more time and money addressing poverty and less trying to change family structures.

During the height of the Occupy Movement, thousands of individuals submitted pictures of themselves to the We are the 99 Percent tumblr blog.  They posed with letters and signs, telling individual stories of what it’s like to be in the 99%.

There’s been a solid critique of how whites, youth, and those with college access have a larger voice on this site, as well as dismissive responses from those on the right, but I’m struck by the rhetoric used. One word stands out to me as particularly jarring: Luck.

[Written for a child] “I am 3 years old and lucky to go to preschool, have a roof over my head and spaghetti-o’s in my belly. I am lucky to have Medicaid while my parents don’t qualify.”

“i am 22, living in a trailer in exchange for labor… We eat 69c mac’n’cheez or ramen; i drive a car illegal with disrepairs. And i’m lucky.”

“I am lucky my husband has a decent job because before I was on his health insurance my coverage  denied normal, annual GYN visits because ‘Being a woman is a pre existing condition.’ And we are the lucky ones!!”

“But I am one of the lucky ones. I was finally diagnosed with borderline personality disorder I am properly medicated”

“I’m one of the lucky ones. I enjoy my part-time job… yet… [have a] $65,000 [student] loan. 4 side jobs – not enough for rent. No health insurance. No children, so I don’t qualify for any aid, but I’m one of the lucky ones.”

“I am a lucky one. I have enough money to eat 3 of 4 weeks of the month…”

Luck is a word that comes up incredibly frequently among the 99 percenters, alongside words like debt, crisis, and unemployment. But what kind of luck is this? What does it mean to be “one of the lucky ones?”

In these posts, people struggling to hold multiple jobs call themselves “lucky” for having food most of the month, enough work to survive, or health care for part of their family — even as they report drowning in debt, losing work, and losing hope.

This isn’t our usual meaning for luck, and it only makes sense in comparison — to the “unlucky ones.” But if the “99 percent” is lucky, who exactly is unlucky? And how does this “luck” relate to the accompanying uncertainty, stalled careers, and failure to attain personal and collective dreams?

After sending in an early picture, I was startled to realize I’d also used the rhetoric of luck as a frame for my complaint. Of course I live in relative privilege to others, but why subsume my experience of uncertainty and dislocation beneath that privilege?

On the one hand, the rhetoric of luck acknowledges our relationships to other human beings, including those with greater struggles. To observant readers, it can also point to the structural and economic challenges that even “lucky” people face.

But I’d argue that the same rhetoric turns our lives into happenstance. It moves our stories harmlessly to the side, so that larger — and often deceptive — narratives about luck, hard work, and the American Dream can continue as planned. By prefacing our stories with an admission of luck, we displace our own voices and cast doubt on our experiences as something that just “happened to us.”

Yet the current economic and political situation didn’t just happen to either the “lucky” or the “unlucky” ones. As in other periods of U.S. economic history since the 1700s, the underemployment, debt, financial instability, and lack of affordable life-goods that Americans face are the result of deliberate policies designed to streamline and protect growth for investors, large corporations, and other profiteers — often at the expense of individual citizens, workers and business owners without large amounts of capital or political access.

So rather than slip into the rhetoric of luck, what other frames can we use to talk about our experiences? Framing our experiences in light of multiple takes on economic history may allow us to draw from previous generations in assessing our options for greater involvement in setting the guidelines for our society. Initiating discussion on the civic responsibility of every stakeholder may involve bringing to task those who have instituted policies beneficial only to a small minority of elite Americans. And collective effort from the left and the right could enable us to ensure that economic activity bears appropriate fruit for individuals, households, and families, and that the people actually have a voice in our towns, states, and nation at least equivalent to other sources of power.

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Celia Emmelhainz, M.A., is an economic anthropologist who conducts ongoing research on citizenship, economics, and religion in Central Asia. With a degree in anthropology from Texas A&M University, she currently works as an academic librarian in Kazakhstan.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Cross-posted at Reports from the Economic Front.

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.