An obvious point rarely made about income inequality
We’ve heard a lot over the past four years about income inequality. The unequal distribution of wealth, and efforts to redistribute it more “fairly,” arguably have been the chief animating concerns of the Obama presidency, from tax laws to social-welfare policies.
With that in mind, I recommend the latest post by economist and blogger Mark J. Perry, who simply compiled census data to show what we know about the characteristics of U.S. household income. There’s a complete chart and fuller discussion of the data in his post, some of which echoes points I’ve made in the past about the correlation between marriage rates and poverty. I recommend reading the whole thing.
But in this space I want to touch on two other points he makes that ought to be blindingly intuitive, but aren’t always mentioned amid the heated rhetoric:
On average, there are significantly more income earners per household in the top income quintile households (2.03) than earners per household in the lowest-income households (0.44). It can also be seen that the average number of earners increases for each higher income quintile, demonstrating that one of the main factors in explaining differences in income among U.S. households is the number of earners per household. …
Almost 62 percent of U.S. households in the bottom fifth of Americans by income had no earners for the entire year in 2011. In contrast, fewer than 3 percent of the households in the top fifth had no earners in 2011, providing more evidence of the strong relationship between household income and income earners per household.
Simply put, the more people working in a given household, the higher its income is likely to be. This is probably the chief reason marriage rates matter when it comes to poverty. Education also matters, as do other factors Perry discusses in his post.
How influential is this factor? Here’s one simple, somewhat crude, but illustrative way to look at the data:
The average income in the top quintile is almost 16 times higher than that of the lowest quintile ($178,020 vs. $11,239). But when we take each group’s average income and divide it by its number of earners, the average earner in the top quintile makes only 3.4 times as much as the average earner in the bottom quintile ($87,695 vs. $25,543). Given that a person in the top quintile is more than 5 times as likely as a person in the bottom group to have a college degree (62.3 percent vs. 12.1 percent), that difference doesn’t seem unreasonable.
In fact, let’s go one step further. If you take the average earner’s income in the top and bottom groups (again, $87,695 vs. $25,543) but flipped the average number of earners for each, the average income in the bottom quintile would be $51,853 — and the average income in the top quintile would be just $38,586. That’s right: The two groups would trade places (actually, the second-lowest quintile would have the highest average income in that scenario).
Should anyone be surprised that having more workers means a household has more money? So why is this almost never part of the discussion about income inequality? As Perry points out: If demographics explain much of the inequality, then “because the key income-determining demographic variables change over a person’s life, so does income mobility.” And mobility is really the key when it comes to assessing inequality.
– By Kyle Wingfield
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154 comments Add your comment
td
January 8th, 2013
3:22 pm
Cheesy Grits is gone but not forgotten
January 8th, 2013
3:04 pm
Texas cut taxes, spending, ends up with $8 billion surplus.
Texas is a welfare state. Like most red states they get back way more than they send in to Washington.
This has already been proven to be lib spam and worthless information. Most of these southern states that receive more then they pay also have very large military bases that the pay in states do not have. Take out the numbers for funding military bases and then let us see your numbers.
Reality
January 8th, 2013
3:23 pm
td –
First of all, huh? What you said has nothing to do with what I said.
Second of all, what you said is wrong. That ’sound bite’ from FOX news is wrong. It has been proven wrong. Yet, FOX news is proof that if you repeat a lie enough times, folks believe it.
Reality
January 8th, 2013
3:25 pm
td –
Are you saying that military bases don’t matter? Are you saying that the federal government should not be paying the States for the military bases?
You are an expert at interjecting random, tangent, useless, and often incorrect information into a point in some failed effort to discredit that point.
Cheesy Grits is gone but not forgotten
January 8th, 2013
3:30 pm
This has already been proven to be lib spam and worthless information. Most of these southern states that receive more then they pay also have very large military bases that the pay in states do not have. Take out the numbers for funding military bases and then let us see your numbers.
Nonsense.
Most of the “moochers” are in Red States.
There is no denying it
td
January 8th, 2013
3:31 pm
Reality
January 8th, 2013
3:23 pm
Here are the numbers I quoted. Look in the bottom right hand corner and you will find that it is IRS data. Now go and see how many other stats from from the tax foundation Bookman publishes or Obama uses if you think this is a right wing site. Sorry that you will not believe the real facts but they are the facts.
http://taxfoundation.org/article/summary-latest-federal-individual-income-tax-data-0
td
January 8th, 2013
3:37 pm
Reality
January 8th, 2013
3:25 pm
Cheesy Grits is gone but not forgotten
January 8th, 2013
3:30 pm
Military spending is not moocher spending. These are the bases that the Federal government set up to house and train our military. Part of the reason is because it cost less in the south to house troops then in the north and training is better for more of the year.
As far as the Moochers in the south it has been proven over and over again that the majority of them are Obama supporters and I am more then happy if they would move to blue states and leave this one.
Lil' Barry Bailout - OBAMAPHONE!!!
January 8th, 2013
3:54 pm
It’s also true that the majority of welfare hounds live in blue states.
Reality
January 8th, 2013
3:56 pm
@Cheesy….
I saw a very interesting news report (don’t recall which station) that analyzed this…
They stated that there are a number of Countries around the world where sections of those Countries want to secede from that Country. One Country I recall specifically was France. Northern France wants to secede because the vast majority of the wealthy is in the north and they are tired of sending money to the south.
In any case, every example they gave around the world was similar. One section of the Country was upset that they were funding a different section of the Country. In addition to France, there was Spain, the Netherlands, and others (as I recall).
Then, they discussed the US. They listed the states that had the secede registration on the White House web site. These states included GA, LA, AL, TX, and others. Without exception, these states really did “take more from the federal government than paid into the federal government.” They pointed out that only in the US do the “takers” want to secede.
Maybe the US should let them….
Lil' Barry Bailout - OBAMAPHONE!!!
January 8th, 2013
3:56 pm
We’ve established several times on this thread that Reality is a factophobe.
Reality
January 8th, 2013
3:59 pm
td -
So let me clearly understand what you are saying….
You are saying that money paid from the federal government to a State for a military base should NOT count. In other words, that State getting the money does NOT benefit from the military base in their State.
Is this what you are saying?
josef
January 8th, 2013
4:00 pm
HILLBILLY
@ 2:00
Exactly. The system is oriented to the breakdown of the nuclear family as the fundamental “way out of poverty.” With the transference of the responsibility for birth control from the male to the female, added to the “don’t need a man” mantra which became the cause celebre of the late 20th Century, and what happened? The male was let lose with no sense of responsibility.
Cheesy Grits is gone but not forgotten
January 8th, 2013
4:01 pm
As far as the Moochers in the south it has been proven over and over again that the majority of them are Obama supporters
Wrong again. The majority of “takers” or “moochers” are southern whites from red states.
All Romney voters.
This is undeniable.
In fact if the welfare extremely poor southern states were to secede the rest of the union would be in great financial shape.
Heck the South wouldn’t even have electricity if not for Northern federal dollars.
Reality
January 8th, 2013
4:01 pm
@Lil’ Barry Idiot -
You are an idiot. Who is this “we”? And exactly what “fact” are you referring?
If you think I ever stated that it is a fact that the average CEO pay was $1.5 million, then you are wrong.
Do you ever tire of being wrong?
td
January 8th, 2013
4:02 pm
Lil’ Barry Bailout – OBAMAPHONE!!!
January 8th, 2013
3:56 pm
We’ve established several times on this thread that Reality is a factophobe.
Yep, as soon as I provided the information and website for what the rich really pays then he gave up his class envy argument and went for a different one.
Cheesy Grits is gone but not forgotten
January 8th, 2013
4:04 pm
Is this what you are saying?
Yes thats what he is saying.
Its the type of doublethink ( see 1984 ) that is only possible in the Republican brain.
Ill give another example.
George W Bush, a coward who had his daddy get him out of combat during Vietnam. Well he is a mans man to Republicans.
John Kerry…who volunteered to serve his country and was wounded in combat. Well he is a coward to them.
Only in the Republican mind is such deception possible.
Lil' Barry Bailout - OBAMAPHONE!!!
January 8th, 2013
4:11 pm
That’s real nice, Reality, calling folks who support our troops “moochers”.
carlosgvv
January 8th, 2013
4:15 pm
Gosh, I must have somehow missed that Obama speech where he said “the unequal distribution of wealth, and efforts to redistribute it more fairly, is the chief animating concern of my Presidency”.
Kyle, do you have a link?
kevin
January 8th, 2013
4:18 pm
There will always be problems with income for the citizens of Georgia and America as a whole. Not that we can treat everyone fairly and decent with pay. The stain that has been put on all of the citrizens has been nothing but a grave misjustice….we want power over one and other; more pay, living large, driving big expensive cars…don’t want others to enjoy the same. Countries around the world has no more respect for us and then, we have rob the people who invesed their money and worked hard to be consider confort when they retire. So while we thing were better than anyone countries; look who help one and other, most certainly not us who lives among one and other. But we know how to take and steal from those who have tried to live a good life. Shame on those who look down on one and other for keep so many down in the slums; non support for the homelessness, etc. I to am gravely dissappointed!
JamVet
January 8th, 2013
4:20 pm
How many more decades before our trickled-on, trickle down fools wake up?
A few more disastrous (for the faux conservatives) elections like the last one and the problem will resolve itself…
Rafe Hollister preparing for an Obamanist America
January 8th, 2013
4:26 pm
Fineesy
I’ll give you another example.
Heroin and Cocaine are illegal, but plentiful, because no one can figure out how to make them scarce or hard to get, even though they are not made in this country.
Firearms, made in this country, and are plentiful already, but Dems think that if they make some of them illegal, we will all be safer.
Only in the Democrat mind is this a logical or reasonable approach.
JamVet
January 8th, 2013
4:31 pm
That’s real nice, you Republicans calling veterans who participated in last year’s massive protests, Occutards, moochers, rapists and arsonists.
Occupy that ,swiftboaters.
td
January 8th, 2013
4:40 pm
JamVet
January 8th, 2013
4:31 pm
I do not remember one story about a large amount of vets that was part of the occupy movement. Most of those people were spoiled college students and just normal crazies.
Politico
January 8th, 2013
4:44 pm
td
In which post did Jamvet say a “large amount”?
Rafe Hollister preparing for an Obamanist America
January 8th, 2013
4:45 pm
George W Bush, a coward who had his daddy get him out of combat during Vietnam. Well he is a mans man to Republicans.
Algore, a multimillionaire, who had his daddy get him a job as a reporter, to keep him out of combat during Vietnam, claims to be an environmentalist. He flies around in a charter jet, fueling it with money from a polluting big oil exporting country, that abuses their female population and is an apologist for terrorist organizations. He is a “green” hero for the left.
JamVet
January 8th, 2013
4:47 pm
Your faulty memory is irrelevant.
As evidenced by your infantile and wholesale slurs of the protesters.
But I love you for it! Really, I do. I never appreciated just how valuable you were until this past November 6th.
And I have very little doubt that the depraved reaction by America’s fascistic right wing hurt them big time at the polls in that election.
Along with their Limbaugh led views about sluts, prostitutes and FemiNazis.
Keep up the great work and better luck in 2024!
Politico
January 8th, 2013
4:56 pm
Jamvet
td was one of the ones touting the “skewed” polls and polling data by siting articles from such sites as theblaze, breitbart and quoting Morris and Rove…………
JamVet
January 8th, 2013
4:59 pm
Politico, did you see the bet he made with me regarding Obama vs. Romney?
Ask him about it.
Talk about COMPLETELY out of touch with reality, the guy is a hoot.
And a holler.
Politico
January 8th, 2013
5:02 pm
Jamvet
He provides as much laughs as he does hyperbole and rhetoric……… Funny little guy he is
Lil' Barry Bailout - OBAMAPHONE!!!
January 8th, 2013
5:23 pm
JamVet: That’s real nice, you Republicans calling veterans who participated in last year’s massive protests, Occutards
———————————-
Link please.
Didn’t think so.
Kyle Wingfield
January 8th, 2013
5:38 pm
That’s it for tonight. Immediate commenting will be back tomorrow morning.
Halftrack
January 8th, 2013
5:45 pm
Most people are looking at more equal outcomes. Capitalism is based on working, ingenuity, and new ideas to supply demand for a product. It’s the individual and their desire as to what they are willing to strive for. Our forefathers, the Pilgrims, at Plymouth Rock tried a form of communism and it did not work out. They had to resort to the principle ” that if you did not work, you did not eat.”
clem
January 8th, 2013
6:46 pm
http://economix.blogs.nytimes.com/2011/03/30/inequality-is-most-extreme-in-wealth-not-income/?emc=patrick.net
Paul
January 8th, 2013
6:47 pm
I believe the ‘explanation’ misses the point of the discussion.
I don’t recall ever hearing ‘income inequality’ being about those in poverty and those making what even Republicans call a middle-class household income. Rather, it’s been about those at the very top – the top 1 or 2 percent – those making well in excess of (minimum) double the upper limit Kyle cites who’ve been able to retain more of their earnings thru favorable tax treatment and options not practically available to the mass of earners.
For example, a person with a compensation package en excess of a million a year is NOT going to have it all subject to earned income rates. The comp will be broken down into several categories to minimize or avoid taxation.
The person who earns a living owning resources will find the tax take a fraction of what it would be if he earned a living thru labor.
A person earning a median wage will have a stunningly higher percentage of wages subject to payroll tax compared to the person with the multi-layered comp package.
No, Kyle. The concern is not those in poverty compared to a median-level income. The concern is unequal and favorable tax treatment of those at the very upper limits of the income strata.
Bob
January 8th, 2013
9:17 pm
Reality, if you knew history you would know that after Reagan and the democrat house cut taxes they then increased taxes 14 times. You would also know that revenue to gov increased close to 100% during Reagan’s 8 years, how did that lead to our downfall.
MrLiberty
January 8th, 2013
10:39 pm
Even better numbers are had when you look at these same statistics before the government’s failed “war on poverty” and today. Blacks, hispanics, and every “minority” group were all FAR better off before the war on poverty and the country as a whole was of course richer because that money wasn’t being wasted on the hoards of government employees required to administer all of these failed programs.
Of course the same could be said for the war on illiteracy, the war on drugs, and now the war on terror. All abject failures that will never achieve their goals because government is a failure.
The only war in this country that has been successful – wildly successful – is the government’s war on freedom and liberty.
Old Timer
January 9th, 2013
12:05 am
Mother/Father familes and education are the time tested answer. Not ignorance and government entitlements.
DeborahinAthens
January 9th, 2013
6:30 am
I wouldn’t disagree that it would be a better world with no divorce, no death of a spouse, no thugs knocking up young, stupid girls and then refusing to support their spawn. However, the income equality that really irks me is when my CEO runs my company into the ground making the stock drop from $58 to 87 CENTS, then lays off employees, cuts the producers salaries 33% and walks away with a multi million dollar severance. Then, the well heeled board puts another failure in as CEO, who completes the job and HE walks away with a multimillion dollar severance package. In th past few decades in THIS country, CEO and upper management pay has gone up several hundred fold (some cases, over a thousand fold) while the average employees’ pay, adjusted for inflation, is actually less than it was twenty years ago. Technology has enabled companies to slash employees from the payroll with impunity, while expecting the remaining drones to take up the slack. I don’t think this is what this county needs. Any country that has no middle class, a state which we are fast approaching, becomes a Banana Republic. I used to be a Republican, but I voted for Obama twice. I am a true Capitalist, and I do NOT think the President is trying to redistribute the wealth. By the way, most industrialized countries such as Germany, have not seen this glaring disparity in wages develop. Their upper level managers and CEOS get much less than ours, and their companies seem to be better run in most cases. Why do we reward these awful CEOs and punish our workers?
Paps Mear
January 9th, 2013
7:22 am
Kyle,
Also important to this discussion is the fact that countries with the greatest income inequality tend to exhibit the greatest economic growth. Opportunity and free market capitalism is the key.
So, can the left explain again why income inequality is so bad?
guy
January 9th, 2013
7:22 am
Keep knocking those “rich folks” and start the high taxation more and more. Guess what,they will close up shop or move out .They don’t have to go through that hell hacking.Then,who’s going to pay the bills? I am way off from being wealthy by a long shot but I work and am thankful someone helps provide an income. I admire those who are successful and made it without going by the rules. There are a lot of honest wealthy folks.Yes, there are crooks that are wealthy too. You can’t change that!
guy
January 9th, 2013
7:24 am
admire those who made it by going by the rules,not made it without going by the rules.
clem
January 9th, 2013
8:48 am
hey dusty, another big business (and there are so many) without values& integrity:
http://www.huffingtonpost.com/2013/01/09/aig-bailout-lawsuit_n_2436679.html#comments
MarkV
January 9th, 2013
8:50 am
Dusty @ 3:20 pm
I love it how Dusty swallows whatever Kyle presents, hook, line, and sinker. I am still waiting for that one time she will have some independent opinion and reasoning instead of fawning, but it is getting less and less likely.
What Kyle has written is not about “the sensibilities that a two dedicated people (married) household will usually manage better financially and otherwise than single adults.” It is an attempt to muddy water and deflect the charge that the income inequality in the US is too high compared with other developed countries. Which is what all standard measures of income inequality show.
I do not know who has “jumped up and down” that figures were not correct; the main issue is not correctness of the numbers, but which numbers are used and how. And the first tactic of Mr. Perry was not to look at the real high earners as the top earners, but at the whole top 20%. The numbers NOT used are such data as the CBO report showing that between 1979 and 2007, after-tax income grew by 275 percent for the top 1 percent of households, 65 percent for the next 19 percent, just under 40 percent for the next 60 percent, and18 percent for the bottom 20 percent. (http://www.cbo.gov/publication/42729).
Or that the 1.2 million households whose incomes put them in the top 1 percent of the U.S. saw their earnings increase 5.5 percent in 2011, according to estimates by the U.S. Census Bureau. And that earnings fell 1.7 percent for the 96 million households in the bottom 80 percent — those that made less than $101,583.
And that the top 1 pct. earned 23.5% of the nation’s income in 2007, while it was around 10% between the early 50s and early 80s, increasing steeply since. But no, according to Messrs Perry and Kyle, we do not have income inequality.
I would like to ask Dusty: What would have to be the percentage of income of the 1 pct earners, to make it too high for YOU: 50%? 75%? 90%? Or should the 1 percenters just take all the money and then give the rest of us allowances?
Thulsa Doom
January 9th, 2013
9:10 am
The connection between poverty and single parent households has been known for some time now. But we avoid a serious discussion about it because with it comes some uncomfortable discussion about demographics and single mothers.
Doug B
January 9th, 2013
9:13 am
Oh, so income inequality is easily solved then, right Kyle? All people have to do is get off their lazy butts and get a job. Nevermind that there aren’t enough jobs to be had. Those lazy people just aren’t trying hard enough.
tiredofIT
January 9th, 2013
9:33 am
With power and wealth concentrated in small group of people you end of with an Aristocracy and we are heading there quickly.
Beside the Point
January 9th, 2013
10:17 am
“Income inequality” isn’t $11K vs. $178K. In the grand scheme of things, those people are varying degrees of poor. Inequality is an engineer making $80K, a physician making $200K, and a hedge fund manager making $500 MILLION to $2 BILLION a year. Unless you work in financial services these days, you’re relegated to the lower class and have next to no influence on legislation.
williebkind
January 9th, 2013
10:35 am
“Most of the “moochers” are in Red States.”
That would be the democratic plantation members mostly.
zeke
January 9th, 2013
11:18 am
ABSOLUTELY!
zeke
January 9th, 2013
11:19 am
Point is, THE TRUTH DOES NOT MATTER WHEN LEFTIST SOCIALIST PROGRESSIVE DEMOCRATS PROMOTE THEIR LEFT WING COMMIE AGENDA OF CLASS WARFARE AND REDISTRIBUTION!!!!
Kyle Wingfield
January 9th, 2013
11:31 am
Immediate commenting is back on, and there’s a new post upstairs.