So we have talked and looked a lot at the inequality in China however we have not spent much time looking and examining the inequality here in the US. Would it be fair to say that the
Let’s take a look at a few charts that show the difference between Poor America vs. Rich America:
I found a wonderful article that provided many charts. The following charts were listed in,
Two Americas: One Rich, One Poor? Understanding Income Inequality in the United States
by Robert Rector and Rea Hederman, Jr.
These are some great charts that provide us with some wonderful information. Let's take a day review what they charts and see what we can draw from them. It really is wonderful that we can get this kind of information. I was looking to see if they had anything like this for China but i could find nothing? In your research have you found anything?
1 comment:
Robert Rector is worth reading to get some balance, but his past work has been so sloppy that I'd like to know more about the data he used to make these charts.
The key point he is making is that inequality isn't really so bad if we compare the top 20% to the bottom 20% in terms of earnings per hour and we adjust for taxes and benefit programs. I imagine his point is correct, that inequality between the top 20% and bottom 20%, on a per-person basis, is something like 3:1, and that seems acceptable.
But we live as households, and most households are multiple-person. Consider a four-person household in the bottom quintile in which one person works 12 hours per week at a retail store or restaurant (for $6.75 per hour) and the other person works 38 hours per week (at $7.50 per hour) for 9-months of the year. Their pre-tax income is around $14,500, but with the Earned Income Tax Credit they might end up with $17,000. That works out to about $4,250 per person per year in that household.
The part-term worker works 580 hours per year, and the full-time worker who only works 9-months of the year works for 1370 hours.
Let's compare them to a four-person family with a single income-earner who works for a $60,000 salary (this worker puts in 1,950 hours of work each year, exactly matching the total paid effort of the other family, and coming close to the average year-round full-time American worker's work effort). This family doesn't get the EITC. Instead, they pay taxes, perhaps something like $9,000 in income taxes, property taxes, and sales taxes. This leaves them with about $51,000 per year in post-tax income, which is $12,750 per person (for their 4-person household). That's exactly a 3-to-1 ratio compared to the first family.
Does this seem fair? I don't even think a $60,000 salary puts the second household in the top quintile. I think it would be in the second quintile. The first household is probably near the top of the bottom quintile.
But, Robert Rector is giving you charts that are misleading, because the problem isn't that the top 20% is too wealthy. The problem is, rather, that the top 5% is too wealthy. Inequality in America only seems obscene when we look at the top 5% or top 1% of wealth and income. Including the next 15% draws in all the upper-middle-class and modestly-affluent people.
Check out the War on Greed web page for an example of what the real inequality problem is.
Post a Comment