Question about trends in income inequality in the US. The US Census Bureau recently posted the 2012 ACS data, including data on income and poverty. Here is a simple table and a few charts
http://gsociology.icaap.org/Misc/US_Inequality2012.html
This shows income inequality has increased continuously over the time period which is covered by the data, 1967 to 2012.
A report from the Census Bureau
http://www.census.gov/hhes/www/income/data/inequality/index.html
talk about the decrease in higher paying jobs for people with lower education or training, and the increase in jobs needing higher education. That would make sense if the top 40% or top 60% of wage earners earned an increasing share of income, but the data show that only the top 20% of people earned the increasing share of wages. Everyone else, 80% of households, is getting less and less share of the income.
So is it simple change in job characteristics or is there something else going on?
This trend has been going on since the late 1970s (depending on which data set one uses), it is only now hitting a cumulative effect level that the media is paying attention.
For the US two major trends, a lot of manufacturing which was the major driver of the middle class has gone overseas and what has remained in the US is much less labor intensive. More computerized with robots. Coupled with a huge growth in the service industry where many of the jobs are low-paying. Really pretty simple. The hard part is if there are policies that be implemented to reverse the trend.
In my recent book (attached below), I compared 143 countries with each other. There are many countries with higher income inequality than the US, but they all are poor or middle-income ones, mainly in Latin America or Southern Africa. Among 37 richest countries, only Hong Kong, Singapore, and Portugal had as bad income inequality as the US (national surveys from 1995 to 2005). Thomas Piketty’s data (http://topincomes.g-mond.parisschoolofeconomics.eu) prove that among nine rich countries the US had the highest share of national income for the richest decile and the US was the only country where that share was continuously increasing up to 2012 (the last year in the data set).
There are some other US features that are clearly exceptional in comparison to other rich countries. The US average health expenditure per capita was almost three times the average expenditure in the rich countries and some 50 percent higher than the next (Switzerland and Norway). But the US achievement, measured by the life expectancy at birth, was only the average of the rich countries. The US shared the highest homicide rates with the Baltic countries; all other rich countries had lower rates. The US road traffic death rate was, together with Lithuania, the highest among the rich countries (excluding Arab oil exporters). The US prisoner rate was the highest in the World. Income inequality correlates with prisoner rate among the rich countries both according to my studies as well as according to the studies of Wilkinson and Picket.
The share of national income for the poorest decile correlates negatively with that for the richest decile. The share of the national income for the poorest decile is so small that it cannot have much direct influence on that for the richest decile. Therefore, the explanation for this correlation could only emerge from some indirect cause. What these indirect causes are – policies or other circumstances – and if they explain also the differences between the US and other rich countries remains an open question.
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