The income gap

If a thesis is repeated hundreds of times, many people believe it; if it is repeated millions of times, hardly anyone doubts it. Like masks can stop the spread of a virus, or you can stop climate change by forcing people to own a different car or sending rich celebrities in private planes to conferences where they lavish themselves with goodies, or men can become women by wishful thinking and hormones. And there's another one: there's a rising gap between rich and poor.

"Phil Gramm, Robert Ekelund, and John Early recently showed in their excellent book "The Myth of American Inequality: How Government Biases Policy Debate." The actual percentage of their income paid by the top one percent of earners in tax in the U.S. was only 16.1 percent in 1962, when the top marginal rate was 91 percent. However, in 1988, when the top rate was only 28 percent, the percentage paid by the top one percent of earners had risen to 21.5 percent! As the top tax rate fell by two-thirds, the percentage of their income that the top one percent of tax filers paid in federal income and payroll taxes rose by a third.

Since the 1960s, the welfare state in the U.S. has been constantly expanded, so that the proportion of the population receiving transfer payments, and the amount of transfer payments, has increased continually. If one takes into account taxes on the one hand and transfer payments on the other, it becomes clear that the actual income, i.e. what a citizen has left after taxes and transfer payments, is much lower for the rich and much higher for those on low incomes."

New Study Calls into Question the Theory of Rising Inequality - Foundation for Economic Education (fee.org)

Exploring Income Transfers: What You Should Know (enrichest.com)

List of 80+ Federal Welfare Programs (singlemotherguide.com)

Disparities

I wish every preacher, politician, prophet and prognosticator could read (or re-read) THE UNPRECEDENTED EXPANSION OF THE GLOBAL MIDDLE CLASS: AN UPDATE (2017) by the Brookings Institution,   non-profit organization devoted to independent research and policy solutions.  https://www.brookings.edu/wp-content/uploads/2017/02/global_20170228_global-middle-class.pdf   Just as an aside, some conservatives consider Brookings part of the “deep state,” i.e. certainly not a Trump supporter.

I commented on that document at my blog in May 2017. I’d forgotten the eye opening research and conclusions and re-read it today.  In light of the current pandemic and the self-flagellation I hear from educated, comfortably middle-class Christian Americans about health disparities, systemic racism, income gaps, struggling inner cities, and failures to thrive of various populations this report is truly stunning.

Here it is:   About TWO-THIRDS of the WORLD are now middle class.  Think on that a moment.  When my great grandfather (b. 1828) set out as a young man to “go west” about 95% of the world existed in overwhelming poverty and the government provided none of the social services we expect today. All that charity was left to the churches and local communities—taking care of the sick and poor and providing children (who often worked in factories or as farm labor) with an education.

In 1990, more than a third of people on Earth lived on less than $1.90 a day, adjusted for local prices (this is the line the World Bank uses as its main metric). By 2013, barely 10 percent of people did; the rate had been cut by more than two-thirds. And most of the recent growth of the last 2 decades has not been among white people (aka Europe and North America) but among Asians and Africans. Even in the U.S. the riches ethnic groups are Asians—Indians and Filipinos. https://www.worldatlas.com/articles/the-biggest-asian-origin-communities-in-the-united-states.html

Of course, the obligatory reporting on global climate change and the percent of rich households (not middle class) consumption being in the U.S. is reported in the Brookings document.  But then, think on this: “India today (2015) is already richer than Germany was when it introduced social insurance for all workers in the late 1880s. Indonesia is richer than the U.S. was in 1935, when the Social Security Act was passed. And China is richer than Britain was in 1948, when the National Health Service was introduced.”  Social programs did not building the middle class—capitalism did.  Brookings, being left of center didn’t say that, but it’s there, in print, and on-line.

Destroying the Trump economy (which actually came after this amazing report) and attempting to make us more dependent on government rather than the values that built our country and those of the countries rising today are critical for those who want global power. Whether you think that means Soros or a global cabal of capitalists, or “woke” international corporations, we seem to be in the battle for our lives.

We need to get back to work and to stop listening to those who are trying to defeat us.

The Warren Gap fallacy—or how she promotes envy and sows discord

For Example:

There are three married couples; all named The Bruces. White, 8th generation, college educated Americans.   Bruces A are 20+ years old; Bruces B are 50+ years old and Bruces C are 65+ years old. From top to bottom, Bruces A, B, and C.

Bruces C are much wealthier than Bruces A and Bruces B. They have pensions, 403-b, 401-K, Social Security,  investments  and 2 homes. Bruces B have some savings, no investments, and 2 homes.  Bruces A have one house, no savings or investments.  There’s a wealth gap.

Bruces B have a much higher income than Bruces A and Bruces C.  There is an income gap.

Bruces A are much healthier than Bruces B and Bruces C.  There is a health gap.

Bruces A have minimal health insurance, some hospitalization coverage never used; Bruces B have great health insurance from large self insured employer—OSU; Bruces C have Medicare A & B, plus supplemental. Good, but not as great as Bruces B.  There is an insurance gap.

Bruces A take no medications at all.  Bruces B have minor conditions requiring little medication.  Bruces C have had heart, blood pressure, cancer, asthma, cholesterol problems, all treatable.  There is a health consumption gap.

Bruces A are usually employed or under employed—they are students or lower level employees; Bruces B are fully employed, or self-employed and are DINKS; Bruces C are not employed even irregularly.  There is an employment gap.

Bruces A rarely ever have a vacation or travel; Bruces B occasionally travel to visit relatives or vacation close to home; Bruces C travel to many countries and enjoy cruises, they eat out frequently, attend art events, pursue hobbies.  There is a leisure gap.

Which of the Bruces, A, B, or C, does Elizabeth Warren want to tax to "help" the other two?

That pesky male female gap

The Pew Research Center found that 2019 will be the first year in which women will comprise the majority of the college-educated labor force in the United States. Women first received more than half of the bachelor’s degrees awarded in the 1981-82 academic year—almost 40 years ago.  Today they earn about 57% of bachelor’s degrees. The number of college-educated women in the adult population (ages 25 and older) surpassed the number of college-educated men in 2007. Does anyone fret about that imbalance created by loans, scholarships, affirmative action and unfair regulations?

https://www.pewresearch.org/fact-tank/2019/06/20/u-s-women-near-milestone-in-the-college-educated-labor-force/ft_19-06-20_womenlaborforce_women-now-half-of-us-college-educated-labor-force-2/

So why are we still hearing about the “gap,” especially since for about 4 decades the college enrollment rate for females has exceeded males and for the younger demographic there is no gap given the same starting place and position? 

There’s a lot of mischief in gap statistics.  Especially college degrees.  Women, even in the same fields as men, may select different specialties—pediatrics instead of neuroscience, family law instead of corporate law, bibliographer instead of library director, or they may want to be an artist instead of a plumber or electrician. Women may decide to raise their own children and “stop-out” for 5-10 years, reentering the labor market with reduced value to employers.  Married women with husbands of equal education and financial status often have the luxury to leave the medical or law fields to start a business in a completely different direction such as interior design or selling craft items. 

Unfortunately, these “justice” studies rarely compare women with women—female doctors with female pre-school directors, or female TV hosts with female owners of bed and breakfasts, or female chefs with female dishwashers, female traffic court judges with female circuit court judges. Why not compare single women who are heads of household with married women who have no children?  In the universe of women employees there are gaps with men, but there are overlaps also, with low end of the bell curve  the men who clean the offices of  wealthy women politicians like Pelosi and Warren who are sitting at the high end of the bell curve.

What is concerning to me is that college educated women increasingly vote for Democrats, seeing themselves still as needing additional help from the government to manage their lives.

Women earn less cash prize money than men in the sciences

Except the answer is in the article.

“The analysis also shows that when considering all of the awards, women earn 64 cents of prize money for every dollar a man receives, and when cutting out the top and bottom prizes, women winners earn 60 cents of every prize dollar a man receives, the researchers report. Women also tend to disproportionately win awards for service compared with those for research, and they do not win as many prestigious prizes as men. An analysis of the most prestigious prizes shows women received only 11.3 percent of them over the 50 years reviewed; they received 5.1 percent of them between 1968 and 1977 and 17.4 percent of them between 2008 and 2017.”

If women disproportionately win awards for service (more time), and win the less prestigious prizes (less money) why would one expect the outcomes to be the same?  Maybe women enjoy the service aspect (like serving on committees) and maybe they don’t compete at the higher levels because they have chosen different career paths.  In the last decade this has changed—women are competing at higher levels than before.  They may be good, but what have they taken out of their lives?  Marriage and children?

How many women were getting PhDs in the sciences between 1968 and 1977?  Maybe 11.3% is more than their population would represent? How many American Indians have received a prestigious cash prize?  How many transwomen?  That question is coming too. And when a transwoman receives a prize, will he be counted as a woman or man?  And are the women scientists earning more than the women grad students, or the women administrative assistants?  Let’s look at all the gaps.

The so-called pay gap

“Feminists, and leading politicians, make much of the so-called gender pay gap which ostensibly favours men. But actually women under 35 years old and working full time have a higher median hourly pay rate than men of the same age. In view of the greater number of women graduates, this disparity in favour of young women is set to increase. Any pay gap in favour of men sets in only once a woman has children. This is due to the woman’s diminished commitment to work due to preferring to prioritise child care instead (and the new father’s increased commitment to work in order to earn more to support the family). The so-called pay gap is actually a parenting gap. That the much vaunted pay gap is not valid is now admitted even by some feminists, e.g., Hannah Rosin who has used the observation of women’s higher pay to support her triumphalist cry of “The End of Men” (book title). When women earned less it was discrimination, now that men earn less it is because men are useless has-beens. Nice.” Introduction to the Disadvantages faced by Men and Boys

http://empathygap.uk/?page_id=22

The wage gap myth

Women earn less than men in the same job at the same hourly wage with the same union benefits because they choose to. Yes. With everything else the same, the paycheck is less because men work more overtime. And on a broader scale, men take the jobs with more risk, and they are more willing to move where the better jobs are. A study of librarians over 20 years ago showed that--men moved more often and had more publications. For over a decade, more women have been graduating from college, but not in the same fields as men. There are limited opportunities for dance majors and art historians. In the trades, there are wonderful opportunities, but women aren't flocking there--don't want to mess up the manicure. We live in a competitive, capitalist country (except where the government interferes) and if the CEO can make more money hiring qualified women, she will do it.

https://legalinsurrection.com/2018/12/harvard-study-confirms-the-gender-wage-gap-is-just-a-myth/

There is no fast food gap--everyone likes it

Apparently, everyone likes fast food. "About 80 percent of those in the lowest 10 percent of income ate at least once at a fast-food restaurant, compared to about 85 percent of those who were ranked near the middle (40 to 50 percent) in terms of income. Of the richest 10 percent, about 75 percent reported eating at least one fast-food meal." Now what will the gap people write about? https://news.osu.edu/news/2017/05/04/eat-fast-food/

Income of Americans

Don’t fall for those memes and posters on income disparity, all weepy about how awful things are.  There’s household income, individual income by labor, then there’s income from all sources, then by education, or by gender or by race. The rich do have more, but they also pay most of the taxes.  But no matter how you slice and dice it, Asian Americans (40 different ethnicities) do better than any other group, all the way from Indians ($101,591) to Chinese ($69,586) to Pakistani ($62,848) to Bangladeshi ($44,512). (Nielsen report on Asian Americans) And they are more likely to be married, and to have more members in the household earning money, and to have more education.  The difference between Nigerian Americans ($62,086) and black Americans ($36,544) is much greater than between white and black Americans. (Wikipedia)

The CBO household income figures are higher than any I’ve seen elsewhere because it includes all income including government transfers. In 2013, according to the Congressional Budget Office’s estimates, AVERAGE household market income of $86,000—a comprehensive income measure that consists of labor income, business income, capital income including capital gains), and retirement income. Government transfers, which include benefits from programs such as Social Security, Medicare, and unemployment insurance, averaged approximately $14,000 per household. The sum of those two amounts, which equals BEFORE TAX INCOME, was about $100,000, on average. https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51361-HouseholdIncomeFedTaxes_OneCol.pdf

Is marriage the culprit?

 "Income and Poverty in the United States: 2015" I've found the gap problem. Marriage. Married couple households in 2014, $81,118; female headed households $36,193; male headed households $53,746. In 2015, it was $84,626; $37,797; and $55,861. I think that's a big jump for all groups, but obviously, married couples do better. Even with my math challenged thinking, I know that two earners will usually yield more income than one earner.  I'm not sure why, but it seems to be in the best interest of government departments and agencies to expand poverty definitions, and there's a new one in the works which adds in all the government benefits instead of using wages/income and adjusts for geographic area. You would think that would lower poverty rates, but it seems to increase them. It's called Supplemental Poverty Measure (SPM).  Also, in the first four years of the Obama administration real poverty that lasted 48 months was only 2.7%. Most poverty rate measures are based on months.

Sex, race and income gaps

On my walk this morning I saw three women and four men, in four different jobs.

One woman was about 23 and a home health aide walking one of my neighbors around the condo grounds.  She was white, attractive, pleasant and cheerful and they were chatting together. Her median pay scale (on the internet, because I didn't ask her) is about $10.00/hour.  If she works for an agency, the family will probably pay more than double that, but she'll have decent benefits. If she's a private contractor, she'll make more, but will have to contribute her own Social Security.  Not even a high school degree is required.  I often see foreign women with limited language skills in these positions.  It was not the case with this young woman.
 
As I continued, I saw two men with the Columbus Public Utilities department--both had uniforms, tools, and white trucks.  They were white and probably under 40. They were repairing a piece of equipment in a large box near the road. I'm guessing they do some kind of electrical maintenance.  I think the box probably controls power in the whole neighborhood. If they were supervisory, they'd need a bachelor's degree and about 10 years experience. Salaries were hard to determine, since I don't have a job title and am guessing, but the median could be $154,000.

Two women were in the playground of the near by church with pre-schoolers.  I don't know if they were teachers or aides, but I'm going to call them pre-school teachers. They were white and probably early 30s. They were actively involved in the children's activities and very watchful. They weren't sitting and chatting or checking their phones. Their median salary is about $12.06/hour  ($28,570) or about 50% of an elementary school teacher ($56,000), and less than a fitness instructor ($39,410) at a private club or gym. I think the pre-school teachers need a bachelor's degree or would be working on one, but most elementary teachers around here have a master's degree.  Also the teachers work 9-10 months with a number of days off during the school year, but the Fitness instructor works 12.  They would probably all have benefits, at least health, vacation and sick leave.  The pre-school teacher may also get free day care for her own children, or a discount.  The fitness instructor may have a family discount to use the gym.  The elementary teacher gets play ground duty and short lunches.

When returning home I noticed two trucks going  a bit over the speed limit driven by two young black men   for the company, 1-800-Got Junk. These days it's called "environmental diversion."  I think they may have been late teens or early 20s. I actually found this company on the internet, and various job titles.  A truck driver makes $11.36 or ($18-$22,000 a year).  I think they had full benefits. There were various job levels, and room for advancement, and no education (for truck driver) was required. Brian Scudamore, a high school drop-out,  is the founder and CEO of 1-800-Got Junk, and you can check him out for a very interesting career story.  He's founded several companies, but this one does about $152 - $170 million a year. He got this idea when he was 18 and working at McDonald's.  (Company is now franchised, so I don't know who owns the one in Columbus.)

The next time you see an article about the wage gap or gender gap or race gap in employment, remember, not all jobs are the same, they don't have the same requirements, responsibilities, education, and race or gender probably isn't what has caused the difference. And also think about Mr. Scudamore.  Anyone could have done what he did, but he rolled up his sleeves and did it.

Why do Democrats talk about the gap instead of life style?

Facebook sent me a memo about what I wrote on November 1, 2014.

"This is why the Democrats have to talk about a gap rather than quality of life and consumption.

The typical poor household, AS DEFINED BY THE U.S. GOVERNMENT, has ...

• a car and air conditioning, two color televisions, cable or satellite TV, a DVD player, and a VCR.
• If there are children, especially boys, the family has a game system, such as an Xbox or PlayStation.
• In the kitchen, the household has a refrigerator, an oven and stove, and a microwave.
• Other household conveniences include a clothes washer, clothes dryer, ceiling fans, a cordless phone, and a coffee maker.
• The home of the typical poor family is in good repair and is not overcrowded.
• The typical average poor American has more living space in his home than the average (non-poor) European has.
• By its own report, the typical poor family was not hungry, was able to obtain medical care when needed, and had sufficient funds during the past year to meet all essential needs."

The immigrants who come here probably know this; the media and politicians don't seem to.

Notice what is soaring?  College tuition and fees, not health care. Government is heavily involved in college loans.

Income inequality has decreased in the U.S. in the last decade

If one looks at after-tax income, the increase in income inequality over time is greatly reduced. If one goes further and factors in the government’s attempts to redistribute income, income inequality is not increasing in the U.S. at all. This after-tax, after-transfer income essentially is a measure of how much stuff you can consume (either by buying it or because somebody gave you free stuff). And, as demonstrated by Gary Burtless of The Brookings Institution (a center-left think tank), income inequality measured this way has actually decreased in the U.S. over the decade from 2000-2010.

http://www.forbes.com/sites#/sites/jeffreydorfman/2014/05/08/dispelling-myths-about-income-inequality/

Robert Putnam speaks at Lakeside

Robert D. Putnam was our program at Lakeside last night--he’s an entertaining, engaging speaker, about my age, married 55 years, a Harvard graduate and college professor.  Even with charts and graphs that show the widening income and behavior gap between upper class (which is growing) and lower class (also growing) and middle class (shrinking) he can hold a large audience‘s attention. He clearly laid out the reasons (particularly for near-by Port Clinton, Ohio, his home town), but his solutions are what one would expect from an academic--more money for education. Twenty years ago his “Bowling alone” book showed how Americans were not pulling together in the communities, clubs, churches and fraternal societies working for the larger good as they had been in the first half of the 20th century.  And that was before the me-phone.

I was shocked to learn that in 1990 Port Clinton’s out of wedlock birth rate was 9% (below the national average) and today just 25 years later is about 40% just a little less than Columbus and above Ohio’s rate. This is not Chicago or Cleveland, but little Port Clinton (ca. 6,000 population, 93% white).  So guess which children are doing better in all measures? Which children are attending church and leaving Port Clinton to go to college?  Children living with married parents who provide economically, spiritually, and socially for them.

And yet he wants education and government to solve this. My belief is that government has contributed to the problem with 128 transfer programs taking money from the middle class to give to the poor that would make a woman think twice or thrice before marrying a guy who cares more about cars and sports than his children, causing her to lose health and housing benefits. Marriage and responsibility help young men become grown ups; the government helps them remain adolescents until they can collect Medicare.

He noted that at the turn of the 20th century Americans decided tax supported high school was important and it made a huge difference in the lives of the poor.  But for some reason I think he’s believing compulsory, government pre-schools and free college will do the same.  Well, not without marriage, and not without jobs—but it will be more jobs for academics and government bureaucracies.

http://robertdputnam.com/about-our-kids/ 

http://robertdputnam.com/about-our-kids/press-release/

http://www.nytimes.com/2015/03/08/books/review/our-kids-by-robert-d-putnam.html?_r=0

Why there is an income gap

Five people in a household working make more money than one person working part time.

Households with two full-time workers earn five times as much as households in which nobody works.

Here is a summary  (from 2010) of some of the key demographic differences between American households in the bottom and top income quintiles in 2010:

1. On average, there were significantly more income earners per household in the top income quintile households (1.97) than earners per household in the lowest-income households (0.43).

2. Married-couple households represented a much greater share of the top income quintile (78.4 percent) than for the bottom income quintile (17 percent), and single-parent or single households represented a much greater share of the bottom quintile (83 percent) than for the top quintile (21.6 percent).

3. Roughly 3 out of 4 households in the top income quintile included individuals in their prime earning years between the ages of 35-64, compared to only 43.6 percent of household members in the bottom fifth who were in that age group.

4. Compared to members of the top income quintile, household members in the bottom income quintile were 1.6 times more likely to be in the youngest age group (under 35 years), and three times more likely to be in the oldest age group (65 years and over).

5. More than four times as many top quintile households included at least one adult who was working full-time in 2010 (77.2 percent) compared to the bottom income quintile (only 17.4 percent), and more than five times as many households in the bottom quintile included adults who did not work at all (68.2 percent) compared to top quintile households whose family members did not work (13.3 percent).

6. Family members of households in the top income quintile were about five times more likely to have a college degree (60.3 percent) than members of households in the bottom income quintile (only 12.1 percent). In contrast, family members of the lowest income quintile were 12 times more likely than those in the top income quintile to have less than a high school degree in 2010 (26.7 percent vs. 2.2 percent).

Today is Tax Day

I was going to say this, but he already did.

"I’m probably in the minority, but as Tax Day approaches and as we analyze and compare tax burdens, I would like to personally express my sincere gratitude to: a) the 3 million Americans in the top 1% with incomes above $615,000 for shouldering almost half of the total US income tax burden with only 17% of the total income,. . ." http://www.aei.org/pu…/tax-day-approaches-lets-thank-top-20/

Democrat memes and lies

In their age and education group, there are no gaps—in fact in many cities they out earn men.  Except for the Democrat White House.  Women really do make quite a bit less if they work for the president.

http://www.washingtonpost.com/politics/male-female-pay-gap-remains-entrenched-at-white-house/2014/07/01/dbc6c088-0155-11e4-8fd0-3a663dfa68ac_story.html

http://www.washingtonexaminer.com/more-evidence-the-gender-wage-gap-is-due-to-choice-not-discrimination/article/2557200#!

http://www.politifact.com/punditfact/statements/2014/apr/09/genevieve-wood/what-pay-gap-young-women-out-earn-men-cities-gop-p/

The income gap

On average, young married men, aged 28-30, make $15,900 more than their single peers, and married men aged 44-46 make $18,800 more than their single peers.

Marriage transforms boys into men.

http://www.washingtonpost.com/news/inspired-life/wp/2015/04/02/dont-be-a-bachelor-why-married-men-work-harder-and-smarter-and-make-more-money/

For all races and ethnic groups. Black men enjoy a marriage premium of at least $12,500 in their individual income compared to their single peers. The advantages also apply, for the most part, to  men and women who are less educated. For instance, men with a high-school degree or less enjoy a marriage premium of at least $17,000 compared to their single peers.

http://www.aei.org/wp-content/uploads/2014/10/IFS-ForRicherForPoorer-Final_Web.pdf

About that pay inequity?

Mr. President,

the 60s called Tuesday night. They are upset that you don't know your history, employment law or what JFK did. The law about equal pay for equal work was passed in 1963. Employers are not allowed to discriminate based on gender. If they are not obeying the law, why didn't you do something? If they are not obeying that law, why will another one help? Also, women have earned 9 million more college degrees than men since 1982. They haven't been earning the same kind of degrees nor working the same number of hours, however. Last I checked, a mining engineer earned more than an art museum curator. Also for over 5 years, young, single college educated women have been earning more than young, single college educated men--in some cities like Atlanta and Memphis it's as much as 20%. Black women are so outpacing black men in college degrees, it is alarming. I think they get about 71% of the masters awarded to blacks students. What will you do about those gaps? Demand more laws?

Georgetown University did a study in 2011 of differences in gender and race in selecting a major. The study found that white men are concentrated in the highest-earning majors, including engineering and pharmaceutical sciences, while women gravitate toward the lowest-earning majors like education, art and social work.  The Journal of Blacks in Higher Education noted that educated white women were less likely to work full time than educated black women, accounting for the difference in their pay (educated black women earn more).

https://georgetown.app.box.com/s/omooxnult5yvuctf0ftl

http://content.time.com/time/business/article/0,8599,2015274,00.html

http://www.jbhe.com/news_views/47_four-year_collegedegrees.html

http://www.jbhe.com/news_views/64_degrees.html

Employers can't discriminate by law, but I’m sure they can read resumes.  And HR reps can talk among themselves and note absences, difficulties with co-workers, willingness to travel, etc.

The War on Poverty

Notice that the bottom quintile is lifted briefly about 10 years, and after that the top quintile takes off. Poverty is lucrative business for politicians and bureaucrats.

With 126 programs to transfer wealth, there's not enough incentive to give up the government safety net and take the risk that education, investing and marriage require.