New Data Shows Sharp Spike in US Income Inequality

The CBO report, “Trends in the Distribution of Household Income Between 1979 and 2007″, found that

After-tax income for the highest-income households grew more than it did for any other group. (After-tax income is income after federal taxes have been deducted and government transfers—which are payments to people through such programs as Social Security and Unemployment Insurance—have been added.)

CBO finds that, between 1979 and 2007, 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, and
  • 18 percent for the bottom 20 percent.

The share of income going to higher-income households rose, while the share going to lower-income households fell.

  • The top fifth of the population saw a 10-percentage-point increase in their share of after-tax income.
  • Most of that growth went to the top 1 percent of the population.
  • All other groups saw their shares decline by 2 to 3 percentage points.
  • New data from both the US Census’ American Community Survey likewise documents widening income gaps among Americans. As UW Geography Professor Mark Ellis explains, “The Census has just released what at first read through seems like a good summary report on income inequality at national, state, metro, and census tract scales from American Community Survey Data.  Although it does not break out the ratio of income of the top 1% to the median (i.e. the summary income measure of the 99%)  it does compute useful income percentile comparisons (90/10, 95/20) and gini coefficients for different geographies.  Interesting but not very surprising findings about where inequality is greatest in the US WA and Seattle have below inequality below US average. Great data and maps”.

    Census Report Summary: The National Picture

    Each year, the Census Bureau publishes an estimate of national income inequality from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC; the latest is DeNavas-Walt et al. 2010). According to analysis of that survey (which has been measuring income inequality since 1947) by Jones and Weinberg 2000 (see also Weinberg 1996), “between 1967 (when income data for households first became available) and 1992, the shape of the household income distribution changed dramatically. This 25-year period was one of increasing household income inequality—as evidenced by several measures.” Subdividing that period, and using the Gini index as the measure, Jones and Weinberg observed that “household income inequality was generally stable between 1967 and 1980.” However, they go on to note that “In contrast to the . . . Gini measures, . . . percentile measures . . . suggest that household income inequality increased from 1967 to 1980 . . . .The 95/20 ratio . . . increased from 1967 to 1980, while the 90/10 ratio . . . declined.” Despite the ambiguity in the 1967–1980 period, they conclude “it is clear that the household income distribution became increasingly unequal beginning in 1981.” Their study ended with 1998 data, but the Census Bureau statistics continue to show increases in inequality since then. The Gini coefficient for household income in 2009 was 0.468, higher than for 1998 (0.456).4

    How the ‘Battle in Seattle’ led to a Global Health Mecca

    The Washington Global Health Alliance and the City of Seattle’s Office of Economic Development has published a new report describing our region’s growing global health industry. Called the 2011 Global Health Strategic Mapping and Economic Opportunity Portfolio, the report identifies local organizations working in global health, the number of jobs, types of projects overseas and business opportunities. Some key findings:

    • Respondent’s organizations have 2,503 projects and initiatives in 156 countries.
    • In Washington, 2,979 people work in global health. Outside of the state, these 59 organizations support an additional 17,275 employees.
    • Washington has particular expertise in infectious & chronic disease and developing technologies & devices.
    • Washington global health organizations surveyed collaborate with 1,574 partners, located in 111 countries across the world.

    UW Geography Professor Matt Sparke has received recent press and  blogosphere attention with his essay on how Seattle’s reincarnation as a global health epicenter relates to its previous reputation as a center for the global justice movement after the anti-WTO protests of 1999:

    Many people at the time thought the 1999 WTO protests marked a significant turning point, against the neo-liberal agenda in globalization. The ‘Spirit of Seattle’ became the rallying cry for those who opposed the market fundamentalism mindset of the time.

    But, today, another global Seattle being built, says Sparke. Neither the promoters of market competition nor the collaborative proponents of global justice have gone away, but in the aftermath of their now-famous standoff, a third and arguably “curative” rethinking of the city is taking shape: a re-visioning of Seattle as a world center of global health philanthropy and other private-sector treatments for the mismatch between global markets and global justice.

    As cited in the influential global health blog Humanosphere, Sparke argues that “The Gates Foundation is basically addressing the same global challenges that the protesters were. But they are doing it in a way that’s much more comfortable with and friendly to the traditional neo-liberal market-based approach.” In his chapter on “Global Geographies” in the department’s recent publication, Seattle Geographies, Sparke also warns of the “commodified” and “corporatized” vision of global health, “taking us back to the age-old competitive concern about promoting Seattle as a global health market leader”:

    The co-optation of global health for selling the city in the old game of global boosterism will seem for many a bitter pill to swallow. But if the historical geography of Seattle’s ongoing remaking as a global city tells us anything, it is that the definition of civic citizenship is always in flux, always being contested, and always, therefore, up for grabs….Global soul is not always for sale, and this city reminds us that there is going to be a battle for it–an ongoing Battle of Seattle over the meaning of world class.

    How the ‘Battle in Seattle’ led to a global health epicenter | Humanosphere.

    Exciting Fall Quarter Simpson Center Events

    Biological Futures in a Globalized World

    Emerging Issues in Biological Futures: A Panel Discussion

    When: Monday, Oct 10, 2011 – 4:00 PM Where: Communications 202

    Biological Futures in a Globalized World brings together scholars across the humanities, social sciences, and natural sciences to explore the current and future impact of bio-technology on human affairs. This inaugural colloquium, moderated by Alison Wylie (Philosophy), features Matthew Sparke (Geography) on global health and South Lake Union as a hub for biotechnology; Leah Ceccarelli (Communication) on the metaphor of the frontier in debates about research priorities in the biological sciences; and Gaymon Bennett (Fred Hutchinson Cancer Research Center) on ethics and the practice of synthetic biology. Part of the 2011-12 Biological Futures Colloquium series.

    Posthegemony and Affect

    Friday, Oct 14, 2011 – 1:00 PM Communications 202

    Beasley Murray is author of Posthegemony: Political Theory and Latin America (2010).

    Indigenous Peoples and the Idea of Reconciliation

    When: Thursday, Oct 20, 2011 – 4:00 PM Where: Communications 12

    In this presentation, Dale Turner, author of This is not a peace pipe: Towards a Critical Indigenous Philosophy (2006), will discuss the evolving idea of Indigenous reconciliation in the context of the recently ratified United Nations Declaration on the Rights of Indigenous Peoples.


    Love Live Shame! The Good Side of Nations and Nationalism

    When: Tuesday, Nov 8, 2011 – 6:30 PM Where: Kane 120

    Benedict Anderson (Emeritus, International and Government Studies, Cornell University).
    This talk by the author of the landmark book Imagined Communities, addresses the origins of political shame and the value that should be attached to it. What creates the visceral attachment people feel for their country? Before which spectators is the emotion aroused? What understanding of “nation” is necessary? Can political shame is progressive and emancipating?

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    Friday, October 14

    The Weakness of One: Devolution, Responsibilisation, and Citizenship in Neoliberal Rationality

    When: Thursday, Nov 17, 2011 – 6:00 PM Where: Communications 120

    In this talk, Wendy Brown, author of Walled States, Waning Sovereignty (2010) and Regulating Aversion: Tolerance in the Age of Identity and Empire (2006) among many other books, offers a theoretical analysis tracing how neoliberalism shapes agency and how that impacts political possibilities for leftist projects.


    Welcome to the Simpson Center | Simpson Center for the Humanities.

    Marketing Responses to US’s Shrinking Middle Class & Growing Inequality,

    A recent Wall Street Journal article on how US corporations are adjusting to a shrinking middle class, Ellen Byron writes:

    In the wake of the worst recession in 50 years, there’s little doubt that the American middle class—the 40% of households with annual incomes between $50,000 and $140,000 a year—is in distress. Even before the recession, incomes of American middle-class families weren’t keeping up with inflation, especially with the rising costs of what are considered the essential ingredients of middle-class life—college education, health care and housing. In 2009, the income of the median family, the one smack in the middle of the middle, was lower, adjusted for inflation, than in 1998, the Census Bureau says.

    The slumping stock market and collapse in housing prices have also hit middle-class Americans. At the end of March, Americans had $6.1 trillion in equity in their houses—the value of the house minus mortgages—half the 2006 level, according to the Federal Reserve. Economist Edward Wolff of New York University estimates that the net worth—household assets minus debts—of the middle fifth of American households grew by 2.4% a year between 2001 and 2007 and plunged by 26.2% in the following two years.

    To monitor the evolving American consumer market, P&G executives study the Gini index, a widely accepted measure of income inequality that ranges from zero, when everyone earns the same amount, to one, when all income goes to only one person. In 2009, the most recent calculation available, the Gini coefficient totaled 0.468, a 20% rise in income disparity over the past 40 years, according to the U.S. Census Bureau.

    “We now have a Gini index similar to the Philippines and Mexico—you’d never have imagined that,” says Phyllis Jackson, P&G’s vice president of consumer market knowledge for North America. “I don’t think we’ve typically thought about America as a country with big income gaps to this extent.”

    Over the past two years, P&G has accelerated its research, product-development and marketing approach to target the newly divided American market.

    Commenting on corporate responses to widening US income inequality, Chrystia Freeland  recently remarked in The New York Times:

    We know one thing for sure: the gap between rich and poor in the United States has widened in the past 30 years. In 2007 the top 1 percent of earners took home 18.3 percent of national income — that is more than two and a half times their level in 1973, when their share was 7.7 percent. Those at the top haven’t enjoyed such a big slice of the national pie since 1929. The middle-class dominated nation that the Greatest Generation inhabited has become as polarized as the plutocracies of Latin America or as America itself was during its fevered Gilded Age.

    The 2008 financial crisis and the prolonged economic downturn has eviscerated the consumption defense as ruthlessly as it has burst the credit bubble that allowed the middle class to feel richer than it was. Income inequality is today a fact of life, as essential to doing business as the rate of inflation: Proctor & Gamble executives study the Gini co-efficient, a technical measure of income inequality, to divine what is happening to their erstwhile middle-class consumer base, and have decided the best strategy is to give up on the center and to market instead to the top and the bottom.

    Citigroup advises investors to design their portfolios around income inequality. It calls this strategy the “Consumer Hourglass Portfolio” and has created an index of companies that serve the rich and the poor while avoiding the vanishing middle.

    Once income inequality has become a tool for marketing executives and stock pickers it becomes pretty hard to deny. But we can still argue over what is causing it.

    Income also continues to dip in Washington state, according to a Sept. 22 Seattle Times article

    Household income — in Washington state and across the country — declined in 2010, while the percentage of people living in poverty increased, as did the numbers of people without health insurance, according to data being released Thursday by the Census Bureau.

    Results from the American Community Survey, successor to the census long form, detail a troubled economy, showing a downward trend that began in 2008 or earlier has continued or worsened in many larger cities and counties.

    Children have been particularly affected. In Washington state last year, 13.4 percent of the overall population, including 18.2 percent of those under 18, were in households with incomes below the national poverty level.

    Another sign of tough times for kids: Statewide, more than 47 percent of single mothers with children under 5 were living in poverty.

    The percentage of Washington residents without health insurance rose from 13.4 percent to 14.2 percent last year. And the percentage of state households receiving food stamps rose from 11.1 percent in 2009 to 13.3 percent last year.

    The survey showed Washington’s median income fell 3.1 percent in 2010 to $55,631, after a 1.8 percent drop the previous year.

    Of the 19 Washington counties in the report, King County had the highest median income in 2010, at $66,174. But that was nearly a 4 percent drop from its median income in 2009.

    Lewis County, in the southwest part of the state, had the lowest median income of the Washington counties reported, at $38,643 — more than a 10 percent drop from 2009.

    Among those same counties, Yakima County had the highest percentage of residents under the poverty level in 2010, 24.3 percent, while Island County had the lowest, 9.4 percent.

    via As Middle Class Shrinks, P&G Marketing Aims High and Low – WSJ.com.