Tuesday, May 13, 2014

Income Inequality: Not Quite What It Appears

It is an article of faith in some circles that income inequality is rapidly rising (in spite of the Zero -- it could not be because of the Zero and his policies, could it?).

The Gini coefficient is one of the commonly accepted measures of the income inequality.  In a society where everyone has the same income, the Gini coefficient is 0.  A Gini coefficient of 1 would mean that one person had all the income, and everyone else had none.  Pretty obviously, a Gini coefficient of 0 never happens, outside of a dystopian novel, and a Gini coefficient of 1 never happens, either.

Anyway, a lot of handwringing leftists like to point to the rising Gini coefficient over the last thirty years as a really, really bad thing -- doubtless the result of Ronald Reagan.  But this article shows a rather different story.  Most importantly

The green line shows the Gini coefficient for individuals -- and you will notice that it is essentially flat since 1962.  Income inequality for individuals hasn't changed much.  What has changed most impressively since 1970, and even more so since 1992, is income inequality for households and families.  (Yes, the .01% who back Obama are vastly richer than they used to be, but relative to the vast majority of the population, I doubt that they are contributing that much to these figures.)

It doesn't take much thinking to see how income inequality for individuals was largely unchanged, but increased substantially for households and families.  In 1962, most women were homemakers.  While there were single  mothers, they were atypical, because divorce was difficult and more importantly, socially frowned upon.

Since 1970, and increasingly since the 1980s, households where both husband and wife are working, usually full-time, has gone from unusual to normal.  There are a lot more single mothers than there used to be, and of course, compared to a family with two full-time workers, the single mothers are going to have a much lower family or household income.

If the progressives really want to do something about income inequality, the solution is obvious, isn't it?  Pass laws requiring women who are married to stay home and bake cookies.  Problem solved!  Somehow, I don't see this becoming the progressive cause.

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