A national group recently issued the 2015 Assets & Opportunity Scorecard, which provides a trove of comparative data on household financial security and policy solutions. It’s a very important resource – coming at a time when new data show that income disparities in Wisconsin have reached record levels, and as a broader range of politicians have begun to offer plans for fighting poverty (see for example the plan recently offered by Senator Darling and Rep. Kooyenga).
The scorecard was prepared by the Corporation for Enterprise Development (CFED), a nonprofit organization based in Washington DC that works to expand economic opportunities for low-income families and communities. They have scored and ranked states on the basis of a wide range of outcome measures, and a second ranking compares states on the basis of how well they are doing in adopting an array of policy solutions that have been shown to increase opportunity for low-income households. Read more
Concerns about increases in income inequality were voiced from a surprising perspective today, when Standard and Poor’s (the bond rating agency) issued a lengthy report titled “Income Inequality Weighs On State Tax Revenues.” The report concludes that “disparity is contributing to weaker tax revenue growth by weakening the rate of overall economic expansion.”
The authors offer this explanation for the correlation between income disparities and economic growth:
“…rising income inequality is a macroeconomic factor that acts as a drag on growth. There is evidence, although not conclusive at this point, that the higher savings rates of those with high incomes causes aggregate consumer spending to suffer. And since one person’s spending is another person’s income, the result is slower overall personal income growth despite continued strong income gains at the top.”
An article in today’s Washington Post sums up the findings in clearer terms:
“Even as income has accelerated for the affluent, it has barely kept pace with inflation for most other people. Read more
Rich Americans are getting richer and the poor are getting poorer. The top 20% of Americans have been enjoying most of the economic gains over the last decade, but the median net worth of most Americans has actually decreased.
To Reduce Income Inequality and Boost Economic Growth, Make sure every Student has an Opportunity to Attend College
Rising levels of income inequality are acting as a drag on the U.S. economy, but we can counter the economic harm by expanding opportunities to attend college, according to a new report from Standard & Poor’s, a financial services company.
Here’s the crux of the report, in a sentence:
Our review of the data, as well as a wealth of research on this matter, leads us to conclude that the current level of income inequality in the U.S. is dampening GDP growth, at a time when the world’s biggest economy is struggling to recover from the Great Recession and the government is in need of funds to support an aging population.
Pretty clear, right? Prominent policymakers, including President Obama, have warned time and again that high levels of income inequality are slowing economic growth. This report adds something new to the conversation in that it represents the viewpoint of a private sector company, and could be an indication that the business community is starting to view income inequality as a problem. Read more
There has been a great deal of interest this year in the subject of income inequality – as evidenced by the fact that economist Thomas Piketty’s book, “Capital in the Twenty-First Century,” reached No. 1 on the non-fiction, best-seller list a few months ago. However, it isn’t an easy summer read, which is why I’m bringing you a very condensed version of a short synopsis that appeared a few days ago in a New York Times column by Nicholas Kristof.
Apparently, buying Picketty’s book is one thing, and getting very far into the 685-page tome is something else. An analysis of Kindle data by UW Madison mathematics professor Jordan Ellenberg suggests that Piketty’s best seller may also be this year’s most unread book. With that in mind, Kristof wrote his recent column, which he calls “An Idiot’s Guide to Inequality.”
I don’t want to discourage you from buying and reading Piketty’s book, but if it isn’t something you envision taking with you to the beach this summer, I encourage you to read Kristof’s “idiot’s guide,” which elaborates on these five points (that I have excerpted from his column):
- Economic inequality has worsened significantly in the United States and some other countries.
Poor residents of the Milwaukee area are more economically segregated than poor residents in any other large metropolitan area in the country, according to a new report from Atlantic Cities. The Milwaukee metropolitan area includes West Allis and Waukesha.
When medium and smaller-sized metropolitan areas are also included in the ranking, Milwaukee ranks second in the country in poverty segregation, behind only State College, Pennsylvania. Madison also ranks high in poverty segregation.
Areas where the poor are most segregated are in the Midwest and the Northeast, and the lowest levels occur in the Sunbelt, especially Florida, and the West.
Cities, in Wisconsin and elsewhere, should strive to avoid high levels of poverty segregation. According to the article: “This increasing concentration of poverty poses a host of problems to communities. Less advantaged communities suffer not just from a lack of economic resources but from everything from higher crime and drop-out rates to higher rates of infant mortality and chronic disease.” People living in segregated poverty also have a harder time getting access to jobs and quality schools. Read more
Income inequality in Wisconsin is widening, according to a new report by the Center on Wisconsin Strategy (COWS) and the Wisconsin Budget Project. The top 1% of earners in Wisconsin have experienced tremendous gains in average income in recent decades, while incomes for the bottom 99% have declined.
Key findings of the report include:
- Between 1979 and 2011, the average income of the top 1% in Wisconsin grew by 104%, while the average income of the bottom 99% dropped by 0.4%.
- The top 1% in Wisconsin had an average income of $783,000 in 2011, more than 18 times the average income of the bottom 99%.
- In 2011, 15.7% of income went to the top 1% in Wisconsin, a share that has more than doubled since the 1970s.
Over the last hundred years, income inequality has followed a U-shape in Wisconsin, with very high levels of income inequality during the 1920s and 1930s, much lower levels in the middle part of the century as economic gains were made at all income levels, and then climbing again to very high levels. Read more
2014 is the 50th anniversary of the “war on poverty,” and we can expect a lot of debate and posturing then about that ambitious undertaking. Expect some legislators to use the opportunity to urge that policymakers renew their commitment to fight poverty and reinvigorate some of the elements of that agenda, while others will take that opportunity to declare the war on poverty a failure and a mistake.
Poverty Remains High, Median Income Remains Low, and Health Insurance Coverage Improves Modestly
Data released today by the U.S. Census Bureau reinforce the recent findings by economists that there is a very wide gap between the rich and the poor. The new Census figures for 2012 from the Current Population Survey (CPS) show that the painfully slow economic recovery has yet to help a large segment of Americans. Poverty remained high last year, at 15% nationally, and median income remained low — 8.3% below the 2007 level, before the Great Recession began.
In a New York Times blog post this afternoon, a graph prepared by Jared Bernstein uses the 2012 Census Bureau data to illustrate the diverging trend lines since 1967 in the household income of low, middle and upper income Americans. And as Bernstein notes, the divergence would be much wider if the Census Bureau didn’t exclude capital gains income from its data. Read more