Thursday, August 28, 2008

Income Inequality?

Here's another one I've heard: income equality in America is getting worse.

Actually....

From a 2007 Census report:
Income inequality decreased between 2006 and 2007, as measured by shares of aggregate household income by quintiles and the Gini index. The share of aggregate income received by households in the top fifth of the income distribution declined, while the shares for the third and fourth quintiles increased. Meanwhile, the Gini index declined from 0.470 to 0.463, moving closer to 0, which represents perfect income equality (1 represents perfect inequality).
This "Gini coefficient" is the standard measurement for income inequality (how rich the rich are versus how poor the poor are). Under Clinton, it went from .433 to .462, an increase of .029.

Under Bush, it has gone to .463 after decreasing between 2006 and 2007, for a total increase of .001.


In other words, income inequality got worse under Clinton. Under Bush, it has not changed.

Here's the whole Census report. The quote was from page 13:
http://www.census.gov/prod/2008pubs/p60-235.pdf


(edit)
Oh dear lord! I found the greatest quote ever. Think about what I just said above and then read this quote from Bill Clinton's DNC speech:
"Look at the example the Republicans have set: American workers have given us consistently rising productivity. They've worked harder and produced more. What did they get in return? Declining wages, less than one-quarter as many new jobs as in the previous eight years, smaller health care and pension benefits, rising poverty and the biggest increase in income inequality since the 1920s."
Oh the irony.

The big increase in income inequality was under YOUR watch, Billy boy! Under Bush it hardly budged!

Maybe he's using some other index. You know, the one the US Census bureau apparently doesn't use.

2 comments:

Northern Paladin said...

Self-comment:
I found out that Clinton got his information from an IRS report, however, the IRS report was comparing the top 1% to the bottom 20% rather than the population as a whole. He would be correct in saying that the richest of the rich are gaining ground on lowest 20%, but what does that actually mean and what impact does that actually have?

The Gini index is far more comprehensive and it still demonstrates that overall income equality is almost unchanged under Bush.

In my opinion, Clinton's finding is more along the lines of "if you look hard enough, you can find a statistic that agrees with you". I'm sure somewhere I could find a percentile of low income that has grown more than a percentile of high income and use that to say, "Income inequality is shrinking [based on the fact that the lower 23rd percentile income is closer to the higher 42nd percentile income in the state of Nebraska among left handed farm hands]" but I think I'll stick with the US Census and the Gini index, since that method has been used for almost 100 years.

Blissfully Delusional said...

I have to admit, reading your blog is a bit of an ambitious feat for me. I can't say that I understand all of it (I'm terrible with REAL world issues, namely those political and economic), but I enjoy trying to understand. I like the way you present it. It's witty, entertaining, and I feel like I'm really learning something. I'll be sure to keep coming back.