November 17, 2007

American Economic Mobility

Some fascinating data has been issued by the Pew Charitable Trust over the last couple of days. In particular I think its worth thinking about two reports that they have compiled, concentrating on black and white earnings in the United States and on male and female earnings.

The report on Black and White earnings and social mobility is fascinating, it is based on income but the conclusions are rather interesting. The report suggests that there is still an income gap between Blacks and Whites, in the United States at the moment the median family income of a black family is 58% that of a white family. Furthermore social mobility is very differently structured for Blacks than for Whites, you see much more downward social mobility from the middle Class. A majority of Black kids whose parents have middle class income drift downwards, only 31% end up with higher incomes than their middle class parents, whereas for Whites 68% of them end up with higher incomes than their parents. Almost 45% of kids born to black middle class parents will end up in the lowest tenth of the earning population, that compares to only 16% of white kids from middle class backgrounds. I'd be interested to read some work on why this is still true but there is definitely still a disadvantage to being born with black skin in the US, and it seems to be a disadvantage independent of class.

The report on male and female income is even more interesting- because it points out that since the 1970s male income has fallen from 40000 dollars a year to 35 dollars as the average, whereas women's income has risen fast. I wonder in part whether that is to do with the erosion of industrial jobs in the United States and the creation of service jobs- and whether therefore you would see a similar phenomenon in the UK. Social mobility is different as well. Girls from less well off families find it difficult to rise to the upper quartiles and more difficult than their brothers. The authors suspect that this is because of teenage pregnancy which takes a girl out of the educational system at a crucial time, a time which can make the difference between attaining qualifications which aid advancement and not attaining those qualifications.

Its interesting to note though that equality between the sexes in terms of income, is not that far away. But equality between the races is a long way away from being acheived and indeed that situation is not even getting better. It will be interesting to see how these figures change in the years to come as well.


Lord Nazh© said...

If people (black, white, other) would move out of the slums into the country (land is generally cheaper along with housing) they wouldn't get stuck in the rut.

Of course that won't fix everyone, but it won't hurt them to get out of the bad areas.

Ruthie said...

I think the reasons behind these disparities have a lot to do with what LN mentioned-- black Americans still find themselves living in large urban areas, because (I'm guessing) many of their ancestors settled in large urban northern cities after fleeing the rural South. A few generations later, many white families left the cities for homes in the suburbs, and the cycle isn't breaking very quickly for new generations of young black Americans.

"Girls from less well off families find it difficult to rise to the upper quartiles and more difficult than their brothers. The authors suspect that this is because of teenage pregnancy which takes a girl out of the educational system at a crucial time, a time which can make the difference between attaining qualifications which aid advancement and not attaining those qualifications."

They're probably right. It is extraordinarily difficult to attain any sort of higher education when you have a kid (or several kids) to take care of.

Vino S said...

Its astounding that median male income has fallen in the US since the 1970s, given the fact that there has been notable economic growth since then. It does suggest that Reaganomics was only good for the rich rather than the ordinary male worker.

edmund said...

a few comments

A very key factor is the poor quality of black education -middle class blacks kid's get worst results in school This is partly due to the awefullness of some black heavy educaion districts and also owes something to family strucutre.

Incidentaly incereasing family break up also means up that increasing female equality in earning can sometimes work to increaser racial and class inequaity between familes (which is arugably what matters most) with the importnat point that African American women earn much more relative to African Americna men ( I think their income may acualy be higher)

I think the word "still" is very misleading- i very much doubt this has actualy been the case before in US history for the African American middle classes.

It'd be inteinsg what he set back of married family life is on female earings ( and particulary on female family earnngs- ie when the division of labour aspect of family life is taken into account) are for teenage pregancies compared to married pregances.

incidentaly it'd be generally be prety un pc in the US to use the terms black" and "white" like this -}

Vilno S I'd add that one should be carefull here a) adjusing for PPP poor people in America in many ways are better off than in western europe (don't forget most US states have a much higher post PPP income than the UK) b) The income figures argualby exaggerate inflation seriously -0 which doesnt matter much for Gracchi's case but's important when one talks in absolute terms c) it may be things like farmworking immigration have played a part in this reduction.

Vino S said...

Edmund, I agree the inflation rate used may over-state inflation but, even so, the fact that there has been negligable increase in male median earnings is worrying. It does show that Reaganomics was not good for the poor. The PPP difference between the EU and the USA is not really relevant to this discussion (although i have written about it a bit on my blog). After all, it is just the USA I am talking about. I am simply focusing on the USA in the 1970s and the situation now.

edmund said...

vilno good points

a) why blame regaonomnics for this fact? after all incomes have actually fallen in several more socialsit countires- b) my point is taken acocunt of that theere'd be a real rise in real earnings c) I think if your talking about US economic policy it's relenvet that these "poor" are not necessairl poor materially compared to those in western europe d) why blame Reaganomics how is it responsible?

Lord Nazh© said...

One thing that they fail to realize (or even care about) is that the median income has NOTHING to do with economic mobility.

Mobility means movement (up or down) and median suggests an average of certain groups. Individuals move up and down quite a bit in the US economy every year, yet the 'poor' stay poor. This looks terrible in any statistical grouping, but it doesn't mean much of anything.

Also, the lower employment of men in the study skews the numbers downward (yes they counted unemployed in both years, but there were more zero earners in the last part of their study, making the numbers fall).

A truer study of incomes would not count zero wage earners in the mix as employment is always a fluid state in the economy (I suspect that the numbers would be much higher for wages now with employment at all-time highs, but it would only change the statistic, not the outlook).

[note: they did study certain individuals/families, but I can't tell where they claim the statistics just for them and not for the whole population]