Monday, October 31, 2011

Income Inequality, Mix vs. Rate vs. Definition

The following charts (hattip Carpe Diem) show household, family and full time worker income inequality from the 1960s to the present.  All of these charts show the same trend:  increasing inequality until '94 and then a flattening of the trend since then.  Two observations and a prediction:

1. What happened in in the mid 90s?  Female labor force participation which had grown from 37 percent in '60 to almost 60 percent in the mid '90s (BLS) flattened out.  And since a woman's 'full time job' on average was 32 hours and a man's 'full time job' was over 50, the increase in female full time participation by definition increased full time worker inequality until the mix stabilized in the mid 1990s.

2. But this doesn't explain why household income inequality should increase, after all if wives are simply going to work but at a lower number of hours than their husbands, then household inequality should remain constant.  But there was a second social trend:  female headed households.  It used to be that in low income families the husband and wife both worked while in high income families the wife stayed home.  No more. Now low income families often don't have marriages and high income families often have two high earners.   Result much more household inequality.  Again, inequality that flattened out once the proportion of women in the work force stabilized.

Prediction:  Men are doing 'badly', less well educated, with huge proportions in prison or kneecapped by felony convictions for erstwhile misdemeanor.  So  I predict that this decline of men will lead to falling income inequality as their level of work and productivity falls relative to women.

It is quite a paradox:  As our society becomes more 'progressive' it becomes less 'equal'.  And it appears that all that it will take to make the statistics go in the 'right' direction is the social tragedy of the marginalization of millions of young men.  It appears to me that the obsession over income 'equality' statistics has become a tool to justify the shifting of more wealth and power to a state disproportionately inhabited by......women.






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