The United States of Inequality

The Usual Suspects Are Innocent
What's causing America's growing income inequality?
Sept. 6 2010 9:27 PM

The United States of Inequality

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Slide Show: The Great Divergence In Pictures. Click image to launch.

Most discussion about inequality in the United States focuses on race and gender. That makes sense, because our society has a conspicuous history of treating blacks differently from whites and women differently from men. Black/white and male/female inequality persist to this day. The median annual income for women working full time is 23 percent lower than for their male counterparts. The median annual income for black families is 38 percent lower than for their white counterparts. The extent to which these imbalances involve lingering racism and sexism or more complex matters of sociology and biology is a topic of much anguished and heated debate.

But we need not delve into that debate, because the Great Divergence can't be blamed on either race or gender. To contribute to the growth in income inequality over the past three decades, the income gaps between women and men, and between blacks and whites, would have to have grown. They didn't.

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The black/white gap in median family income has stagnated; it's a mere three percentage points smaller today than it was in 1979.   This lack of progress is dismaying. So is the apparent trend that, during the current economic downturn, the black/white income gap widened somewhat. But the black/white income gap can't be a contributing factor to the Great Divergence if it hasn't grown over the past three decades. And even if it had grown, there would be a limit to how much impact it could have on the national income-inequality trend, because African-Americans constitute only 13 percent of the U.S. population.

Women constitute half the U.S. population, but they can't be causing the Great Divergence because the male-female wage gap has shrunk by nearly half. Thirty years ago the median annual income for women working full-time was not 23 percent less than men's, but 40 percent less.   Most of these gains occurred in the 1980s and early 1990s; during the past five years they halted. But there's every reason to believe the male-female income gap will continue to narrow in the future, if only because in the U.S. women are now better educated than men. Ever since the late 1990s female students have outnumbered male students at colleges and universities. The female-male ratio is currently 57 to 43, and the U.S. Department of Education expects that disparity to increase over the next decade.

Far from contributing to the Great Divergence, women have, to a remarkable degree, absented themselves from it. Take a look at this bar graph by David Autor, an MIT labor economist:

Chart of the changes in occupational employment shares by education and sex, 1979 - 2007.

The graph demonstrates that during the past three decades, women have outperformed men at all education levels in the workforce. Both men and women have (in the aggregate) been moving out of moderately skilled jobs—secretary, retail sales representative, steelworker, etc.—women more rapidly than men. But women have been much more likely than men to shift upward into higher skilled jobs—from information technology engineer and personnel manager on up through various high-paying professions that require graduate degrees (doctor, lawyer, etc.).

These findings suggest that women's relative gains in the workplace are not solely a You've-Come-a-Long-Way-Baby triumph of the feminist movement and individual pluck. They also reflect downward mobility among men. My Slate colleague Hanna Rosin, writing in the Atlantic, recently looked at these and other data and asked, "What if the modern, postindustrial economy is simply more congenial to women than to men?"

She might have asked the same about the modern, postindustrial family. The declining economic value of men as Ward Cleaver-style breadwinners is a significant reason for the rise in single parenthood, which most of the time means children being raised by an unmarried or divorced mother. The percentage of children living with one parent has doubled since 1970, from 12 percent to more than 26 percent in 2004 (see Table 2). Conservatives often decry this trend, and they rightly point out that children who grow up in single-parent homes are much likelier to be poor. "Single mothers seldom command high wages," confirmed David Ellwood and Christopher Jencks, both of Harvard's Kennedy School of Government, in a 2004 paper. "They also find it unusually difficult to work long hours." But it would be difficult to attribute much of the Great Divergence to single parenthood, because it increased mostly before 1980, when the Great Divergence was just getting under way.   By the early 1990s, the growth trend halted altogether, and though it resumed in the aughts the rate of growth was significantly slower.  

Also, single parenthood isn't as damaging economically as it was at the start of the Great Divergence. "That's mostly because the percentage of women who are actually working who are single parents went up," Jencks told me.  In a January 2008 paper, three Harvard sociologists concluded that the two-thirds rise in income inequality among families with children from 1975 to 2005 could not be attributed to divorce and out-of-wedlock births. "Single parenthood increased inequality," they conceded, "but the income gap was closed by mothers who entered the labor force." One trend canceled the effects of another (at least in the aggregate).

While we're on the topic of single versus two-parent households, perhaps we ought to consider what a "household" is.

Stephen J. Rose is a labor economist at Georgetown best-known for publishing, since the 1970s, successive editions of Social Stratification in the United States, a pamphlet and poster much revered by the left that depicts economic inequality in the United States. In his recent book   Rebound, Rose made an apparent 180-degree turn and argued that worries about rising income inequality and a disappearing middle class were overblown. Rose built his case largely on the notion that the Census Bureau's preferred metric—"median household income"—was misleading.

The trouble, Rose wrote, was that households varied greatly in composition and size. A household might consist of a single young man just starting out on his own or an elderly widow in retirement. Neither would likely enjoy a high income, but that would be a function of mere circumstance (the young man was just beginning his climb up the greasy pole; the retired widow no longer worked at all) and need (neither was likely to be responsible for any children). Another problem, Rose suggested, was that some households were bigger than others. Couples tended to have larger household incomes than single people, but that was because they likely collected two paychecks rather than one. The proportion of Americans living alone had for various reasons increased over time; that needed to be taken into account, too. Correcting for all these factors, Rose calculated that median household income was 30 percent higher than the Census' official figure (about $50,000 in 2007).

That was the good news. The bad news was that even with these new calculations, Rose couldn't deny the existence of a Great Divergence. "Under all circumstances," he wrote, "inequality has risen considerably, and this is a bad thing for America. Those at the bottom of the income ladder have benefited only minimally from the significant gains in overall production over the past three decades."

Back, then, to the drawing board. Conventional liberal and conservative explanations about what ails society can neither explain the Great Divergence nor make it go away.

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Timothy Noah is a former Slate staffer. His  book about income inequality is The Great Divergence.

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