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Chapter 33 Distributing Income To
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I. Income statistics
| Quintile | 1950 | 1960 | 1970 | 1980 | 1990 | 2000 |
| Lowest | 4% | 4 | 5 | 5.1 | 4.6 | 3.6 |
| 2nd Lowest | 11% | 12 | 11 | 11.6 | 10.8 | 8.9 |
| Middle | 17% | 17 | 16 | 17.5 | 16.6 | 14.8 |
| 2nd Highest | 24% | 24 | 24 | 24.3 | 23.8 | 23.0 |
| Highest | 44% | 43 | 44 | 41.6 | 44.3 | 49.6 |
| Top 5% | 15.3 | 17.4 | 21.9 | |||
| Various
Statistical Abstracts of the United States, Data rounded Note: Inter-quintile movement is substantial as families continuously move into and out of the different quintiles. |
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B. Household Income distribution by percentile (Figures in 2000 CPI-U-RS adjusted dollars)
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Income by Decade |
Percent change from previous decade |
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Percentile |
1970 | 1980 |
1990 |
2000 |
1970 | 1980 |
1990 |
2000 |
1970 - 2000 |
Percentile |
|
10th |
$7,944 | $8,945 | $9,376 | $10,600 | 12.6% | 4.8% | 13.1% | 33.4% |
10th |
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| 20th | $14,425 | 15,503 | 16,050 | 17,955 | 7.5% | 3.5 | 11.9 | 24.5 | 20th | |
| 50th | $33,746 | 35,238 | 38,446 | 42,00 | 4.4% | 9.1 | 9.2 | 24.5 | 50th | |
| 80th | $56,646 | 63,075 | 70,882 | 81,960 | 11.3% | 12.4 | 15.6 | 44.7 | 80th | |
| 90th | $72,251 | 81,580 | 95,828 | 111,602 | 12.9% | 17.5 | 16.5 | 54.5 | 90th | |
| 95th | $89,553 | 102,472 | 121,654 | 145,526 | 14.4% | 18.7 | 19.6 | 62.5 | 95th | |
| U.S. Census Bureau has a great deal of interesting data. | ||||||||||
| This Bureau of Labor Statistics data reports that over the last five years the percentage of young people are working has declined as has their real pay. This has happened even though they are investing more time and money in education. Data from page 13 of the July 2, 2007 issue of Business Week. |
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The recovery of the stock market after 9/11 and the most recent housing boom has household wealth up 40%.
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Secondary Source The Big Picture, August 21, 2007
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![]() Primary Source:
Average
Incomes Fell for Most in 2000-05 |
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C.
Household income in the United States from Wikipedia
D.
Middle Class Squeeze Continues
from The Big Picture Blog.
E. According to one 2006 study**,
by Dirk Krueger of the University of Pennsylvania and Fabrizio Perri of New York
University, consumption inequality has barely budged for several decades,
despite a sharp upswing in
income inequality. See
Does Income Inequality Lead to
Consumption Inequality? Evidence and Theory”
II. Analyzing the distribution of income with Lorenz Curves
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III. Causes of income inequality A. Personal endowments differ (mental, physical, and personal abilities) B. Human capital investments differ (education and training) C. Job characteristics cause people to accept differing amounts of compensation (white vs. blue collar, job prestige, job risk) D. Wealth generates income E. Market power (unions, associations such as AMA, ABA, and AARP) F. Discrimination G. Willingness to assume risk H. Luck 1. Recently, 2001-2202, (like 1991, and 1980) was not a great time to be graduating from college and seeking a job. 2 .The worst time was 1929 -1938. My dad graduated from Tufts College in 1933. He got his first real job in 1937 and because of WWII, he didn't get his first new car until 1947. I. Power CEOs have the power and no one can stop them. Business Week, February 26, 2007 page 44 J. Equality Denial from Economist.com takes a different view. |
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J. Visit
The L-Curve: A Graph of the US Income Distribution for an interesting of income distribution in the United States.IV. Understanding poverty
A. 1990 Poverty threshold
1.
Originally set at three times a family's minimum food requirement,
it is now adjusted for inflation
2.
$13,359 annually for a family of four
3.
$6,652 annually for a single person
B. By 2005, the Department of Health and Human
Services reported higher thresholds.

B. The poverty rate is decreasing.
1. 32.0%
of the population lived in poverty in 1950.
2. Just
over 11% was the poverty rate through the early 1970's.
3. 15.2%
of the population during 1981-82 recession which is the
most recent poverty rate peak.
4. 14.2%
of the population (35.7 million people) in 1991 lived in poverty.
5.
Between 1970 and 1990 the percentage of children living in poverty
increased from 14.9% to 19.9% with the corresponding
increases
for white, black, and Hispanic children being 10.5% to
15.1%, 41.5% to 44.2%, and NA to 33.9% respectively.
| Year | Millions
of Poor People |
Percent | White | Black | Hispanic | Family of
Four Poverty Income |
Median
Couples Family Income, Wife Not in the Labor Force |
| 1959 | 39.5 | 22.4% | 18.1% | 55.1% | NA | $2,973 | |
| 1970 | 25.4 | 12.6 | 9.9 | 33.5 | NA | $3,968 | $9,304 |
| 1980 | 29.3 | 13.0 | 10.2 | 32.5 | 25.7 | $8,414 | $18,972 |
| 1990 | 33.6 | 13.5 | 10.7 | 31.9 | 28. | $13,359 | $30,265 |
|
2000 |
31.1 |
11.3 | 9.4 | 22.1 | 21.2 |
$17,050 |
$39,982 |
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Note: The ratio of nonwhite to white median family income while improving some in the 1960's,is back to approximately the .55 level it was in the early 1950's. 1992 and 2003 Statistical Abstract of the
United States and 2001 Census Bureau Data Update from Institute for Research on Poverty: "In 2001 the number of poor and the poverty rate both rose as economic difficulties moved into recession, and the rate has continued to rise; in 2003, 35.8 million people were poor by the official measure of poverty. In 2004, the number rose to 37 million people (12.7 percent of the population)." |
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C. Federal programs to help the poor
V. Effectiveness of government poverty programs
| Quintile in 1990 | Income Before Taxes and Transfer | Income After Taxes and Before Transfers | Income after Taxes and Transfers | Effect of Taxes and Taxes on Income |
| Lowest | $2,096 | $2,045 | $10,904 | + $8,808 |
| 2nd Lowest | 14,644 | 13,126 | 18,676 | + 4,012 |
| Middle | 28,836 | 24,102 | 27,017 | - 1,819 |
| 2nd Highest | 45,836 | 36,991 | 38,780 | - 7,056 |
| Highest | 93,966 | 70,338 | 71,944 | - 22,022 |
| Department of Commerce from the 1992 Economic Report of the President | ||||
VI. Understanding Poverty in America states that America's poor are not that poor.
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John Edward on Poverty in America from UC Berkeley |
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Robert Reich: How Unequal Can America Get Before We Snap? from UC Berkeley |
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VII. Author's editorial!
A September 3, 1992 Wall Street Journal editorial by Robert Rector,
a policy analyst for the Heritage Foundation in Washington, D.C.,
reported the following concerning 1990 government spending on
poverty:
"Out of a total of $184 billion in welfare spending..." "...Census counted only $32.5 billion as income."
This means that the actual income of those living in poverty is substantially
understated. It is difficult to lower the number of
people
living on poverty income if much of the money given them
does not count as income! Approximate per capita understatement
would
be calculated as follows:
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Administrative costs must be subtracted therefore not all of the $4,328.57 per person was given in direct aid.
Note: Most poverty programs have a finite qualifying amount.
A family receiving substantial aid that is not counted as income
may just
qualify for aid while another family may earn just above the qualifying amount and receive no aid.
For a different views and more information visit
1.
Income - Home for census bureau data and reports.
2.
Wealth and Poverty Outline from the Department
of Anthropology , Oregon State University
3.
Fight
Poverty in the U.S.
from save
the children
4.
The Bell Curve and Social Stability: from
Shrink Wrapped Blog, A Psychoanalyst Attempts to
Understand Our World
5. The Capitalism They Hate by Anthony
de Jasay
A. Part I
The Inequality Machine
B. Part II.
Indecent Earnings
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