Sunday, July 23, 2017


Government measures of poverty in America tell us nothing about the long-term psychological effects of low incomes and rising inequality, which are undermining the belief that hard work pays off. Scholars have found a measurable relationship between this loss of faith and the declining interest many Americans now show in seeking a better future through education and job performance.

Gateway to Sources and Information About Income Inequality in the United States

Millions of Americans are working longer hours for lower wages, and yet almost all of the new income and wealth being created is going to the top one percent. While the top one percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. 
  Scholars, from the Nobel-Prize-winning Paul Krugman to the widely respected economist James Surowiecki, have been working to analyze these disparities. Americans are not generally aware of the extent of this income inequality. In most developed countries, there is a direct relationship between income inequality and the public's views about the need to address the issue – but not in America, where income inequality is worse but the concern is lower. The most commonly accepted measurement of income inequality, the Gini Index, ranks the United States sixth-worst among 173 nations. 

Private-equity companies are far more obviously connected to an undue concentration of wealth at the expense of workers and communities than are collateralized-debt obligations, which were at the core of our 2008 Great Recession. Within the one percent, there is a top one percent that consists disproportionately of private-equity and hedge-fund principals.


Too little attention is being paid to new analyses showing that people of all racial and ethnic groups are losing confidence in the core American principle that hard work is a means to upward mobility. This will have long-term economic costs as low-income Americans increasingly see few benefits of education or hard work for themselves and their children.

"America: The Forgotten Poor," Jeff Madrick, New York Review of Books, June 22, 2017, pp. 49-50.


[The Census Bureau's annual Official Poverty Measure] tells the public little about how materially deprived the poor are, how much income they actually have, how reduced their children’s chances are of developing skills for climbing into the middle class, or, most important, how many truly poor there are in America.

"America: The Forgotten Poor," Jeff Madrick, New York Review of Books, June 22, 2017, pp. 49-50.


In 2015, the last year for which data are available, 43.1 million people—13.5 percent of the population—were considered to be in poverty, defined as falling below an annual income threshold of $24,257 for a family of four.

"America: The Forgotten Poor," Jeff Madrick, New York Review of Books, June 22, 2017, pp. 49-50.


The poverty rate has been as low as 11.1 percent in the 1970s; it rose under Ronald Reagan to approximately 15 percent and then fell to about 13 percent before rising again, then fell again under Bill Clinton to 11.3 percent before rising in the 2000s.

"America: The Forgotten Poor," Jeff Madrick, New York Review of Books, June 22, 2017, pp. 49-50.


Census Bureau measures tell us nothing useful about the growing number of people whose average incomes are above the poverty line but who often fall under it for several months of the year. According to one sample, 94 percent of those who earn between 100 and 150 percent of the poverty line are officially poor for at least one month, for example.

"America: The Forgotten Poor," Jeff Madrick, New York Review of Books, June 22, 2017, pp. 49-50.

Monday, April 3, 2017


“In recent years, trends in average living standards interacted with rising income inequality to produce stagnant wages in the lower and middle income groups. . . . since 2000, the decline in average income growth was further exacerbated for the lowest income groups by a declining share of the total. So, for the bottom fifth, the growth in real income declined from 3 percent . . . to essentially zero in the last fifteen years. Of this catastrophic decline, about half was due to the slower overall growth, while half was due to rising inequality.”

William D. Nordhaus, “Why Growth Will Fall, New York Review of Books, August 18, 2016, page 66.