there has been absolutely no meaningful change in the inequality of
individual income earners in the years from 1994 through 2010. If
income inequality in the U.S. was really driven by economic factors,
this is where we would see it, because paychecks (or dividend checks, or
checks for capital gains, etc.) are made out to individuals, not to
families and not to households.
Check the data to see. The same fellow who brings us the chart
draws his conclusions.
the real complaint of such people isn't about rising income inequality,
but rather, how people choose to group themselves together into their
families and households.
Spell that out for us.
With a near rock-steady level of income inequality among individual
income earners over time, it is only possible for income inequality to
rise among families and households if the most successful income earners
group themselves into families and households and if the least
successful income earners likewise group themselves together into
families and households as well.
Think about it. The reason that the income inequality levels
recorded for families and households are lower than those for
individuals are because most families and households may have one high
income earner, who is balanced out by individuals within the families or
households who have low or no incomes.
But, if people with very high income earning potential join together
to form families and households, and increasingly do so over time,
perhaps because such people might have things in common that make
forming themselves into families and households an attractive
proposition, then income inequality among families and households will
increase.
And if those people don't have any children, or just one, that has one kind of impact. And another is to be found at the opposite end of the scale from divorce and illegitimacy.
The same holds true for the opposite end of the income earning spectrum.
If people with really low income earning potential join together to
form families and households, or perhaps if they choose to split apart,
and increasingly do so over time, then the resulting low income family
and household will also make income inequality among families and
households rise, even though there has been no real change in the amount
of actual income inequality among individuals.
This is not just some random blogger asserting this.
Ivan Kitov did an analysis of census data from 1947 and concludes the following about changes to the economy since 1960.
the Gini curve associated with the fine PIDs is a constant near 0.51
between 1960 and 2005 despite a significant increase in the GPI/GDP
ratio and the portion of people with income during this period (see
Figure 1). This is a crucial observation because of the famous
discussion on the increasing inequality in the USA as presented by the
Gini coefficient for households (US CB, 2000). Obviously, the
increasing G for households reflects some changes in their composition,
i.e. social processes, but not economic processes as defined by
distribution of personal incomes.
Paul Ryan & Rick Santorum have it right. It's pointless to talk about the economy if we're not going to talk about the family. And you can't tear the family apart without hurting the poor disproportionately.
