I've been looking at some of the data on inequality today, and have been
very surprised by some of the numbers.
I first looked at the data set for white households:
The 4th Quintile of White Housholds (60th percentile to 80th percentile,
which is essentially upper middle class) begins the data set in 1967 with
an even 24% of all White Household Income (WHI). By 1975 this improves to
24.7% of WHI and essentially holds constant until 1980. Starting in the
recession year of 1982, this share of WHI slowly drops until reaching a
level of 24.1% in 1992. (Actually in dips slightly lower in 1989 before
rising back to 24.1 in 1992.) At any rate, 1993 seems to be a seminal
year for income inequality among white households. The share of our 4th
Quintile plummets in this year to 23.3%. It then falls slightly
throughout the 1990's before reaching a share of 22.9% - which,
interestingly enough, has held constant through 2001 (the last year for
which data is available, sadly.)
Anyhow, in 1993, the share of WHI of the Top 5% jumps from 18.4% to 20.7%
and for the top 20% jumps from 46.2% to 48.2%. The 3rd Quintile drops
from 15.9% to 15.3% and the 2nd Quintile (Lower Middle Class, 20th-40th
Percentile) drops from 9.7% to 9.3%.
The story of the Middle Quintile of White Households is a little more
depressing. Beginning at 17.4% in 1967, it slowly falls to an even 17% in
1981. It then loses a fulll percentage share of WHI by 1989-1991, where
it holds at 16%. The next 10 years are no better, falling again to 14.9%
by the end of the 1990's, with again a huge portion of the drop occurring
in 1993.
So, what occurred in 1993? Well, one was Clinton's tax increases.
Another, however, was a change in survey methodlogy from paper-based to
computer-based. Could the latter really be producing such a significant
impact in the data set? Could tax increases on the rich have produced a
paradoxical effect? I checked the Household Data against the data for
White Families, and found the outlines of the story to be roughly similar.
Looking at the real income data, one thing that immediately jumps out is
the effect of the 2001 tax cuts. Among white families, the Fourth
Quintile actually every so slightly increased its Mean Wage, whereas all
other Quintiles, and even the Top 5% of White Families saw their wages go
down by at least .75% - with the Top 5% losing 2%!!! Among white
households, this effect complete disappears. Every quintile's median wage
decrease, except the Top 5%'s, whose mean wage naturally goes up.
When looking at changes in Median Income per quintile from five years
previously, it immediately becomes clear that prolonged booms are the best
way to help the lowest quintile. Particularly good times for this
quinitle were the early 70's, the late 80's, and of course, especially well
during the late 1990's. The same thing is roughly true for the middle
class as well. One thing that is interesting is that the mid-970's seem
to have been particularly bad for the mean income of the rich and the mean
income of the 2nd Quintile (20th-40th Percentile), while the other three
quintiles at least managed modest gains in income during those year.
The same jump in 1993 occurs again, with the Top 5% of Famlies seeing a 20%
increase in income in that year alone... which obviously just doesn't seem
right, even without remembering all the details of the Clinton tax plan.
JDG
_______________________________________________________
John D. Giorgis - [EMAIL PROTECTED]
"The liberty we prize is not America's gift to the world,
it is God's gift to humanity." - George W. Bush 1/29/03
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