I’ve written a lot about increasing income disparity and wealth disparity in America. A consumer economy cannot thrive with such trends in place and worsening: with a larger and larger percentage of the population having little or no disposable income, we simply cannot support the economic sectors like homebuilding and retail sales that propelled the U.S. to be the world’s dominant economy.
The NYT has had several interesting pieces on this recently, as the press and the Census have struggled to come up with the best way to describe the “near poor.”
When the Census Bureau this month released a new measure of poverty, meant to better count disposable income, it began altering the portrait of national need. Perhaps the most startling differences between the old measure and the new involves data the government has not yet published, showing 51 million people with incomes less than 50 percent above the poverty line. That number of Americans is 76 percent higher than the official account, published in September. All told, that places 100 million people â€” one in three Americans â€” either in poverty or in the fretful zone just above it.[. . .]
Outside the bureau, skeptics of the new measure warned that the phrase â€œnear poorâ€ â€” a common term, but not one the government officially uses â€” may suggest more hardship than most families in this income level experience. A family of four can fall into this range, adjusted for regional living costs, with an income of up to $25,500 in rural North Dakota or $51,000 in Silicon Valley.
But most economists called the new measure better than the old, and many said the findings, while disturbing, comported with what was previously known about stagnant wages.
â€œItâ€™s very consistent with everything weâ€™ve been hearing in the last few years about familiesâ€™ struggle, earnings not keeping up for the bottom half,â€ said Sheila Zedlewski, a researcher at the Urban Institute, a nonpartisan economic and social research group.
A few days ago, the NYT’s Middle-Class Areas Shrink as Income Gap Grows, New Report Finds detailed the “shrinking middle” — the increase in people living in either very affluent or relatively poor areas, as fewer Americans live in traditionally middle-class ones. From the piece:
In 2007, the last year captured by the data, 44 percent of families lived in neighborhoods the study defined as middle-income, down from 65 percent of families in 1970. At the same time, a third of American families lived in areas of either affluence or poverty, up from just 15 percent of families in 1970.
The study comes at a time of growing concern about inequality and an ever-louder partisan debate over whether it matters. It raises, but does not answer, the question of whether increased economic inequality, and the resulting income segregation, impedes social mobility.
Much of the shift is the result of changing income structure in the United States. Part of the countryâ€™s middle class has slipped to the lower rungs of the income ladder as manufacturing and other middle-class jobs have dwindled, while the wealthy receive a bigger portion of the income pie. Put simply, there are fewer people in the middle.
We’re not just looking at an economic problem here, but at a geographical one that impacts all sorts of public services, from road building to law enforcement, from transit needs to property taxation. This study, by the way, looked at data through 2007. It’s very likely that these trends have been exacerbated since the recession began at the end of 07.