The Other Side of Inequality

As we discussed last week in class, the creation of a new rich is not without its merits. USA Today is running an article today that notes how more and more Americans are affluent (income exceeding $250,000) for at least a year:

New research suggests that affluent Americans are more numerous than government data depict, encompassing 21% of working-age adults for at least a year by the time they turn 60. That proportion has more than doubled since 1979.

Predictably, this group is not emblematic of the US as a whole (as Murray notes). It tends to be older, whiter, and, more recently, has been hurt far less by the economic recession:

Sometimes referred to by marketers as the "mass affluent," the new rich make up roughly 25 million U.S. households and account for nearly 40% of total U.S. consumer spending. 

While paychecks shrank for most Americans after the 2007-2009 recession, theirs held steady or edged higher. In 2012, the top 20% of U.S. households took home a record 51% of the nation's income. The median income of this group is more than $150,000.

 

This affluence comes at a price. Most of the Americans who temporarily enter into the top 2% of earners quickly fall out of it. Nevertheless, they continue to remain in the top quintile of earners for the most part. Lastly, they tend to have a different conception of what state the US finds itself in:

In a country where poverty is at a record high, today's new rich are notable for their sense of economic fragility. They're reached the top 2%, only to fall below it, in many cases. That makes them much more fiscally conservative than other Americans, polling suggests, and less likely to support public programs, such as food stamps or early public education, to help the disadvantaged.

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The group is more liberal than lower-income groups on issues such as abortion and gay marriage, according to an analysis of General Social Survey data by the AP-NORC Center for Public Affairs Research. But when it comes to money, their views aren't so open. They're wary of any government role in closing the income gap. 

In Gallup polling in October, 60% of people making $90,000 or more said average Americans already had "plenty of opportunity" to get ahead. Among those making less than $48,000, the share was 48%.  

The Opportunity Index

The Opportunity Index provides an Opportunity Score with economy, education, and community sub-scores for all 50 U.S. states and Washington, DC, and Opportunity Grades for more than 3,000 counties. You can also compare each state's score with the national average.

The annual Opportunity Index was started by Opportunity Nation, a campaign by Be the Change, out of the idea that "your zip code shouldn't determine the amount of opportunity available to you."

Further Discussion of the "Bubble Test"

I'm really curious to see how everyone else scored on the "Bubble Test".  I thought it might be interesting for us to share our scores on here, so comment on this post with your score!

Feel free to also say whether or not you thought your score was accurate, whether or not you think this is a good way to measure how isolated one is from mainstream American culture, or any questions on the test that particularly stood out to you.

My score was 56 and having grown up in a small city with middle-class parents (neither of whom attended college), I feel that this is pretty accurate. I found it interesting the way that Murray indirectly asks certain questions, such as asking if you had a close friend who could not get better than C grades even if they tried really hard instead of asking about IQ scores, and asking whether you lettered in something in high school rather than simply asking if you attended a public or private school.  It is clear that Murray put a lot of thought into his questions in order to find out a lot of information in as few questions as possible, making it an effective way to measure how in touch one is with American culture.

I hope you are all having a great weekend; happy studying!

What CAN'T money buy?

Just an interesting Ted talk.

Inequality in Education

As we consider inequality in America, one area we should consider is our education system and how it can work to both allow social mobility and inhibit it. One area where inequality in public education is stark is in dollars spent per student. There remains some debate as to whether spending more money on students can lead to better education for them, but what is not debatable is that some districts can raise millions of dollars in outside monies to the benefit of their students, while others must work with the funding allocated by the state/feds. This is in many ways allowed by the "neighborhood sorting" that Murray argues has occurred.

When considering school funding, you need to realize that while some of the money comes from the state and federal governments, other sources of revenue include donations, parcel taxes passed by the voters in a school district, and bonds passed by the voters (usually for construction).Not only is it far easier in CA to raise donations in a wealthy community, but also far easier to pass a parcel tax or bond to add to district revenue. Additionally, in California many public education advocates argue that Proposition 13, which caped property taxes, has served to harm public education funding and has resulted in an environment in which inequality in school funding exists.

If you have communities of almost all upper class parents, they can afford to help their schools become the best they can be. In my own community, the disparity was stark. The Menlo Park School District completed a new $52 million middle school last year, decked out with all the bells and whistles you could think of, and my own elementary district just passed a $60 million bond for remodeling, while many students who attend Willow Oaks School, located in the much poorer Ravenswood School District, went to class in portables plopped on a parking lot. A focus on district revenue and the millions that districts like Menlo Park raise every year to sustain low class sizes, classroom technology initiatives, et cetera, should not detract from how schools located in poor neighborhoods must also combat all the issues that come along with the low socio-economic status of their students.

The following articles discuss the culture of school funding and what we can do to remedy the issue. A couple of these articles were especially significant to me, because they examined the area and culture I grew up in. If you are short on time, I highly recommend you read the article by George Packer. His was a particularly interesting analysis not only of public education funding, but also of Silicon Valley political culture. For the record, I do not agree with all of the arguments or characterizations these authors make, in particular Packer's demonization of "Silicon Valley excess" (I paraphrase), but do see all the articles as eloquently capturing a very real problem.

George Packer: "Change the World"
And the "Reply from Silicon Valley" (less relevant to the public education part, more about Silicon Valley culture)

Rob Reich: "Not Very Giving"

Richard Reves: "Funding Gaps in Public Schools"

Raj Chetty and John Friedman; Harvard Univ. Study: "Does Local Tax Financing of Public Schools Perpetuate Inequality?"

Poverty and Inequality in California

A press release from the  Southern California Association of Governments:

Poverty levels in the six-county Southern California Association of Governments region have jumped 69 percent since 1990, with one in four children now living in poverty, according to
research to research being presented tomorrow (Thursday, Dec. 5) at SCAG’s 4th Annual Economic Recovery & Job Creation Summit.

The numbers, from U.S. Census Bureau data, show 3.2 million people in the SCAG region living in poverty in 2012, up from 1.9 million in 1990. That 69 percent increase is nearly three times the  population growth rate (26 percent) during that period. Overall, the share of SCAG-region residents living in poverty is now 18 percent, led by Imperial County (23 percent) and San Bernardino County (20 percent).

A press release from the UCLA Anderson Forecast:

The California forecast report, authored by Senior Economist Jerry Nickelsburg, examines the recovery in employment in California, both by geography and sector. The economic news coming out of California is relatively bright when compared to the rest of the United States, but the state is not participating in the recovery equally. Rather, the California economy is divided both by geography and skill class.

In a report titled, “Where are the Jobs, California,” Nickelsburg notes that the coastal economies in California that are driven by investment, technology, and trade have outperformed the U.S. Conversely, the inland economies driven by migration, construction and government have stagnated. The data from the past 12 months reveals a similar pattern to that of the previous three years. Employment in the Bay Area, Orange County, San Diego and Ventura has consistently grown at a faster rate than the U.S. Los Angeles and the Mid-Coast, after a slower start, have seen employment growth at about the anemic national rates. But the Sacramento Delta, San Joaquin Valley and Inland Empire, absent the primary drivers of economic growth, continue to fall further behind the rest of the state. 

At The Weekly Standard, Charlotte Allen writes of Silicon Valley:

The big names in tech might be awash in capital and might have made their founders billionaires (New Economy founders typically retain large blocks of their own stock), but they employ surprisingly small numbers of U.S. workers. Google, the valley’s largest employer, has 46,000 people on its payroll. Facebook employs only 4,600, and Twitter, in San Francisco, fewer than 2,000. Apple claims 400,000 people putting together components and creating apps and other extras for its iPhones, iPads, iPods, MacBooks, and desktop computers. Yet only 16,000 of those are on the payroll in Cupertino. Another 31,000 work at Apple operations in Texas and other states, but the vast bulk of manufacturing is outsourced abroad via contractors to China and other cheap-labor purgatories. Yet those 16,000 in Cupertino make Apple the second-largest employer in the valley. [Joel] Kotkin compares those numbers to the 212,000 employed by GM, the 170,000 employed by Ford, and the more than 100,000 employed by Exxon Mobil, all three presumably Old Economy dinosaurs. The New Economy generates prosperity all right, prosperity that mostly flows to those in the upper echelons.

Urban Planning and Racial Segregation in Cities

http://www.wired.com/design/2013/08/how-segregated-is-your-city-this-eye-opening-map-shows-you/