still more dramatic declines: These approaches all focus on absolute rather than relative poverty and therefore privilege material deprivation over social exclusion. Measures that incorporate an element of relative poverty report more modest declines in poverty, but even these are falling. For example, a poverty rate calculated by the OECD, which sets the poverty threshold at one-half of median income, remained lower in 2013 (17.2 percent) than it was in 1947 during the Great Compression (18.9 percent). See OECD, “OECD Data: Poverty Rate,” accessed October 10, 2016, https://data.oecd.org/inequality/poverty-rate.htm; Victor Fuchs, “Redefining Poverty and Redistributing Income,” The Public Interest 8 (Summer 1967): 90.
below 5 percent: Christopher Jencks, “The War on Poverty: Was It Lost?,” New York Review of Books, April 2, 2015, accessed November 18, 2018, www.nybooks.com/articles/2015/04/02/war-poverty-was-it-lost/. Social scientist Jencks takes the official poverty rate and discounts it by nearly 10 percentage points to account for expanded food and housing benefits, the earned income tax credit and child tax credit, and the use of an alternative inflation measure.
4.5 percent by 2010: Bruce D. Meyer and James X. Sullivan, “Winning the War: Poverty from the Great Society to the Great Recession,” NBER Working Paper No. 18718 (January 2013), Table 1, www.nber.org/papers/w18718.pdf. Hereafter cited as Meyer and Sullivan, “Winning the War.”
remained about 6 percent: U.S. Census Bureau, 2010 Annual Social and Economic Supplement, Current Population Survey (2010), ftp://ftp.census.gov/programs-surveys/cps/techdocs/cpsmar10.pdf. In 2009, 19,028,000 Americans lived below 50 percent of the poverty line (i.e., in deep poverty). This represented 6.26 percent of the total population.
below 1 percent: Meyer and Sullivan, “Winning the War,” Figure 6.
The poor can afford: Bernadette D. Proctor, Jessica L. Semega, and Melissa A. Kollar, Income and Poverty in the United States: 2015, U.S. Census Bureau, Current Population Reports no. P60-256 (September 2016), accessed December 30, 2018, 31, Table A-2, www.census.gov/content/dam/Census/library/publications/2016/demo/p60-256.pdf. Between 1967 and 2015, the mean real income of the bottom fifth of households grew by 25.4 percent.
A typical poor family: Liana Fox et al., “Trends in Deep Poverty from 1968 to 2011: The Influence of Family Structure, Employment Patterns, and the Safety Net,” Russell Sage Foundation Journal of the Social Sciences 1, no. 1 (November 2015): 16, https://doi.org/10.7758/RSF.2015.1.1.02. Hereafter cited as Fox et al., “Trends in Deep Poverty,” citing Nathan Hutto et al., “Improving the Measurement of Poverty,” Social Service Review 85, no. 1 (March 2011): 47, https://doi.org/10.1086/659129. A typical poor family now spends one-sixth of its income on food, as opposed to one-third.
In 1960, the poor: In 1960, 21.7 percent of the population made less than $3,000. Consumer Income, U.S. Census Bureau, Current Population Reports no. P60-36 (June 9, 1961), accessed December 30, 2018, 2, Table 1, www2.census.gov/library/publications/1961/demographics/p60-36.pdf. U.S. Census Bureau, Statistical Abstract of the United States 1971, 321 (1971). The shares in the main text are derived by combining this fact with Census Bureau data on ownership of consumer durables by income. U.S. Census Bureau, Statistical Abstract of the United States 1971, 321 (1971).
By 2009, over 80 percent: Bruce D. Meyer and James X. Sullivan, “The Material Well-Being of the Poor and the Middle Class Since 1980,” American Enterprise Institute for Public Policy Research Working Paper 2011-04, October 25, 2011, 44, Table 2, www.aei.org/wp-content/uploads/2011/10/Material-Well-Being-Poor-Middle-Class.pdf. Hereafter cited as Meyer and Sullivan, “Material Well-Being of the Poor.” See also U.S. Census Bureau, American Housing Survey (2013); Attanasio and Pistaferri, “Consumption Inequality,” 19. These outcomes reflect steady increases. At the end of the 1980s (roughly midway between 1960 and 2009), 54 percent of the poorest quintile of American households had air conditioners, 48 percent had clothes dryers, 22 percent had dishwashers, and more than 70 percent owned a car. See Meyer and Sullivan, “Material Well-Being of the Poor,” Table 2.
during the same period: Attanasio and Pistaferri, “Consumption Inequality,” 21. See Aguiar and Hurst, “Measuring Trends in Leisure,” 993–94.
its attendant harms: Aguiar and Hurst, “Measuring Trends in Leisure,” 969–1006. The increased divide in leisure time between rich and poor cannot be attributed solely to changing incomes or expenditures, and may be a result of a shift out of market work for lower-income groups.
as much as 75 percent: Alan Barreca et al., “Adapting to Climate Change: The Remarkable Decline in the US Temperature-Mortality Relationship over the Twentieth Century,” Journal of Political Economy 124, no. 1 (January 5, 2016): 152, https://doi.org/10.1086/684582. “There were roughly 5,900 premature fatalities annually due to high temperatures [between 1960 and 2004]. . . . The diffusion of residential AC during the 1960–2004 period reduced premature fatalities by about 18,000 annually.” 18,000/(18,000 + 5,900) = 0.753.
The mortality rate: “Mortality Rate, Under-5 (per 1,000 Live Births),” World Bank Open Data, World Bank, accessed October 12, 2018, https://data.worldbank.org/indicator/SH.DYN.MORT?locations=US. In addition, teenage birth rates have dropped by roughly 75 percent since 1957. Birth rates for persons aged fifteen to nineteen have fallen from 96 per thousand in 1957 to 24.2 per thousand in 2014. Centers for Disease Control and Prevention, National Vital Statistics Reports 49, no. 10 (September 25, 2001): 2, accessed November 18, 2018, www.cdc.gov/nchs/data/nvsr/nvsr49/nvsr49_10.pdf; “Trends in Teen Pregnancy and Childbearing,” Department of Health and Human Services, accessed October 12, 2018, www.hhs.gov/ash/oah/adolescent-development/reproductive-health-and-teen-pregnancy/teen-pregnancy-and-childbearing/trends/index.html.
increased by about 10 percent: “Human Development Data,” United Nations Development Programme, accessed October 12, 2018, www.hdr.undp.org/en/indicators/137506. The United Nations Development Programme’s Human Development Index (HDI) measures “average achievement in three basic dimensions of human development: a long and healthy life, knowledge and a decent standard of living.” The HDI for the United States was 0.826 in 1980, and increased to 0.915 in 2014.
by richer Americans: See Social Security Administration, Office of Retirement and Disability Policy, “Trends in Mortality Differentials and Life Expectancy for Male Social Security–Covered Workers, by Socioeconomic Status,” Social Security Bulletin 67, no. 3 (2007): Table 4, www.ssa.gov/policy/docs/ssb/v67n3/v67n3p1.html. See also Lawrence Summers, “The Rich Have Advantages That Money Cannot Buy,” Financial Times, June 8, 2014, accessed November 18, 2018, www.ft.com/content/36d0831a-eca2-11e3-8963-00144feabdc0. Hereafter cited as Summers, “The Rich Have Advantages.”
between half and a sixth: For income poverty over time, see U.S. Census Bureau, “Historical Poverty Tables: People and Families—1959 to 2017,” Current Population Survey, last modified August 28, 2018, Tables 2–3, www.census.gov/data/tables/time-series/demo/income-poverty/historical-poverty-people.html. For consumption poverty over time, see Meyer and Sullivan, “Winning the War,” Table 1. See also Meyer and Sullivan, “Material Well-Being of the Poor,” 19–20.
no longer dominates the American scene: An honest accounting must, however, recognize another historical trend that analyses of poverty all too often simply ignore. Incarceration rates have exploded even as poverty rates have fallen. Official poverty rates do not include prisoners, as the population base for these measures excludes those living in institutions or “group quarters.” See Fox et al., “Trends in Deep Poverty,” 30. (Quite absurdly, university students living in dormitories are excluded under the same principle. See Fox et al., “Trends in Deep Poverty,” 17.)
Nevertheless, even as the state provides prisoners with food, shelter, and medical care, prisoners earn effectively no income and (especially in the harsher state prison systems) consume at levels that would count as deep poverty were they the consumption of free citizens. This makes
it natural to ask how properly to account for the poverty status of prisoners. Studies that have analyzed the link between poverty and incarceration have found that the intensity of American poverty may be understated by as much as a sixth of the official measure. See Ian Irvine and Kuan Xu, “Crime, Punishment and the Measurement of Poverty in the United States, 1979–1997,” 22, Dalhousie University Economics Working Paper (July 29, 2003), Dalhousie University, Halifax, NS. This effect does not, however, undermine the broader downward trend in poverty, as the overall poverty rate has fallen by a much, much greater proportion—between a half and five-sixths, depending on the measure used.
Once again, wealth has advanced: “Income Inequality, USA, 1970–2014,” World Inequality Database, accessed October 12, 2018, https://wid.world/country/usa/.
It would be instructive to construct a series for the top 1 percent’s consumption share, but existing data do not allow this. The Consumer Expenditure Survey tracks expenditure shares by quintiles of pretax income, and (beginning more recently) by deciles of pretax income. See, e.g., Bureau of Labor Statistics, Consumer Expenditure Survey (2015), Table 1101, www.bls.gov/cex/2015/combined/quintile.pdf, and Bureau of Labor Statistics, Consumer Expenditure Survey (2015), Table 1110, www.bls.gov/cex/2015/combined/decile.pdf. The survey also currently tracks consumption by income buckets that range from “less than $15,000” to “$200,000 or more” (which represents roughly the top 5 percent in 2015). See Bureau of Labor Statistics, Consumer Expenditure Survey (2015), Table 1203, www.bls.gov/cex/2015/combined/income.pdf. But decile tracking began only recently and the income buckets used by the survey have changed over time, so that no good time series for top/bottom ratios can be constructed using these categories. Moreover, the survey still does not track consumption in still narrower economic elites. Time trends in consumption by quintile are summarized over 1984–2010 by Kevin A. Hassett and Aparna Mathur, who find only a modest increase in thetop/bottom-quintile consumption ratios over the period of their study. Kevin A. Hassett and Aparna Mathur, A New Measure of Consumption Inequality, American Enterprise Institute (June 2012), 5, www.aei.org/wp-content/uploads/2012/06/-a-new-measure-of-consumption-inequality_142931647663.pdf.
twenty-three times as large: In 2014, the average income within the bottom quintile was $13,132, the median income was roughly $43,955, and the average income among the top 1 percent was $1,012,549 (all in nominal 2014 dollars). See World Top Incomes Database / United States, Post-tax national income / Average income / Equal-split adults / P0-P20, P49-P51, P99-P100, https://wid.world/country/usa/.
In 1964, the average income within the bottom quintile was $990, the median income was roughly $4,185, and the average income among the top 1 percent was $54,530 (all in nominal 1964 dollars). See World Top Incomes Database / United States, Post-tax national income / Average income / Equal-split adults / P0-P20, P49-P51, P99-P100, https://wid.world/country/usa/.
were not middle class: “The American Middle Class Is Losing Ground,” Pew Research Center, December 9, 2015, accessed October 14, 2018, www.pewsocialtrends.org/2015/12/09/the-american-middle-class-is-losing-ground/. Hereafter cited as Pew Research Center, “The American Middle Class Is Losing Ground.”
no longer the richest in the world: David Leonhardt and Kevin Quealy, “The American Middle Class Is No Longer the World’s Richest,” New York Times, April 22, 2014, accessed November 18, 2018, www.nytimes.com/2014/04/23/upshot/the-american-middle-class-is-no-longer-the-worlds-richest.html?_r=0. Leonhardt and Quealy use data from the Luxembourg Income Study to show that around 2010, median incomes in Canada and Norway overtook those in the United States, and that median incomes in almost every other rich nation have been catching up rapidly over the past three decades.
as high as 0.49 today: These figures are calculated using date from the World Top Incomes Database. See World Top Incomes Database / United States / Post-tax national income / Gini (P0—P100) / Equal-split adults, October 29, 2018, https://wid.world/country/usa/. The calculation uses post-tax and -transfer incomes, in order to capture the true circumstances of the various segments of the economy that the Gini coefficients describe. In addition, the calculation uses one hundred data points for each year, corresponding to income levels at each percentile in the distribution. This increases accuracy and, more important for present purposes, makes it possible to calculate Gini coefficients for parts of the distribution, as the main text does. Many alternative U.S. Gini series, by contrast, calculate the Gini Index using only far fewer data points per year—often just five, corresponding to incomes for each quintile (with various methods of interpolation used within quintiles). This difference affects the absolute level of the calculated Ginis, and the series behind the claims made here departs from other prominent series, which depart from each other. At the same time, the trends revealed by all the series coincide, so that they rise and fall together.
the bottom nine-tenths of the U.S. income distribution: Congressional Budget Office, “Trends in the Distribution of Household Income,” 16.
as high as 0.5 today: The data used to calculate these Ginis come from the World Top Incomes Database, Post-tax national income / equal-split adults / Average / Adults / constant 2015 local currency, https://wid.world/country/usa/.
within the top twentieth: Some studies go even further and question whether there has been any steady or even significant rise in economic inequality since 1993 across the bottom 99 percent of the distribution. For a review, see Robert J. Gordon, “Misperceptions About the Magnitude and Timing of Changes in American Income Inequality,” NBER Working Paper No. 15351 (September 2009), 1, www.nber.org/papers/w15351.pdf.
“You didn’t build that”: Aaron Blake, “Obama’s ‘You Didn’t Build That’ Problem,” Washington Post, July 18, 2012, accessed November 18, 2018, www.washingtonpost.com/blogs/the-fix/post/obamas-you-didnt-build-that-problem/2012/07/18/gJQAJxyotW_blog.html; Lucy Madison, “Elizabeth Warren: ‘There Is Nobody in This Country Who Got Rich on His Own,’” CBS News, September 22, 2011, accessed October 14, 2018, www.cbsnews.com/news/elizabeth-warren-there-is-nobody-in-this-country-who-got-rich-on-his-own/.
a moral imperative: This view is powerfully expressed by many thinkers and activists, including Matthew Desmond, Evicted: Poverty and Profit in the American City (New York: Crown, 2016); Donald S. Shepard, Elizabeth Setren, and Donna Cooper, “Hunger in America: Suffering We All Pay For,” Center for American Progress, October 2011, www.americanprogress.org/wp-content/uploads/issues/2011/10/pdf/hunger_paper.pdf; H. Luke Shaefer and Kathryn Edin, “Extreme Poverty in the United States, 1996 to 2011,” Policy Brief 28 (February 2012), National Poverty Center, http://npc.umich.edu/publications/policy_briefs/brief28/policybrief28.pdf; H. Luke Shaefer and Marci Ybarra, “The Welfare Reforms of the 1990s and the Stratification of Material Well‐Being Among Low‐Income Households with Children,” National Poverty Center Working Paper Series 12-12, National Poverty Center, Ann Arbor, MI, May 2012, http://npc.umich.edu/publications/u/2012-12-npc-working-paper.pdf; Yonatan Ben-Shalom, Robert Moffitt, and John Karl Scholz, “An Assessment of the Effectiveness of Anti‐Poverty Programs in the United States,” National Poverty Center Working Paper Series 11-19, National Poverty Center, Ann Arbor, MI, June 2011, http://npc.umich.edu/publications/u/2011-19_NPC_Working_Paper.pdf.
Official statistics that document the suffering of the poor today include U.S. Department of Agriculture, Economic Research Service, Food Security in the United States, accessed October 3, 2016, www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-us.aspx; Key Statistics and Graphics, accessed October 3, 2016, www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-us/key-statistics-graphics.aspx; Food Security in the United States, accessed October 3, 2016, www.ers.usda.gov/data-products/food-security-in-the-united-states.aspx; Current Population Survey Food Security Supplement, accessed October 3, 2016, www.ers.usda.gov/data-products/food-security-in-the-united-states.aspx#26502.
outnumbered elites: See Aristotle, Aristotle’s Politics, Book IV; James Madison, Federalist No. 10, in The Federalist Papers, ed. Clinton Rossiter (New York: New American Library, 1961), 77–84.
the top marginal tax rate: See, e.g., Internal Revenue Code (I.R.C.) § 1 (1954); I.R.C. § 1 (1971); I.R.C. § 1 (1976); I.R.C. § 1 (1981); I.R.C. § 1 (1986); I.R.C. § 1 (1991) I.R.C. § 1 (1996); I.R.C. § 1 (2001); I.R.C. § 1 (2006); I.R.C. § 1 (2011); I.R.C. § 1 (2016). See also “Historical Highest Marginal Income Tax Rates,” Tax Policy Center, accessed October 14, 2018, www.taxpolicycenter.org/statistics/historical-highest-marginal-income-tax-rates. The top marginal rate was raised to 91 percent in 1951 and to 92 percent in 1952 and 1953. It then fell back to 91 percent, where it remained until 1963. Internal Revenue Service, “Historical Table 23: U.S. Individual Income Tax: Personal Exemptions and Lowest and Highest Bracket Tax Rates, and Tax Base for Regular Tax, Tax Years 1913–2015” (2018), www.irs.gov/statistics/soi-tax-stats-historical-table-23.
“significant advances in recent centuries”: Winters, Oligarchy, 4.
political economy in mass democracies: The mystery is so confounding that the American Political Science Association made studying it the central goal of its 2001 Task Force on Inequality and American Democracy. “Task Force on Inequality and American Democracy,” American Political Science Association, accessed October 14, 2018, www.apsanet.org/PUBLICATIONS/Reports/Task-Force-on-Inequality-and-American-Democracy.
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