The Hoarding of the American Dream

the top quintile of earners—those making more than roughly $112,000 a year—have been big beneficiaries of the country’s growth. To make matters worse, this group of Americans engages in a variety of practices that don’t just help their families, but harm the other 80 percent of Americans.

.. if we are serious about narrowing the gap between ‘the rich’ and everybody else, we need a broader conception of what it means to be rich.

the upper-middle class has pulled away from the middle class and the poor on five dimensions:

  1. income and wealth,
  2. educational attainment,
  3. family structure,
  4. geography, and
  5. health and longevity

.. They dominate the country’s top colleges, sequester themselves in wealthy neighborhoods with excellent public schools and public services, and enjoy healthy bodies and long lives.

They then pass those advantages onto their children, with parents placing a “glass floor” under their kids.

  • They ensure they grow up in nice zip codes,
  • provide social connections that make a difference when entering the labor force,
  • help with internships,
  • aid with tuition and home-buying, and
  • schmooze with college admissions officers.

All the while, they support policies and practices that protect their economic position and prevent poorer kids from climbing the income ladder:

  • legacy admissions,
  • the preferential tax treatment of investment income,
  • 529 college savings plans,
  • exclusionary zoning,
  • occupational licensing, and
  • restrictions on the immigration of white-collar professionals.

.. As a result, America is becoming a class-based society, more like fin-de-siècle England than most would care to admit, Reeves argues. Higher income kids stay up at the sticky top of the income distribution. Lower income kids stay down at the bottom. The one percent have well and truly trounced the 99 percent, but the 20 percent have done their part to immiserate the 80 percent, as well

Reeves offers a host of policy changes that might make a considerable difference:

  1. better access to contraception,
  2. increasing building in cities and suburbs,
  3. barring legacy admissions to colleges,
  4. curbing tax expenditures that benefit families with big homes and capital gains.

.. Expanding opportunity and improving fairness would require the upper-middle class to vote for higher taxes, to let others move in, and to share in the wealth.

.. Prying Harvard admission letters and the mortgage interest deductions out of the hands of bureaucrats in Bethesda, sales executives in Minnetonka, and lawyers in Louisville is not going to be easy.

Women just aren’t that into the ‘marriageable male’ anymore, economists say

The “marriageable male” has steady income. He pays his bills on time and could help support a child, too. He has long captured the interest of economists, who associate him with a healthier economy.

.. Historically, bursts of prosperity among blue-collar men have reduced the share of kids born to unwed parents.

.. The commitment to childbearing with marriage in the ’70s and ’80s is just no longer there.”

.. Riley Wilson, calculated that every $1,000 per capita increase in an area’s fracking production was linked to an additional six births per 1,000 women. About half of those extra babies, she said, were born to married parents.

In other words, more money seemed to bring more kids — regardless of the parents’ marital status.

This baby boom wasn’t as shocking to Kearney as the unofficial relationships. Babies, she explained, are viewed as “normal goods” — a demand that increases when income increase

.. A 10 percent increase in earnings was tied to a 9.6 percent decrease in the share of unmarried women (ages 15 to 34) — and a whopping 25 percent reduction of children born to single moms.

.. In the United States, 40 percent of children are born to unmarried women

.. Educational differences skew the share, however: Sixty-two percent of such kids have mothers who lack a college degree.

.. In his groundbreaking book, “ The Truly Disadvantaged,” Wilson sought to explain why single motherhood was on the rise in predominately black communities and found that employed women were outnumbering employed men. That imbalance, he concluded, reduced women’s incentive to marry.

 

Owning Your Own Future

Political analysts will long debate over where Brexit, Trump and Le Pen came from. Many say income gaps. I’d say … not quite. I’d say income anxiety and the stress over what it now takes to secure and hold a good job.

I believe the accelerations set loose by Silicon Valley in technology and digital globalization have created a world where every decent job demands more skill and, now, lifelong learning. More people can’t keep up, and clearly some have reached for leaders who promise to stop the wind.

An Econ Mystery: Why Did Wages Flatline?

The latest jobs report shows full employment but it hasn’t brought workers higher pay.

 Over the past year average hourly earnings have risen by 2.5%. Unfortunately, the consumer-price index, a standard measure of inflation, rose by 2.4%, meaning the average worker’s purchasing power hardly grew at all.
.. Since 2010, hourly wages corrected for inflation have risen at barely 0.5% a year. The official statistics back up reports that Americans are working harder than ever just to stay even.

Since the depths of the Great Recession, household incomes have increased steadily—not because wages are rising, but because Americans are working more hours. A longer view reveals the limits of these gains. Nearly eight years after the official end of the recession, median household incomes aren’t much higher than they were when the recession began, and they remain a bit lower than in January 2000. For families in the middle, it has been a lost two decades.

.. Productivity gains have been meager since the end of the Great Recession. But as this newspaper reported last week, profits at S&P 500 companies in the first quarter of 2017 were up nearly 14% over the comparable period a year ago. Firms have gains they could share with their workers, but they have chosen not to do so. Even in occupations where companies complain of labor shortages, there is scant evidence that they are responding by raising compensation.

Why Those Bigger Paychecks Don’t Feel as Good as You Thought They Would

Weekly earnings were rising at the fastest rate since the recession ended, but inflation-adjusted gains remain lackluster

 .. Americans’ paychecks are rising at the fastest rate since the recession ended, but that’s done little to spark stronger spending at stores and restaurants.One explanation is that rising prices mean consumers don’t feel much richer than they did a year ago.

.. Median usual weekly earnings for full-time workers rose 3.9% in the first quarter from a year earlier, the Labor Department said Tuesday.

.. But when adjusting for inflation, paychecks are growing more slowly than they were a year ago. When factoring in price changes, weekly earnings rose just 1.2% from a year earlier. That matches the fourth quarter of 2016 as the smallest advance since late 2014.

Improving Economic Opportunity in the United States

  • Near-term policy solutions aimed at reducing these barriers include running tight labor markets, infrastructure investment, direct job creation, health care and other work supports, apprenticeships, and more.

.. Janet Yellen recently noted that unemployment rates “averaged 13 percent in low- and moderate-income communities from 2011 through 2015, compared with 7.3 percent in higher-income communities.”

.. Racial disparities exist in unemployment rates even controlling for education.[3] Among white people with terminal high school degrees, unemployment was about 5 percent in 2015. For black people, it is twice that.

.. Black people with at least BAs have unemployment rates of 4.1 percent, compared to the 2.4 percent for whites with at least BAs.

.. While employment levels fell about the same amount in percentage terms in both areas over the Great Recession of 2007-2009, metro employment has recovered much more quickly

.. Rising income inequality provided high-income households more resources, and parents used these resources to purchase housing in particular neighborhoods, with residential decisions structured, in part, by school district boundaries.

.. Yellen noted that close to 100 percent of children of parents with higher incomes and levels of educational attainment pursued higher education, and 60 percent earned a bachelor’s degree. But among children of parents with lower incomes and education levels, 72 percent pursued higher education and only 14 percent completed a BA. The figure below, from Chetty et al., shows that the likelihood that a child from a wealthy family will attend an Ivy-league or similarly elite school is 50 times that of a child from a low-income family.

.. children who grow up in affluent households but do not graduate from college are 2.5 times as likely to have high incomes in adulthood as children who grow up poor but do graduate from college

.. Other OECD countries spend 5 times what we spend on young children, often through pre-kindergarten education, despite the fact that solid research shows the benefit-cost ratio of such spending to be more than 8-to-1

.. In the presence of high inequality, stronger growth is necessary but not sufficient to take down mobility barriers. If most of the growth flows to the top of the scale, as has occurred in recent decades, then absent aggressive redistribution, we cannot expect to push back on the many problems just documented.

The Rise of ‘Welfare Chauvinism’

The United States and Europe reveal the contrasting ways in which political systems in advanced democracies cope with factors as diverse as globalization, depressed wages, cultural tension, welfare policy, immigration and nontraditional family structures, along with racial, ethnic and religious division.

In the United States, the besieged two-party system has remained intact, protected by a 200-year-old tradition and an electoral system that cuts short any bid to create a viable third party.

There are two major costs to this stability: recurrent gridlock, which constricts legislative action, and a failure to provide full representation to the most aggrieved constituencies.

.. These parties have adopted a strategy that might seem strange on its face but actually makes sense, according to the logic of their grievances: exclusionary nationalism combined with generous support for safety-net programs available only to legal residents.

.. The traditional European social democratic left and the Democratic Party are both struggling to address the often conflicting interests of a socially liberal elite and an economically pressed lower class.

.. New actors on the far left and far right, as well as astutely positioned conservative and Christian democratic parties, will not hesitate to capitalize on the struggle to craft a clear narrative – however myopic and divisive.

.. These changes, Ford and Goodwin write, “have pushed to the margins a class of voters who we describe as the ‘left behind’: older, working-class white voters with few educational qualifications.”

.. These value shifts have also left older white working-class voters behind, as a worldview which was once seen as mainstream has become regarded as parochial and intolerant by the younger, university-educated, more socially liberal elites who define the political consensus of twenty-first-century Britain.

.. supporters of Marine Le Pen’s right-wing National Front are, in comparison to supporters of other parties, less well educated, employed in manual and blue-collar jobs and live in rural areas.

.. “The Class Basis of Switzerland’s Cleavage Between the New Left and the Populist Right.”

.. small-business owners and workers prefer cultural demarcation and defend national traditions, salaried professionals strongly favor international integration and multi-culturalism.

.. “the more robust the multiparty system, the less likely the main left party will be able to dominate” among liberal-leaning constituencies.

.. the emergence of “a more profound, if nuanced, politics of identify” is fracturing the European left from two directions.

.. On one side, “middle-class progressive-values voters and the younger generation place an ever-increasing importance on a tolerant society and support equality for gays, promote multiculturalism, and express concern for the environment.”

.. the new politics of identity traps progressives on both sides. Whatever political position they adopt is bound to alienate either their working-class voters, who tend to be more conservative with regards to values, or progressive-values voters and the millennial generation, who are turned off by the more nationalistic rhetoric that appeals to the traditional or core voter base.

.. Populist parties on the right are moving beyond their adamant opposition to immigration, the European Union and the welfare state to become proponents of a more lavish, but also more restrictive, domestic social spending regime under a policy European scholars describe aswelfare chauvinism.”

.. parties of the right support health care, housing programs and other benefits with the explicit proviso that only legal residents qualify and that public spending on behalf of illegal immigrants be eliminated.

.. We will ensure that visitors to the U.K., and migrants until they have paid N.I. for five years, have N.H.S.-approved private health insurance as a condition of entry to the U.K.

.. the American two-party system, when it works, forces politicians and the public to submit to a multi-step process requiring competing interests to compromise. The first stage is the building of Democratic and Republican coalitions with the aim of winning elections