Earlier this month four economists released a study of income trends based on an under-used data source, Social Security wage records. These earnings reports are submitted by employers for the purpose of calculating workers’ tax payments and, eventually, Social Security benefits. The income amounts are quite accurate and cover a full career of wage income. The new study confirms that average male earners have seen scant wage gains over the past generation. The study also turned up a surprise. When we combine the earnings trends for men and women, the rise in inequality appears much slower than when we examine trends among each sex separately.
Using panel data on individual labor income histories from 1957 to 2013, we document two empirical facts about the distribution of lifetime income in the United States. First, from the cohort that entered the labor market in 1967 to the cohort that entered in 1983, median lifetime income of men declined by 10%–19%. We find little-to-no rise in the lower three-quarters of the percentiles of the male lifetime income distribution during this period. Accounting for rising employer-provided health and pension benefits partly mitigates these findings but does not alter the substantive conclusions. For women, median lifetime income increased by 22%–33% from the 1957 to the 1983 cohort, but these gains were relative to very low lifetime income for the earliest cohort. Much of the difference between newer and older cohorts is attributed to differences in income during the early years in the labor market. Partial life-cycle profiles of income observed for cohorts that are currently in the labor market indicate that the stagnation of lifetime incomes is unlikely to reverse. Second, we find that inequality in lifetime incomes has increased significantly within each gender group. However, the closing lifetime gender gap has kept overall lifetime inequality virtually flat. The increase within gender groups is largely attributed to an increase in inequality at young ages, and partial life-cycle income data for younger cohorts indicate that the increase in inequality is likely to continue. Overall, our findings point to the substantial changes in labor market outcomes for younger workers as a critical driver of trends in both the level and inequality of lifetime income over the past 50 years.
The state added more than 300,000 residents last year with the largest increases in big cities, according to a report released Monday by the California Department of Finance.
In this era of anti-Trump resistance, many progressives see California as a model of enlightenment. The Golden State’s post-2010 recovery has won plaudits in the progressive press from the New York Times’s Paul Krugman, among others. Yet if one looks at the effects of the state’s policies on key Democratic constituencies— millennials, minorities, and the poor—the picture is dismal. A recent United Way study found that close to one-third of state residents can barely pay their bills, largely due to housing costs. When adjusted for these costs, California leads all states—even historically poor Mississippi—in the percentage of its people living in poverty.
“The bottom line: If you see a growing Latino middle class, you will see a growing Latino representation in government,” said Mike Madrid, a veteran political strategist and author of a study by the newly formed California Latino Economic Institute. The CLEI report, which looks into economic as well as political issues, was jointly commissioned by the Legislature’s Latino Caucus and the California Business Roundtable.