Unemployment Gap between Rich and Poor Sets Record

In a recent Associated Press news article, reporter Hope Yen said that "the gap in employment rates between America's highest- and lowest-income families has stretched to its widest levels since officials began tracking the data a decade ago." She adds that "(r)ates of unemployment for the lowest-income families — those earning less than $20,000 — have topped 21 percent, nearly matching the rate for all workers during the 1930s Great Depression."

The data analysis using the Current Population Survey from the U. S. Census Bureau for this report was conducted by Andrew Sum of the Center for Labor Market Studies and Ishwar Khatiwada from Northeastern University  Additional materials were provided by David Autor of MIT, John Schmitt, a senior economist at the Center for Economic and Policy Research, a Washington Think Tank, and Mark Rank of Washington University in St. Louis.
Read more:
http://www.ap.org/
http://news.yahoo.com/employment-gap-between-rich-poor-widest-record-072956259.html
http://www.census.gov/cps/data/
http://www.census.gov/
http://www.northeastern.edu/clms/
http://www.cepr.net/

Child Care Costs Nearly Doubled in 25 Years

According to a report published earlier this month by the United States Census Bureau titled "Who's Minding the Kids? Child Care Arrangements: Spring 2011" the cost of child care nearly doubled from 1986 to 2011. In 1986, the average family with an employed mother spent $84.30 a week (in 2011 dollars) on childcare compared to $143 in 2011. Despite this dramatic increase in child care costs, the proportion of income spent on child care has remained relatively steady from 6% of the monthly family income spent on child care in 1986 to 7% in 2011. It is also important to note that the wage earned by full-time child care workers has not increased in the past 20 years. According to the United States Census Bureau, in 1990 the average full-time child care worker earned $19,680 (2011 dollars) compared to $19,098 in 2011. Interestingly, it seems the proportion of children cared for by a non-relative in the providers residence declined while the proportion of families who rely on day-care centers or fathers taking care of preschool children has increased. However, despite an increased reliance on organized day care centers, many children are still cared for by relatives. As of 2011, nearly 1 in 4 preschoolers were cared for by a grandparent, about 1 in 5 were cared for by their fathers while their mothers were employed, and 1 in 10 were cared for by a sibling or other relative. For more information on how the demographics of child care has changed, please read the full report at http://www.census.gov/prod/2013pubs/p70-135.pdf.

The effect of measuring procedure on Gini ratio estimates

The Census Bureau publishes Gini ratio for households as based on the Current Population Surveys conducted every March. Unfortunately, the CPS data are not compatible over time. (Actually, the CB mentions that in footnotes, but this is not the best place for general public and even for experts.) Therefore, the estimates of Gini ratio are biased and cannot be used in order to characterize the evolution of income inequality in the US. At the same time, each estimate is accurate to the extent the data and calculation procedures allow. Here we present the case of changing data granularity in 2009 which affected the estimates of Gini ratio for various household sizes.  

It is well known that the total income increases with time due to the increase in nominal GDP and population growth. The Census Bureau was measuring the household income distribution in $2500 bins with the upper limit of $100,000 since 1994. All households with income above $100,000 were counted in the open-ended ”$100,000 and above” bin. In 1994, there were 6,581,000 households in this bin and the portion of income was only 26%. This is not good for the Gini ratio estimation since one bin cover a quarter of all total income. In 2008, this bin accommodated 51% of total income. Such a bin counting is too crude and it makes the Gini ratio calculations almost worthless. Since the higher incomes are distributed according to the Pareto law, i.e. a power law, the CB can and does calculate the Gini ratio analytically for higher incomes.

In any case, the Census Bureau had to increase the bins to $5000 and the upper limit to $200,000 together with calculation of Gini ratio with bin counting up to $250,000 (the readings in the bins above $200,000 are not published!).   For the convenience of the CB, this change is appropriate. But it induced a step in the Gini ratio time series. Figure 1 displays the jumps for households of various sizes – from one person to seven+ people. Since households with more people have higher incomes one can expect that the portion of households with $100,000+ income increases with household size. The change in bin granularity and the upper limit from 2008 to 2009 has to change this portion and induce a step in the Gini ratio series.  Table 1 lists these portions for 2008 and 2009 as well as their ratios.

Table 1. The portion of households with income above $100,000 in 2008 and $200,000 in 2009.

	2008	2009	ratio
One person	0.054	0.008	6.52
Two people	0.213	0.037	5.69
Three people	0.270	0.048	5.61
Four people	0.339	0.068	4.99
Five people	0.311	0.071	4.36
Six people	0.282	0.057	4.90
Seven people or more	0.278	0.053	5.20

We illustrate the step in Gini ratio using the overall income distribution. The overall Gini was calculated using the Pareto law approximation for the higher incomes and thus is not biased as the estimates of individual household sizes.  Figure 2 depicts three Lorentz curves based on the relevant CB estimates of household income distribution in 1994, 2008, and 2009. One can see a dramatic difference in Lorentz curves in 2008 and 2009. The high income bin with a half of total income makes the 2008 Gini ratio to be highly underestimated compared to the 2009 estimate. Both curves are identical for 85% of population, however. The 1994 curve also coincides with the 2009 one up to the last bin. Table 2 compares our estimates of Gini ratio and those reported by the CB. One can see that the 2008 CB estimate is corrected, but the step of 0.023 well reproduces the step observed for the individual household sizes in Figure 1.

Table 2. The estimates of Gini ratio in this post and those reported by the CB.

	Gini ratio	CB Gini ratio
2009	0.466	0.465
2008	0.443	0.466
1994	0.457	0.456

 

Figure 1. The evolution of Gini ratio for individual household sizes. Notice the step between 2008 and 2009.

Figure 2. The Lorentz curves for household income distribution in 1994, 2008, and 2009, as constructed from the CB income distributions without approximation of the higher incomes by the Pareto law.

Population Density in the Early 20th Century

The Census Bureau's weekly data visualization shows the change in population density by county of the United States each decade from 1920-1950.  In the 1920s, predominantly rural counties in the East saw declining population densities due to a trend of migration to cities.  The 1930s saw the Great Plains decline in population while rural areas in the East became more densely populated again.  As World War II ended, the United States saw increased geographic mobility, which led to 21.5 percent of civilians moving to different counties or states between 1940 and 1947.  The map shows that urban and populated Northeast and Midwest counties saw the largest growth in the 1940s, while predominantly rural counties in the Great Plains and the South continued to see declining population density.

Construction Spending Rises Slowly

In the U.S. Department of Commerce’s press release detailing construction spending, it appears construction is slowly creeping upwards after a precipitous drop off following the recession.  The May 2012 estimate of annual construction spending pegged the seasonally adjusted rate at $830.0 billion, up 0.9% from April’s estimate.  At its peak in early 2006, the rate topped off at just over $1.2 trillion, and today’s level is similar to that of a decade ago.  Additionally, the total construction spending of $310.4 billion during the first 5 months of the year is 9.4% greater than the $283.8 billion spent for the same period in 2011.  With that said, there exists a discrepancy between private and public spending on construction.  Private construction spending is up 13.1% from 2011, while spending in the public sector has fallen 3.9%. 

Playing Politics with Data

In the increasingly polarized political environment in the United States, it is hard to imagine policy-making becoming even more ideological and subjective.  This is the main concern of two associate professors from Columbia University Emi Nakamura and Jon Steinsson and assistant professor Nicolas Vincent from HEC Montreal in a recent Bloomberg View op-ed.


Sparked by recent legislation passed in the U.S. House of Representatives in early May, the trio outlines a dangerous trend of conservative governments all over the world (Argentina, Greece, and Canada) playing politics with data collection that serves as objective voice in policy-making.  Most notably, Greece's misreporting of budget deficit statistics that resulted in an criminal investigation as the country faced total economic collapse.


According to the authors, "It’s hard to overstate how dangerous the destruction of high-quality, objective statistical information would be."  The three main statistical agencies in the United States - the Census Bureau, the Bureau of Economic Analysis and the Bureau of Labor Statistics - "account for less than 0.05 percent of President Barack Obama’s $3.7 trillion proposed budget." 


This issue is being played out in the media as the budget deficit and economy is the main concern on the minds of voters heading into the upcoming national elections.  Increasing awareness and educating the public about the importance of collecting reliable demographic data could swayvoters as they head to the polls this November.

Minorities Now Account for The Majority of Births in the U.S.

This past Thursday, the Census Bureau announced that white births now account for less than half of all births in the United States.  For the first time, minorities account for the majority of births (50.4%).  Dr. William H. Frey, SSDAN Director and senior demographer at the Brookings Institution, explained, “This is an important tipping point.”  He described the trend as a “transformation from a mostly white baby boomer culture to the more globalized multiethnic country that we are becoming.  Sabrina Tavernise of The New York Times writes that Hispanics, blacks, and Asians accounted for 26%, 15%, and 4% respectively of births in the year ending in July 2011.  Still, though, whites represent 49.6% of all births – the single largest share of any ethnicity.  Dr. Frey also discovered another interesting fact: minorities accounted for a whopping 92 percent of all population growth in the decade ending in 2010.  You can read the full New York Times article here, which goes more into detail on historical implications and on what else may have contributed to this fascinating trend.

Census Bureau Releases Data on Voting Trends

Earlier this week the Current Population Survey and the U.S. Census Bureau released revised data on voting trends from 1964 to 2010.  The data examines voting and registration behavior by region, race and ethnicity, gender, age, educational attainment and other demographic features for both congressional and presidential elections.  One graph that was included was “Percent  Voting by Race and Age: Presidential Elections,” which shows the percentage of whites and blacks of voting age and whites and blacks 18-24 years old that voted from 1968 to 2008.  For every presidential election in this time period, a substantially larger percentage of all voters participated than the percentage of 18- to 24-year-olds.  In 1968 and 1972, a much larger percentage (roughly 52% for each election) of white 18 to 24-year-olds voted than black 18 to 24-year olds (approximately 38% and 35% respectively).  This racial gap in voting narrowed substantially by 1984, however, when both groups were slightly above 40% with the percentage of white 18 to 24-year olds voting only slightly higher than black 18 to 24-year-olds.  Since 2000, young black people have shown a better voter turn- out than white young people – especially in the 2008 election in which roughly 52% of black young people voted compared to only about 44% of white young people.       

Numbers in Poverty Up; Minorities Hardest Hit As Wealth Disparity Widens

According to a recent report from the Census Bureau, 2.6 million more Americans fell into poverty in 2010; the 46.2 million people in poverty signaled both "the fourth consecutive annual increase and the largest number in the 52 years for which poverty estimates have been published." The report also contained disturbing news regarding the middle class: the New York Times writes that "median household incomes fell last year to levels last seen in 1997."

Lawrence Katz, an economics professor at Harvard, dubbed the period "a lost decade." He told the Times that this "was the first time since the Great Depression that median household income, adjusted for inflation, had not risen over such a long period," and he went so far as to say that "the median family is in worse shape than it was in the late 1990s." Adjusted for inflation, the median household income dropped to $49,445, a decline of 2.3 percent and seven percent below the high of $53,252 in 1999.

15.1 percent of Americans were below the poverty line ($22,314 for a family of four) last year, the highest percentage since 1993. And as the Times points out, the gap between the wealthy and poor continued to grow: "Median household income for the bottom tenth of the income spectrum fell by 12 percent from a peak in 1999, while the top 90th percentile dropped by just 1.5 percent."

The rising poverty rate was most severe for blacks and Hispanics. 27 percent of blacks were in poverty in 2010, up from 25 percent in 2009, and 26 percent of Hispanics--up from 25 percent in 2009--were also below the line. 9.9 percent of whites were in poverty in 2010, as compared with 9.4 percent in 2009. Among Asians, however, the poverty rate remained steady at 12.1 percent.

According to the Times, most economists agree that "joblessness was the main culprit pushing more Americans into poverty." And with President Obama recently proposed jobs bill, analysts say the Census report could swing support either way. As the Times reports, "the bleak numbers could help [Obama] make his case for urgency...[b]ut they could also be used against him by Republican opponents seeking to highlight economic shortcomings on his watch."

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