Income Growth in College-educated Households

A recent Pew Research Center report in FacTank, on the distribution of American household's income according to educational attainment, research associate, Richard Fry said that nearly one half of all income (49.7%) is paid to those household's headed by a person with at least a Bachelor's degree compared to 1991 when this group claimed only 37% of all income paid. The data are taken from the 2013 Annual Social and Economic Supplement (ASEC) of the Current Population Survey (CPS) conducted by the U. S. Census Bureau in February, March and April of 2013. The majority of these interviews were conducted as face to face interviews. Supplemental questions were asked of approximately 75,000 heads of households. 

The chart also indicates that, since 1991, those households headed by a person with "less than a high school diploma" have lost earning power, declining 7% from 12% to 5% of total income paid, and those households headed by a "high school graduate" declined 3% from 23% to 20% of total income paid. Households headed by an individual with "some college" has also seen their share of total income decline from 28% to 25%


Read more:
http://www.pewresearch.org/
http://www.pewresearch.org/fact-tank/
http://www.pewresearch.org/fact-tank/2013/09/24/the-growing-economic-clout-of-the-college-educated/
http://www.census.gov/hhes/www/income/index.html
http://www.census.gov/
http://www.census.gov/prod/2013pubs/p60-245.pdf
http://www9.georgetown.edu/grad/gppi/hpi/cew/pdfs/CollegeAdvantage.FullReport.081512.pdf
http://www.pewresearch.org/author/rfry/

Can Obama's second term outperform his first?

On President Obama’s inauguration day for his second term, the Economist explores the economic performance of two-term presidents since the start of the 20^th century.  A range of sources measured performance according to industrial production, federal debt, GDP, stock market, household income, unemployment rate, and real house prices.  The overall score of each president’s second term decreases by an average of 4.2 percentage points from their first term score.

Don’t write off Obama’s second term yet, though.  Franklin Roosevelt’s highly successful New Deal policies in his first term led to a substantially lower relative second term, and three of the eleven two-term presidents (including most recent Democratic president Bill Clinton) had higher economic performances in their second terms.

Household Income Left Behind In Recovery

Rakesh Kochar, writing for the Pew Research Center, examined household income during the recent recession and recovery.  From 2007 to 2009, the median household income fell 4.2%, and while the economy began to turn around and businesses started to rebuild, incomes continued to drop.  From 2009 to 2011, as the U.S. embarked on a sluggish recovery, the median income failed to improve.  In fact, the median household income fell almost as much (4.1%) during the recovery years as during the recession.  After a 5.7% decrease in household income due to the 1973 recession, incomes salvaged a 2.3% increase in the following 2 year recovery period.  The 1980 to 1982 recession drove incomes down 5.0%, but in the subsequent two-year recovery, incomes rebounded with a 2.4% improvement.  This prolonged period of income losses reflects a greater trend from the past decade.  The highest median household income was $54,932 in 1999, and since then, that level has only been approached in 2007, when incomes were $54,489.  

Income, Poverty and Health Insurance Coverage

On Wednesday, the Census released its yearly report on "Income, Poverty, and Health Insurance Coverage in the United States: 2011."  Median household income fell for the fourth straight year to $50,054.  Men still earn more than women; the median income for men was over $11,000 more than for women.  Looking at various ethnicities, Asians possess the highest median household income at $65,129, followed by Whites with $55,412, Hispanics at $38,624, then and Blacks with $32,229. 

The recession's impacts on income were wide-ranging, and as a result poverty increased drastically.  While the poverty rate fell, it did so only slightly, dropping from 15.1% in 2010 to 15.0% in 2011.  Since 1965, the poverty rate jumped above 15.0% for just five years – 1982, 1983, 1993, 2010 and 2011. 

Lastly, health insurance coverage improved slightly from 2010; however, over 48 million continue to forego coverage.  15.7% of the population lacks health insurance.  This lackluster rate finds its roots in companies' inability to provide employer-based coverage, and in Americans’ inability to simply find a job.  With an unemployment rate that has doubled since the start of the recession and businesses around the country struggling to remain profitable while still providing health benefits, 11 million less Americans received health insurance through their jobs in 2011 than in 2000.  On the other hand, the number of people relying on government health insurance programs, such as Medicare and Medicaid, has shot upwards more than 31 million in that same timeframe.  

Obesity in America

Gallup’s assessment of obesity in America illustrates some interesting trends.  Blacks are more likely to be obese than any other race.  20.8% of Blacks received the distinction of falling into the obese class I.  8.8% were in obese class II and 6.0% in obese class III. The latter two categories are recognized as very obese.  Asians were the least likely to be obese with only 7.6% falling into obese class I, 2.1% in obese class II, and 1.0% in obese class III.  Overall, men are more likely than women to be obese, but a slightly higher percentage of women are categorized in obese class III (4.0% versus 2.9%).  Additionally, unemployed Americans are more likely to be obese than those who possess a job.  

Finally, both income and education are related to obesity levels.  As Americans obtain higher levels of education (the study tracks those with high school or less up to postgraduate degrees), they are less likely to be obese.  5.2% of those who earn less than $36,000 a year have BMIs high enough to be categorized in obese class III, compared to just 1.8% of Americans who earn greater than $90,000 a year.  

To be considered obese, one must have a body mass index (BMI) of over 30.  For a person who is 5 feet 9 inches, his/her weight would need to rise above 203 pounds to be classified as obese.  To fall under obese class III, that same person would need to weigh over 271 pounds.

America at a Glance

The New York Times has extracted data from the Census Bureau's 2005-2009 American Community Survey in order to compose a map displaying the racial, socioeconomic, and educational composition of the U.S.  In terms of income distribution, there is a high density of Americans earning over $200,000 in the Northeast.  For instance, more than 15% of the population in Hunterdon, New Jersey, Fairfield, Connecticut, and Westchester, New York earn over $200,000.  Another map illustrating the percentage of foreign born residents shows a high concentration throughout much of California, southern Arizona, south and southwest Texas, and southern Florida.  Additionally,  New York City and the region surrounding it possesses a high percentage of foreign born residents. 

3 in 4 Americans Feel College is Too Expensive

In a recent survey, the Pew Research Center presented the American public with this statement: "College costs in general are such that most people can afford to pay for a college education." Overwhelmingly, respondents disagreed with the statement.  75% did not agree, and only 22% felt that college costs are affordable.  Despite this response, the rapidly rising cost of college tuition has not swayed parents' feelings on the importance of a college education.  94% of parents want their children to go to college, even though 57% of Americans feel that colleges fail to offer students a valuable education that is on par with the high costs.  Only 5% of the public feel that college is of "excellent" value to students.  Much more respondents fell in the middle-ground, with 77% saying that college was of "only fair" to "good" value.  Additionally, though, it seems that college graduates are happy with their decision to enroll.  86% of graduates believe their investment in tuition was beneficial, and American Community Survey data supports this belief.  In 2009, the median income for college graduates was $46,931, whereas the median income for those with only a high school diploma was $27,381. 

62 Percent of Parents Provide Financial Assistance to Their 19- to 22-Year-Old Children

On May 3^rd, USA Today focused on a University of Michigan study regarding the proportion of parents who provide financial assistance to their 19- to 22-year-old children.  The lead author of the study, Patrick Wightman, found that 62% of young adults collect funds from their parents.  About 42% of parents assist with bills, 35% pay for a portion of tuition, and 23% help with vehicle costs.  Additionally, a little more than one in five parents contribute to their children’s rent and 11% provide their kids with loans.  82 % of wealthier parents (those making $99,910 or more a year) supported their children with some form of financial assistance, compared to 47% of lower income parents (those making less than $37,274).  However, regardless of wealth, parents who provided money to their children sent an equal share – about one tenth – of their income.

New Study Shows Teachers--and Test Scores--Matter in the Long-Term

A new study by three economists suggests that elementary- and middle-school teachers who help increase their students' standardized-test scores have a significant, positive and lasting impact on those students' lives in the long term. Their influence extends beyond academics, as good teachers also mean "lower teenage-pregnancy rates and greater college matriculation and adult earnings," writes the New York Times. The study tracked the lives of 2.5 million students over 20 years, "allowing for a deeper look at how much the quality of individual teachers matters over the long term."

Although the economists set out to challenge the use of value-added ratings, which according to the Times "measure the impact individual teachers have on student test scores," researchers ultimately found that "controlling for numerous factors, including students’ backgrounds...the value-added scores consistently identified some teachers as better than others, even if individual teachers’ value-added scores varied from year to year." They concluded that "using value-added scores would lead to fewer mistakes, not more."

And the positive effect of teachers who increased student test scores was striking. The Times notes, "Replacing a poor teacher with an average one would raise a single classroom’s lifetime earnings by about $266,000, the economists estimate. Multiply that by a career’s worth of classrooms." The researchers surmise that the same results would be obtained by replacing an average teacher with an excellent teacher: "Given the difficulty of finding, training and retaining outstanding teachers...the difference in long-term outcome between students who have average teachers and those with poor-performing ones is as significant as the difference between those who have excellent teachers and those with average ones."

The positive effect of an excellent teacher on one individual student is less impressive than that teacher's potential impact on the entire class taken together, of course. "All else equal, a student with one excellent teacher for one year between fourth and eighth grade would gain $4,600 in lifetime income, compared to a student of similar demographics who has an average teacher. The student with the excellent teacher would also be 0.5 percent more likely to attend college." Still, "students with top teachers are less likely to become pregnant as teenagers, more likely to enroll in college, and more likely to earn more money as adults."

The study will likely add fuel to the value-added score debate, as many people--and teachers' unions--"say that isolating the effect of a given teacher is harder than it seems, and might unfairly penalize some instructors." The researchers of this study are firmly on the other side: "The authors argue that school districts should use value-added measures in evaluations, and...remove the lowest performers." One of the researchers, Harvard Professor John N. Friedman, was quoted in the Times as saying, “The message is to fire people sooner rather than later.”

TV Industry, Marketers Change Tune, Start Focusing on Older Clientele

According to a piece in the New York Times, advertisers and media executives have started to rethink their strategy of primarily targeting younger consumers, responding instead to an economic reality that has older people vastly out-earning the young. Carter and Vega write: "Marketers like Kellogg’s, Skechers and 5-Hour Energy drink are broadening their focus to those 55 and up, who were largely ignored in most of their media plans until recently." They continue: "Network executives are planning to introduce shows created to have broad appeal, including to older viewers and the ad dollars they represent."

The reason for the shift in a strategy that has been in place since the 1960s is largely one of numbers. Younger people have been hit harder by the recession: the unemployment rate for individuals aged 20-24 is 14.2 percent and for those 25-34 9.4 percent, as compared with only 6.2 percent among people aged 55-64.

Median earnings between the age groups are similarly disparate, again favoring older age groupings. Individuals aged 45-54 and 55-64 had the highest median weekly earnings of any age segment, coming in at $844 and $860, respectively. On the other end of the spectrum, people aged 20-24 averaged weekly earnings of only $454, while those aged 25-34 had median weekly earnings of $682.

Carter and Vega write that until recently, "Once viewers reached 55, they were considered all but valueless." But older people--especially as the impact of the recession still lingers strong--have more money to dispense with than other age groups, consume a lot of media, and, according to Stephanie Papas, a source quoted in the article, "remain optimistic."

Since 2006, "the median age for audiences for every broadcast network has moved upward," and a NBC study suggested that older "consumers also seem to be spending on categories not traditionally associated with" their age group. This includes areas--such as electronics and digital devices--that are traditionally associated with younger consumers.

Says Alan Wurtzel, president of research for NBC Universal, about those who fail to begin targeting an older clientele: “You risk not only growth, but at some point you risk your brand.”

NH cf

Within-Country Inequality Rising in Rich Countries

A new report from the Organisation for Economic Co-operation and Development -- a club of the world's wealthiest nations -- shows that across the developed world, income inequality between households is on the rise. Over the past twenty years a confluence of events have biased big economies towards wealthier individuals. Low-wage workers in rich countries now face competition from cheaper workers in poorer countries and from computerization and mechanization of many low-skilled jobs. As a result, they have seen incomes stagnate, and their working hours decline: a trend exacerbated by the Thatcher/Reagan wave of neo-liberalism that loosed regulations intended to protect these employees in many countries. Meanwhile, wealthier people have benefited disproportionately from technological advances and globalization and have made money through capital gains on assets.

In addition to the familiar refrain of globalization, technology and neo-liberalism, generally used to explain the rise in within-country inequality (and corresponding decline in between-country inequality), the authors of the OECD report offer another possible explanation for rising households inequalities. As more and more households include two incomes, the gap in household income will increase given that most rich people marry other rich people and most poor people marry other poor people.

The OECD report has been widely discussed throughout the world.