The Price of Inequality: How Today's Divided Society Endangers Our Future (46 page)

32.
Larry Katz of Harvard has popularized the term in a number of papers written with coauthors (and cited in the next chapter). See David H. Autor, Lawrence F. Katz, and Melissa S. Kearney, “The Polarization of the Labor Market,”
American Economic Review
96, no. 2 (May 2006): 189–94; and Claudia Goldin and Lawrence F. Katz, “Long-Run Changes in the Wage Structure: Narrowing, Widening, Polarizing,”
Brookings Papers on Econoic Activity
2 (2007): 135–64, and the references cited there. Autor, Katz, and Kearney cite Maarten Goos and Alan Manning, “Lousy and Lovely Jobs: The Rising Polarization of Work in Britain,” London School of Economics, Center for Economic Performance Discussion Papers: No. DP0604, 2003, as the first source of the term “polarization.”

33.
One way of saying this numerically is the following: the ratio of the income of those at the top (say, at the 95th percentile, i.e., only 5 percent of the population has a higher income) to those in the middle has increased, while the ratio of the income of those in the middle to those at the bottom (say, at the 20th percentile) has not changed. Data from Piketty and Saez, “Income Inequality in the United States, 1913–1998,” to U.S. Census Historical Tables (H-9 and H-1), shows that the ratio of the 95th percentile households to the median in 1980 was 2.6; the ratio of the median income households to the 20th percentile was 2.4. In 2010, the ratio of the 95th percentile income to the median income was 3.0; the ratio of the median income to the 20th percentile income was still 2.4.

34.
Another way of seeing the evisceration of the middle class is that the fraction of those with incomes that are close to the middle—within a range that goes from 50 percent greater than the median to 50 percent less than the median—has fallen since 1970 from just over 50 percent to just over 42 percent. Krueger, “The Rise and Consequences of Inequality,” citing Council of Economic Adviser calculations based on the Current Population Survey.

35.
Bureau of Labor Statistics, Employment Situation Summary, November 2011, available at
http://www.bls.gov/news.release/empsit.nr0.htm
.

36.
For an excellent telling of some of these stories, see Peter Goodman,
Past Due: The End of Easy Money and the Renewal of the American Economy
(New York: Times Books, 2009). See also Lisa A. Goodman, Leonard Saxe, and Mary Harvey, “Homelessness as Psychological Trauma: Broadening Perspectives,”
American Psychologist
46, no. 11 (November 1991): 1219–25.

37.
See U.S. Census Bureau, “Income, Poverty, and Health Insurance Coverage in the United States: 2010,” issued September 2011, P60-239.

38.
Himmelstein et al. “conservatively” estimate that “62.1% of all bankruptcies in 2007 were medical,” that is, had important medical factors as a contributor. Furthermore, “most medical debtors were well educated, owned homes, and had middle-class occupations. Three quarters had health insurance. Using identical definitions, between 2001 and 2007, the share of bankruptcies attributable to medical problems rose by 49.6%.” D. Himmelstein, D. Thorne, E. Warren, and S. Woolhandler, “Medical Bankruptcy in the United States, 2007: Results of a National Study,”
American Journal of Medicine
122, no. 8 (2009): 741–46. In terms of getting at a more causal measure, i.e., estimating the direct effect of a health shock on the decision of whether or not to declare bankruptcy, Gross and Notowidigdo find “that out-of-pocket medical costs are pivotal in roughly 26 percent of personal bankruptcies among low-income households.” Tal Gross and Matthew J. Notowidigdo, “Health Insurance and the Consumer Bankruptcy Decision: Evidence from Expansions of Medicaid,”
Journal of Public Economics
95, nos. 7–8 (2011): 767–78.

39.
Washington State Child Care Resource and Referral Network, 2010 data reports. Average statewide cost for one preschooler and one toddler. Assumes children are in full-time, full-year center care. Available at
http://www.childcarenet.org/partners/data
(accessed February 2, 2012).

40.
Bureau of Labor Statistics, Employment Situation, available at
http://www.bls.gov/news.release/empsit.toc.htm
(accessed February 2, 2012).

41.
See, e.g., Stephane Pallage, Lyle Scruggs, and Christian Zimmermann, “Unemployment Insurance Generosity: A Trans-Atlantic Comparison,” IZA Discussion Papers 3869, Institute for the Study of Labor (IZA), 2008.

42.
Most recently, before this book went to press, in February 2012.

43.
A Congressional Research Service report notes that 2 million of the 14.4 million unemployed in June 2011 were unemployed for more than 99 weeks. G. Mayer, “The Trend in Long-Term Unemployment and Characteristics of Workers Unemployed for More Than 99 Weeks,” September 12, 2011, available at
http://big.assets.huffingtonpost.com/crsreport.pdf
. The BLS reports that 9 percent of the 2010 unemployed had reached a duration of 99 weeks of unemployment. See R. Ilg, “How Long before the Unemployed Find Jobs or Quit Looking?,” Bureau of Labor Statistics, May 2011, available at
http://www.bls.gov/opub/ils/summary_11_01/unemployed_jobs_quit.htm
.

44.
As of October 2011. In December 2007, that ratio was 1.8; at the peak of the Great Recession, it reached 6.1. Bureau of Labor Statistics, “Job Openings and Labor Turnover Survey—October 2011,” December 13, 2011, available at
http://www.bls.gov/web/jolts/jlt_labstatgraphs.pdf
.

45.
Some politicians, and a few economists, worried that unemployment insurance would discourage search. But more search would have just meant longer lines, not more employment.

46.
Michael Cooper and Allison Kopicki, “Jobless Go Without, But Stay Hopeful, Poll Finds,”
New York Times
,
October 27, 2011, pp. A1, A16.

47.
For those 45 to 54, the average duration of unemployment in January 2012 was 43 weeks, for those 55 to 64, the average already exceeds a year, at almost 57 weeks. See Household Data Table A-6 from the Bureau of Labor Statistics, “Unemployed Persons by Age, Sex, Race, Hispanic or Latino Ethnicity, Marital Status, and Duration of Unemployment,” January 2012, available at
http://www.bls.gov/web/empsit/cpseea36.pdf
(accessed March 6, 2012).

48.
See, e.g., Steven J. Davis and Till von Wachter, “Recessions and the Costs of Job Loss,” November 2011, prepared for the Brookings Papers on Economic Activity, available at
http://www.columbia.edu/~vw2112/papers//Recessions_and_the_Costs_of_Job_Loss_23_November_2011.pdf
(accessed March 5, 2012). See also P. Oreopoulos, T. von Wachter, and A. Heisz, “The Short- and Long-Term Career Effects of Graduating in a Recession: Hysteresis and Heterogeneity in the Market for College Graduates,” NBER Working Paper, no. 12159 (2006); or L. Kahn, “The Long-Term Labor Market Consequences of Graduating from College in a Bad Economy,”
Labour Economics
12, no. 2 (April 2010): 303–16.

49.
A point explained in Domenico Delli Gatti, Mauro Gallegati, Bruce C. Green-wald, Alberto Russo, and Joseph E. Stiglitz, “Sectoral Imbalances and Long Run Crises,”
proceedings of the Beijing 2012 World Congress of the International Economic Association
.

50.
One in four mortgage owners, some 14 million Americans, are underwater, for a net negative equity total of $700 billion. M. Zandi, “To Shore Up the Recovery, Help Housing,” Special Report, Moody’s Analytics, May 25, 2011.

51.
Those receiving mortgages between 2004 and 2008 were particularly hard hit; of those receiving loans in this period, 2.7 million households have already been foreclosed upon, and another 3.6 million are at serious risk. D. Gruenstein Bocian, W. Li, and C. Reid, “Lost Ground, 2011: Disparities in Mortgage Lending and Foreclosures,” Center for Responsible Lending, November 2011, available at
http://www.responsiblelending.org/mortgage-lending/research-analysis/Lost-Ground-2011.pdf
.

52.
Zandi, “To Shore Up the Recovery.”

53.
Pew Research Center, “Wealth Gaps Rise to Record Highs between Whites, Blacks, Hispanics Twenty-to-One” (2011), available at
http://www.pewsocialtrends.org/2011/07/26/wealth-gaps-rise-to-record-highs-between-whites-blacks-hispanics/
.

54.
World Bank, Life Expectancy at Birth (years), available at
http://data.worldbank.org/indicator/SP.DYN.LE00.IN?order=wbapi_data_value_2009+wbapi_data_value+wbapi_data_value-last&sort=desc
.

55.
According to the World Bank, the United States’ mortality rate for under-5’s in 2010 was 8 per 1000. This places it 45th in the world on this metric, worse, e.g., than Cuba (6), Belarus (6), Lithuania (7), and the United Arab Emirates (7). In Iceland the rate is four times better (at 2). Data available at
http://data.worldbank.org/indicator/SH.DYN.MORT?order=wbapi_data_value_2010+wbapi_data_value+wbapi_data_value-last&sort=asc
. The pictures for maternal mortality ratio data from the World Bank are similar, where, e.g., the performance of Germany is three times better than that of the United States.

56.
In 2002 the bottom decile’s life expectancy was 73.2, as opposed to 79.8 for the top. The gap between the top and the bottom has actually been growing. In 1982 the highest decile had an expected life of 76.3 compared with 71.0 for the lowest decile. (Some measures of inequality in health, however, such as the Gini coefficient, do show an improvement.) S. Peltzman, “Mortality Inequality,”
Journal of Economic Perspectives
23, no. 4 (Fall 2009): 175–90. Inequalities in health are long-standing and widespread. As reported in David Cutler, Angus Deaton, and Adriana Lleras-Muney, “The Determinants of Mortality,”
Journal of Economic Perspectives
20, no. 3 (Summer 2006): 97–20, “Americans in the bottom 5 percent of the income distribution in 1980 had a life-expectancy at all ages that was about 25 percent lower than the corresponding life-expectancies of those in the top 5 percent of the income distribution (Rogot, Sorlie, Johnson and Schmitt, 1992)” (p. 98). They continue (p. 99), “American blacks had a life expectancy in 2002 that was 5.4 years less than that of American whites. In England and Wales in 1997–2001, male manual workers could expect to live 8.4 years less than professionals, a gap that has increased since the early 1970s.”

57.
Some 5.9 million aged 25 to 34 were living at home, up 14 percent from a prerecession figure of 4.7million. See “America’s Families and Living Arrangements: 2011,” a series of tables from the 2011 Current Population Survey. K. Newman,
The Accordion Family
(Boston: Beacon Press, 2012), reports that there is a higher proportion of U.S. parents living with children than at any other time since the 1950s.

58.
Carol Morello, “Married Couples at a Record Low,”
Washington Post
,
December 14, 2011, citing data provided by Rose Kreider, a Census Bureau demographer. The trend, of course, was present before the recession, but the magnitude of the change was dramatic, and had much to do with the recession. The total number of couples living together without being married was 7.5 million in 2010. In many poorer countries, lack of economic resources is a barrier to marriage or leads to marriage later in life; in some ways, American mores are following the same pattern.

59.
Part of the problem is that individuals without a history of violent crime can be given long prison terms for possession of drugs. But part of the problem reflects high levels of violence. But the pattern of incarceration suggests that other social forces (including discrimination) are at play. See Robert Perkinson,
Texas Tough
(New York: Metropolitan Books, 2010) and Michelle Alexander,
The New Jim Crow
(New York: New Press, 2010).

60.
FBI, “Crime in the US, 1991–2010,” Uniform Crime Reports, available at
http://www.fbi.gov/about-us/cjis/ucr/crime-in-the-u.s/2010/crime-in-the-u.s.-2010/tables/10tbl01.xls
. Homicides rose sharply in the 1970s, to peak at 10.2 per 100,000 in 1980, falling slightly in the mid-1980s before rising again to 9.8 per 100,000 in 1991 and falling off since. In 2010 the rate was 4.8 per 100,000. U.S. Department of Justice,
Homicide Trends in the United States, 1980–2008
, November 2011. The violent-crime rate reached its highest level of 758 per 100,000 people in 1991 (the data cover 1960–2010). By 2009 that rate was down to 429. FBI, Uniform Crime Reports as prepared by the National Archive of Criminal Justice Data, available at UCR data tool,
http://www.ucrdatatool.gov/index.cfm
(accessed January 1, 2012).

61.
The rates of incarceration and supervision are from L. Glaze,
Correctional Populations in the United States, 2010
, United States Bureau of Justice Statistics, NCJ 231681, 2011. According to the same report, the total number under correctional supervision as of 2010 is even larger—more than seven million. International comparisons are from the International Centre for Prison Studies, available at
http://www.prisonstudies.org/info/worldbrief/wpb_stats.php?area=all&category=wb_poprate
, according to which the world’s next highest incarceration rates are Rwanda, at about 595, and Russia, with a rate of 542. For more within-U.S. cross-state comparisons, see also Pew Center on the States, 2008,
One in 100: Behind Bars in America 2008
, available at
http://www.pewcenteronthestates.org/uploadedFiles/One%20in%20100.pdf
.

62.
Between 1987 and 2007 the ratio of (general fund) spending on corrections to that on higher education increased across all states except two. In New York that ratio increased by 0.61. Oregon spends a $1.06 on corrections for every dollar of spending on higher education; Michigan, $1.19. Pew Center on the States,
One in 100: Behind Bars in America 2008
, available at
http://www.pewcenteronthestates.org/uploadedFiles/8015PCTS_Prison08_FINAL_2-1-1_FORWEB.pdf
.