This morning I posted on the flaw of using the popular measure of income disparity across nations. Many organizations use the GINI coefficient to measure this disparity. However, what these organizations fail to mention is that they are measuring household disparity, not individual disparity. And when they compare nation to nation, they don’t normalize those numbers so that we’re comparing apples to apples.
For example, in the United States, a massive amount of “households” is comprised of single parents. That is, the home will find a single eligible wage earner. And many of those parents opt not to work. Now, some will say that’s because there is no work to be had. Others, me included, will say that the incentives are all wrong. The entitlement programs offer enough aid that the prospect of going to work doesn’t make sense.
So, no income.
Is this sad? Most certainly.
Does this promote poverty generation to generation? With out a doubt.
Is this a serious problem that requires serious thought? Yes.
Does this implicate the job market, compensation structure or some inherent bias towards “the wealthy”? Under no circumstance.
This morning I showed the “horizontal” version of the data. Let’s look at the vertical:
|Descriptor||Lowest Fifth||Second Fifth||Third Fifth||Fourth Fifth||Highest Fifth|
The data continues to reveal reality. The quintile that represents the poorest among us, the “Lowest Fifth” has 62.4% of it’s members with ZERO wage earners. That is, more than half, WAY more than half of the poorest quintile has no one in it making any amount of money. NONE. There is no way that this can be counted towards any measure of income disparity. For that to happen, there must be an income!
I have lived in North Carolina for 12 years [damn! 12 years] and I have never won the North Carolina lottery. Never mind that we have had a lottery for only 7 years and that I’ve never bought a ticket. Is it realistic that I be counted among lottery players that haven’t won?
Back to the data. The “Lowest Fifth” has 62.4% of its members with no income. 62.4%. Compare this to the “Highest Fifth”. That quintile has 3% with no wage earners. Three. Further, the “Lowest Fifth” has only 4.5% of its membership with 2 or more earners. Compare that with the “Highest Fifth” who have 5.8% with FOUR wage earners.
It turns out that a predictor of income is, shockingly, the number of wage earners.