Thursday I posted my thoughts on the GINI rating and how it pertains to income here in America. In that post, my main thrust was the fact that GINI, as reported when comparing national income disparity rankings, was comparing household incomes. Not the incomes of individuals, but of households.
And I think that’s important. As I demonstrated in that post, taking these two families:
- Family A making $60,000 a year
- Family B making $70,000 a year
Looks to be fairly equitable. But now let’s consider that family A and family B get divorced, created 4 households out of two. Then the breakdown looks like this:
- Family A making $0 a year
- Family B making $28,000 a year
- Family C making $32,000 a year
- Family D making $70,000 a year
THIS looks to be dramatically different. However, the same four families in the second picture are the individual household represented in the first picture. Remarkable, yes?
So, how do things look in real life? Let’s take a look at the US Census Bureau’s Current Population Survey for 2010:
The data is remarkable. Let’s go through it bit by bit.
First, the “Fifths” listed at the top is earnings by quintile. That is, the poorest 20% is the “Lowest Fifth” while the richest 20% is the “Highest Fifth”.
Now then, the data:
Households that are “families” is a massive indicator of income.As the percentage of families in each fifth increases, so does the wealth. The same goes for married couples. The top fifth has nearly 5x the number of married couples as the bottom fifth. Seems that family is important in wealth creation.
Family aside, the powerful statistic that I took away was the number of earners in a household. And what I found matches exactly with the phenomenon I described in my earlier post.
Of the households in the bottom fifth, more than HALF don’t have a single wage earner in the household. More than half. While the top 20% has only 2.6% of households that don’t qualify as a wage earner.
Further, if you look at the “Lowest Fifth” as a column and march down, you’ll see that fewer and fewer of those households have the described number of earners. Starting at the top, this segment of the population has 54% of households with 0 wage earners. While at the bottom, it has but .2% of the households with 4 wage earners. The exact opposite is true of the “Highest Fifth”.
In short, it would seem that as a household has more wage earners, that household moves from one of the fifths to another. And to the extent that this is true, look at the last line; aggregate earners.
The “Lowest Fifth” has 10,240 members. The fifth that earns twice as much money as the lowest fifth has twice as many wage earners. The fifth that makes three times as much as the lowest fifth has three times as many wage earners. The fourth has four times as many wage earners. And the highest has five times the number of wage earners.
This is true almost to the exact number.
The data presented above tells me that we don’t have an income disparity issue. We have a family structure issue. If you take a single wage earner in a household and compare that household to one with 4 wage earners, it should be no surprise which of the two households makes more money.
And lest there be any doubt. The “Highest Fifth”? They are some working sums -o- beetches. Fully 62.7% of those households have FOUR wage earners. This is not the lazy rich that the OWS and the ((% make them out to be.