Income Inequality

Note: This post was constructed for an assignment in an Honors Contemporary Social Problems class I took in the Spring of 2011. I rather liked the work I produced for this class, so I will continue to leave this post up despite the (potential) disconnect from the current focus of my blog. This post was a part of the final project for the class (along with an oral/visual presentation) and included researching and examining all aspects of claims-making on a topic of choice (income inequality).

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What are the claims?

Timothy Noah, who authored a series looking at income inequality on Slate states, “It’s generally understood that we live in a time of growing income inequality…” (Slate) A large portion of claims-makers on the topic of income inequality view it in the same belief: that income inequality is rising in the United States.

Another major claim that was frequently seen is the belief that there is a correlation between income inequality and social issues. The construction of this in claims ranges from implied to near fear-inducing.

This claim leads into another claim, “the gulf between the wealth of America’s richest and poorest is widening, and few signs show any indication of it slowing.” (Huffington Post)

The rich are too rich. This is illustrated with the use of graphs, charts and the data most used in claims on income inequality:  “the richest 1 percent of Americans hold about __ percent of U.S. income/wealth.” I will go into deeper detail on this later in my post.

Sub-claims?

One sub-claim that consistently appears is that Americans believe in social mobility and that this believe is imagined and does not match real social mobility. Along the same line, there are claims of Americans having, “[a]n incorrect assessment of one’s own standing in the income distribution…” or that all,  “[a]mericans all seem to think they’re ‘middle class.’” (Economix Blog, New York Times)

Not all economists agree income inequality is a bad thing.

Who are the claims-makers?

Claims-makers of income inequality are varied and include the following:
Media
Government
Academic
Activists
Economists

What is income inequality?

The majority of claims-makers that I looked at did not explicitly define income inequality. Defined loosely, income inequality is the unequal distribution of income. In order to better understand income inequality, income itself needs to be defined.

How is income being defined?

Most of the data I looked at defined income vaguely as “market income.” Non-Profit Quarterly stated, “The data purposefully includes only market-generated income (wages, pensions, business income and interest), excluding government transfer payments.” (Non-Profit Quarterly) Government transfer payments, are those from social service agencies such as welfare payments and social security.

It is important to make note that income is not the same as wealth. “Income is what people earn from work, but also from dividends, interest, and any rents or royalties that are paid to them on properties they own.” Whereas, “…wealth is the value of everything a person or family owns, minus any debts.” (Wealth, Income, and Power,by G. William Domhoff) In this way, a person’s income and wealth are too very different things. In looking at claims on income inequality, many claims-makers do not distinguish the differences between income and wealth, and thus income inequality and wealth inequality. Claims-makers take income and wealth to be interchangeable, which objectively they are not.

For example, the first sentence of an article from PBS Newshour states, “Income inequality has changed over time: today the richest 1 percent of Americans hold about 24 percent of U.S. wealth.” (PBS) The article continues stating, “But almost a century ago in 1915, that same top percent had 18 percent of the nation’s wealth, according to Berkeley economist Emmanuel Saez in his report ‘Striking it Richer.’” The report by Emmanuel Saez clearly states income data in the US, not wealth.

And yet the statistics from this report are consistently used in many claims-makers claims about income inequality incorrectly.

Timing and Motives:

Picture Mill, End Credits “The Other Guys”

Timing plays a HUGE role on the claims being made. Some of the relevant issues are the president’s proposed tax rates, current debates regarding the national debt and decisions being made on investing or defunding the safety net for people or places (cutting services and funding). Claims about income inequality are also a way to frame the economy, unemployment, the recession, corporate crime and government bailouts. The claims very much piggyback on these already widespread issues.

The claim of inequality in relation to the economy and money is already a mainstream idea. It was referenced in the end credits of the Will Ferrell and Mark Whalberg comedy “The Other Guys” with an animated sequence explaining Ponzi schemes, TARP bailout, and imbalance of CEO pay. A buddy-cop, light-hearted comedy one wouldn’t expect to find such serious, political information in the end credits. What’s more interesting to me is that, “‘[t]he sources were official government documents,’ [says] art director Grant Nellessen. ‘Sony had to vet everything to confirm we weren’t making up facts,’ he says. ‘It wasn’t just our opinion.’” (MovieFone)

Typifying Stories

Claims-makers make use of typifying stories that focus on victims. Victims are mainly the middle-class and poor, though occasionally the upper class (such as in this Fortune article)

“Many feel the middle class is disintegrating, as are their prospects. Cookie Sheers, for example, who works at a non-profit:
‘There are days that I walk to work because I couldn’t afford $1.25 to get on the bus,’ said Sheers, a single mother of three who makes $34,000 a year. ‘There are days that I sacrifice a meal because I want to make sure my children eat.'” (PBS)

As you can see in this story from PBS, the claims-makers are constructing a victim that is very sympathetic. She’s a single mom, who sacrifices for her kids and going without meals so her children can eat. And she works for a non-profit, which helps construct her as a moral person and adds to the construction of victim purity.

“…a woman named Colleen, a single mother of two, saying much the same thing about the wealthy families whose floors she scrubs on hands and knees. ‘I don’t mind, really,’ she says, ‘because I guess I’m a simple person, and I don’t want what they have. I mean, it’s nothing to me.'” (Slate)

In this story from Slate we are again presented with a sympathetic victim. Another single mom, who is scrubbing floors for the wealth. And not just scrubbing the floors, she’s on her hands and knees scrubbing the floors. But despite the hardships that have been constructed on her, she’s modest and portrayed as being content with what is constructed as a difficult life.

Villains in this claim are usually not clearly defined. If a villain is defined, it is framed as being the social problem itself.

The social problem of income inequality is constructed in the diagnostic frame as social, as it is a societal issue that requires a societal change. Motivational frames in the construction include capitalism and the family.

Extreme Consequences


Income inequality claims include everything from crime to financial problems to political instability to increasing social issues to the disrepair of roads…all the way to CHAOS! Many are not specified but are definitely intended to provoke fear. The Yonder has an article that claims, “Our brief analysis documents how income inequality has some relationship with crime rates (both violent and property), teenage birth rates, and poverty rates (overall and child poverty). ” They illustrate this with brightly colored charts, each showing that as income inequality increases so does crime, teenage birth rates and poverty.

Data and Statistics

Claims-makers use graphs, charts and statistics to help construct their claims.

One thing that confused me was that there were different figures used by claims-makers stating 1% of Americans have 18%, 23.5% or 24% of all income.

“The share of total income going to the top 1 percent of earners, which stood at 8.9 percent in 1976, rose to 23.5 percent by 2007” (NY Times)

“Today, the richest 1 percent account for 24 percent of the nation’s income.” (Slate)

The data comes from a report by Emmanuel Saez. Upon researching it I found that the statistic of “Top 1% of US earned 18% of all income” is from data in 1915. The statistic of  “24% of all income” is a rounded up number from the correct data of  “23.5% of all income” which was computed using IRS data from 2007 and that was published/analyzed in 2009. It is the most recent data available. This statistic was also skewed at times, interchanging income and wealth to mean the same thing (they are not). This PBS article  incorrectly states, “Income inequality has changed over time: today the richest 1 percent of Americans hold about 24 percent of U.S. wealth,” substituting wealth where income should be. (PBS) Other claims also made this mistake. Despite income and wealth being two different things they are often times used interchangeably by claims-makers.

Graphs are also widely used. The Daily Yonder, a site for rural Americans, posted an article on income inequality using counties. They also correlated income inequality to a host of social issues and crated graphs for each one. I find the choice in graph coloring makes it somewhat difficult to read. It also seems much of the data they used was from estimates or surveys. (Daily Yonder)

Another site that was encompassed almost entirely of graphs and charts was this post from Mother Jones, entitled “It’s the Inequality Stupid: Eleven charts that explain everything that’s wrong with America.” An important thing to note is that only the first chart is about income inequality. (Mother Jones) Labels need to be clearly read, as well as one having the ability to properly read charts and graphs in order to obtain accurate information. In this way, claims-makers can often confuse or misinform people who aren’t paying close attention to the information provided or ignore charts and graphs all together, leaving gaps in the bigger picture.

Constructing Solutions

Interestingly, while most claims agree that something should be done, many don’t give any solutions:

“…we should just agree that it’s a bad thing — and try to do something about it.” (New York Times)

“What is the ideal distribution of income in society? I couldn’t tell you, and historically much mischief has been accomplished by addressing this question too precisely. But I can tell you this: We’ve been headed in the wrong direction for far too long.” (Slate)

“We would suggest that policy makers also consider the continuing increase in income inequality in this country” (Daily Yonder)

The ones that do offer a prognostic frame, focus mainly on changes in taxes or the need for more education and higher skilled workers. “So if you look at it, there are, basically, a few ways to change the distribution of inequality of wealth, taxes is one of them.”  (NPR)

Fortune offers this:
“Worker education is the key. It will make them more productive — and richer…Workers’ skills aren’t keeping up with the advance of technology, so the shrinking proportion of workers with the needed skills command a larger share of the pie. Get high school and college graduation rates rising again, and the economic forces reverse, spreading the benefits of economic growth more evenly.” (Fortune)

While more education sounds like a good idea, since higher education levels should ideally equal higher incomes, it isn’t necessarily the case. The US already has issues with unemployment and recent college graduates being unable to find jobs is their fields. Additionally, a college education isn’t free. The cost to benefit ratio of paying for a higher education needs to be looked at, as well as career outcomes and employment opportunities in those fields.

Additional Information

Income Inequality Slide Show : Power Point Presentation

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4 thoughts on “Income Inequality

  1. D. Wasielewski

    The prognostics seem to follow the classic liberal/conservative model. NPR – a traditionally liberal media outlet suggests institutional remedies like raising taxes. Fortune, a traditionally conservative leaning outlet suggests the solution lies with the individual – who must strive to educate him/herself out of the situation. Your personal ideological beliefs will tend to determine which prognostic you embrace.

    For additional info I suggest “Aftershock” by Robert Reich, former Secretary of Labor under President Clinton. He presents a clear analysis of the effects of unequal income distribution as well as detailing how and why we need to reverse the trend described in this presentation.

    Reply
    1. ksgaherty

      This social problem falls right into our cultural themes of prosperity and equality. We feel that because we have to opportunities to advance in this country, we all should do so. Then when we reach the top and become that 1% that brings in somewhere between 18% and 24% of the wealth, we don’t want to share it and trickle it down. I realize that is a generalization and claim in itself, but it is important to think about why this is even brought up as a social problem. I like how you noted this was the social problem proposed to you by a number of your online friends. This tells me that there is this undercurrent that may have a lot to do with the current state of the economy and everyone worrying about what they will be making in a few years down the line. The blame for the economic crash has been placed on the shoulders of Wall Street and this seems like another way to say the rich are to blame for all of our problems. We believe everyone should have the right to work hard and make it to the top but once they make it up there and accumulate a huge amount of wealth we want to criticize them (cultural theme?). Also the idea that this kind of data is beyond our understanding makes it intimidating to the audience and easy for the audience to pick a side based on what they already believe. The complicated charts and economic talk would put the common person on a roller coaster of confusion, so they would just agree with whichever side of the spectrum they are on. And hey, wouldn’t we all like to make the man with all the money share a little with us? 🙂

      Reply
  2. rrischner

    If a proposed solution is education of the individual then I would think that at least one claims- maker used the individual diagnostic frame. This was a fantastic presentation. I found the sheer number of graphs available on the topic staggering. Were you able to find raw data at all? Graphs and charts can be extremely manipulative, you are relying on the presenter to interpret the data for you. With raw data, you can perform your own tests and draw your own conclusions.
    I found that education was at the heart of my social problem as well. Unfortunately, having a degree, even in the “right” field, is not enough in today’s tough job market. Employers want experience.

    Reply
    1. Lyndsey Post author

      I was able to find Emmanuel Saez’s report ‘Striking it Richer’ which is where the data many claims-makers use comes from. (.pdf)

      In this report, he even states, “Efforts at analyzing long-term trends are often hampered by a lack of good data…The only data source consistently available on a long-run basis is tax data. The U.S. government has published detailed statistics on income reported for tax purposes since 1913, when the modern federal income tax started. These statistics report the number of taxpayers and their total income and tax liability for a large number of income brackets. Combining these data with population census data and aggregate income sources, one can estimate the share of total personal income accruing to various upper-income groups, such as the top 10 percent or top 1 percent.”

      Basically, he used raw data from the final IRS tax statistics (combined with census data and aggregate income sources) to estimate the data used in his report.

      In trying to find raw data it was extremely difficult. I was able to find some sources for IRS tax data, but didn’t have adequate time to properly delve into it.

      Individual Complete Report Publication
      Tax Year 2007 County Income Data

      Reply

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