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Reflections on Income Inequality

  • Written by Syndicated Publisher No Comments Comments
    January 22, 2014

    Last night my wife and I were looking for something to stream on Netflix, and I remembered that The Butler was available on Red Box (which has a vending machine about a 90-second walk from our residence).

    About 34 minutes into the film, Vice President Nixon (John Cusack) enters the White House kitchen, where the butler (Forest Whitaker) and two other staff members (Cuba Gooding, Jr. and Lenny Kravitz) are kneading dough (no pun intended). The opportunistic Nixon passes out some campaign buttons and turns the scene into a research session:

    Nixon: Let me ask you something, in all candor, as members of the Negro community, what are your biggest concerns?Now, come on now, boys. Don’t be shy.James Holloway (played by Kravitz): “Well, since you asked, sir.”Nixon: I did.Holloway: The colored help gets paid almost 40% less than the white help.

    Nixon: Is that right?

    Holloway: Yes, sir. And it’s very difficult for the colored staff to be promoted.

    Nixon: I’ll tell you what. When I’m President, I’m gonna look into getting you boys the raises and promotions you deserve.

     

    When the film was over, I downloaded the Census Bureau’s historical data for Per Capita Income. The annual data starts in 1967, a bit over seven years after the hypothetical conversation between Nixon and the staff. Based on the CB data, we can assume that the 1960 White House was probably a bit more equitable in salaries than society at large. The per capita income gap between blacks and whites at the inception of the CB data was 46%. Forty years later, in 2007, the gap reached its narrowest at 35%. The latest annual data, though 2012, puts the gap slightly wider at 36%.

    Here is a more detailed snapshot of the data: real per capita annual income for blacks and whites in chained 2012 dollars using the Consumer Price Index for Urban Consumers – Research Series, which is the CB’s preferred inflation index. For some historical context, I’ve highlighted recessions and the Presidencies during this timeframe.

     

     

    The next chart gives us a clearer view of the relative growth of these two data series.

     

     

    For a more detailed analysis of the recent trends, see this monthly breakdown by race and ethnicity of household incomes from June 2009 to June 2013, data courtesy of Sentier Research.

    As we readily see, our progress toward income equality has been quite limited, and the little success we can measure has been excruciatingly slow in coming.

    Images: Flickr (licence attribution)

    About The Author

    My original dshort.com website was launched in February 2005 using a domain name based on my real name, Doug Short. I’m a formerly retired first wave boomer with a Ph.D. in English from Duke. Now my website has been acquired byAdvisor Perspectives, where I have been appointed the Vice President of Research.

    My first career was a faculty position at North Carolina State University, where I achieved the rank of Full Professor in 1983. During the early ’80s I got hooked on academic uses of microcomputers for research and instruction. In 1983, I co-directed the Sixth International Conference on Computers and the Humanities. An IBM executive who attended the conference made me a job offer I couldn’t refuse.

    Thus began my new career as a Higher Education Consultant for IBM — an ambassador for Information Technology to major universities around the country. After 12 years with Big Blue, I grew tired of the constant travel and left for a series of IT management positions in the Research Triangle area of North Carolina. I concluded my IT career managing the group responsible for email and research databases at GlaxoSmithKline until my retirement in 2006.

    Contrary to what many visitors assume based on my last name, I’m not a bearish short seller. It’s true that some of my content has been a bit pessimistic in recent years. But I believe this is a result of economic realities and not a personal bias. For the record, my efforts to educate others about bear markets date from November 2007, as this Motley Fool article attests.

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