Wage Gap Shrinking -- Slightly

The 2009 American Community Survey shows that the wage gap between men and women persists in every corner of the United States, though not quite every corner of American territory. Women earn 78.2 cents per dollar that men earn -- up from 77.2 cents in 2008. The average full-time, year-round female worker earns $35594 compared to $45485 for a full-time, year-round male worker. The wage gap was the lowest in the District of Columbia where women earned 88.2% of what men did. In Wyoming, women earned just 65.5% of what men did. Unlike women in every state on the mainland, Puerto Rican women earned $1.033 per dollar men earned in Puerto Rico. With a 90% margain of error of 3.2%, that advantage is slight, but statistically significant. Still, Puerto Rican woman earn far less than women in any state. Per capita income on the island is about half of the United States average.

Correlation however, does not imply causation (ie. gender discrimination). Some evidence suggests that in most professions, gender inequities are explained by other exogenous factors not evenly distributed across genders.

Life and Economics After Prison

In light of modern America's tremendously high incarceration rate (especially among young black males), the Pew Charitable Trusts released a report on the costs in economic mobility of effects of incarceration on economic mobility. Among the top-line findings reported by the New York Times: the average income of former inmates was $23500 compared to an average inome of $39100 that they would have earned if never incarcerated. This resulted from lower wages and fewer working hours. Inmates also enjoyed reduced economic mobility compared to those who hadn't served time.

How big of an economic issue is incarceration? Pew offers one especially sobering statistic. More black males 20-35 who haven't graduated from high school are incarcerated at any given time than are employed.

The World is Fat

Americans often think of obesity as a uniquely American problem, and it is true that only Mexico has a higher rate of obesity and overweight, but a new report from the Organisation for Economic Cooperation and Development, reported on by the New York Times, reminds us that obesity is a worldwide epidemic that affects all rich nations. Severely obese people die 8-10 years younger than people of healthy weight and every extra 15 kgs of weight (33 pounds) increases the likelihood of early death by 30%. Despite the tremendous costs the rate of overweight and obesity is skyrocketing. By 2020 75% of the United States, 70% of the UK, 65% of Australia and majorities of Spain and Canada will be overweight; 70% of people in Mexico already are. Obesity (being severely overweight) is more medically worrying than overweight, and it too is skyrocketing, reaching 16% among males and 17% among females across the OECD, 30% in Mexico and 28% in the United States. Across countries, the rates of obesity tend to be highest among the poor and uneducated who have less access to healthy foods and know less about healthy choices. In it's only encouraging note, the report does say that small investments in prevention could save lives at very low costs.

The executive summary is available here, and the report dealing specifically with the United States, here.

Putting the smallest first

Having fallen to 'bigger' issues on the world's to-do list, the concern of world hunger is still a major problem. According to an article on the Economist, India has the largest percentage of chronically malnourished children, with almost 60.8% of children under five not receiving proper nutrition. What's more perturbing is the absence of adequate government intervention. Despite India having seen tremendous increases in GDP since the 90s, the level of malnutrition has dropped only a few percentage points with an ever-increasing gap between the have's and have-not's.

Malnutrition is not limited to only growth impediments and increased susceptibility to disease, but a lack of nutrition is estimated to account for a 3% loss in annual GDP. Much in the same way that obesity was suggested to cost the US $66 billion in lost productivity, malnutrition accounts for both health and economic problems.

Although government programs in India aimed at alleviating malnutrition do exist, corruption and inefficiency are said to impede their success. In combination with the misunderstanding of the importance of breastfeeding to infant children whom are often given water and cow's milk as an alternative to having the mother remain at home when she could be working, this has worked to designate India as the most malnourished country for children.

While corn rots in a silo in Nebraska because of an overabundance of food in the US, almost half of all Indian children are not receiving their nutritional requirements for beginning a healthy life.

(Some) Health Care Relief Goes into Effect

This Thursday, September 23rd, a number of the measures included in the Patient Protection and Affordable Care Act--the health care bill signed into law by President Obama six months ago--will go into effect. These measures, a large portion of which were designed to protect consumers from insurance companies, will be felt by Americans struggling to afford health care, and may provide an important boost to Democrats in the upcoming midterm elections.

According to the New York Times, "polls have found that many of the provisions taking effect Thursday are popular." Those provisions include making it illegal for insurance companies to exclude children with pre-existing conditions from health plans, denying insurance companies the right to drop patients after finding technical errors on applications, and other consumer protections.

According to the same polls, President Obama has gained favor with many Americans by putting restrictions on what insurance companies can and cannot do. In America today there is "a national sense of fairness and...distrust of health insurers."

Since Republicans and Democrats are still arguing over the law--with some Republicans even promising an effort to repeal it--the health care law may become a big issue again when midterm elections roll around. Just how much Americans agree with the President on the issue may be put to the test this November.

The Morality of Mortgages

With anger at banks high and many homeowners unable to make their overvalued rent payments, the Pew Research Center asked 2,967 respondents whether they thought it was "acceptable or unacceptable for people to walk away from their mortgages" and let banks foreclose on their homes. 19% said it was acceptable, 59% said it was unacceptable while 17% volunteered that the morality depends on the circumstances.

The New York Times looked into some of the more detailed demographic breakdown of those who think it is acceptable or unacceptable to cease making mortgage payments. Among the more interesting findings, Democrats are more likely than Republicans to find it "acceptable" to walk away from their mortgage. Those who rent are more likely than those who actually own homes to find it acceptable, and among homeowners, those who have experienced problems paying bills of any kind are unsurprisingly less likely to judge those who struggle to make mortgage payments.

To put questions about the morality of default in perspective, Bloomberg reports that 12% of defaults are strategic decisions made by debtors who can afford to make their payments In 2007, only 4% of defaults were strategic.

The poll had a 95% confidence interval of +/-2.2%. Detailed information can be downloaded here.

Worst Recession Since Great Depression Ended in June 2009

The so-called Great Recession officially ended in June of 2009 after 18 months according to the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER). 18 months marks the longest downturn in the United States since the Great Depression. The previous record had been 16 months. Recessions are now officially defined by NBER based on a variety of economic indicators. Nearly every major economic indicator reached its low point in June of 2009 and has been in recovery since July 2009. The major exception was employment, which reached its worst point several months later. Unemployment peaked in October of 2009 at 10.1%. But unemployment typically lags broader economic indicators; in 2001 unemployment peaked a whole 19 months after GDP troughed.

Uncommonly long, the recession was also uncommonly deep. Output dropped more in this recession than in any other postwar recession. On the other hand, the economy was so bubbled before the recession that it hasn't fallen as far bellow "normal" capacity as it did in the 1981-82 recession. And while more jobs have been lost than in any postwar recession, the unemployment rate peaked at 10.1% as compared to 10.8% in 1982. But , the workforce today is older, more established and unemployment "ought" to have stayed lower. Whether or not this recession was the most severe or second most severe since the Great Depression, it does have one notable and disturbing difference from all others. Other recessions of such depth were followed by similarly robust bounce-backs. The recovery from this recession has been so slow that fears of a double-dip recession surfaced and output still remains below pre-recession levels.

Image Courtesy of MarketWatch

Rich Getting Richer, Riskier

It's common knowledge that the gap between rich and poor has grown substantially in recent decades, but a new paper from two Northwestern economists suggests that as the rich have grown wealthier, their income has also become more volatile. The top 0.01% of Americans have seen their income drop by 12.7% since the recession began. Americans in general have seen their income fall just 2.6%. More importantly, the wealthy have gained much more than the rest of the country in boom times; in the four years prior to the recession, the same one-in-ten-thousand saw incomes increase 13.9% while the other 99.99% saw incomes rise just 1.8%. Defining wealth more broadly, the same pattern remains. From 1982 to present, income for the top 1% has been 2.4 times more volatile than for the rest of the rest of country, while from 1946-1982 their income was 30% less than average. The paper found these trends to hold in both the United States and Canada (where income inequality is not as high). In short it's getting better, but riskier, to be rich, at least in North America.

According to the Wall Street Journal same trends of globalization and new technology that have helped the rich get richer by exposing them to growth in the global economy also exposes them more to slowdowns and are likely also the reason that their incomes are more volatile.

Why Housing Will Come Back

Homeownership has long been an icon of the American way of life. However, in light of the burst of the housing bubble, many are starting to question whether homeownership is economically viable and whether Americans should still aspire to own a “piece” of the American dream.

Homeownership has risen from 44% in 1944 to nearly 70% at the height of the housing bubble, indicating not only social achievement but preferences favoring suburban single-family lifestyles. While such strong associations between homeownership, property, and democracy will likely deter any major change in homeownership patterns, housing inflation poses a major problem for affordability. Between 2006 and 2008, barely 2% of families with a median income in Los Angeles could afford to buy a median priced home. However, after market correction, the affordability number, or “Housing Opportunity Index”, for Los Angeles is 34% -- 17 times better than two years ago. These lower prices will likely lure new buyers to places with drastically improved housing affordability, but many wonder whether these locations will become overrun with “the next slums”.

Joel Kotkin at Forbes states that the importance of re-establishing homeownership as less of a gamble than a long-term lifestyle choice will soon become apparent. By the year 2050, the American population is predicted to grow by 100 million and the demand for homes will be excessively high. At the same time, the Millenial generation (born after 1983 and now entering their late 20s) are “family-oriented young people who value homeownership even more than their boomer parents”. They also subscribe more strongly to the American ideal of suburban living than the previous generation. These factors should lead to an increase of home buying starting later this decade, a resurgence that has the potential to not only save our economy but restore traditional American values centered around the home.

Poverty Rates Highest in Years

14.3% of Americans now live in poverty, defined as $21,954 annually for a family of four (or a comparable level of income for larger or smaller families), according to numbers released today by the Census Bureau. This marks the highest percentage living in poverty since 1994 and the largest absolute number of Americans in poverty (43.6 million) since 1959 (the headline writers at the USA Today seem to have some difficulty figuring out the difference in an article entitled: "USA's Poverty Rate Reaches Highest Level in 51 Years"). The rate of child poverty -- usually higher than adult poverty -- passed 20% for the first time since 1996, an increase that Brookings Institution and University of Michigan demographer William Frey notes was largely driven by a substantial increase in white child poverty: from 10.6% to 11.9%.

Stephen Gandel at Time magazine attempts to explain why poverty has gone up so quickly in this recession given that poverty rates have only increased marginally in previous recessions. He argues that in addition to the fact that this recession is steeper than most, it builds on long-term economic trends. The first is increasing inequality: the broadest measure of inequality in the US, the gini coefficient, has gone up 22% since the early 1980s. Thus more people are more vulnerable to cyclical downturns that might force them into poverty. The second is that more of the unemployed have been unemployed for longer; 42% of the unemployed for August (and 46% in July) had been unemployed for more than six months, a much higher percentage than normal. Thus the economic pain of unemployment is concentrated on fewer more vulnerable households. As the graph below shows, term of unemployment is largely cyclical but has shown a secular upward trend over the past thirty years. Thus Gandel argues that even after recovery begins, the United States may struggle with long term poverty.

Obesity Costs US $215 Billion

A new study from the Brookings Institution suggests that obesity costs the United States at least $215 billion dollars annually. Most of that comes from over $161 billion in increased health care costs (of which adult obesity increases health care costs by $147 billion and childhood obesity by $14.3 billion). However indirect costs of obesity also substantial. Though these are harder to estimate, one Brookings researcher suggests that productivity lost due to obesity-related illnesses could cost the American economy as much as $66 billion each year. Other costs are even more difficult to quantify, for instance larger people require larger vehicles increasing spending on gas and increasing the greenhouse gas emissions that cause global warming.

Finally, Brookings noted that obesity is positively and significantly correlated with lower rates of marriage, lower incomes, lower education rates and higher rates of poverty in women and with lower rates of marriage in men. Of course, correlation does not imply causation and it's quite possible that the same social conditions which cause these negative outcomes also cause higher rates of obesity.

More News, More Online

The Pew Research Center for People and the Press released a biennial survey on the news consumption habits of Americans. It shows that while use of traditional news sources is declining slightly, consumption of media through the internet and other new technology has more than made up the difference. Thus total media consumption is at its highest level since the mid 1990s. The average American consumes a bit more than seventy minutes of news per day (Pew reports seventy without counting news accessed through cell phones). TV news remains important even though cable viewership has dropped slightly from its peak during the 2008 election. The number reading print newspapers has dropped and the number visiting newspaper websites has risen, but by less, thus the total number of newspaper readers is down slightly. Worse, readers of local papers tend to be older than the country as a whole (though the same is not true for readers of national papers like the New York Times, Wall Street Journal and USA Today). Despite slight dips in the number of people consuming traditional media, those who still consume traditional news are consuming slightly more; the average American still spends 57 minutes a day on news from newspapers, radio or television as was the case a decade ago. In addition, we now also consume, on average, thirteen minutes of online news.

The poll surveyed 3,006 adults with land lines or cell phones and has a margin of error (95% confidence) of +/-2.5% for the full sample. Subsamples have higher margins of error, up to +/-7.5% for the 256 person sample of Twitter users. The full report is available for download here.

The Tax Cuts and You

The major policy debate in Washington right now is what to do with George Bush's 2001 and 2003 tax cuts that are set to expire this year. The Tax Policy Center, a project of the Urban Institute and the Brookings Institution, has put together a calculator, which MSNBC has publicized, allowing taxpayers to calculate how much they would pay in taxes under three scenarios: a total extension of the 2001 and 2003 tax cuts, an expiration of all of those tax cuts as would take in the absence of Congressional action, or the policy which President Obama favors: an extension of the cuts on income under $200,000 for individuals or $250,000 per family. Those who prefer not to enter all of their information can select from a series of "typical" taxpayers at different income levels. For those who know their taxable income (after deductions) NPR has simplified the calculator.

The other side of the tax question is, of course, the budget deficit. Estimates vary, but Obama's proposal is expected to cost the US Treasury $3 trillion over the next decade compared to allowing all the tax cuts to expire. The Republican plan to continue all of the tax cuts would cost an additional $700 billion for a total cost of nearly $4 trillion.

ICPSR and RCMD Call for Student Research Papers

ICPSR and the Research Center for Minority Data are pleased to announce our 2011 Research Paper Competitions. This year, ICPSR and RCMD are holding three competitions – two for undergraduates and one for master’s students.

The purpose of these competitions is to highlight student research papers using RCMD or ICPSR data. The objective is to encourage students to explore the social sciences by means of critical analysis of a topic supported by quantitative analysis of a dataset(s) held within ICPSR or the RCMD archive and presented in written form. Entries to the either undergraduates or master’s competition could be papers written for a capstone course, a senior seminar, or any writing intensive course for which the student uses quantitative data analysis to support or refute a hypothesis. A master’s thesis could be appropriate provided that the terms above are met.

One of the undergraduate competitions is for papers using data in the RCMD archive; the other can use dataset(s) from any ICPSR archive. The master’s competition can use data from any ICPSR archive.

Competitions awards are $1,000 for first place and $750 for second place. The deadline for submission is January 31, 2011. For more information, submission guidelines, and promotional posters, please visit the competition Web site. Please share this exciting opportunity with faculty and students!

2010-09-13

US Trade Deficit Narrows

The United States trade deficit was 14% lower in July than it was in June thanks to a $2.8 billion increase in exports (lead by a $2.3 billion increase in capital goods, largely civilian aircraft) and $4.9 billion less in imports (lead by a $1.9 billion decrease in consumer spending on imported goods). Disappointingly weak growth in Europe (especially in the Mediterranean region) did, however, lead to a growth in the American trade deficit with the European Union. GDP for the second quarter grew much more slowly than had been expected (estimates were revised downward from 2.4% annualized growth to 1.6% growth) largely because the trade deficit took 3.4% out of potential GDP growth. The improved trade numbers suggest that American economic growth in the third quarter could be better than expected.

Meanwhile at the Washington Post Bruce Katz and Jonathan Rothwell of the Brookings Institution use a great deal of data to argue that the story about American trade and exports is far more encouraging that it has traditionally been seen.

Pew Surveys Re-Employed

Pew Research Center released a survey showing that 26% of the United States' 139 currently employed people have been unemployed at some point during the recession. More than a third of that group has been unemployed more than once during the recession. Those who are reemployed are less likely to be satisfied with their current job (although 78% still say they are satisfied vs. 89% of those who have not lost their job). They are also more likely to feel overqualified for their current job (54% vs. 36%).

While only 38% of respondents say the pay at their new job is better, and 28% say the benefits are better (and reemployed respondents often feel overqualified and unsatisfied) a plurality of 43% claim to be happier at their new job than at their old one, though Pew suggests that this might be an expression of relief at being re-employed rather than genuine enjoyment of their new job. 55% still claim to be worse off economically, perhaps because of the income lost while unemployed. These complex and nuanced positions, which the Washington Post discusses, could suggest mixed attitudes or uncertainty among respondents about their own position.

Read the full report here

Illegal Immigration Slowing Quickly

The Pew Hispanic Center, a non-partisan research organization, says that the number of illegal immigrants living in the United States is down about 900,000 from 12 million to 11.1 million, though the population is hard to estimate. This two-year trend marks the first statistically significant decline in the undocumented population in the last twenty years. The annual inflow is down more sharply: from a peak of 850,00 per year at the beginning of the decade to around 200,000 per year for the period of the study -- March 2007 to March 2009. The decline in illegal immigration was most notable from Central and South American countries other than Mexico.

The New York Times notes that the Mexican census confirms the trends noted by Pew (Mexicans account for about 60% of the illegal immigrants in the United States). While Mexico has seen a 67% decline in the outflow of immigrants to the United States from 2006 to 2009 it showed no notable increase in inflow. One researcher notes that most Mexican immigrants are settled in the United States unlikely to move due to a recession, and that the increasing level of enforcement of recent years has been focused on patrolling the border rather than on immigrants already living in the United States.

The full report from Pew is available for download.

The "Mosque" and the Media

The proposed Islamic community center to be built a few blocks from the site of the 9-11 attacks, which has been dubbed by some in the media as the "ground zero mosque" dominated news coverage for the third week of August, receiving 15% of total news coverage (compared to 9% for the ending of the Iraq War and 7% for the economy). But it only received 3% of the coverage in newspapers, compared to 24% of radio coverage and 29% of cable news airtime. Most strikingly 45% of airtime on cable talk and opinion shows (that is, not straight news programs) was devoted to the controversy.

The weekly study from the Pew Center for Excellence in Journalism studies Network TV News, newspapers, online news sites, cable news and radio news. A look at its methodology is available here.

Quantifying a War

National Public Radio's "All Things Considered" interviewed the Brookings Institution's Michael O'Hanlon who has published, often in the New York Times a segment called Iraq by the Numbers. Upon the withdrawal of combat troops from Iraq, O'Hanlon attempted to provide final numbers. Among the costs:

-4,500 American dead (with an additional 60,000 wounded, half of them seriously), 100,000-150,000 Iraqi civilians dead and about 10,000 Iraqi military deaths

-$700 billion in direct costs with ripple effects throughout the economy that could potentially mean the total cost to the US economy reached $3 trillion

Upon the end of Operation Iraqi Freedom conditions in Iraq remain mixed:

-Oil production is slightly higher than it was before the war, about 2.5 million barrels per day, though some estimate Iraq has the resources to potentially produce 6 million barrels per day with the right investment

-O'Hanlon estimates unemployment to be over 30%

-Electricity production is nearly double what it was under Saddam Hussein, 7,000-8,000 megawatts vs. 4,000 before the war

-5 million Iraqis displaced (3 million internally and 2 million abroad) of which 1 million have been able to return out of an Iraqi population of somewhat more than 25 million.