Income inequality in Massachusetts

The Boston Foundation has put out a report on Boston. The Boston Globe talks about it here and leads with a graphic showing that income growth was fairly evenly distributed from 1947 to 1070, but concentrated at the top from 1980 to 2009 (earnings went up 55% for the top 20%, 25% for the next quintile, 15% for the middle, 7% for the next group, and down 4% for the bottom–notice that this understates the problem since the same is true in the top quintile, most of the growth was in the top 1% or even .1%). The report has much more (I will only describe the graphs, you’ll have to click on the link to see them–I give the page numbers from the file, not as given on the pages):

  • a graph on page 13 shows the decoupling of the growth of productivity and wages–they mostly went up together until the early 1970s, but wages went up only 7% from 1980 to 2009 while productivity went up 80%.
  • from page 15 we get:

US health care costs are twice the average of those in other wealthy developed nations, all of which provide health care coverage to all of their people. Yet despite these high costs, Americans’ health ranks among the lowest. This discrepancy is often explained in terms of America’s greater diversity and disparities, yet insured, white, middle-class Americans now rank lower in health status than all British residents. And white Americans’ life expectancy is shorter than that of all Canadians—who spend 40% less.


National Institute of Medicine (IOM) research finds that the cost discrepancy in health spending between the US and its peers is due to the US health care system wasting about one-third of its cost through inefficiencies and a lack of focus on preventable disease. Nationally in 2009, that “wasted one-third” equaled about $765 billion of the total $2.2 trillion spent.

  • one of the reasons that productivity gains have been passed on is that companies are keeping it (from page 16):

Over the last decade, despite two recessions, US corporate profits soared to record levels. In 2010, US corporations posted $1.4 trillion in post-tax profits, up from $507 billion in 2000—a 178% increase over the decade. By comparison, post-tax corporate profits in the US rose by 40% in the 1950s and by 90% in the 1960s.
In contrast to earlier decades, however, rising corporate prosperity did not translate into job growth. From 2000 to 2010, total US employment grew by an average annual rate of 0.1%—a fraction of growth
in previous decades. This reflects in part the sea-change of increasing productivity through automation and off-shoring.

  • intergenerational economic mobility is now lower in the US than many other countries, such as France, Canada, and Denmark (see graph on page 18)

There’s more, so go read.

As an aside, articles like this, while laughable in some ways, shows that problems that inequality causes (such as worrying about losing your job) are creeping up the income scale. This is happening because the inequality is getting so severe that only the very top earners are seeing their income go up significantly (that top .1 or 1%), look here for example.

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