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  • And The Poor Get Richer

    In the Wall Street Journal today American University and the University of Nevada at Reno economics professor Brad Schiller offers a great corrective to those who claim inequality is growing in the United States. First Schiller notes that while the share of the pie the bottom 20% of the population is earning is smaller than it was in 1970, the pie itself is much larger. Factoring in economic and population growth, Schiller explains, “the average income of people at the bottom of the income distribution has risen 36%” since 1970.

    Also overlooked by Census data, are the policies the shaped the makeup of the bottom quintile. Since 1998 the U.S. population has increased by over 20 million and almost half that growth has come from immigration. As previous Heritage research has shown, our immigration policies import poverty into the U.S.:

    Today’s immigrants differ greatly from historic immigrant populations. Prior to 1960, immigrants to the U.S. had education levels that were similar to those of the non-immigrant workforce and earned wages that were, on aver­age, higher than those of non-immigrant workers. Since the mid-1960s, however, the education levels of new immigrants have plunged relative to non-immigrants; consequently, the average wages of immigrants are now well below those of the non-immigrant population. Recent immigrants increasingly occupy the low end of the U.S. socio-economic spectrum.

    With the NCAA tournament around the corner, Schiller details how the immigrant flow affects income disparity data:

    To understand what’s happening here, envision a line of people queued up for March Madness tickets. Individuals move up the line as tickets are purchased. But new people keep coming. So the line never gets shorter, even though individuals are advancing. Something similar happens with the distribution of income. People keep entering the distribution line from the bottom. Even though individuals are moving up the line, the middle of the line never seems to move. Hence, an unchanged — or even receding — median marker could co-exist with individual advancement. The people who were at the middle marker before have moved up the distribution line. This is the kind of income mobility that has long characterized U.S. income dynamics.

    Posted in Economics [slideshow_deploy]

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