Friday, August 27, 2004

Income, Poverty and Health Insurance in the United States: 2003

The Bush administration tried to sneak this out while everybody is on vacation and before the Republican convention meets in New York. Naughty, naughty!

But just in case it was an honest mistake to bury the data pretty deep (and to give it in as raw form as possible), I am going to do my little bit towards greater publicity of the numbers.

First, the real median income didn't change from 2002. Second, poverty rates rose by 0.4 percent or by 1.3 million people. Third, the number of people without health insurance rose by 1.4 million. We now have 45 million people who lack health insurance, and slightly more than one child in ten is without any coverage whatsover.

Now to the interesting stuff: The Newsday summary of the report states the following:

Income inequality showed no change between 2002 and 2003 when measured by the Gini index. The share of aggregate income received by the lowest household income quintile (20 percent of households) declined from 3.5 percent to 3.4 percent, while remaining unchanged for the other quintiles.

The Census report itself says something a little bit different:

Income inequality can be measured in a number of ways. According to the most widely used measure, the Gini index, household money income inequality did not change from 2002 to 2003. Other measures do showed an increase in inequality. One such measure involves the income levels delineating each 20 percent of households. The income level separating the lowest 20 percent of households from the second 20 percent decreased by 1.9 percent, to about $18,000, while the level separating the fourth 20 percent from the highest 20 percent increased, by 1.1 percent, to about $86,900. A third measure involves the share of aggregate income that each 20 percent of households received. The share of income received by the lowest 20 percent of households declined from 3.5 percent to 3.4 percent, while the shares of the other groups did not change.

What all this economese is really saying is that the poor got poorer and the rich got richer. Using the Gini coefficient as the first measure of inequality mentioned is an attempt to hide this fact (The Gini coefficient is more sensitive to changes in the middle incomes than the incomes which are very high or very low). The gap between the rich and the poor grew, and in fact the gap between the rich and the middle classes grew, too:

For the first time, households at the 80th percentile have twice the income of those in the middle.

In other words, the households that are richer than roughly 80% of the population but poorer than roughly 20% of the population have double the incomes of those who are richer than roughly 50% of the population. Or did that clarify anything at all? Well, I tried.

Another thing hidden in the information of stagnant overall median incomes is the distribution of these incomes between various groups.
Though the report does mention them later on, beginning with unchanging median incomes gives the impression that everybody is somehow as well off in 2003 as in 2002. But in fact households with Hispanic householders saw their incomes fall by 2.6%, and the median earnings of women who work full-time declined 0.6% while those of men who work full-time remained constant.

This means that the wage gap between men and women (which calculates women's earnings as a percentage of men's earnings) increased. Women earned 76 cents for each dollar men earned in 2003, down from 77 cents per dollar in 2002.

This decline may not show a long-term trend of worsening earnings inequalities between various groups, though of course it's possible that it does and that this is the administration's intent. To examine these possibilities more closely I tried to find data on the median earnings of full-time workers by race and ethnic group as well as sex, but all I was offered were tables of classified data. To get the numbers I want, I need to download the data and run the analyses on my own computer. And I don't feel like doing that on a Friday afternoon. Maybe that's what the administration is relying on?