Income Inequality

In Case You Missed It: Third and State Blog This Week

This week, we blogged about job growth in Pennsylvania, what message President Obama should send to the U.S. Chamber of Commerce, lessons to learn from other state's fiscal woes and a whole lot more.

In case you missed it:

  • On the economy, Steve Herzenberg explained how Pennsylvania was a big winner in job performance for 2010, while New Jersey was the "biggest loser." Steve also blogged on what message President Obama should be sending to the U.S. Chamber of Commerce and weighed in on the nation's "Swiss Cheese" tax system.
  • On the state budget, Chris Lilienthal highlighted another edition of the Pennsylvania Budget and Policy Center's Fiscal Facts, and talked about lessons to learn from other states' budget challenges.
  • On jobs and unemployment, Mark Price wrote that for the long-term unemployed, the jobs just aren't there. Mark also blogged this week on strengthening the middle class and debunking bogus research on upward mobility and income 

More blog posts next week. Keep us bookmarked and join the conversation!

Switching Places ... or Not: Intragenerational Mobility

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Over the last several decades, income inequality in the United States has increased dramatically. Back in the early 90s, conservatives were looking for ways to demonstrate that inequality had not gotten worse. Glenn Hubbard (who later was one of the architects of the 2003 Bush tax cuts), while on leave from an academic post, released a study from the U.S. Treasury's Office of Tax Analysis which purported to show that:

86 percent of households in the bottom fifth in 1979 had climbed out of poverty by 1988.

Here is Paul Krugman from 1992 explaining the "strange procedure" that produced this result:

Here's what Hubbard's report did: it tracked a group of individuals who paid income taxes in all ten years from 1979 to 1988, and compared their incomes not with each other but with those of the population at large. The restriction to individuals who paid taxes in all years immediately introduced a strong bias toward including only the economically successful; only about half of families paid income taxes in all ten years.

What Obama Should Say to the U.S. Chamber

President Obama addresses the U.S. Chamber of Commerce today as part of his post-election effort to improve relations with U.S. business.

What part of U.S. business does the Chamber represent? Mostly big business and corporate CEOs — people who make many millions, often without risking any of their own money. That’s the only way to explain that the extension of the Bush tax cuts for the very rich was the top Chamber priority last year — even though this won’t benefit the vast majority of businesses.

Strengthening the middle class

On Thursday, Derek Thompson, an associate editor at the Atlantic, wrote a guest post at Ezra Klein’s blog discussing how to rebuild the middle class.  Below is his list of possible interventions to cure what ails the middle class:

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