Brookings: Topics - Inequality

How Much Do Americans Care About Income Inequality? Part II

Scott Winship — Wed, 15 May 2013 16:00:00 -0400

Recently in this space, I criticized an op-ed that claimed to resolve a paradox related to inequality and public policy. Ilyana Kuziemko and Stefanie Stantcheva argued that while Americans are "deeply troubled about the current level of income inequality," support for government policy to reduce it is low. Based on a series of randomized experiments they conducted with Emmanuel Saez and Michael Norton, Kuziemko and Stantcheva speculated that rising inequality has eroded trust in government, resolving the paradox.

In my previous essay, I argued that there is little evidence to indicate that Americans are particularly concerned about inequality, so their lack of interest in having the government intervene should be unsurprising. Here I want to draw attention to a problem with the conclusion of Kuziemko and her colleagues that providing people with information about inequality reduced trust in government.

In their experiment, some survey respondents were provided information about their ranking in the income distribution and about inequality levels. Receiving this information produced a decline in expressed levels of trust in government. Kuziemko and her colleagues conclude that,"emphasizing the severity of a social or economic problem appears to undercut respondents' willingness to trust the government to fix it-the existence of the problem could act as evidence of the government's limited capacity to improve outcomes more generally." But the information in their survey did not simply emphasize the severity of inequality, it exaggerated economic hardship.

Respondents randomly selected to receive information about inequality first input their "annual household income" and were told the share of "US households" that earn less than their own "household." But the information the survey gave respondents made them feel richer than they were. I typed into the survey form the 2011 median household income according to the Census Bureau-$50,054. The survey should have told me that "my" household was richer than 50 percent of American households-that's what the median is. Instead, I was told I was richer than 66 percent of households.

In fact, what the information provided by the survey told the subject was the percentage of tax returns that have less gross income than the household income she reported. Tax returns are not households. Two roommates living together, a cohabiting couple, a married couple filing separate returns-all of these constitute one household but two tax returns. More to the point, a sixteen-year-old burger-flipper or a fulltime college student with a work-study job are also distinct tax returns even if they live at home. Furthermore, gross income on tax returns (AGI with adjustments put back in) is not "household income" as most people think of it. For example, non-taxable public transfers-including most Social Security benefits and all welfare benefits-are excluded. So are the tax-favored employee benefits commonly deducted from paychecks, such as health insurance premiums, retirement plan contributions, and flexible spending accounts.

The result of these differences between the income of households and the gross income of tax returns is that the median for the former is quite a bit bigger than the median for the latter (and the same is true for other parts of the income distribution, such as the "richest ten percent" or the"poorest third"). The survey tool reports that $33,800 is the median "household income"-one-third less than the actual median.

The respondent, then, "learned" that she was richer than she was, and if she correctly thought that her standard of living was average before responding, she learned that it was better than average. More people were doing worse than her than she thought, and fewer people were doing better than her. The next step in the survey drove that home by inviting her to move a slider to see how "households" with different income levels rank compared with other households. This step reinforced that Americans were poorer than they actually were.

Different subjects were shown additional screens subsequently. However, everyone randomized to receive the information about inequality proceeded through the rest of the survey-with its questions about policy preferences and trust in government-having been given this overly-negative data about how Americans are doing economically. The subjects randomized to bypass the informational screens were not primed in this way. The design of this experiment does not allow us to assess whether getting accurate information about the distribution of household income reduces trust in government. Instead, trust in government may be eroded by getting anxiety-provoking (and inaccurate) information.

Interestingly, Kuziemko and her colleagues report results from a separate experiment they conducted indicating that among below-median households, being primed with negative information about the state of the economy reduces opposition to inequality and support for redistribution and for progressive approaches to deficit reduction. It may be that attempting to convince middle class Americans that economic insecurity is more pervasive than it is will prove counterproductive to those who wish to help the truly insecure.

I have argued elsewhere that conventional accounts on the left do, in fact, systematically overstate both the extent of economic insecurity and the strength of the evidence that income inequality is harmful. It would be a regrettable irony if an excessive and distorted focus on inequality turns out to be more harmful to struggling families than income inequality itself.

Authors

Scott Winship

Publication: Real Clear Markets

Image Source: © Carlo Allegri / Reuters

Why We Still Think College Isn't for Everyone

Isabel V. Sawhill and Stephanie Owen — Mon, 13 May 2013 15:41:00 -0400

Is a college degree worth it? Not for everyone, according to our newly-released Center on Children and Families policy brief. The value of a college degree can vary dramatically, depending on factors such as field of study, type of college, graduation rate and future occupation. Here’s our final follow-up blog post, where we take a closer look at the conclusions we come to in the brief. (Read the first, second, and third parts here.)

Last week, the Center on Children and Families released a policy brief on making smarter decisions about higher education. We have welcomed the ensuing spirited debate from policymakers, students, colleges, and fellow researchers. The title of our policy brief, “Should Everyone Go To College,” is intentionally provocative and was chosen to start a conversation around the question. In favor of simplicity, we used the blanket term “college” to argue that a traditional four-year bachelor’s degree is not for everyone. We do think that some sort of postsecondary training is a good idea for almost everyone. This includes associate’s degrees, technical and vocational certification, apprenticeships, and worker training programs.

Some suggest that encouraging marginal students to pursue some of these non-academic paths creates a tracked system that keeps low-income and minority kids out of the upper echelons of our society. For that reason, vocational education has largely fallen out of favor in the United States, but gaps in academic performance between rich and poor and blacks and whites have persisted or, in the case of income, even grown. Closing these gaps has been one goal of the research done by the Center on Children and Families at Brookings, and we agree strongly that more needs to be done to prepare students to be college ready at the end of secondary school. But for the students we focus on in our brief—teenagers and young adults planning their educational and career paths—it is often too late to make up this lost ground.

The goal should be to help them make the choices that will turn out best for them given their individual strengths at the end of high school. For a student who has performed poorly in the classroom, the most bang-for-the-buck may come from a vocationally-oriented associate’s degree or career-specific technical training or from a period of work before returning to school with stronger motivation to learn what academic institutions teach. Think of the alternative: this student’s poor grades and possible ambivalence about classroom learning means he is likely to never finish his degree, and will have wasted time and money that could have been spent learning an employable skill. On the other hand, there are plenty of low-income students who are smart enough to succeed in college but who tend to choose schools that are beneath their ability and are more likely to drop out. The correlations of family background with college entry, persistence, and graduation have been rising, meaning it is especially important to help low-income students with the requisite abilities and preparation to enroll in a high-quality institution. Those individuals could benefit from better information about financial aid, graduation rates, and expected earnings.

Unfortunately, that information is not currently available: no one single comprehensive dataset containing information on earnings by school (let alone by major or program) exists. The Student Right to Know Before You Go Act, which we mention in our brief, has bipartisan support and would be an improvement on the status quo. The PayScale dataset we used for our brief has significant limitations, including questions about the reliability of its calculations and its representativeness.

Finally, some have rightly pointed out that our findings are descriptive, and should not necessarily be interpreted causally. It is likely true that smarter students self-select into engineering majors, so not every student will do better if she studies engineering rather than English. The same logic applies to more selective schools: part of why students at elite schools do better later on is that they are more talented before they ever enter college. Even so, careful economic research suggests that students do best when they attend the best school they can get in to, and that certain majors have real benefits.

Ultimately, higher education decisions are made by individual students and their families, and are based on their unique interests, strengths, and personal values, not only income and career prospects. Students need to have realistic expectations about what they’re likely to get out of pursuing higher education. Rigorous economic research has found that there is a sizeable proportion of people who experience a negative return to their education. That doesn’t mean they may not excel at other pursuits. It just means that one size doesn’t fit all high school students.

Authors

Isabel V. Sawhill
Stephanie Owen

Image Source: © Jessica Rinaldi / Reuters

Should Everyone Go To College?

Stephanie Owen and Isabel V. Sawhill — Wed, 08 May 2013 09:00:00 -0400

Summary

For the past few decades, it has been widely argued that a college degree is a prerequisite to entering the middle class in the United States. Study after study reminds us that higher education is one of the best investments we can make, and President Obama has called it “an economic imperative.” We all know that, on average, college graduates make significantly more money over their lifetimes than those with only a high school education. What gets less attention is the fact that not all college degrees or college graduates are equal. There is enormous variation in the so-called return to education depending on factors such as institution attended, field of study, whether a student graduates, and post-graduation occupation. While the average return to obtaining a college degree is clearly positive, we emphasize that it is not universally so. For certain schools, majors, occupations, and individuals, college may not be a smart investment. By telling all young people that they should go to college no matter what, we are actually doing some of them a disservice.

The Rate of Return on Education

One way to estimate the value of education is to look at the increase in earnings associated with an additional year of schooling. However, correlation is not causation, and getting at the true causal effect of education on earnings is not so easy. The main problem is one of selection: if the smartest, most motivated people are both more likely to go to college and more likely to be financially successful, then the observed difference in earnings by years of education doesn’t measure the true effect of college.

Researchers have attempted to get around this problem of causality by employing a number of clever techniques, including, for example, comparing identical twins with different levels of education. The best studies suggest that the return to an additional year of school is around 10 percent. If we apply this 10 percent rate to the median earnings of about $30,000 for a 25- to 34-year-old high school graduate working full time in 2010, this implies that a year of college increases earnings by $3,000, and four years increases them by $12,000. Notice that this amount is less than the raw differences in earnings between high school graduates and bachelor’s degree holders of $15,000, but it is in the same ballpark. Similarly, the raw difference between high school graduates and associate’s degree holders is about $7,000, but a return of 10% would predict the causal effect of those additional two years to be $6,000.

There are other factors to consider. The cost of college matters as well: the more someone has to pay to attend, the lower the net benefit of attending. Furthermore, we have to factor in the opportunity cost of college, measured as the foregone earnings a student gives up when he or she leaves or delays entering the workforce in order to attend school. Using average earnings for 18- and 19-year-olds and 20- and 21-year-olds with high school degrees (including those working part-time or not at all), Michael Greenstone and Adam Looney of Brookings’ Hamilton Project calculate an opportunity cost of $54,000 for a four-year degree. In this brief, we take a rather narrow view of the value of a college degree, focusing on the earnings premium. However, there are many non-monetary benefits of schooling which are harder to measure but no less important. Research suggests that additional education improves overall wellbeing by affecting things like job satisfaction, health, marriage, parenting, trust, and social interaction. Additionally, there are social benefits to education, such as reduced crime rates and higher political participation. We also do not want to dismiss personal preferences, and we acknowledge that many people derive value from their careers in ways that have nothing to do with money. While beyond the scope of this piece, we do want to point out that these noneconomic factors can change the cost-benefit calculus.

As noted above, the gap in annual earnings between young high school graduates and bachelor’s degree holders working full time is $15,000. What’s more, the earnings premium associated with a college degree grows over a lifetime. Hamilton Project research shows that 23- to 25-year-olds with bachelor’s degrees make $12,000 more than high school graduates but by age 50, the gap has grown to $46,500 (Figure 1). When we look at lifetime earnings—the sum of earnings over a career—the total premium is $570,000 for a bachelor’s degree and $170,000 for an associate’s degree. Compared to the average up-front cost of four years of college (tuition plus opportunity cost) of $102,000, the Hamilton Project is not alone in arguing that investing in college provides “a tremendous return.”

It is always possible to quibble over specific calculations, but it is hard to deny that, on average, the benefits of a college degree far outweigh the costs. The key phrase here is “on average.” The purpose of this brief is to highlight the reasons why, for a given individual, the benefits may not outweigh the costs. We emphasize that a 17- or 18-year-old deciding whether and where to go to college should carefully consider his or her own likely path of education and career before committing a considerable amount of time and money to that degree. With tuitions rising faster than family incomes, the typical college student is now more dependent than in the past on loans, creating serious risks for the individual student and perhaps for the system as a whole, should widespread defaults occur in the future. Federal student loans now total close to $1 trillion, larger than credit card debt or auto loans and second only to mortgage debt on household balance sheets.

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Should Everyone Go To College?

Authors

Stephanie Owen
Isabel V. Sawhill

Image Source: © Brian Snyder / Reuters

College Is The Holy Grail, But Should Everyone Go?

Isabel V. Sawhill — Wed, 08 May 2013 09:30:00 -0400

The new Holy Grail in American life appears to be a four-year college degree. Almost all high school students and their parents aspire to go to college, and high school graduates are enrolling in much higher numbers than in the past. The problem is that too few of them are graduating. Dropout rates from four-year schools are over 40 percent and from community colleges they are closer to 70 percent. The need for remedial courses to compensate for what kids are not learning in high school is distressingly high and not all that effective.

For those who actually graduate, a college degree can pay off handsomely in the labor market. After adjusting for other confounding variables, the extra lifetime income associated with a bachelor’s degree is $570,000, and the rate of return is high – somewhere around 10 percent. However, those figures are averages. The benefits of a college degree vary widely depending on the quality of the school and a student’s choice of major. Not all college degrees are created equal: there is a huge variation in the return to a bachelor’s degree, depending on choice of major and occupation; school type and selectivity level; as well as the likelihood of graduating. The details are spelled out in a newly released Brookings brief that notes that 170 of 853 unique schools, or 1 in 5 of those schools analyzed, have negative returns on investment.

With college costs at record highs, many students are incurring debilitating debt. Student loans are the second largest item on household balance sheets after mortgage debt. It may actually be irresponsible to tell young people that college is always the best choice, and that they will be able to find jobs that make these debt levels affordable. If a student is able to get into a school with high graduation rates, generous financial aid, and he or she chooses a major with high expected earnings – such as engineering or science -- they can greatly improve their lifetime prospects. But an expensive degree at a non-selective four-year school with a low graduation rate may not be a wise decision.

How can we help students make smarter investments in their postsecondary years? First, we need to make sure they have better information on financial aid, graduation rates, earnings levels, and other relevant information about the institutions they are considering. Some of this data exists, such as the PayScale college rankings and the Obama Administration’s College Scorecard, but should be more broadly publicized. Second, we should encourage more students to consider less traditional postsecondary alternatives such as job training programs, apprenticeships, vocational certificates, and associate degrees that train students in skills that are in high demand by employers. Finally, financial aid should be tied to academic performance: research suggests that students with financial aid that has strings attached are more likely to complete their degrees.

Authors

Isabel V. Sawhill

Publication: Real Clear Markets

Image Source: © Jason Reed / Reuters

Time for Change: A New Federal Strategy to Prepare Disadvantaged Students for College

Ron Haskins and Cecilia Elena Rouse — Tue, 07 May 2013 09:00:00 -0400

Abstract

If more children from low-income families graduated from college, income inequality would fall and economic opportunity would increase. A major barrier to a college education for students from low-income families is that they are poorly prepared to do college work. Since the War on Poverty of the 1960s, the federal government has funded several programs to help prepare disadvantaged students to succeed in college. Evaluations show that these programs are at best only modestly successful. We propose to consolidate these programs into a single grant program, require that funded programs be backed by rigorous evidence, and give the Department of Education the authority and funding to plan a coordinated set of research and demonstration programs to develop and rigorously test several approaches to college preparation.

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Time for Change: A New Federal Strategy to Prepare Disadvantaged Students for College

Authors

Ron Haskins
Cecilia Elena Rouse

Publication: The Future of Children

Inequality and Inclusive Growth in Africa: A Conversation with South African Finance Minister Pravin Gordhan

Wed, 17 Apr 2013 16:00:00 -0400

Event Information

April 17, 2013
4:00 PM - 5:30 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

livefrombrookings on livestream.com. Broadcast Live Free

Africa is the world’s second-fastest growing region, and South Africa is the continent’s economic leader. The country recently hosted the BRICS Summit and has been working hard to promote growth and encourage investment. Yet inequality has been a persistent challenge. As the economies of South Africa and the African continent continue to expand, governments in the region must ensure that such growth follows a sustainable model that creates wage-paying jobs and lifts citizens out of poverty.

On April 17, the Africa Growth Initiative at Brookings hosted a conversation with the Honorable Pravin Gordhan, minister of finance for the Republic of South Africa, on inequality and inclusive growth in South Africa and the African continent. Minister Gordhan’s remarks were followed by a panel discussion with Brookings Senior Fellow Homi Kharas, deputy director of Global Economy and Development. Brookings Vice President Kemal Derviş, director of Global Economy and Development, moderated the discussion.

You can join the conversation on Twitter using #Africagrowth.

Myths of Inequality and Stagnation

Scott Winship — Wed, 27 Mar 2013 00:00:00 -0400

Much of what I write is an attempt to dispel economic doomsaying on the left. It’s not that I think we have solved every problem of fairness, opportunity, or security; rather, certain problems are real while others are overstated.

Sometimes dramatically so. Last month David Cay Johnston, Pulitzer Prize winner and former New York Times reporter, wrote an essay for the (generally very informative) “taxanalysts” website on income inequality. Johnston tried to make the case that the gains of the rich have come at the expense of everyone else with the eye-raising claim that the income received by “the bottom 90 percent of earners” rose by only $59 in terms of today’s purchasing power between 1966 and 2011.

This is one of those litmus-test claims that in a perfect world would disqualify some people from debate over living standards, inequality, and the state of the middle class. To honestly believe that below the top 10 percent of earners there has been essentially no improvement in 45 years is to declare an extreme disconnection from the real world and a commitment to a negative interpretation of the American economy that is beyond parody.

The claim was dutifully repeated this week by the Center for American Progress’s Think Progress, the Huffington Post, and Salon. It has been tweeted, liked, or emailed by over 10,000 readers of those sites and in turn read by their own followers and friends. They will be more accepting of the next fearful economic claim as a consequence.

This is an egregiously erroneous “finding”, as I’ll explain in a moment. But first, take the test yourself. The median household income is the income of the household that is right in the middle of the distribution—half of all households are richer than it and half are poorer. How much do you think median household income has risen since 1966? (Hint: I’d take the “over” if we’re starting with $59.)

The Census Bureau’s Current Population Survey is the most widely-used source of income data, though it has some flaws. The first year for which household income datais readily available from the CPS is 1967. From 1967 to 1979, median household income grew by $5,500. This understates income growth during this period because it does not incorporate non-cash public transfers like food stamps, Medicaid, and Medicare and does not include fringe benefits or realized capital gains (such as from the sale of a home). From 1979 to 2009, we can use improved estimates from the Congressional Budget Office that combine the CPS data with tax return data to partially fill these gaps. CBO indicates that median household income (before taxes) rose by $14,200. After taxes, median income rose by $17,600.

At a minimum, therefore, median household income rose by $20,000 from 1967 to 2009. The data on which Johnston relies shows a decline of $200.

Despite his claim, the data Johnston uses represents tax returns, not “earners”. A married couple filing jointly is a single tax return. But even if we give Johnston the benefit of the doubt and ask what has happened to the median “earner”, he is way off. Thereadily available CPS data goes back to 1975—the increase in earnings for the median worker was $6,500 from 1975 to 2011, while the tax return data relied on by Johnston suggests a decline of $1,200.

How did Johnston get it so wrong? The most fundamental answer is that he failed to challenge his priors when the data showed an implausible result. But he is not making his numbers up. The problem is that the data he used cannot be used to examine trends in living standards among the non-rich.

Johnston relies on the tax-return-based data of economists Thomas Piketty and Emmanuel Saez—the data that is the basis for the ubiquitously reported (and true) finding that incomes at the top have sky-rocketed. As I have written before, the degree of income inequality we have in the U.S. is truly mind boggling, though that fact tells us nothing about whether inequality is problematic. Clearly it makes a difference if the bottom 90 percent is only $59 richer over 45 years rather than $20,000 richer. Piketty and Saez do show that the income received by the bottom 90 percent of “tax units” rose by just $59. We know because they admirably make mounds of their data available to the public (in this case, see the “Table_Incomegrowth” tab, column J).

Why are their numbers so different from the Census Bureau and CBO figures? The share of household and personal income that is included in the Piketty/Saez measure has declined markedly since 1966. In that year, the total income in the Piketty/Saez data amounts to 109% of the total income in the CPS. That the share is over 100% largely reflects the fact that the CPS does not capture the very richest households and caps the amount of income reported at artificially low levels for confidentiality purposes. By 1979, Piketty/Saez income was just 93% of CPS income, despite the fact the CPS continued to understate income at the top. The decline in share of income accounted for by Piketty/Saez is due to the fact that taxable public transfers are largely excluded from their measure, as are tax-favored employer benefits deducted from paychecks. Both sources of income have grown over time. Their estimates also exclude realized capital gains among the bottom 90 percent, and those were rising over time too.

The share of CPS income accounted for by Piketty/Saez income was largely unchanged in 2009. But this was the period in which income inequality rose. If the CPS could adequately capture top incomes, the increase in CPS income would have been greater than the data indicate, and so the share of CPS income accounted for by Piketty/Saez income would have fallen again. From 1979 to 2009, we can turn to the CBO income estimates, which incorporate public transfers, employer-provided health insurance, full pay (before deductions), capital gains, and top incomes. The share of CBO income accounted for by Piketty/Saez income fell from 89% in 1979 to 77% in 2009.

It is also the case that “tax units”—essentially tax returns, but with a small number of additional “units” added in to account for non-filers—include, for example, teenagers who have summer jobs and college kids on work study who file tax returns and make very little. Changes over time in the size of these groups could also affect the results—not only by pulling the incomes of the bottom 90% down but by pushing the entry point to the top 10% up (more low-income tax returns means the “top 10%” is a richer group). There may also be under-reporting of self-employment and other income in the tax return data, and if that has increased over time, it would also dampen the rise in income in the bottom 90%.

You might think that these problems call into question the basic Piketty/Saez claims about rising income inequality.This is a possibility I’ve considered (and continue to), but evidence from other sources supports the basic conclusion that the incomes of the very rich have skyrocketed. These sources are not without problems themselves (and most rely on the tax return data in some way), but many of the shortcomings of the Piketty/Saez income measure are absent from them.

The Johnston analysis, in the end, is just an extreme case of liberal negativism about living standards. As I discuss in my new essay for National Affairs, “Overstating the Costs of Inequality,” the median household in the U.S. is twice as rich as it was in 1960, at the peak of the supposed “Golden Age” the American middle class. Too many commentators refuse to see that and are all-too-ready to accept the most outlandish claims about living standards. As I’ve argued before, this sort of thing sows economic insecurity and works against continued improvement in our standard of living. And it detracts from real-world problems.

Authors

Scott Winship

Publication: National Review

Image Source: © Frank Polich / Reuters

Overstating the Costs of Inequality

Scott Winship — Mon, 25 Mar 2013 17:16:00 -0400

In recent years, inequality has become the core economic concern of the American left. The gap between the haves and have-nots is understood to be the fatal flaw of our economic system — a fundamental problem that is the source of countless other difficulties. To hear many liberals tell it, increasing inequality is holding back growth, crushing the prospects of the poor and middle class, and even undermining American democracy. Such concerns are prominent in President Obama's rhetoric, and seem also to drive key parts of his policy agenda — especially the relentless pursuit of higher taxes on the wealthy. As the president put it in his second inaugural address in January, he believes "that our country cannot succeed when a shrinking few do very well and a growing many barely make it."

The idea that our economy is held back by inequality is echoed in the claims of some of the nation's most prominent economists. Princeton professor (and Nobel laureate) Paul Krugman and David Card of the University of California, Berkeley, contend that inequality hurts economic mobility. Princeton's Alan Krueger (now chairman of the White House Council of Economic Advisers) and Columbia's Joseph Stiglitz (another Nobelist) think it dampens economic growth. Along with Raghuram Rajan, former chief economist of the International Monetary Fund, Stiglitz also argues that inequality was behind the financial crisis. Cornell economist Robert Frank and former labor secretary Robert Reich are convinced that it fuels the indebtedness of the middle class. The Massachusetts Institute of Technology's Daron Acemoglu believes that inequality enables economic elites to capture the machinery of government and thus ultimately produces national decline.

Read the rest of the article at the National Affairs website or download a fully annotated version of the essay.

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Overstating the Costs of Inequality (with full annotations)

Authors

Scott Winship

Publication: National Affairs

International Women’s Day in India and Around the World: Progress and Strategies for Action

Urvashi Sahni and Xanthe Ackerman — Fri, 08 Mar 2013 09:00:00 -0500

International Women’s Day, March 8, is here again, and it is time to take stock of women’s lives in the world today. Great progress has been made in education and for women more broadly. Still, so much work remains to ensure that women are empowered, educated, safe, healthy and free to be fully participating members of equal societies. In India, the recent groundswell of support for women and girls speaks to the potential to overturn harmful gender norms. We need approaches, such as self-organizing and campaigning for women’s rights, gender-sensitive education, and including men in the fight for equality, that go beyond business as usual. At the global level, it is critical that the next set of development goals hold actors to better account for progress for women and girls.

In many countries, the situation for women is improving at the highest levels of leadership and among the poor, even if slowly. There are now 17 female heads of state around the world—almost twice as many as in 1990. According to UNESCO’s Global Monitoring Report, the number of countries where girls face severe gender disparity—defined as having less than nine girls in primary school for every ten boys—has dropped from 33 countries in 1999 to 17 in 2010. Gender parity at the secondary level has improved and, when girls make it to the secondary level in most countries, their retention and progression is the same or better than boys. More women are receiving antenatal care and skilled assistance during delivery—one of the most critical times in the prevention of maternal mortality.

While the international community welcomes and celebrates these gains for women and girls, much more needs to be done to ensure women and girl’s equality, and to meet the goals set out by the first set of Millennium Development Goals (MDGs). Women are still largely unsafe, unwanted and unequal in the developing world. There are 4 million missing women and girls each year in developing countries. They are killed in the womb, soon after birth or during their child-bearing years. Most countries will miss the Education For All goal of a 50 percent improvement in adult literacy—a challenge that disproportionately affects women, who make up about two-thirds of the 775 million adults who cannot read. In addition to addressing lagging progress in female mortality reduction and access to education and economic opportunity, the World Development Report 2012 calls for renewed efforts to increase women’s voice and agency in the home and society, and to limit the reproduction of gender inequality across generations. Gender-based violence also continues to plague women around the world. According to CARE’s Women and Empowerment report, at least 1 in 3 females has been physically or sexually abused, often repeatedly and by a relative or acquaintance. Violence rivals cancer as a top cause of morbidity and mortality for women of child-bearing age.

In India, the case for renewed commitment to women and girls is clear. The government has made significant efforts to improve conditions for women and girls, including creating a large-scale girls’ education program that provides schools and support for girls in rural areas and has already helped to narrow the gender gap. Still, much remains to be done by the government and all other stakeholders. The child mortality rate in India is the highest in the world and some estimate that 1 million girls are killed in the womb there each year. In terms of education, gender overlaps with other causes of marginalization, including poverty, location (rural vs. urban) and social factors, such caste and tribe to worsen access and outcomes. For instance, according to the World Inequality Database on Education, in 2005, 31 percent of women age 17-22 years had less than four years of school, compared to 16 percent of men. Among the poor in the poorer regions of India, the numbers were as high as 91 percent of women compared to 55 percent of men.

Of all the challenges that women and girls face, to some, having no voice is among the most intolerable. Heroines the world over who struggle to be free and to make their voices heard, even when confronting lethal consequences. Malala was shot because she voiced the right to education for women in Pakistan, and Nirbhaya in India was brutally raped and murdered because she expressed her right to travel freely. For any known story, there are millions of lesser known cases such as Khusboo. This young woman in Uttar Pradesh, India received an education—a gender-based education that made empowerment the central goal—and found the courage to voice her right to complete high school. She resisted her father’s attempt to marry her off at 16 and for that she was beaten mercilessly and cast out of his house. To share her story and her voice, she recently made an award-winning autobiographical video that showed the abuse she faced and the triumph of holding up the diploma she earned.

On International Women’s Day, let us celebrate women’s triumphs, but let us also consider what more can be done to confront the reality that so many women face. The following are strategies that show promise in India and can be replicated and scaled.

Strategy #1: Self-Organize and Challenge the Status Quo

Advocacy campaigns that demand gender equality, examine gender norms and address the inconsistency of patriarchal structures in democratic societies can be highly effective. On February 14, 2013, Valentine’s Day, millions of women and many men rose up against gender-based violence across the globe. In India, thousands of people of all ages and gender took to the streets with banners, slogans, songs, street plays and dances, celebrating women and supporting their right to control their lives, their right to a safe world, their right to a voice. The India’s Daughters Campaign represents a civil society effort along these lines and has used mobile technology to engage and organize youth in the most rural areas, including the students at 28 girls’ schools.

Campaigning as a part of the ongoing public outcry following the rape and death of Nirbhaya has resulted in the constitution of a high-level committee to review laws related to sexual crimes. The committee produced The Justice Verma Report in record-breaking time. The report makes several recommendations to the government including judicial, political, police and military reforms. The committee also recommended that the Parliament promulgate a special bill of rights for women to ensure a life of safety and dignity, including in marriage. For the first time there is mention of “sexual autonomy” for women, and there is some recognition of marital rape as a crime. Severe punishments for rape and for all sexual offences are recommended, including stalking and sexual harassment in the work place. The committee writes that all marriages should be registered, which will make it possible to identify and prevent child marriages, which are widely prevalent in India. In addition, it recommends that police be subject to punitive action for not registering cases of rape and other sexual crimes. Jody Williams, civil rights activist and Nobel Peace Prize winner for her work on the Campaign to Ban Landmines, states “impunity” as the single biggest reason that violence against women continues to exist in such large numbers. Accordingly, the Justice Verma Report tries to make the law more responsive.

People in India are demanding that the issue of women’s safety be taken seriously by the government, and the state has, in this instance, responded. Their actions pave the way for further progress. For instance, a recent budget declaration allocates $200 million for the “safety of women,” and civil society organizations now are organizing to understand how the Ministry of Women and Children will spend this money. The fact that the elections are only a year away could be a factor in government’s responsiveness to civil society demands. Even so, women are being taken seriously as a political constituency to be recognized and considered.

The movement that led to the Justice Verma Report has been hugely successful, but there is more work to be done. Advocacy efforts should focus not only on these issues and judicial responses, but also the administrative environment and ability for crimes to be redressed quickly. The Indian government passed an ordinance recognizing 90 percent of the recommendations, but left out two important ones. Marital rape has still been denied legal recognition, leaving women unsafe in the domestic space, and the armed forces have been left out of the punitive net. Both are grave omissions, and women’s organizations are contesting them strongly.

Strategy #2: Include Gender Education in the Curriculum

Since critical dialogues can lead to real change in society with positive outcomes for women and men, we must note that the education system can support these dialogues by introducing gender education in the curriculum to sensitize and empower both girls and boys. What is most significant in the recent events in India is that we have seen that girls and women (at least in urban areas) are finding their “voice” and raising it. Critical dialogues and discussions around gender are taking place all over, in the media, universities, government, policymaking halls of power, schools, cafes, homes, and on the streets. Gender has become, at least for now, an important issue. This transformation can and should happen in every school for every girl and boy. Even now, policymakers and civil society are considering the convening of a national-level working group in India to examine how education can promote positive gender norms.

Indeed, gender norms should receive special official focus in education systems, curricula and teacher training. Students must know the laws and recognize that women are entitled to an equal voice in the home and in society. Education helps girls and women develop their voice and the capacity to aspire to equality, based on the recognition of themselves as equal persons. We must include gender education in our core curriculum along with or as part of human rights education. This inclusion will help reduce one more gender gap—that of limiting the reproduction of inequality across generations—by enabling both boys and girls to examine gendered construction of identities and social norms, the underlying structures that perpetuate inequality, and to unlearn negative and harmful ideas about gender.

In order for gender education to be included in national curricula, it is necessary for ministries of education to approve and initiate a process whereby academics, gender experts, practitioners and educationists can work collaboratively to develop a graded curriculum for gender education, along with related teacher training courses. Schools provide an opportunity for intellectual discussions about gender roles, responsibilities and resulting power relations, which could help students gain a clearer perspective about what “equality” means in democratic societies. Making gender education a curricular subject will make the issue “official” and legitimate and create a generation of more egalitarian gender norms. A concerted effort is required by the international education and development community to influence policy at the country level in this direction.

Strategy #3: Include Men in the Conversation

If there is anything to rejoice and feel hopeful about for women on International Women’s Day, it is the support from men for the movement to better ensure women’s safety and opportunity, especially in India. Men’s participation is something that all of us, men and women everywhere, should tenaciously hold on to in the fight for gender equality. We need male champions in every sphere: national politics, business, civil society, in homes and in schools. We all stand to gain from a society where everyone has a voice. As we’ve learned, boys are open and willing to think about the issue seriously: The protests in India were led equally by young men and women.

The inclusion of boys and men in the struggle for gender equality is critical, and women and girls need them as allies. Women’s education, health and safety are not “women’s problems” to be dealt with for and by women alone. Boys must be engaged in serious discussions about the social construction of masculinity and feminity in their contexts with the resulting implications for gender equality.

Strategy #4: Ensure the Next Set of Global Goals Focus on Gender Equality

At the global level, we must all work to ensure that gender continues to play a prominent role in the next set of global development goals. Whether gender is a cross-cutting issue that runs through all goals, or whether there are one or more goals that deal specifically with gender, the commitment to measuring progress for women and girls and funding policies and programs that improve conditions for women is critical and must be increased. Goals, metrics and policies should recognize that progress for girls and women over all often masks the lack of progress for large swaths of the female population. Even when average conditions for women and girls are improving, the situation for those affected by multiple forms of disadvantage, such as extreme poverty, remote location, conflict, disability, domestic abuse, negative gender norms, often remain unchanged.

While on International Women’s Day we celebrate the goals accomplished by women and girls, and men and boys—we also take stock of all that is yet to be finished.

Authors

Urvashi Sahni
Xanthe Ackerman

A New Federal Policy Architecture to Promote Social Mobility

Richard V. Reeves — Tue, 22 Jan 2013 11:15:00 -0500

Right now in Washington, it's all fiscal cliffs and debt ceilings. But there is a slower-burn crisis taking place in the US: the quiet decline of social mobility. Harvard academic Robert Putnam has warned that we are heading towards a “mobility cliff,” with affluent kids all but guaranteed a comfortable adult life and the poorest kids likely to remain stuck on the bottom rungs. Isabel Sawhill and Ron Haskins have vividly described the lack of mobility in the U.S. The opportunity gaps start at conception, widen through K-12, and harden during the transition to adulthood. Horatio Alger is not dead, but he is pretty sick.

To say that promoting mobility is a complex task would be a wild understatement. A vast array of economic, social, cultural and individual factors are at work, to different degrees, across the entire life course – influencing an equally wide canvas of outcomes, from education to character to fertility. Promoting intergenerational mobility is not a policy agenda for the faint-hearted. There are no quick or easy solutions.

But it is wrong to be fatalistic. There are policies proven to narrow gaps. If they are applied consecutively, one brick on top of another, their effects are likely to amplified. And other nations, even those with similar levels of income inequality to the U.S. – such as Canada and Australia – have higher rates of intergenerational mobility. Improving rates of mobility is hard, but not impossible. Given the economic and social consequences of a more stratified society, we cannot simply shrug our shoulders.

A small but important first step would be to create a Federal “policy architecture” to properly track trends in mobility, and evaluate the impact of policies. The UK Government, explicitly committed to a mobility goal, has created a annual dashboard of “leading indicators” of mobility. My former boss, Deputy Prime Minister Nick Clegg, has also created an independent commission to report annually on progress towards greater social mobility.

Of course this kind of policy architecture would not promote mobility. But it would create a shared understanding of the facts, and a foundation for developing policy. Back in the 1970s, Brookings called for the creation of an independent agency within the legislative branch of government, to forecast the public finances and estimate the fiscal impact of legislation or proposed policies. The Congressional Budget Office was born. Something similar is now needed for opportunity: say a Congressional Mobility Office? So that if our politicians are able to look beyond today's cliffs and ceilings, and embrace the challenge of promoting opportunity, they'll have a better idea where to start.

Authors

Richard V. Reeves

Image Source: © Aaron Bernstein / Reuters

Family Structure: The Growing Importance of Class

Isabel V. Sawhill — Wed, 16 Jan 2013 10:44:00 -0500

In 1965, Daniel Patrick Moynihan released a controversial report written for his then boss, President Lyndon Johnson. Entitled “The Negro Family: The Case for National Action,” it described the condition of lower-income African American families and catalyzed a highly acrimonious, decades-long debate about black culture and family values in America.

The report cited a series of staggering statistics showing high rates of divorce, unwed childbearing, and single motherhood among black families. “The white family has achieved a high degree of stability and is maintaining that stability,” the report said. “By contrast, the family structure of lower class Negroes is highly unstable, and in many urban centers is approaching complete breakdown.”

Nearly fifty years later, the picture is even more grim—and the statistics can no longer be organized neatly by race. In fact, Moynihan’s bracing profile of the collapsing black family in the 1960s looks remarkably similar to a profile of the average white family today. White households have similar—or worse—statistics of divorce, unwed childbearing, and single motherhood as the black households cited by Moynihan in his report. In 2000, the percentage of white children living with a single parent was identical to the percentage of black children living with a single parent in 1960: 22 percent.

What was happening to black families in the ’60s can be reinterpreted today not as an indictment of the black family but as a harbinger of a larger collapse of traditional living arrangements—of what demographer Samuel Preston, in words that Moynihan later repeated, called “the earthquake that shuddered through the American family.”

That earthquake has not affected all American families the same way. While the Moynihan report focused on disparities between white and black, increasingly it is class, and not just race, that matters for family structure. Although blacks as a group are still less likely to marry than whites, gaps in family formation patterns by class have increased for both races, with the sharpest declines in marriage rates occurring among the least educated of both races. For example, in 1960, 76 percent of adults with a college degree were married, compared to 72 percent of those with a high school diploma—a gap of only 4 percentage points. By 2008, not only was marriage less likely, but that gap had quadrupled, to 16 percentage points, with 64 percent of adults with college degrees getting married compared to only 48 percent of adults with a high school diploma. A report from the National Marriage Project at the University of Virginia summed up the data well: “Marriage is an emerging dividing line between America’s moderately educated middle and those with college degrees.” The group for whom marriage has largely disappeared now includes not just unskilled blacks but unskilled whites as well. Indeed, for younger women without a college degree, unwed childbearing is the new normal.

These differences in family formation are a problem not only for those concerned with “family values” per se, but also for those concerned with upward mobility in a society that values equal opportunity for its children. Because the breakdown of the traditional family is overwhelmingly occurring among working-class Americans of all races, these trends threaten to make the U.S. a much more class-based society over time. The well-educated and upper-middle-class parents who are still forming two-parent families are able to invest time and resources in their children—time and resources that lower- and working-class single mothers, however impressive their efforts to be both good parents and good breadwinners, simply do not have.

The striking similarities between what happened to black Americans at an earlier stage in our history and what is happening now to white working-class Americans may shed new light on old debates about cultural versus structural explanations of poverty. What’s clear is that economic opportunity, while not the only factor affecting marriage, clearly matters.

The journalist Hanna Rosin describes the connection between declining economic opportunities for men and declining rates of marriage in her book The End of Men. Like Moynihan, she points to the importance of job opportunities for men in maintaining marriage as an institution. The disappearance of well-paying factory jobs has, in her view, led to the near collapse of marriage in towns where less educated men used to be able to support a family and a middle-class lifestyle, earning $70,000 or more in a single year. As these jobs have been outsourced or up-skilled, such men either are earning less or are jobless altogether, making them less desirable marriage partners. Other researchers, including Kathryn Edin at Harvard, Andrew Cherlin at Johns Hopkins, and Charles Murray of the American Enterprise Institute, drawing on close observations of other working-class communities, have made similar arguments.

Family life, to some extent, adapts to the necessities thrown up by the evolution of the economy. Just as joblessness among young black men contributed to the breakdown of the black family that Moynihan observed in the ’60s, more recent changes in technology and global competition have hollowed out the job market for less educated whites. Unskilled white men have even less attachment to the labor force today than unskilled black men did fifty years ago, leading to a decline in their marriage rates in a similar way.

In 1960, the employment rate of prime-age (twenty-five to fifty-five) black men with less than a high school education was 80 percent. Fast-forward to 2000, and the employment rate of white men with less than a high school education was much lower, at 65 percent—and even for white high school graduates it was only 84 percent. Without an education in today’s economy, being white is no guarantee of being able to find a job.

That’s not to say that race isn’t an issue. It’s clear that black men have been much harder hit by the disappearance of jobs for the less skilled than white men. Black employment rates for those with less than a college education have sunk to near-catastrophic levels. In 2000, only 63 percent of black men with only a high school diploma (compared with 84 percent of white male graduates) were employed. Since the recession, those numbers have fallen even farther. And even black college graduates are not doing quite as well as their white counterparts. Based on these and other data, I believe it would be a mistake to conclude that race is unimportant; blacks continue to face unique disadvantages because of the color of their skin. It ought to be possible to say that class is becoming more important, but that race still matters a lot.

Most obviously, the black experience has been shaped by the impact of slavery and its ongoing aftermath. Even after emancipation and the civil rights revolution in the 1960s, African Americans faced exceptional challenges like segregated and inferior schools and discrimination in the labor market. It would take at least a generation for employers to begin to change their hiring practices and for educational disparities to diminish; even today these remain significant barriers. A recent audit study found that white applicants for low-wage jobs were twice as likely to be called in for interviews as equally qualified black applicants.

Black jobless rates not only exceed those of whites; in addition, a single-minded focus on declining job prospects for men and its consequences for family life ignores a number of other factors that have led to the decline of marriage. Male employment prospects can lead to more marriages, but scholars such as Harvard’s David Ellwood and Christopher Jencks have argued that economic factors alonecannot explain the wholesale changes in the frequency of single parenting, unwed births, divorce, and marriage, especially among the least educated, that are leading to growing gaps between social classes. So what else explains the decline of marriage?

First, and critically important in my view, is the changing role of women. In my first book, Time of Transition: The Growth of Families Headed by Women, published in 1975, my coauthor and I argued that it was not just male earnings that mattered, but what men could earn relative to women. When women don’t gain much, if anything, from getting married, they often choose to raise children on their own. Fifty years ago, women were far more economically dependent on marriage than they are now. Today, women are not just working more, they are better suited by education and tradition to work in such rapidly growing sectors of the economy as health care, education, administrative jobs, and services. While some observers may see women taking these jobs as a matter of necessity—and that’s surely a factor—we shouldn’t forget the revolution in women’s roles that has made it possible for them to support a family on their own.

In a fascinating piece of academic research published in the Journal of Human Resources in 2011, Scott Hankins and Mark Hoekstra discovered that single women who won between $25,000 and $50,000 in the Florida lottery were 41 percent to 48 percent less likely to marry over the following three years than women who won less than $1,000. We economists call this a “natural experiment,” because it shows the strong influence of women’s ability to support themselves without marriage—uncontaminated by differences in personal attributes that may also affect one’s ability or willingness to marry. My own earlier research also suggested that the relative incomes of wives and husbands predicted who would divorce and who would not.

Women’s growing economic independence has interacted with stubborn attitudes about changing gender roles. When husbands fail to adjust to women’s new breadwinning responsibilities (who cooks dinner or stays home with a sick child when both parents work?) the couple is more likely to divorce. It may be that well-educated younger men and women continue to marry not only because they can afford to but because many of the men in these families have adopted more egalitarian attitudes. While a working-class male might find such attitudes threatening to his manliness, an upper-middle-class man often does not, given his other sources of status. But when women find themselves having to do it all—that is, earn money in the workplace and shoulder the majority of child care and other domestic responsibilities—they raise the bar on whom they’re willing to marry or stay married to.

These gender-related issues may play an even greater role for black women, since while white men hold slightly more high school diplomas and baccalaureate degrees than white women, black women are much better educated than black men. That means it’s more difficult for well-educated black women to find black partners with comparable earning ability and social status. In 2010, black women made 87 percent of what black men did, whereas white women made only 70 percent of what white men earned. For less educated black women, there is, in addition, a shortage of black men because of high rates of incarceration. One estimate puts the proportion of black men who will spend some time in prison at almost one third.

In a forthcoming book, Doing the Best I Can: Fatherhood in the Inner City, Timothy Nelson and Edin, the Harvard sociologist, describe in great detail the kind of role reversal that has occurred among low-income families, both black and white. What they saw were mothers who were financially responsible for children, and fathers who were trying to maintain ties to their children in other ways, limited by the fact that these fathers have very little money, are often involved in drugs, crime, or other relationships, and rarely live with the mother and child. In other words, low-income fathers are not only withdrawing from the traditional breadwinner role, they’re staging a wholesale retreat—even as they make attempts to remain involved in their children’s lives.

Normative changes figure as well. As the retreat from marriage has become more common, it’s also become more acceptable. That acceptance came earlier among blacks than among whites because of their own distinct experiences. Now that unwed childbearing is becoming the norm among the white working class as well, there is no longer much of a stigma associated with single parenting, and there is a greater willingness on the part of the broader community to accept the legitimacy of single-parent households.

Despite this change in norms, however, most Americans, whatever their race or social class, still aspire to marriage. It’s just that their aspirations are typically unrealistically high and their ability to achieve that ideal is out of step with their opportunities and lifestyle. As scholars such as Cherlin and Edin have emphasized, marriage is no longer a precursor to adult success. Instead, when it still takes place, marriage is more a badge of success already achieved. In particular, large numbers of young adults are having unplanned pregnancies long before they can cope with the responsibilities of parenthood. Paradoxically, although they view marriage as something they cannot afford, they rarely worry about the cost of raising a child.

Along with many others, I remain concerned about the effects on society of this wholesale retreat from stable two-parent families. The consequences for children, especially, are not good. Their educational achievements, and later chances of becoming involved in crime or a teen pregnancy are, on average, all adversely affected by growing up in a single-parent family. But I am also struck by the lessons that emerge from looking at how trends in family formation have differed by class as well as by race. If we were once two countries, one black and one white, we are now increasingly becoming two countries, one advantaged and one disadvantaged. Race still affects an individual’s chances in life, but class is growing in importance. This argument was the theme of William Julius Wilson’s 1980 book, The Declining Significance of Race. More recent evidence suggests that, despite all the controversy his book engendered, he was right.

To say that class is becoming more important than race isn’t to dismiss race as a very important factor. Blacks have faced, and will continue to face, unique challenges. But when we look for the reasons why less skilled blacks are failing to marry and join the middle class, it is largely for the same reasons that marriage and a middle-class lifestyle is eluding a growing number of whites as well. The jobs that unskilled men once did are gone, women are increasingly financially independent, and a broad cultural shift across America has created a new normal.

Editor's Note: This article originally appeared in the January/February 2013 issue of The Washington Monthly under a different title.

Authors

Isabel V. Sawhill

Publication: Washington Monthly

Image Source: © Aaron Bernstein / Reuters

Promoting Gender Equality through Education in India

Rebecca Winthrop — Tue, 15 Jan 2013 14:25:00 -0500

Protests continue in India, weeks after the horrific gang-rape of a 23-year old university student on December 16th and her subsequent death two weeks later – and rightly so, the incident itself was beyond the pale. A young couple in Delhi boarded a private bus after seeing a movie and instead of discussing character development and plot turns on the way home, the bus doors locked and they were subject to brutal attacks by the other passengers and driver as the bus drove around the city for over two hours. Witnesses driving by did nothing and the victims were eventually dumped out of the bus under an underpass.

But the awful details of this crime are not the main reason for the protests. Instead it is the deep and pervasive gender inequality in India of which this heinous act is a symbol. Girls and women are attacked every day and Indians across the country, particularly young people, are sick of it. Enough is enough they say. There are real reasons why half of all the girls in India don’t want to be girls, and it’s time to change.

If there is any silver lining to this tragedy, it is that the issue of gender equality is on everyone’s lips. Urvashi Sahni, an alumna of our girl’s education Global Scholars Program, is tracking this issue from India and writes that for one of the first times the debate on gender equality is “engaging voices from all sectors of society including students, civil society, academia, political parties, the police, the judiciary and the government.” Now the question remains: what will India do to improve the status of girls and women?

Much of the public discussion focuses on short and long-term solutions such as reforming the law enforcement systems, updating the legal code, supporting the women’s movement, developing new systems of accountability and, of course, having “greater dialogue about India’s patriarchal norms.” All of these things are important but it is the last that is perhaps the most difficult for policymakers and bureaucrats to tackle. Even if it is the most difficult, upending gender norms is perhaps the most fundamental thing needed for long-term sustainable change. Without transforming, in the deepest sense, how girls and women are valued in India, important interventions around such things as legal reforms and police training will end up in the problematic category of “necessary but not sufficient” for developing gender equality in society.

If done right, education can play an important role in redefining gender norms in India. Around the world, there have been numerous excellent examples of education changing people’s way of viewing the world and leading to new forms of behavior, ways of relating with others and ultimately social norms. Indeed, there have been decades of academic research on this topic, so much so that entire subfields of education theory and practice have developed (see for example Jack Mezirow and the field of transformative learning and Paulo Freire and the field of critical pedagogy).

India itself has good examples of education changing social norms towards gender equality. An interesting case of girls’ education programs run in the province of Uttar Pradesh demonstrates that schooling, if done right, can help change gender norms, even in the most marginalized societies. Founded by Urvashi Sahni, the Study Hall Foundation has demonstrated that at the same or lower cost per student as the government schools, their schools can educate girls in a way that enables them to both excel academically, but more importantly emerge as empowered young women. In one of their schools, Prerna, girls outperform their peers both within the province and across India. Ninety percent of Prerna girls complete their education to year 10, compared to below 30 percent nationally, and they do so while outperforming in virtually all subjects (in math and science the Prerna girls perform about 20 percentage points higher on exams than the national average). But most importantly, these girls are changing the gender norms in their communities. They are beginning to fight back when they or their peers are planned to be married off at too early an age. Through street protests and cajoling discussions, they have convinced their parents to keep them in school instead. They initiate community-wide discussions on violence against women. They apply for higher education scholarships and convince their families to let them go once they receive them (an incredibly 88 percent of the girls go on to higher education).

The success of this program is not because the students come from well-to-do families, they don’t (the average family income of students is $108 and 60 percent of their mothers and 40 percent of their fathers have never been to school). It is also not because teachers have higher qualifications or are better paid than government teachers. Rather, according to Mrs. Sahni, it’s because every day the girls’ talk about their worth, value and the issues they face around gender equality. “Gender equality needs to be taught, like math, science, and any other subject” says Sahni, who describes how in Prerna gender equality classes are regularly taught alongside a government curriculum. Then, she is quick to point out, teachers need to be encouraged and supported to fulfill their role as social change agents.

Now this is an idea that the Indian government would do well to listen to. It very well may be a center piece for transforming India’s “patriarchal norms”.

Authors

Rebecca Winthrop

Image Source: © Mansi Thapliyal / Reuters

Make 2013 the Year to Improve Middle Class Economic Prospects

Isabel V. Sawhill — Fri, 21 Dec 2012 10:00:00 -0500

President Obama campaigned on a promise to improve the economic prospects of the middle class and those aspiring to join the middle class. Delivering on that promise is a tall order. After decades of slow or no progress in middle class incomes, and with the recovery limping along at a glacial pace, and with even that progress threatened by fiscal and European troubles, the challenge is daunting.

In the short-run, the President's priority has to be to resolve the debt crisis without sending the economy back into recession, raising taxes on the middle class, or decimating spending on such growth-enhancing areas as education, infrastructure, and research. While raising taxes on the wealthy somewhat relieves pressure on these other parts of his agenda, it will not produce the kind of broadly shared prosperity that he presumably wants. Most critically, the fragile recovery must not be allowed to collapse. Without jobs, progress will be impossible.

For the longer-term, the President needs to focus on upward mobility for those trying to remain in or join the middle class. There is an emerging bipartisan and expert consensus that America has less mobility than it believes and less than some other advanced countries.

But what can a President do when faced with a divided Congress and an opposition party intent on keeping his legislative agenda tied up in knots?

First, he can rely more heavily on institutional reform, executive orders, and regulation to achieve his goals. As one example, he could establish a Commission or task force to better publicize, track, and recommend measures to improve economic mobility in the U.S. As Richard Reeves has argued, the U.K. has already established the architecture for such an effort with useful lessons for the U.S. As another example, he could convene a group of wise men and women to debate the future of affirmative action in a society where race and gender inequalities, while still important, are now arguably less serious than class or income-based inequalities. Perhaps an African American president is uniquely positioned to call for such a discussion.

Second, he can use the bully pulpit and appeals to civil society to address barriers to mobility that have their roots in cultural attitudes and behaviors. For example, he has already addressed the need for parents to turn off the TV, to read to their children, and instill in them a lifelong love of learning. He has also encouraged absent fathers to connect with their children and employers to provide more work-family balance for their employees, but he could do more in these critical opportunity-enhancing domains involving stronger families and better parenting.

Finally, he can look for areas where there is likely to be common ground with Republicans. One example that I have written about elsewhere is my proposal to provide a temporary super deduction for charitable giving. The proposal would create jobs, help nonprofits, and provide some tax relief for the very wealthy who are especially civic-minded while asking those intent on keeping their wealth to pay higher taxes, both on their incomes and on their estates.

To be sure, these are small-bore ideas, and will not solve all of the problems facing the middle class, but we should not minimize the power of the President to set an agenda and influence behavior in ways both large and small.

Authors

Isabel V. Sawhill

Image Source: © Larry Downing / Reuters

The Exaggerated Death of the Middle Class

Ron Haskins and Scott Winship — Tue, 11 Dec 2012 00:00:00 -0500

Mark Twain, upon reading his obituary in the New York Journal, famously quipped that the reports of his death were greatly exaggerated. The same could be said today of reports from the scholarly world, the media and even the White House about the shrinking of the middle class. Here’s why.

The most easily obtained income figures are not the most appropriate ones for assessing changes in living standards; those are also the figures that are often used to reach unwarranted conclusions about “middle class decline.” For example, analysts and pundits often rely on data that do not include all sources of income. Consider data on comprehensive income assembled by Cornell University economist Richard Burkhauser and his colleagues for the period between 1979—the year it supposedly all went wrong for working Americans—and 2007, before the Great Recession.

When Burkhauser looked at market income as reported to the Internal Revenue Service (IRS), the basis for the top 1 percent inequality figures that inspired Occupy Wall Street, he found that incomes for the bottom 60 percent of tax filers stagnated or declined over the nearly three-decade period. Incomes in the middle fifth of tax returns grew by only 2 percent on average, and those in the bottom fifth declined by 33 percent.

Things appeared somewhat better when Burkhauser looked at the definition of income favored by the Census Bureau which, unlike IRS figures, includes government cash payments from programs like Social Security and welfare, and looks at households rather than tax returns.

Still, the income of the middle fifth only rose by 15 percent over the entire three decades, much less than 1 percent per year. The Census Bureau reports that from 2000 to 2010, the income of the middle fifth actually fell by 8 percent. With numbers like these, it’s understandable why so many people think the American middle class is under threat and in decline.

But there are three reasons why even the Census Bureau figures are deceiving. The size of U.S. households, which has been declining, is not taken into account. The figures ignore the net impact on income of government taxes and non-cash transfers like food stamps and health insurance, which benefit the poor and middle class much more than richer households, and the value of health insurance provided by employers is also left out.

Burkhauser and his colleagues show that if these factors are taken into account, the incomes of the bottom fifth of households actually increased by 26 percent, rather than declining by 33 percent. Those of the middle fifth increased by 37 percent, rather than by only 2 percent. There is no disappearing middle class in these data; nor can household income, even at the bottom, be characterized as stagnant, let alone declining. Even after 2000, estimates from the Congressional Budget Office (CBO) show the bottom 60 percent of households got 10 percent richer by 2009, the most recent year available.

Making sense of income trends

Aside from the brighter picture presented by the Burkhauser and CBO analyses, there is a more complicated trend emerging in the United States. Four factors, both inside and outside the market, explain those trends.

The first market factor affecting middle-class income is a longtime trend of low literacy and math achievement in U.S. schools, which partially explains why conventional analyses of income show stagnation and decline. Young Americans entering the job market need skills valuable in a modern economy if they expect to earn a decent wage. Education and technical training are key to acquiring these skills. Yet the achievement test scores of children in literacy and math have been stagnant for more than two decades and are consistently far down the list in international comparisons.

It is true that African American and Hispanic students have closed part of the gap between themselves and Caucasian and Asian students; but the gap between students from economically advantaged families and students from disadvantaged ones has widened substantially—by 30 to 40 percent over the past 25 years.¹

In a nation committed to educational equality and economic mobility, the income gap in achievement test scores is deeply problematic. Far from increasing educational equality as an important route to boosting economic opportunity, the American educational system reinforces the advantages that students from middle-class families bring with them to the classroom. Thus, the nation has two education problems that are limiting the income of workers at both the bottom and middle of the distribution: the average student is not learning enough, compared with students from other nations, and students from poor families are falling further and further behind.

It is difficult to see how students with a poor quality of education will be able to support a family comfortably in our technologically advanced economy if they rely exclusively on their earnings.

The second market factor is the increasing share of our economy devoted to health care. According to the Kaiser Foundation, employer-sponsored health insurance premiums for families increased 113 percent between 2001 and 2011. Most economists would say that this money comes directly out of worker wages. In other words, if it weren’t for the remarkable increase in the cost of health care, workers’ wages would be higher. When the portion of market compensation received in the form of health insurance is ignored in conventional analyses, income gains over time are understated.

Turning to non-market factors, marriage and childbearing increasingly distinguish the haves and have-nots.

Families have fewer children, and more U.S. adults are living alone today than in the past. As a result, households on average are better off since there are fewer mouths to feed, regardless of income. At the same time, single parenthood has grown more common, thereby increasing inequality between the poor and the middle class. Female-headed families are more than four times as likely to be in poverty, and children from these families are more likely to have trouble in school as compared with children in married-couple families. The increasing tendency of similarly educated men and women to marry each other also contributes to rising inequality.

The most important non-market factor is the net impact of government taxes and transfer payments on household income. The budget of the U.S. government for 2012 is $3.6 trillion. About 65 percent of that amount is spent on transfer payments to individuals. The biggest transfer payments are: $770 billion for Social Security, $560 billion for Medicare, $262 billion for Medicaid, and nearly $100 billion for nutrition programs. In addition to these federal expenditures, state governments also spend tens of billions of dollars on programs for low-income households. Almost all of the over $1 trillion in state and federal spending on means-tested programs (those that provide benefits only to people below some income cutoff) goes to low-income households.

Thus, taking into account the progressive nature of Social Security and Medicare benefits, the effect of government expenditures is to greatly increase household income at the bottom and reduce economic inequality.

Similarly, federal taxation—and to a lesser extent state taxation—is progressive. Americans in the bottom 40 percent of the income distribution pay negative federal income taxes because the Earned Income Tax Credit and the Child Tax Credit actually pay cash to millions of low-income families with children.

IRS data on incomes incorporate only the small fraction of transfer income that is taxable. Census data includes all cash transfer payments but leaves out non-cash transfers—among which Medicaid and Medicare benefits are the most important—and taxes.

The bottom line is that market income has grown, and government programs have greatly increased the well-being of low-income and middle-class households. The middle class is not shrinking or becoming impoverished. Rather, changes in workers’ skills and employers’ demand for them, along with changes in families’ size and makeup, have caused the incomes of the well-off to climb much faster than the incomes of most Americans.

Rising inequality can occur even as everyone experiences improvement in living standards.

Even so, unless the nation’s education system improves, especially for children from poor families, millions of working Americans will continue to rely on government transfer payments. This signals a real problem. Millions of individuals and families at the bottom and in the middle of the income distribution are dependent on government to enjoy a decent or rising standard of living. While the U.S. middle class may not be shrinking, the trends outlined above make clear why this is no reason for complacency. Today’s form of widespread dependency on government benefits has helped stem a decline in income, but far better would be to have more people earning all or nearly all their income through work. Getting there, though, will require deeper reforms in the structure of the U.S. education system.

1 Sean F. Reardon, Wither Opportunity? Rising Inequality and the Uncertain Life Chances of Low-Income Children (New York: Russel Sage Foundation Press, 2001).

Authors

Publication: Americas Quarterly

Rising Inequality in America and Around the World

Tue, 27 Nov 2012 15:30:00 -0500

Event Information

November 27, 2012
3:30 PM - 5:00 PM EST

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

Income inequality has been on the rise in the United States since the late 1970s— a trend that is also surfacing in many other countries around the world. Even among those who view inequality neutrally— or even positively— for economic growth, most agree that some of the features that accompany it, such as reduced opportunity and low social mobility, increased prevalence of poverty, and stagnation of the middle class, are undesirable.

On November 27, the Brookings Institution in cooperation with the Carnegie Endowment for International Peace and Oxfam America hosted a discussion on the implications of rising U.S. and global inequality. The discussion will examine the facts and trends underlying increasing inequality, and explore what kinds of policies are desirable for addressing inequality. Panelists included: Uri Dadush of the Carnegie Endowment for International Peace, co-author of Inequality in America: Facts, Trends, and International Perspectives (Brookings Press, 2012); Chrystia Freeland of Thomson Reuters, author of Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else (Penguin Press, 2012); Branko Milanovic, author of The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality (Basic Books, 2010); and Ray Offenheiser, president of Oxfam America. Vice President Kemal Derviş, director of Global Economy and Development at Brookings and a co-author of Inequality in America, moderated the discussion. The panelists discussed findings and observations from their respective books on inequality as well as those of other recent books on the topic by Joseph Stiglitz and Francois Bourguignon.

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Rising Inequality in America and Around the World

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20121127risinginequalitytranscript

A New Look at How the Tax Code Works for Working Families

Elizabeth Kneebone — Mon, 19 Nov 2012 16:00:00 -0500

As the clock ticks down to January 1, and lawmakers try to hash out a deal to avoid the fiscal cliff and address the expiration of the Bush tax cuts, new data on taxpayers in the United States--collected from federal tax returns and available down to the ZIP code level through Brookings’ EITC Interactive--provide an important perspective on the impact of the tax code on families and communities across the country.

For instance, the latest EITC Interactive data--which represent tax returns filed in January through June of 2011--show that key provisions in the tax code proved responsive to the Great Recession, helping working families to weather the downturn.

Roughly one in five tax filers claimed the Earned Income Tax Credit (EITC) in TY2010--a tax break for workers with low incomes--compared to 16 percent of filers in TY2007. In part the increase in EITC receipt reflects rising unemployment and falling incomes that may have led more workers to become eligible for the credit, but it also reflects targeted expansions to the credit made through the American Recovery and Reinvestment Act (ARRA) to help strengthen the safety net and stimulate local economies.

In TY2010, nine states saw anywhere from one quarter to one third of their taxpayers claim the EITC, led by Mississippi, Louisiana, Alabama, Georgia, and Arkansas. And 10 states experienced an uptick in the rate of EITC receipt of 5 percentage points or more over the course of the recession, led by Mississippi, Georgia, Arizona, Idaho, and Tennessee. No state experienced a decrease in EITC receipt during the downturn.
More than half (60 percent) of EITC filers also benefitted from the refundable portion of the Child Tax Credit (ACTC) in TY2010--a tax benefit for low- and moderate-income working families with children that was also expanded temporarily through ARRA—compared to 45 percent in TY2007.
All together, EITC filers claimed an average credit of $2,247 in TY2010, and for those EITC filers who who received it, the ACTC boosted the average refund by $1,234.

See the map: Share of Filers Claiming EITC by State, Tax Year 2010

The release of the Census Bureau’s Supplemental Poverty Measure (SPM) last week underscores the importance of these tax credits for low-income working families. If it weren’t for the EITC and ACTC, the Census Bureau estimates that the U.S. poverty rate in 2011 would have been 2.8 percentage points higher, at 18.9 percent. The impact on child poverty would have been even greater: without these credits the child poverty rate would have reached 24.4 percent rather than 18.1 percent under the SPM definition.

Though the SPM is not available for smaller, sub-state geographies, through Brookings’ EITC Interactive policymakers and other stakeholders can find estimates of the number of filers benefitting from these credits--and the dollar amounts claimed--for every congressional and state legislative district in the country, and for every ZIP code, municipality, county, metro area, and state.

Contrary to Mitt Romney’s narrative about the 47 percent “takers” and giveaways to the Democratic base, these data show that the impact of these credits is far-reaching and broadly shared (as the list of “red” states above suggests)--crossing party and geographic lines to reach struggling working families at tax time. And that phrase bears repeating: These are taxpayers who are working.

Part of welfare reform in the late 1990s was an explicit decision to do less via traditional cash assistance and do more through the tax code to encourage work. Years’ worth of research illustrates the success of the EITC as a policy to promote work and better economic outcomes for low-income families. Updated profiles of the EITC-eligible population in TY2010 give greater insight into who these taxpayers are. More than three-quarters of these taxpayers live in family units; more than 54 percent are white; and almost half (46 percent) have some higher education. The typical EITC-eligible taxpayer has an adjusted gross income of just $13,905, and is most likely to have earned that income working in the retail, health care, accommodation and food service, construction, and manufacturing industries. These are workers filling the increasing number of low-wage service sector jobs the economy has been churning out in recent years, and in industries that bore the brunt of the latest downturn.

Discussions over the fiscal cliff and longer-term tax reform will inevitably include calls for more taxpayers to have “skin in the game.” But that’s not only a distraction from the real issues, it’s a distortion of reality. We made a choice in the 1980s and the 1990s to support work and alleviate poverty through the federal income tax. And all the evidence--federal, state, and local--shows that it’s working, for a broad base of Americans. Taxing hard-working families deeper into poverty is no fix for our short- or long-run budget problems.

Authors

Elizabeth Kneebone

Publication: The Avenue, The New Republic

Life Expectancy and Rising Income Inequality: Why the Connection Matters for Fixing Entitlements

Gary Burtless — Tue, 23 Oct 2012 11:15:00 -0400

Nearly all indicators of inequality show American income disparities have increased since the late 1970s. The magnitude of change in inequality is sensitive to the particular income measure we use, but essentially all measures imply that income gaps are bigger today than they were three decades ago.

Statisticians analyzing the most comprehensive income measures find that much of the jump in inequality was due to gains at the very top of the distribution. More than three-quarters of the relative income gains enjoyed by Americans in the top fifth of the income distribution were obtained by people in the top 1% of the distribution. We saw an uptick of inequality among households in the bottom 95% of the income distribution in the 1980s, but this trend seems to have run its course by the end of that decade.

The growth in inequality has been a topic of intense interest to social scientists for the past quarter century. More recently it has become the focus of political debate and press attention. Although the effects of increased inequality remain uncertain, there has been a flurry of research aimed at understanding possible links between inequality and a variety of social and economic trends.

One of the most basic indicators of well-being is life expectancy. Analysts have long recognized the powerful association between personal income and expected life spans. People with higher incomes tend to live longer than people with lower incomes. Statistical tabulations suggest that the relationship is nonlinear. A $10,000 increase in annual income does more to lift the life expectancy of someone who lives on a meager income than it does to boost the life span of someone who is already well off. This suggests that transferring $10,000 a year from someone who is rich to someone who is poor should lift the expected life span of the poor recipient more than it hurts the life span of the rich donor. It therefore seems logical to expect that a more egalitarian income distribution would lift average life expectancy.

We can conceive of societies where a reduction in inequality would surely add to average life spans. Of course, we can also imagine societies where the attempt to reduce inequality through redistribution would reduce economic growth, generate political turmoil, and slow the rise in average incomes. If you oppose income redistribution because you fear its potential impact on politics or growth, you may not be impressed by the argument that longevity would improve a bit faster if there were less inequality.

As many observers have noted, the United States has exceptionally wide inequality for a high-income country. It also has relatively low average life expectancy. Among 34 countries in the Organization of Economic Cooperation and Development (OECD), the U.S. ranks 27^th in life expectancy at birth. If we limit our comparison to the 21 large OECD countries with high incomes, America ranks dead last. This lowly rank is especially surprising because average income in the U.S. is about 40% higher than it is on average in other OECD countries, and real health spending per person is about 150% higher than it is in the other countries. Of course, wide income disparities in the U.S. mean that low-income Americans have lower incomes than people in comparable positions in the income distributions of many other rich countries.

A recent study of American life expectancy uncovered trends that may be partly traceable to increased income inequality. S. Jay Olshansky and his colleagues found evidence that white men and women who lack high school diplomas have seen a noticeable drop in life expectancy over the past three decades. These groups have struggled as job prospects for less educated workers have dried up. Their declining economic position may be worsening their chances of living a long life. Another interpretation is that the fraction of whites who fail to complete high school has shrunk, so the apparent decline in dropouts’ life expectancy may be a result of shifts in the composition of the population that lacks a high school diploma. Expected life spans for whites in general, and indeed for Hispanics and African Americans, continue to improve.

An older study of changes in life expectancy used Social Security records to determine the relationship between workers’ position in the wage distribution and their mortality rates. Hilary Waldron, a Social Security Administration researcher, estimated mortality rates of white men born between 1912 and 1941 who had earnings between ages 45 and 55. She divided these men according to their average position in the earnings distribution when they were between 45 and 55, and she then determined the effects of their income position on their mortality rates between ages 60 and 89. Between ages 60 and 80 men with a worse earnings position had a higher mortality rate. More disturbingly, the mortality differential between low-earnings and high-earnings men increased substantially over time. The mortality rates of both low-earnings and high-earnings men improved during the period Waldron examined. However, improvements in life span overwhelmingly favored the men at the top of the earnings distribution. Men born in 1912 who had earnings in the top half of the wage distribution lived 1.2 years longer than men born in the same year who had earnings in the bottom half of the earnings distribution. For men born in 1941 the difference in life expectancy soared. Better paid men in the younger birth cohort can expect to live 5.8 years longer than men born in the same year who are in the bottom half of the wage distribution.

It is not clear whether the growing life expectancy gap between the affluent and less affluent can be traced to widening inequality. It may be due instead to growing differences in eating habits, smoking, exercise, and lifestyle habits that favor the affluent over the less affluent.

Even if we cannot be confident of our explanation of the trend, some of its policy implications should be plain. If gains in expected life spans are increasingly concentrated among the well-to-do, we should not ask the less affluent to bear the main burden of an aging society. One proposal to deal with the financial problems of Social Security and Medicare is to lift the age of eligibility for benefits. This policy makes sense if the gain in life spans is enjoyed equally by the rich and poor. It makes less sense to ask the poor to wait longer for retirement benefits when a disproportionate share of the life span improvement is concentrated among the affluent.

Authors

Gary Burtless

Publication: Real Clear Markets

Inequality Is Not What We Imagine

Scott Winship — Fri, 19 Oct 2012 10:50:00 -0400

Rising inequality in America, according to a number of economists and many more pundits and political actors, has hurt economic growth. By reducing economic mobility, it is said to have inefficiently allocated talent. Similarly, outsize salaries in the financial sector are said to distort career decisions of college graduates. Inequality, others say, reduces worker motivation and happiness and social trust, which affect productivity. It lowers aggregate demand because the rich consume a lower percentage of their income and in ways that do not promote future growth. It reduces entrepreneurship by saddling college graduates with student debt.

These contentions make intuitive sense and are eminently plausible. The problem with most analyses of rising inequality is that they do not take the all-important step of actually examining the evidence. Such ad hoc hypotheses about inequality’s effects on growth are easy to spin. From the right, Edward Conard and others have just as plausibly argued that rising inequality gives people the incentives to take risks and work hard — elements crucial for robust economic growth; if it would induce more people to pursue Steve Jobs levels of innovation, maybe we need higher inequality still!

What does the evidence show? The liberal Center for American Progress recently released a report purporting to show how inequality hurts the economy. If the research on the link between inequality and growth persuasively showed a strong connection, you can be sure that the center would have trumpeted it. Here is what the authors, Heather Boushey and Adam S. Hersh, instead wrote:

"There is, of course, a rich literature on the relationship between inequality and growth. Although there are many conflicting views, there is ample evidence that inequality can, in fact, hurt growth under many circumstances. But this literature focuses mostly on the experience of developing countries, and its applicability to the challenges currently facing the United States is not entirely clear."

Widely cited research by I.M.F. economists — embraced by the chairman of the Council of Economic Advisors, Alan Krueger, in a speech in January and highlighted by Annie Lowrey in The New York Times this week — has this very problem of focusing primarily on developing countries. Inequality in dictatorships and oligarchies with mass poverty is a very different matter than inequality in rich democracies.

Indeed, research by Christopher Jencks of Harvard University looking at the experience of 12 developed countries over the past century indicates no relationship across those countries between the share of income received by the top 1 percent and economic growth rates. Since 1960, however, countries with higher inequality have experienced more growth. Boushey and Hersh do not cite Jencks’s study but nevertheless conclude that, “Ultimately, data and methodological issues mean that analyses are too imprecise to deliver definitive answers to this old and central question in economics research.”

Studies that look at some of the specific hypotheses mentioned above also are inconclusive or refute the idea that inequality is harmful to growth. Inequality does not appear to lead to financial crises. Its link to opportunity is highly questionable. The evidence that it distorts political outcomes is similarly thin and again based largely on developing countries.

It is not enough to construct arguments about why inequality might matter; in the end this is a question we can subject to empirical testing. The evidence does not give much reason to worry that inequality saps growth, or much reason to think that it increases it.

Authors

Scott Winship

Publication: New York Times