Monthly Archives: October 2011

This morning I posted on the flaw of using the popular measure of income disparity across nations.  Many organizations use the GINI coefficient to measure this disparity.  However, what these organizations fail to mention is that they are measuring household disparity, not individual disparity.  And when they compare nation to nation, they don’t normalize those numbers so that we’re comparing apples to apples.

For example, in the United States, a massive amount of “households” is comprised of single parents.  That is, the home will find a single eligible wage earner.  And many of those parents opt not to work.  Now, some will say that’s because there is no work to be had.  Others, me included, will say that the incentives are all wrong.  The entitlement programs offer enough aid that the prospect of going to work doesn’t make sense.

So, no income.

Is this sad?  Most certainly.

Does this promote poverty generation to generation?  With out a doubt.

Is this a serious problem that requires serious thought?  Yes.

Does this implicate the job market, compensation structure or some inherent bias towards “the wealthy”?  Under no circumstance.

This morning I showed the “horizontal” version of the data.  Let’s look at the vertical:

Descriptor Lowest Fifth Second Fifth Third Fifth Fourth Fifth Highest Fifth
No Earners 62.4% 29.6% 14.0% 6.3% 3.0%
One Earner 33.0% 52.6% 48.4% 33.1% 22.2%
Two Earners 4.3% 16.0% 32.4% 49.3% 55.9%
Three Earners 0.2% 1.6% 4.4% 8.9% 13.1%
Four Earners 0.0% 0.2% 0.8% 2.4% 5.8%

The data continues to reveal reality.  The quintile that represents the poorest among us, the “Lowest Fifth” has 62.4% of it’s members with ZERO wage earners.  That is, more than half, WAY more than half of the poorest quintile has no one in it making any amount of money.  NONE.  There is no way that this can be counted towards any measure of income disparity.  For that to happen, there must be an income!

I have lived in North Carolina for 12 years [damn!  12 years] and I have never won the North Carolina lottery.  Never mind that we have had a lottery for only 7 years and that I’ve never bought a ticket.  Is it realistic that I be counted among lottery players that haven’t won?


Back to the data.  The “Lowest Fifth” has 62.4% of its members with no income.  62.4%.  Compare this to the “Highest Fifth”.  That quintile has 3% with no wage earners.  Three.  Further, the “Lowest Fifth” has only 4.5% of its membership with 2 or more earners.  Compare that with the “Highest Fifth” who have 5.8% with FOUR wage earners.

It turns out that a predictor of income is, shockingly, the number of wage earners.

Thursday I posted my thoughts on the GINI rating and how it pertains to income here in America.  In that post, my main thrust was the fact that GINI, as reported when comparing national income disparity rankings, was comparing household incomes.  Not the incomes of individuals, but of households.

And I think that’s important.  As I demonstrated in that post, taking these two families:

  • Family A making $60,000 a year
  • Family B making $70,000 a year

Looks to be fairly equitable.  But now let’s consider that family A and family B get divorced, created 4 households out of two.  Then the breakdown looks like this:

  • Family A making $0 a year
  • Family B making $28,000 a year
  • Family C making $32,000 a year
  • Family D making $70,000 a year

THIS looks to be dramatically different.  However, the same four families in the second picture are the individual household represented in the first picture.  Remarkable, yes?

So, how do things look in real life?  Let’s take a look at the US Census Bureau’s Current Population Survey for 2010:

Descriptor Lowest Fifth Second Fifth Third Fifth Fourth Fifth Highest Fifth
Family Households 9,411 13,969 16,162 18,543 20,528
% 12 17.8 20.6 23.6 26.1
Married Couples 4,037 8,521 11,587 15,270 18,621
% 7 14.7 20 26.3 32.1
No Earners 14,805 7,037 3,327 1,496 722
% 54.1 25.7 12.1 5.5 2.6
One Earner 7,845 12,474 11,488 7,853 5,263
% 17.5 27.8 25.6 17.5 11.7
Two Earners 1,020 3,790 7,702 11,700 13,258
% 2.7 10.1 20.6 31.2 35.4
Three Earners 55 379 1,040 2,112 3,119
% 0.8 5.6 15.5 31.5 46.5
Four Earners 5 58 180 577 1,377
% 0.2 2.6 8.2 26.2 62.7
Aggregate Earners 10,240 21,940 31,595 41,125 48,338

The data is remarkable.  Let’s go through it bit by bit.

First, the “Fifths” listed at the top is earnings by quintile.  That is, the poorest 20% is the “Lowest Fifth” while the richest 20% is the “Highest Fifth”.

Now then, the data:

Households that are “families” is a massive indicator of income.As the percentage of families in each fifth increases, so does the wealth.  The same goes for married couples.  The top fifth has nearly 5x the number of married couples as the bottom fifth.  Seems that family is important in wealth creation.

Family aside, the powerful statistic that I took away was the number of earners in a household.  And what I found matches exactly with the phenomenon I described in my earlier post.

Of the households in the bottom fifth, more than HALF don’t have a single wage earner in the household.  More than half.  While the top 20% has only 2.6% of households that don’t qualify as a wage earner.

Further, if you look at the “Lowest Fifth” as a column and march down, you’ll see that fewer and fewer of those households have the described number of earners.  Starting at the top, this segment of the population has 54% of households with 0 wage earners.  While at the bottom, it has but .2% of the households with 4 wage earners.  The exact opposite is true of the “Highest Fifth”.

In short, it would seem that as a household has more wage earners, that household moves from one of the fifths to another.  And to the extent that this is true, look at the last line; aggregate earners.

The “Lowest Fifth” has 10,240 members.  The fifth that earns twice as much money as the lowest fifth has twice as many wage earners.  The fifth that makes three times as much as the lowest fifth has three times as many wage earners.  The fourth has four times as many wage earners.  And the highest has five times the number of wage earners.

This is true almost to the exact number.

The data presented above tells me that we don’t have an income disparity issue.  We have a family structure issue.  If you take a single wage earner in a household and compare that household to one with 4 wage earners, it should be no surprise which of the two households makes more money.

And lest there be any doubt.  The “Highest Fifth”?  They are some working sums -o- beetches.  Fully 62.7% of those households have FOUR wage earners.  This is not the lazy rich that the OWS and the ((% make them out to be.

A few nights ago I struck a blow for the 100%.

With proper proportions and proper heat, these ingredients become a very stable solid’ish kinda goop.Armed with the knowledge that:

  1. Mammals are able to sense “heat”.  That heat found in peppers that burns the tongue.
  2. Birds can’t.

I had a most excellent day watching my birds happily eat their new treat while simultaneously watching my squirrels retreat in pain!


The big news here in Raleigh in the last few days was the arrest of 8 protesters down at the State Capital grounds.  Apparently they were on the sidewalk in front of the Capital and the Capital Police asked them to leave.  I’m assuming, dangerous I know, that they were occupying the sidewalk and not just using it to go from the actual occupation to the Apple store where they could get more iPads, iPods, iPhones, batteries and a MiFi hot spot so that they could use Facebook and Twitter and WordPress to keep people abreast of their actions.

Anyway, I digress.

The big news wasn’t the arrest of the 8 people.  Everyone expects these guys to get arrested in some number now and then.  In fact, I suspect for some of ’em, it’s a badge of honor to be arrested for protesting and somehow adds to that individual prestige within the movement.  Again, whatever.  The big news was the complain by the Occupy Raleigh folks that the police somehow crossed a line by asking a woman, who is disabled, to disperse as well.  As if!

The whole idea, near as I can tell, of this whole movement is that we should all be treated fairly.  We should all be expected to contribute and we should all be expected to obtain compensation.  There is no special exceptions for anyone.  So it seems strange to me, but not unexpected given the Leftists tendencies and strategies of this movement, that they would call “foul” that one of the 99% be expected to abide by the laws just as the rest of us.

But no, what we get is shock and disbelief.  As if the cop was just such a monster.

And we get it from the paper too:

The arrests of eight people Thursday at an Occupy Raleigh protest did not sit well with Mayor Charles Meeker.

Meeker said it was his understanding that Raleigh police would get involved only “if there were an assault on a Capitol Police Officer or other similar disturbance.”

But a different scenario played out. City officers aided Capitol Police in arresting eight people, including a disabled woman sitting on a chair, after the demonstrators refused to leave a sidewalk in front of the Capitol.

Now we are hearing, from the newspaper mind you, that she was sitting on a chair, not the sidewalk.  More and more spin and perception changing.

But what does the woman herself have to say?

I respect this.  I disagree with her on many levels, but I respect it.

She admitted she purposely acted in such a manner that would result in her arrest.

The police were polite and offered her an “out”.

She wants no special treatment as a result of her disability.

Of course this’ll be ignored by the Occupiers.  They’ll ignore that an individual has the right to rights.  And this brings with it the right to be arrested for unlawful conduct.

This just goes to prove my point.  These people do NOT want a level playing field.  They want a tilted playing field just as surely as anyone else might want the field tilted.  No, trust me, these occupiers just want the tilt to be in their favor.

I’m guessing that the OWS crowd doesn’t like the fact that corporations are viewed as people.  With free speech rights and the ability to donate to campaigns or to purchase advertising.

I wonder if they think those same rules should apply to OWS or not?

I’m guessing they think that the rules they want applied to corporations are not the rules that want applied to themselves.

A few days ago I posted a story about OWS protestors in LA who realized that their protest camp was being infiltrated by imposters and homeless:

Anyway, this nicely frames this nugget:

Homeless transplants from the city’s Skid Row have set up their tents within the larger tent city. No violence has been reported, but protest organizers are attempting to discourage people who are only at the encampment for the amenities.

I smiled and said, “Welcome to the 53%!”

Now, to be very clear, I do NOT think the OWS crowd is obligated to serve food and provide shelter for people who are not members in their group.  The people who are organizing any individual movement and group is working hard, I am sure.  However, what they are protesting subjects them to a degree of tolerance that would not otherwise be applied to other organizations.

See, the 99% feel that other people in the world should labor for their direct benefit.  These people honestly feel that they deserve a “living wage”, free college and healthcare.  Gone is the concept that any and all of these things require that an individual, somewhere-anywhere, labor for the benefit of the 99% and not themselves.

This is, of course, crazy and no one really supports it.

See, what’s happening is that protesters have organized into roles.  One of those roles is to cook and prepare meals for the other protesters, in theory, so that they can focus on other tasks that are required.  Perhaps this is park cleaning, garbage removal, sign making and library tending.  This makes sense.  Just like in life, specialization of tasks is more efficient and better serves the community.

However, because of the nature of the camps, homeless and other non-protesters are coming for the meals.  And the folks who are contributing are getting fed up; they are tired of supporting those who don’t contribute in other ways.

Again, no one supports requiring people to labor for those who don’t contribute.

And the proof that no one supports it is the fact that those protesting for just such that condition are opposed to that condition when they are the ones being asked to contribute money and labor.

Hat tip Boortz.

To show they mean business, the kitchen staff refused to serve any food for two hours yesterday in order to meet with organizers to air their grievances, sources said.

The Assembly announced the three-day menu crackdown announced earlier in the day — insisting everybody would be fed something during that period.

Some protesters threatened that the high-end meals could be cut off completely if the vagrants and criminals don’t disperse.

Unhappiness with their unwelcome guests was apparent throughout the day.

“We need to limit the amount of food we’re putting out” to curb the influx of derelicts, said Rafael Moreno, a kitchen volunteer.

See, they understand.  They GET it.  And when faced with the prospect of laboring for those who don’t contribute in a meaningful way, they react by reducing the “welfare” they provide to “vagrants”.  Further, these people understand the power of incentives.  They know that if they put out more and more “stuff” they will get more and more “derelicts”.  The reverse seems to be obvious.  Reduce the quality of the “stuff” and the “derelicts” go away.

I so do love the free market.

Much has been said during the last few years about income disparity.  And not just the disparity, but the mobility of people from one income group to another.

I’ve done some reading last night and this morning a thought struck me:

GINI measures the disparity in household income.  Consider Dick and Jane and their neighbors John and Mary.

Dick works in retail and is making $28,000 a year.  Jane works in service and makes $32,000 a year.

John works as a manager in a factory making $70,000.  Mary stays home and cares for their family.

The disparity between Dick and Jane vs. John and Mary is low.  Dick and Jane earn $60,000 a year while John and Mary earn $70,000.

Now, consider Dick and Jane get divorced.

The disparity between two households earning $28k and $32k compared to the one earning $70k is much higher, and the GINI goes up.  But nothing changed as far as economic earnings are concerned.  In fact, if you take this one step further, consider John and Mary also suffer divorce.  Now the incomes for FOUR households is:

  • $0
  • $28,000
  • $32,000
  • $70,000

A very disparate view when compared to the initial comparison of $60,000 and $70,000.

In the same way that the demographics of America impact life expectancy statistics [Japanese Americans live as long as native Japanese] I suspect that demographics impact the GINI.  I also suspect that this isn’t calculated into the analysis when people discuss the GINI.