Report: Mass. Among Most Unequal States On Income Gap

Center On Budget and Policy Priorities

Here in Massachusetts we often crow about how great things are — our premier health care and education systems, for instance. But it’s worth noting that not everything is so hot, and some things are pretty miserable. Here’s some evidence: A new report by the Center on Budget and Policy Priorities has found that across all states the gap between the richest and poorest households are wide and growing. The states with the largest gaps: New Mexico, Arizona, California, Georgia, New York, Louisiana, Texas, Massachusetts, Illinois, and Mississippi.

According to a statement on the group’s website, the 2000′s were a “lost decade” for low and middle-income households:

“Prolonged growth in income inequality undermines the basic American belief that hard work should pay off,” said Elizabeth McNichol, co-author of the report and senior fellow at the Center. “Anyone who contributes to the nation’s economic growth should reap the benefits of that growth. But for decades now, those benefits have been skewed in favor of the wealthiest members of society.”

The long-standing trend of growing income inequality continued between the late 1990s and the mid-2000s.

Incomes fell by close to 6 percent among the bottom fifth of households, on average, while rising by 8.6 percent among the top fifth, during this period. Incomes grew even faster — 14 percent — among the top 5 percent of households. For the middle fifth of households, incomes grew by just 1.2 percent.

In 45 states and the District of Columbia, gaps between the richest and the poorest households widened during this period and narrowed in none. Average incomes grew more quickly among the top fifth of households than among the bottom fifth in most states.

“For low- and middle-income families, the 2000s were a lost decade of falling incomes and economic insecurity,” said Doug Hall, co-author of the report and Director of the Economic Analysis and Research Network (EARN) at the Economic Policy Institute.

“That’s not only harmful to these families, but it also threatens our future economic growth.”

How does this relate to health care? Quite directly, says Nancy Turnbull, Senior Lecturer on Health Policy and Associate Dean for Educational Programs at the Harvard School of Public Health:

“As you can see, Massachusetts is one of the most unequal states, and had one of the biggest increases in inequality. While state policies in a few areas help to mitigate some of the impact of this trend on health (e.g., health reform and in particular, Medicaid and Commonwealth Care), we know that having a low income is just about the worst thing for your health. Very troubling report for everyone, and particularly those of us who care about the health of the state.”

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  • Sharona Rose

    The last commenter obviously has no idea about the health risks involved for poor people, and especially low-income workers. If he were to look at the aging housing of most urban dwellers, he’d see poor insulation, lead paint (it’s still there, unless someone complains or the children are obviously poisoned), moldy basements, asbestos, etc. These conditions promote asthma, allergies and other immune responses. Air is polluted by diesel and gasoline fumes, and poor, urban neighborhoods are not generally safe for outdoor play. Being poor is tough on families and leads to feelings of hopelessness about life and the ability to improve their surroundings, which can result in substance abuse, obesity and depression. People work long hours at multiple, low-paying jobs and worry about their kids in poor daycare situations. I think, Dennis, you need to walk a mile in those shoes before you judge. Does a woman who cares for your grandmother in the nursing home work harder than Warren Buffet? Is the job she does as important? I say the answer to both questions is an unqualified “yes.” The top 5% of income earners will easily pay more for a wallet or a Halloween costume for their dog than the health care aide makes in a week at her back-breaking job. Is this humane or moral?

  • Dennis Byron

    Probably the most absurd statistical nuttiness I’ve ever seen from you guys. Bad in terms of both methodology and presentation. And the analysis of the data defies logic.

    Presentation: Should we compare the bottom 20% vs the top 5% or the top 20%; the slide does both. And why? Why not compare the bottom 5% vs. the top 5% or the bottom 5% vs. the top 20% instead? Or just keep picking cohorts that make whatever wacky point the Center on Budget Policy (whatever that is) wants to make (whatever that is).

    Methodology: You presented the slide so that a reader of your web site cannot read the footonote but going back to the state data tables that related to this out-of-context slide on your web site, I find that the authors say “Income is post-tax and includes the the value of the EITC and the cash value of food stamps and housing subsidies.” Uh-huh, so the authors count as income money that low-income residents get from the government but do not count as income money that high-income residents give to the government. Why would they do that if their intention — for whatever reason — is to show a high ratio. My guess is because if you actually wanted to compare the ratio of those who actually have income, the ratio would be much lower.

    Absurd Analysis of the Absurd Data 1: But what’s really interesting is the accompanying analysis:

    “Anyone who contributes to the nation’s economic growth should reap the benefits of that growth.”

    Should they reap it in proportion to their contribution as measured by their spending or by their investments or… Apparently, the authors conclude if you get food stamps from the government and (hopefully) buy food with it, the value of those food stamps should grow at the same rate as Warren Buffet’s investment income from saving GE from bankruptcy. (I guess Buffet would agree with that but I think you would find most investors would pull out of such an investment environment and keep their cash on the sidelines; oh wait, that has already happened.)

    Totally Absured Analysis of the Data 2: Then your blog post concludes with the really over the top crackpot reach tying this already nutty data to healthcare: But actually Ms. Turnbull’s conclusion is consistent with the author of the report. She basically says

    “Having given the (apparently) lowest 20% of income (as defined above; meaning not really income) “earners” in Massachusetts free (or — in a small number of cases as a percent of total — highly subsidized) health care insurance, their health care is still poor. And because we can’t give away any more free insurance than we already give (characterized by Ms. Turnbull as a little bit of help that might slightly mitigate the low quasi-income earner’s health situation), the health situation in Massachusetts is “troubling.””

    She isn’t singing out of the Deval Patrick song book with that conclusion.