Income Gap: Like Newton's First Law of Motion
Tuesday, September 28, 2010 at 9:41PM About two weeks ago, the Census Bureau released their Income, Poverty, and Health Insurance Coverage in the United States: 2009 report. The cliff notes:
The poor are getting poorer quicker, and in greater numbers, than ever.
Earlier today, Hope Yen at the Associated Press ran a story noting that income inequality reached a record gap; 14.5 to 1 vs. vs. 1968’s low of 7.7 to 1. (Translation: for every slice of pie a poor person has, someone making over $100,000 has 14.5 slices). Her piece also cited a measure, called the Gini index that shows US income inequality at its widest level since the index began in 1967. The conclusion was examined in a subsequent piece by Timothy Noah who has written an excellent 10-part series on income inequality for Slate, pointing out that one of the measures used was based on adjusted figures, which show the gap getting wider more quickly.
The sad fact is these figures are growing period. The sadder fact is that though this is nothing new, now, it is taking place in a country that has proven it can create trillions of dollars in a Washington minute, when the banking system needs help, but can't figure out how to create a more equitable economy.
The US poverty rate for 2009 is 14.3 percent, (POB – or post-bailout) up from 13.2 percent in 2008 (PB – pre-bailout). 43 million people lived in poverty in 2009 vs. 39.8 million in 2008. The number of people living in poverty is at a record high. The increase in poverty rates was the highest for Hispanics. The increase for families headed by single-women was higher than for married couples.
In terms of income, things weren’t that different in 2009 vs. 2008. In terms of health insurance, the percent of uninsured and number of people without insurance rose more quickly than ever. The percent rose to a record 16.7% or more than 50 million Americans in 2009 vs. 15.4% or 46 million in 2008.
Take away all the stats and fancy index names and we’re left with a phenomenon that follows Newton’s First Law of Motion (yeah, that’s fancy too, sorry). A body in motion will remain in motion unless acted upon by an external force. The wealthy will remain holding a greater proportion of the nation's net worth, absent anything to get in their way, while the poor and middle class will continue to get less of the pie.
Bailout, Income inequality, health insurance, poverty 
Reader Comments (3)
"In terms of health insurance, the percent of uninsured and number of people without insurance rose more quickly than ever. The percent rose to a record 16.7% or more than 50 million Americans in 2009 vs. 15.4% or 46 million in 2008."
These numbers amazed and saddened me. Will the "Obama Health Care" really cut this down significantly? What's your opinon on that issue?
Cheers! Edmond
It's almost too early to tell. One thing is for sure, in just the past few months, insurance companies have jacked up their rates. Anthem Blue Cross/Blue Shield, for example, sent letters out to 90% of their customers, informing them of a 14% increase in annual premiums based on their current plans. With rate increases like that from private insurance, by the time the health care bill creates a common platform (if that actually happens) for insurance, rates will have increased by more than that common platform would instill a competitive rate structure, plus fewer people will be able to afford their plans, plus fewer companies will be able to afford the plans they offer employees. For the health care bill to have really worked, it would have had to include insurance premiums caps, without those, it's not clear that more people will have access to affordable insurance in general by the time it takes effect.
Dear Miss Prins,
Thank you very much for your personal observations. Overhere in NL we got a new governement, that has made it it's target to cut billions from the budget. First result as far as health insurance is concerned; today announcement of one of the insurance companies: Premiums will raise with 11 percent.
A couple of years ago when the whole system was changed form public to private, the then Minister of Health, Wellness and Sport, Hans Hoogervorst, said: "The insurance companies shall not raise the prices because of competition, they'll think about that twice" (or words to that effect) Sure, he knew what was going on, didn't he! Well the insurance companies have been thinking really hard, stimulated by the financial crisis that nobody had seen coming. Of course I was the stupid one to read what people like John Bellamy Forster, Fred Magdoff and others had to say.
Anyway, after he stepped down he went to work for the AFM (Authority Financial Markets) a public-private company in the Netherlands; sort of watchdog for financial institutions. He now earns € 420,000 (= about $ 337,153.98) In a recent interview on Dutch national tv he indicated that he was worth it. Sure!
In closing I really want to thank you very much for your research, books, articles, observations, speeches and the like. Many an eye opener for me! 8-))
Cheers, Edmond