Income Inequality Overall and by Race and Gender

I've been trying to work through the question of how to talk about racial, gender, and class inequality simultaneously. I think a lot of those discussions are muddled and so I want to present a general scheme of how you might do so more clearly, using income inequality as an illustration.

Before we get into the theory part, let's look at some graphs (click here for a full spreadsheet).

Per Capita Disposable Income

First, I have a graph that charts the disposable per capita income of various race+gender combos, broken down by percentile.

As you can see, the X percentile of white males has a higher disposable income than the X percentile of any other group. Overall racial differences at each percentile are larger than gender differences at each percentile. This is so for a number of reasons, but one of them is that men and women of the same race often live together, meaning their per capita disposable incomes are often the same. Put simply, the per capita disposable income of a wife is the same as the per capita disposable income of a husband. Similarly, the per capita disposable income of a male child is the same as the per capita income of their female child sibling, provided they are living in the same household.

Equivalized Disposable Income

Here is the same graph, but this time using equivalized disposable income rather than per capita disposable income.

As you can see, switching from one or the other changes the amounts quite a bit and even changes the gaps some, but overall, the general picture is pretty similar.

Race, Gender, and Class

Ask yourself the following question: how must these graphs change to achieve racial, gender, and class equality in the realm of income?

For race and gender equality, the answer seems to be that each of the six race+gender lines should move towards the Overall line. That is to say, when it comes to income at least, race and gender equality seems to be the stuff of closing gaps within percentiles. Indeed, the most prominent presentation of the gender wage gap operates on the assumption that the gap will be closed when the 50th percentile of full-time women workers and the 50th percentile of full-time men workers receive the same wage.

For class equality, the answer is that the lines themselves need to be flattened. Incomes of those at and around the bottom need to go up and incomes of those at and around the top need to go down. Or at minimum, the income of lower percentiles need to increase faster than incomes at the higher percentiles. Put simply, class equality is the stuff of closing gaps between percentiles.

The tasks of closing gaps within percentiles and closing gaps between percentiles are not inherently in tension with one another (though at times they can be depending on the policy in question). But, in practical politics, there is often the sticky question of policy priorities and that's where the tensions often arise.


Technical Notes.

To define disposable income, I use a modified version of the supplemental poverty metric's income concept. I take the SPM income and modify it by adding back child care expenses and medical out of pocket expenses. So, the income concept becomes, essentially: market income + transfer income - taxes.

For per capita income, you add up all the income of every member of the family, and then you divide that income by the number of people in the family. So, for instance, if a family of four has a combined income of $40,000, their per capita income is $10,000 ($40,000/4). Everyone in that four-person family would be coded as having $10,000 of income.

For equivalized income, you do the same thing as per capita income except you divide the family's total income by the square root of the number of people in the family. So, a family of four with a $40,000 income has an equivalized income of $20,000 ($40,000/sqrt(4)).

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