The Great Divergence

Part Two:

Most discussion about inequality in the United States focuses on race and gender. That makes

sense, because our society has a conspicuous history of treating blacks differently from whites

and women differently from men. Black/white and male/female inequality persist to this day.

The median annual income for women working full time is 23 percent lower than for their male

counterparts. The median annual income for black families is 38 percent lower than for their

white counterparts. The extent to which these imbalances involve lingering racism and sexism or

more complex matters of sociology and biology is a topic of much anguished and heated debate.

But we need not delve into that debate, because the Great Divergence can't be blamed on either

race or gender. To contribute to the growth in income inequality over the past three decades, the

income gaps between women and men, and between blacks and whites, would have to have

grown. They didn't.

The black/white gap in median family income has stagnated; it's a mere three percentage points

smaller today than it was in 1979.3 This lack of progress is dismaying. So is the apparent trend

that, during the current economic downturn, the black/white income gap widened somewhat. But

the black/white income gap can't be a contributing factor to the Great Divergence if it hasn't

grown over the past three decades. And even if it had grown, there would be a limit to how much

3

It is possible to argue that the black/white wage gap grew worse during the past three decades, for instance by factoring in blacks’ higher incarceration rate and lower participation in the job market. It has also been shown that, within income groups, blacks enjoyed less upward mobility during this period than whites. But the Great Divergence is a phenomenon that’s measured according to family (“household”) income, so in examining whether black/white income inequality contributed to it, I’ll consider only the 30-year change in black family income relative to white family income. And that change is nonexistent.

impact it could have on the national income-inequality trend, because African-Americans

constitute only 13 percent of the U.S. population.

Women constitute half the U.S. population, but they can't be causing the Great Divergence

because the male-female wage gap has shrunk by nearly half. Thirty years ago the median annual

income for women working full-time was not 23 percent less than men's, but 40 percent less.4

Most of these gains occurred in the 1980s and early 1990s; during the past five years they halted.

But there's every reason to believe the male-female income gap will continue to narrow in the

future, if only because in the U.S. women are now better educated than men. Ever since the late

1990s female students have outnumbered male students at colleges and universities. The femalemale

ratio is currently 57 to 43, and the U.S. Department of Education expects that disparity to

increase over the next decade.

Far from contributing to the Great Divergence, women have, to a remarkable degree, absented

themselves from it. Take a look at this bar graph by David Autor, an MIT labor economist:

The graph demonstrates that during the past three decades, women have outperformed men at all

education levels in the workforce. Both men and women have (in the aggregate) been moving

out of moderately skilled jobs—secretary, retail sales representative, steelworker, etc.—women

4

more rapidly than men. But women have been much more likely than men to shift upward into

higher skilled jobs—from information technology engineer and personnel manager on up

through various high-paying professions that require graduate degrees (doctor, lawyer, etc.).

These findings suggest that women's relative gains in the workplace are not solely a You've-

Come-a-Long-Way-Baby triumph of the feminist movement and individual pluck. They also

reflect downward mobility among men. My Slate colleague Hanna Rosin, writing in the Atlantic,

recently looked at these and other data and asked, "What if the modern, postindustrial economy

is simply more congenial to women than to men?"

She might have asked the same about the modern, postindustrial family. The declining economic

value of men as Ward Cleaver-style breadwinners is a significant reason for the rise in single

parenthood, which most of the time means children being raised by an unmarried or divorced

mother. The percentage of children living with one parent has doubled since 1970, from 12

percent to more than 26 percent in 2004. Conservatives often decry this trend, and they rightly

point out that children who grow up in single-parent homes are much likelier to be poor. "Single

mothers seldom command high wages," confirmed David Ellwood and Christopher Jencks, both

of Harvard's Kennedy School of Government, in a 2004 paper. "They also find it unusually

difficult to work long hours." But it would be difficult to attribute much of the Great Divergence

to single parenthood, because it increased mostly before 1980, when the Great Divergence was

just getting under way.5 By the early 1990s, the growth trend halted altogether, and though it

resumed in the aughts the rate of growth was significantly slower.6

Also, single parenthood isn't as damaging economically as it was at the start of the Great

Divergence. "That's mostly because the percentage of women who are actually working who are

single parents went up," Jencks told me. In a January 2008 paper, three Harvard sociologists

concluded that the two-thirds rise in income inequality among families with children from 1975

to 2005 could not be attributed to divorce and out-of-wedlock births. "Single parenthood

increased inequality," they conceded, "but the income gap was closed by mothers who entered

the labor force." One trend canceled the effects of another (at least in the aggregate).

While we're on the topic of single versus two-parent households, perhaps we ought to consider

what a "household" is.

Stephen J. Rose is a labor economist at Georgetown best-known for publishing, since the 1970s,

successive editions of Social Stratification in the United States, a pamphlet and poster much

revered by the left that depicts economic inequality in the United States. In his recent bookRebound, Rose made an apparent 180-degree turn and argued that worries about rising income

inequality and a disappearing middle class were overblown. Rose built his case largely on the

5

By 1980 the proportion of children living with one parent was already 20 percent.

6

The especially worrisome trend of teenage births peaked in the early 1990s.

notion that the Census Bureau's preferred metric—"median household income"—was

misleading.

The trouble, Rose wrote, was that households varied greatly in composition and size. A

household might consist of a single young man just starting out on his own or an elderly widow

in retirement. Neither would likely enjoy a high income, but that would be a function of mere

circumstance (the young man was just beginning his climb up the greasy pole; the retired widow

no longer worked at all) and need (neither was likely to be responsible for any children). Another

problem, Rose suggested, was that some households were bigger than others. Couples tended to

have larger household incomes than single people, but that was because they likely collected two

paychecks rather than one. The proportion of Americans living alone had for various reasons

increased over time; that needed to be taken into account, too. Correcting for all these factors,

Rose calculated that median household income was 30 percent higher than the Census' official

figure (about $50,000 in 2007).

That was the good news. The bad news was that even with these new calculations, Rose couldn't

deny the existence of a Great Divergence. "Under all circumstances," he wrote, "inequality has

risen considerably, and this is a bad thing for America. Those at the bottom of the income ladder

have benefited only minimally from the significant gains in overall production over the past three

decades."

Back, then, to the drawing board. Conventional liberal and conservative explanations about what

ails society can neither explain the Great Divergence nor make it go away.

How many of you actually get this or understand? I have seen so many follow and believe ridiculous people and their stories. I cannot believe the majority of our nation could actually be so naive, I refuse to believe it.

Some people prefer to compare median weekly incomes because women are more likely to take time off over the course of the year, but weekly incomes followed a near-identical trend. Among part-time workers, women now enjoy a higher median weekly income than men. This is mainly because female part time workers tend to be older than male part-time workers.

The usual suspects are innocent