NCPA - National Center for Policy Analysis

The U.S. "Income Gap?" Hold on a Minute!

November 12, 2002

One hears much about an income gap in the U.S. -- how the rich are outdistancing poorer Americans. That conclusion is based on static census figures.

But when one follows actual people as they move along on their career paths, an altogether different picture emerges: the poor are getting richer.

The San Francisco-based Sphere Institute -- in a study entitled "Moving Up? Earnings Mobility in California" -- followed flesh-and-blood workers, tracking the wages of more than 180,000 Californians from 1988 to 2000. Not only did people in all quintiles move up the economic ladder, the "real wage gains were greatest for those workers who started out at the lowest wages," the report concludes.

  • Workers in the first, or bottom, quintile more than doubled their earnings in constant 2000 dollars during the period -- starting at an average of $13,136 per year in 1988 and ending up at $27,194 by 2000.
  • By contrast, workers starting in the middle quintile in 1988 and making $36,874 saw their earnings rise to $42,410 12 years later.
  • Those in the top quintile, the highest earners, only went from $74,826 to $80,209.

Income advancement among the poor in California becomes even more dramatic when one recognizes that the state has experienced an influx of low-skilled immigrants primarily from Mexico and Central America. These folks often have little or no formal education and partial or no English skills.

Source: Editorial, "An Embarrassment of Riches," Wall Street Journal, November 12, 2002.

For text (WSJ subscribers)

http://online.wsj.com/articles/SB1037065764976485868.djm

For Sphere report

http://www.sphereinstitute.org/pdf/CPR_v1n4.pdf

 

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