The Poverty and Inequality Report

Pathwaysa magazine on poverty, inequality, and social policy Special Issue 2014 STATE of the UNION The Poverty and Inequality Report 2014 Funding from the Elfenworks Foundation and SUBSCRIBE NOW! the U.S. Department of Health and Human Would you like to continue receiving Services gratefully acknowledged. Additional a free copy of Pathways? funding for this research provided by The Russell Sage Foundation and The United Way Sign up for hard copy delivery or PDF of the Bay Area. notification at www.inequality.com The contents of this issue are solely the responsibility of the authors and do not necessarily represent the official views of the Russell Sage Foundation, the United Way of the Bay Area, the Elfenworks Foundation, the Stanford Center on U.S. Department of Health and Human Services (Office of the Assistant Secretary for Planning Poverty and Inequality and Evaluation), or the Substance Abuse and www.inequality.com Mental Health Services Administration. table of contents 2 Editors’ Note 3 Executive Summary Charles Varner, Marybeth Mattingly, and David Grusky 8 Labor Markets Michael Hout and Erin Cumberworth 13 Poverty Sheldon Danziger and Christopher Wimer 19 Safety Net Karen Jusko and Kate Weisshaar 28 Income Inequality Jeffrey Thompson and Timothy Smeeding 34 Wealth Inequality Edward N. Wolff 42 Health Inequality Sarah A. Burgard and Molly M. King 51 Education Sean F. Reardon Pathways • The Poverty and Inequality Report 2014 Pathways editors note a magazine on poverty, inequality, and social policy ’ Special Issue 2014 The Stanford Center on Poverty and Inequality, one of the country’s three feder- ally-funded poverty centers, is a nonpartisan organization dedicated to monitoring SEnior EditorS art dirECtor David Grusky Robin Weiss trends in poverty and inequality, examining what is driving those trends, and devel- Charles Varner adminiStrator oping science-based policy on poverty and inequality. We present here our first Marybeth Mattingly Alice Chou annual report laying out some of the important trends and developments in poverty Michelle Poulin and inequality. The purpose of establishing this annual series is to ensure that the key facts Editorial Board on poverty and inequality enjoy the same visibility as other indicators of the coun- Kenneth Arrow, Stanford University try’s health. As it stands, there are all manner of analyses that focus on particular Peter Bearman, Columbia University David Card, University of California at Berkeley aspects of poverty and inequality, including excellent studies that take on separately Joshua Cohen, Stanford University such issues as employment, income inequality, wealth inequality, health inequality, Dalton Conley, New York University or educational access. This issue instead provides a unified analysis that brings Greg Duncan, University of California at Irvine together evidence across seven key domains, thereby allowing a global assessment Kathryn Edin, Johns Hopkins University of where problems exist, where achievements are evident, and how a coordinated Paula England, New York University Robert Frank, Cornell University effort to reduce poverty and equalize opportunity might be undertaken. Mark Granovetter, Stanford University The results in this report suggest the importance of distinguishing rigorously Robert Hauser, National Research Council between the upstream causes of poverty and its downstream effects. The upstream Michael Hout, New York University causes are simple: We have a jobs disaster and a labor-market disaster of epic Jon Krosnick, Stanford University proportions. The downstream effects are, by contrast, broad and complicated given Glenn Loury, Brown University that so many individual-level outcomes (e.g., health, schooling, crime) are affected. Hazel Markus, Stanford University Douglas Massey, Princeton University It is worth pursuing this point with a metaphor. Let’s suppose that there’s an Susan Mayer, University of Chicago upstream lumber mill that pollutes the river running through it with chemicals that Charles Murray, American Enterprise Institute cause all manner of health problems in the downstream cities (e.g., asthma, cancer, for Public Policy Research cognitive dysfunction). These cities then respond by hiring (a) epidemiologists to Katherine Newman, Johns Hopkins University tease out the relationship between exposure and health, (b) clinicians to help the Thomas Piketty, Paris School of Economics affected families minimize exposure and identify symptoms, (c) special-education Woody Powell, Stanford University Barbara Reskin, University of Washington teachers to provide compensatory training to those with cognitive dysfunction, (d) Richard Saller, Stanford University physicians to diagnose and treat those who have been exposed, (e) social workers William Julius Wilson, Harvard University to dispense benefits, and (f) police officers and prison guards to deal with the fraying Stanford CEntEr on povErty and in Equality social fabric. Building 370, 450 Serra Mall, Stanford University This downstream approach is clearly complicated and costly. The obvious alter- Stanford, CA 94305-2029 native is the upstream solution: If we’d rather not hire workers to repair all the harm Tel: 650-724-6912 Fax: 650-736-9883 and remediate all the effects, we can always resort to the cheaper option of reducing Email: [email protected] the pollution itself. Website: www.inequality.com A contrived metaphor? Not at all. The vast antipoverty apparatus that we’ve built The Stanford Center on Poverty and Inequality is a is not unlike the downstream approach to remediating pollution. We have social program of the Institute for Research in the Social scientists teasing out the many effects of poverty; clinicians, social workers, and Sciences. Funding from the Elfenworks Foundation and the U.S. Department of Health and Human child-care workers providing compensatory care to poor children; special-education Services gratefully acknowledged. Additional teachers addressing learning disabilities caused by poverty; social workers dispens- funding for this research provided by The Russell ing payments and benefits to the poor; and police and prison guards regulating and Sage Foundation and The United Way of the Bay warehousing the poor. If we instead addressed poverty and inequality at the source Area. The contents of this issue are solely the by providing education and jobs, we could do away with much of this downstream responsibility of the authors and do not necessarily apparatus in one fell swoop. represent the official views of the Russell Sage Foundation, the United Way of the Bay Area, the This is of course but one of many possible reactions to the evidence presented Elfenworks Foundation, the U.S. Department here. In producing this report, we wish only to ensure that the key facts are in play, of Health and Human Services (Office of the with the hope that they’ll prompt a renewed national conversation about how best to Assistant Secretary for Planning and Evaluation), configure our labor market, safety net, and educational institutions. or the Substance Abuse and Mental Health Services Administration. — David Grusky, Marybeth Mattingly, Michelle Poulin, and Charles Varner Pathways • The Poverty and Inequality Report 2014 EXECUTIVE SUMMARY the poverty and inequality report The Stanford Center on Poverty and Inequality CHARLES VARNER, MARYBETH MATTINGLY, AND DAVID GRUSKY The Poverty and Inequality Report provides a unified assessment of how the United States is faring in its efforts to reduce poverty and inequality and equalize opportunity. In this inaugural edition, top experts have been asked to report on current conditions across seven social and economic domains, the objective being to crisply characterize the best and most current evidence available. We will lead off the report with a simple overview of the key findings coming out of these analyses of poverty, the labor market, the safety net, income and wealth inequality, health inequality, and educational inequality. Although we obviously cannot do justice to the extensive analyses presented in each of these seven domains, we can at least provide a roadmap of the types of analyses that have been undertaken and the types of conclusions that have been reached. To this end, Table 1 pres- ents some of the indicators relevant to the analyses, with a more detailed description of sources and definitions provided in the individual briefs. The rankings in Table 1 allow us to assess how each indicator stacks up across the 13 years since 2000 (with a ranking of 13th meaning that the current year is the very worst over this period).1 Pathways • The Poverty and Inequality Report 2014 4 executive summary The Big Picture • The long-term unemployment rate for men and women What, then, are the main conclusions of this report? It is dif- alike is near the all-time high for the period since 2000. ficult not to be struck by the sheer number of indicators in Table 1 for which the current year is one of the very worst Implication: Although the Great Recession ended over four over the period we have covered. If an overall assessment years ago, the economy is still not delivering enough jobs. In is to be had, it is that the country’s economy and labor mar- the past, recoveries have not produced substantial employ- ket remain in deep disrepair, whereas our various post-market ment gains beyond the sixtieth month after the recession institutions (e.g., the safety net, educational institutions, began, a result that suggests that full

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