U.S. Census highlights rising economic inequality

Posted on by Ed Paisley

The U.S. Census Bureau’s latest set of annual reports on income, poverty, and health insurance coverage in the United States demonstrates that economists and policy makers alike need to come to grips with the short- and long-term affects of economic inequality on economic growth and prosperity. The two reports present data for 2013, four and half years after the official start of the economic recovery from the Great Recession that began in December 2007 and ended in June 2009. Although there are a few bright spots, most of the data reported are dismal and the implications for income inequality are disturbing.

Most tellingly, the long-term trend lines in rising income inequality are essentially unchanged over more than four decades—across several business cycles—which means we need to understand the short- and long-term factors that result in stagnant incomes for all but the most wealthy. So let’s parse the numbers.

The first report deals with income and poverty while the second report describes health insurance coverage. The first report found that real median household income (the income of the household in the middle of the income distribution) in 2013 was stagnant for the second year in a row after having fallen for the four consecutive years after 2007. At $51,900, median household income was still 8 percent, or nearly $4,500, below its level in 2007, roughly equal to what it was nearly 20 years ago in 1995, and less than what it was in 1989. The only racial or ethnic group to experience a statistically significant increase in annual income last year was members of Hispanic households, who earned 3.5 percent more in 2013 than in 2012.

The median earnings of full-time, year-round workers did not improve, though the number of such workers increased by 2.8 million, which reflects the growth in jobs in 2013 and the gradual shift from part-time to full-time work that has been ongoing since 2010. The gap between the median earnings of men and women who worked full time, year round, was slightly reduced, but the gap was not statistically different from what it was in 2012—meaning that the data are not precise enough for the Census Bureau to state unequivocally that the earnings gap had narrowed.

Moreover, the reported improvement in the female-to-male earnings ratio, from 77 cents on the dollar in 2012 to 78 cents last year, was not just a function of an increase in the earnings of women, something we could all celebrate, but also a function of the long-term continuing stagnation in the earnings of full-time, year-round, male workers. This is a worrisome phenomenon. In fact, the median earnings of full-time, year-round male workers were no higher in 2013 than they were more than 40 years ago in 1972.

One positive finding in this year’s poverty-and-income report is that the overall poverty rate declined from 15 percent in 2012 to 14.5 percent in 2013. As the report notes, this was the first decrease in the poverty rate since 2006. However, the report cannot tell us how much of the reduction in poverty was due to an improvement in the economy and in earnings versus an increase in government transfer payments to low income households or other factors.

Almost the entire decline in poverty is attributable to a reduction in the poverty of children under the age of 18 alongside a reduction in the poverty rate of Hispanics. The poverty rate for children fell from 21.8 percent to 19.9 percent, and an estimated 1.4 million fewer children lived in poverty. The poverty rate among Hispanics dropped from 25.6 percent to 23.5 percent, indicating that nearly 900,000 Hispanics (almost 600,000 of whom were children under age18) were no longer living in poverty.

Still, some 45.3 million people were living in poverty in 2013, including 14.7 million children. And, as was true in prior years, those with the highest poverty rates include women, children, people of color, and the disabled.

The Census bureau report measures income inequality in a wide variety of ways. They include:

  • Six different income ratios such as the 90th/10th ratio, which is the income of the household that is earning more than 90 percent of other households (i.e. the household at the 90th percentile) divided by the income of the household earning less than 90 percent of households (i.e. the household at the 10th percentile).
  • The Gini coefficient, which summarizes the income dispersion in a number that varies from 0 to 1 and indicates greater inequality as it approaches 1.
  • The Mean logarithmic deviation of income, which is a measure of the gap between the median and average income.
  • The Theil index, which summarizes the dispersion of income in a number that varies from 0 to 1 with higher numbers indicating more inequality.
  • The Atkinson measure, which suggests the end of the income distribution that contributed most to inequality.

None of the measures in the report indicates any reduction in income inequality in 2013 relative to 2012. By every measure, income inequality in 2013 was higher than in previous years or equally as high as has ever been reported by the Census bureau since it started collecting these data in 1967.

Here are just two cases in point. The household income at the high earning 90th percentile was 12.1 times greater than the income of the household at the low earning 10th percentile—the widest gap ever reported by the Census Bureau. Similarly, the Gini index of income inequality, one of the most commonly used measures of income inequality, was 0.476 and indistinguishable from the record high of 0.477 reported in 2012 and 2011.

It should be noted, too, that the income data reported by the Census Bureau understate the degree of income inequality. The reason: research shows that the data, derived from a survey of people, tends to overstate the incomes of low earners and understate the incomes of high earners. Thus, the true distribution of income is more uneven than indicated by the reported data.

The bottom line is that after nearly five years of economic recovery and growth in national income most Americans have not experienced an increase in their earnings while the earnings of those at the top have largely returned to their pre-recession level. The wages of men in particular have stagnated while women, children, and people of color have suffered in disproportionate numbers from the ravages of poverty. By every measure, income inequality is at a record high or on par with the record highs reported by Census in 2012 and 2011.

The second report, which deals with health insurance coverage, provides additional data that confirm the high degree of inequality revealed in the first report. Unfortunately, because of a redesign in the questions asked of respondents, it is not possible to compare results from this year’s report to prior years.  Thus, the second report does not provide a perspective on whether or not inequality in health insurance coverage is growing. A different Census Bureau study, the American Community Survey, provides annual estimates of health insurance coverage that have closely followed trends in the Current Population Survey Annual Social and Economic Supplement, also commonly known as the March CPS. The American Community Survey data suggest that there have been recent improvements in health insurance: the percent of the population without health insurance fell from 15.5 percent in 2010 to 14.5 percent in 2013.

 

The most recent Census Bureau survey found that nearly 42 million residents, or 13.4 percent of the population, did not have health insurance coverage for the entire 2013 calendar year. The lower a household’s income, the more likely they were to lack health insurance. For example, 24.9 percent of households living in poverty had no health insurance during the year while only 5.3 percent of households earning more than $150,000 lacked insurance in 2013. Those most eligible for government provided health insurance typically had the highest insurance coverage. For instance, only 1.6 percent of those over age 65 and 7.6 percent of those under age 19 lacked insurance compared to 18.4 percent of the rest of the population. Race and ethnicity also influence coverage as nearly a quarter of all Hispanics and 1 in 6 blacks lacked health insurance coverage compared to just 1 in 10 non-Hispanic whites.

 

The quality of health care that people get tends to be a function of both insurance coverage and the quality of health insurance. While these data provide information about coverage, they tell us nothing about the quality of health insurance. But, from other sources we know that lower income households, blacks, and Hispanics tend to have poorer quality insurance even when they are covered which further exacerbates inequality in health care services.

A central concern of the Washington Center on Equitable Growth is that these high and persistent levels of income inequality and other forms of inequality, such as in health care, may have detrimental effects on long-term economic growth and the well-being of most Americans. Though the Census Bureau data provide a useful snapshot at a particular moment in time of the levels of income, poverty, health insurance, and income inequality, they do not tell us what is causing these levels or their economic implications.

To promote rapid and widely shared growth may require attention to both short and long-run demand and supply factors. For instance, we may need to better understand the role that demand plays in promoting business sales, creating jobs, and boosting wages. Likewise, we may need to better comprehend the productivity or long-term supply side effects of investments in the health, education, and training of people. In the coming years, Equitable Growth will analyze the data ourselves and provide annual grants to other academics across an array of social sciences in an attempt to provide answers.

Morning Must-Read: Charles Evans: Patience Is a Virtue When Normalizing Monetary Policy

Posted on by Brad DeLong

Charles Evans: Patience Is a Virtue When Normalizing Monetary Policy: “At the end of the second quarter of 2014…

the labor force participation rate was between 1/2 and 1-1/4 percentage points below trend… as much as 3/4 of a percentage point below predictions based on its historical relationship with the unemployment rate…. Virtually all the gap during this cycle has been due to withdrawal from the labor market of workers without a college degree…. If skills mismatch were an ongoing problem, we’d expect to see wages rising for those with the skills in demand…. Pools of potential workers other than the short-term unemployed, notably the medium-term unemployed and the involuntary part-time work force, substantially influence wage growth at the state or metropolitan statistical area level…. Current circumstances and a weighing of alternative risks mean that a balanced policy approach calls for being patient in reducing accommodation…. The biggest risk we face today is prematurely engineering restrictive monetary conditions…. If we were to… reduce monetary accommodation too soon, we could find ourselves in the very uncomfortable position of falling back into the ZLB environment…. There are great risks to premature liftoff…. And the costs of being mired in the zero lower bound are simply very large…

Morning Must-Read: Michael Lewis: Occupational Hazards of Working on Wall Street

Posted on by Brad DeLong

Michael Lewis: Occupational Hazards of Working on Wall Street: “Technology entrepreneurship will never have the power to displace big Wall Street banks…

…in the central nervous system of America’s youth, in part because tech entrepreneurship requires the practitioner to have an original idea, or at least to know something about computers, but also because entrepreneurship doesn’t offer the sort of people who wind up at elite universities what a lot of them obviously crave: status certainty…. The question I’ve always had about this army of young people with seemingly endless career options who wind up in finance is: What happens next to them? People like to think they have a ‘character’, and that this character of theirs will endure…. It’s not really so…. The best a person can do… is to choose carefully the environment that will go to work on their characters. One moment this herd of graduates of the nation’s best universities are young people…. The next they are essentially old people… gaming ratings companies… designing securities to fail… [to] make a killing off the… dupe[s]… rigging various markets at the expense of… society… encouraging… people to do stuff with their capital… they never should do….

All occupations have hazards. An occupational hazard of the Internet columnist… is that he becomes the sort of person who says whatever he thinks will get him the most attention rather than what he thinks is true, so often that he forgets the difference. The occupational hazards of Wall Street are… the pressure to pretend to know more than he does… hard to form deep attachments to anything much greater than himself… enormous pressure to not challenge or question existing arrangements…. So watch yourself, because no one else will.

Things to Read on the Afternoon of September 24, 2014

Posted on by Brad DeLong

Must- and Shall-Reads:

 

  1. Young Rand Paul (1984): Stealing to Help the Needy: “To the editors: After reading Mr. Wilzrkarth’s editorial (Feb. 2) condemning President Reagan’s plan for a ‘New Federalism’, every national person should contemplate the essence of the system that has created such a controversy. The main thrust of the article lies in the assertion that neither state governments nor private charity can absorb the immensity of the welfare system. We have been taught as Christian people that it is wrong to steal. But underlying the whole welfare concept is the principle of theft. Money in the form of taxes is confiscated from the producers in society and redistributed to those who can’t or won’t produce. The immoral act of stealing, thus, has become moral in the eyes of society. Immediately, I sense the horror stricken faces of those persons finishing the previous paragraph. Why, he would let the needy starve! My reply would be: How many realistic people believe there are 22 million Americans who need food stamps to survive? How many open-minded people believe 11 million Americans actually need sustenance? Let us assume a highly unlikely percentage, such as half, truly need some support. If individuals were not burdened by taxes incurred by this wealth transfer system, the truly needy would surely be supported. Randall H. Paul; Biology, ’85”

  2. David G. Blanchflower and Adam Posen: Wages and Labor Market Slack: Making the Dual Mandate Operational: “We examine the impact of rises in inactivity on wages in the US economy and find evidence of a statistically significant negative effect. These nonparticipants exert additional downward pressure on wages over and above the impact of the unemployment rate itself. This pattern holds across recent decades in the US data, and the relationship strengthens in recent years when variation in participation increases. We also examine the impact of long-term unemployment on wages and find it has no different effect from that of short-term unemployment. Our analysis provides strong empirical support, we argue, for the assessment that continuing labor market slack is a key reason for the persistent shortfall in inflation relative to the Federal Open Market Committee’s (FOMC) 2 percent inflation goal. Further, we suggest our results point towards using wage inflation as an additional intermediate target for monetary policy by the FOMC.”

  3. Jason Fried (2012): Some advice from Jeff Bezos: “Jeff Bezos… shared an enlightened observation about people who are ‘right a lot’. He said people who were right a lot of the time were people who often changed their minds…. The smartest people are constantly revising their understanding, reconsidering a problem they thought they’d already solved. They’re open to new points of view, new information, new ideas, contradictions, and challenges to their own way of thinking…. What trait signified someone who was wrong a lot of the time? Someone obsessed with details that only support one point of view…”

  4. John Holbo: If she weighs the same as a duck… she’s made of wood… and therefore–: “Unless I’m missing something, [Stanley] Kurtz’s actual argument [at National Review] that Hillary has consistently remained an Alinskyite radical is that, for decades, she has consistently done absolutely nothing whatsoever to suggest this is true–as one would expect! She is, to all appearances, moderate, incrementalist and pragmatic. Just like Barack Obama, who is such a model Alinskyite radical that he is on track to govern for eight years and retire to private life without once doing anything to suggest he’s got a radical bone in his body. How much more sinister would The Manchurian Candidate have been if the trigger word were never spoken? The sleeper never wakes! (A lone hero tries to warn the world but, because there is literally nothing to warn people about, he is ignored.)

  5. Suzy Khimm: How DC’s conservative elite view liberals: “Here’s the view from the Heritage Foundation: Liberalism creates self-indulgent, licentious hedonists willing to cede every other kind of freedom to an increasingly authoritarian government. ‘Give up your economic freedom, give up your political freedom, and you will be rewarded with license’, said Heritage’s David Azerrad, describing the reigning philosophy of the left. ‘It’s all sex all the time. It’s not just the sex itself—it’s the permission to indulge.’ Liberals, said editor Bill Voegeli, want to create ‘the United States of Feeling Good About Ourselves’. What’s more, they think that those who disagree with them ought ‘to imprisoned—not to be debated, to be locked up on criminal charges and imprisoned’, said the National Review’s Kevin Williamson…. The event at Heritage—which prides itself as being the intellectual backbone of the conservative movement—was intended to address where liberalism was headed…. At the Tuesday event, a curious portrait of modern-day liberalism emerged. Liberalism meant Robert F. Kennedy Jr. and Gawker (for wanting to punish climate change deniers), Senate Democrats (for wanting to undo Citizens United), writer Matt Yglesias (for wanting to eliminate summer vacations), the term ‘mansplaining’ (for being a symptom of P.C. extremism), and Rolling Stone magazine (for giving voice to far-left writers in ‘the most frivolous consumer product in the history of frivolous consumer products’, per Williamson). But more than anything, the panelists stressed, liberalism is an idea, and a deadly one at that: a Janus-faced monster of moral relativism and authoritarianism.”

    • Daron Acemoglu and James Robinson: Taxation vs. Expropriation: “What’s the difference between a 50% marginal tax rate on income vs. 50% expropriation by a kleptocratic ruler or corrupt officials?… Most citizens of Western democracies (with the notable exception of Tea Party supporters in the United States) are happy with marginal tax rates around 50% or sometimes above, but few businessmen in sub-Saharan Africa or South Asia can be found to sing the praises of similar rates of expropriation or corruption. Why?… High tax rates that emerge from the democratic process are viewed more positively… because citizens consent to them with the expectation that the proceeds will be used for spending that they value…”

  7. Schumpeter: Entrepreneurs Anonymous:/a> “Over half of American startups are gone within five years. Most of the survivors barely stumble along…. Barton Hamilton of Washington University in St Louis compared the income distributions of American employees and entrepreneurs, and concluded that the latter earned 35% less over a ten-year period than those in paid jobs…. The paradox of the current, romantic view of entrepreneurs is that it leads us to undervalue their achievements. It is easy to envy people if you focus on a handful of success stories…. Would-be entrepreneurs need to have a more measured view of the risks involved before they start a business. But society also needs to have more respect for people who put their lives on the line to build something from nothing.”

  8. Richard Mayhew: Tools to Detect Bulls—: “There are a couple obvious sign-posts…. If you start to see the following signs, you are either engaging with a sophomore in college who just learned something really cool in an introductory class but has neither the advanced classes in the field nor the experience to know better or you are seeing bulls—. 1. The units of analysis make no sense: Avik Roy’s ‘study’ of sticker shock in 2014 based on average prices per county had the unit of analysis as the county…. There are 3,144 counties in the US. 8 counties contain slightly more than 10% of the US population, and the largest county in the US, Los Angeles County, is roughly 120,000 times larger than the least populated…. 2. The comparisons are wildly bizarre: Again, Avik Roy compares community rated insurance with a fairly rich benefit package to underwritten insurance with significant exclusions of coverage…. It is real easy for an insurance company to offer low prices when it is statistically unlikely to pay big claims due to a screening of the risk pool…. 3. The claims are incredible: Timothy Jost looked at Avik Roy’s Obamacare replacement plan…. ‘He claims it would increase access to providers by 4 percent (98 percent for Medicaid recipients) and average health outcomes by 21 percent, while reducing the federal budget deficit by $29 billion over the first 10 years and $8 trillion over 30 years…. These claims are based on analysis of the proposal conducted by Stephen Parente, an American Enterprise Institute Scholar. I can find, however, no description of the methodology, or for that matter of the inputs, applied in this analysis. In particular, how Parente and Roy modeled an improvement in health outcomes, something the CBO never attempts, is a complete mystery.’… 4. The underpants gnomes dominate the theory of change:… When the underpants gnomes have to do the heavy lifting in a theory of change, it is either a first draft that needs to be fleshed out…. Congressman Ryan (R-Wis) wants to use dynamic scoring to get around the fact that he is making two incompatible promises–lower tax rates, especially on the wealthy, and revenue neutrality…. 5. Don’t look at past predictions: Be extremely skeptical of people who don’t audit their past predictions. Jonathan Chait ripped Reason magazine’s Peter Suderman apart on his Obamacare predictions…. People get things wrong all the time. That is fine. It is not fine when there is no evaluation of the process that produces wrongness as that guarantees the continuation of the Garbage In-Garbage Out loop. There are plenty of other high quality bullshit detection tools that are useful in policy analysis, but the above tools can be safely applied by anyone with some curiosity and interest in a subject.”

Should Be Aware of:

 

  1. Ali Ozdagli: Financial Frictions and the Reaction of Stock Prices to Monetary Policy Shocks: “This paper reveals and tests a new theoretical implication of the credit channel of monetary policy: as financial frictions (monitoring or auditing costs) increase, the reaction of stock prices to monetary policy shocks decreases. Correspondingly, towards the end of the Enron accounting scandal, the stock prices of firms sharing the same auditor as Enron responded by about 50 to 60 basis points less than other firms to a 10 basis point reduction in the federal funds target rate. This effect is particularly strong among more opaque firms for which financial statements likely provide a more important monitoring tool.”

  2. Regis Barnichon and Andrew Figura: The Effects of Benefits on Unemployment and Labor Force Participation: “This paper presents estimates of the effect of emergency and extended unemployment benefits (EEB) on the unemployment rate and the labor force participation rate using a data set containing information on individuals likely eligible and ineligible for EEB back to the late 1970s. To identify these estimates, we examine how exit rates from unemployment change across different points of the distribution of unemployment duration when EEB is and is not available, controlling for changes in labor demand and demographic characteristics. We find that EEB increased the unemployment rate by about one-third percentage point in the most recent recession but did not affect the participation rate. In previous recessions, the effect of EEB on the unemployment rate was even smaller.”

  3. Thoreau: Merit-based charade: “I’ve been thinking more about Twilight of the Elites…. I wish Chris Hayes had come up with a descriptor better than ‘meritocracy’ for what he’s arguing against. The issue is… that our elite is exceptionally isolated and powerful, and more and more of a monoculture. And our ‘solution’ is to use educational tools to solve problems that are fundamentally not about education…. I admit that I don’t have an obvious candidate that packs all of the counter-intuitive punch and connects to all the ideas presented there, but when you pick a term like that you are just setting up the argument against yourself…”

  4. David Freedman (2010): “In my view, regression models are not a particularly good way of doing empirical work in the social sciences today, because the technique depends on knowledge that we do not have…. Their conclusions may be valid for the computer code they have created, but the claims are hard to transfer from that microcosm to the larger world…. I doubt that models can be rescued by technical fixes. Arguments about the theoretical merit of regression or the asymptotic behavior of specification tests for picking one version of a model over another seem like the arguments about how to build desalination plants with cold fusion and the energy source. The concept may be admirable, the technical details may be fascinating, but thirsty people should look elsewhere…. Causal inference from observational data presents may difficulties, especially when underlying mechanisms are poorly understood. There is a natural desire to substitute intellectual capital for labor, and an equally natural preference for system and rigor over methods that seem more haphazard…. However, the assumptions often turn out to be unsupported by the data. If so, the rigor of advanced quantitative methods is a matter of appearance rather than substance…”

Afternoon Must-Read: David G. Blanchflower and Adam S. Posen: Wages and Labor Market Slack: Making the Dual Mandate Operational

Posted on by Brad DeLong

David G. Blanchflower and Adam S. Posen: Wages and Labor Market Slack: Making the Dual Mandate Operational: “We examine the impact of rises in inactivity…

…on wages in the US economy and find evidence of a statistically significant negative effect. These nonparticipants exert additional downward pressure on wages over and above the impact of the unemployment rate itself. This pattern holds across recent decades in the US data, and the relationship strengthens in recent years when variation in participation increases. We also examine the impact of long-term unemployment on wages and find it has no different effect from that of short-term unemployment. Our analysis provides strong empirical support, we argue, for the assessment that continuing labor market slack is a key reason for the persistent shortfall in inflation relative to the Federal Open Market Committee’s (FOMC) 2 percent inflation goal. Further, we suggest our results point towards using wage inflation as an additional intermediate target for monetary policy by the FOMC.

Afternoon Must-Read: Ezra Klein: In Conservative Media, Obamacare Is a Disaster. In the Real World, It’s Working

Posted on by Brad DeLong

Ezra Klein: In conservative media, Obamacare is a disaster. In the real world, it’s working: “Before Obamacare launched…

…conservative outlets warned that the law would collapse as insurers shunned the overpriced, overregulated insurance exchanges…. I remember, a month or two after HealthCare.Gov opened (and crashed), being on a panel with a conservative writer who said that Obamacare might well enter a death spiral as insurers pull out of the marketplaces. On Tuesday, the idea that insurers would flee Obamacare joined the long procession of Obamacare disasters that simply didn’t happen…. This news is not, as I write this on Tuesday evening, being carried on the home pages of Fox Business, HotAir.com, or the Heritage Foundation. (In case you’re wondering, the most recent Obamacare article on FoxBusiness.com is “Obamacare website still not secure?”; on Hot Air.com, it’s “How many people are poised to lose 2014 Obamacare coverage?”; at Heritage, it’s “Why you can’t keep your plan under Obamacare, explained in 3 minutes”.)… My hunch is that relatively few conservatives realize that premiums are lower-than-expected, and that the law’s costs are lower-than-expected ($104 billion lower, as of April 2014)….

Republicans have, for a long time, been putting forward health-care plans that would devolve single-payer insurance programs like Medicare to private insurers that would hold down costs by narrowing networks and managing care. Then, they figure, Americans can shop around, and the market will reward the plans that hold down costs and punish the plans that don’t. These ideas were present in the health reforms Mitt Romney passed in Massachusetts, and Obamacare borrowed heavily from them. Rep. Paul Ryan has also been a key sponsor of these ideas. But now that they’re happening in Obamacare, he’s selling it to conservatives like some kind of catastrophe…. Except that very dynamic is exactly the way Ryan’s own fabled Medicare plan is designed to work…. On the whole… costs are lower than expected, enrollment is higher than expected, the number of insurers participating in the exchanges is increasing, and more states are joining the Medicaid expansion. Millions of people have insurance who didn’t have it before. The law is working. But a lot of the people who are convinced Obamacare is a disaster will never know that, because the voices they trust will never tell them.

Afternoon Must-Read: Jason Fried: Some Advice from Jeff Bezos

Posted on by Brad DeLong

Jason Fried (2012): Some advice from Jeff Bezos: “Jeff Bezos… shared an enlightened observation…

…about people who are ‘right a lot’. He said people who were right a lot of the time were people who often changed their minds…. The smartest people are constantly revising their understanding, reconsidering a problem they thought they’d already solved. They’re open to new points of view, new information, new ideas, contradictions, and challenges to their own way of thinking…. What trait signified someone who was wrong a lot of the time? Someone obsessed with details that only support one point of view…

The future of marriage and income inequality

Posted on by Nick Bunker

The Pew Research Center today released a new report by Wendy Wang and Kim Parker on the record number of Americans who have never been married. One-fifth of all Americans over the age of 25 in 2012 had never been married. In 1960, that group was only 9 percent of those over 25. The cause for this shift is most likely due to decisions by many young adults to defer marriage as well as to a lack of employed men, as other articles about the report have noted. But the differences in the trend by education level can give us an insight into the possible future of U.S. income inequality.

The report shows starkly that the pool of available and employed men in the United States has been on the decline for decades. In 1960, there were 139 employed and never-married men for every 100 never-married women. By 2012, there were only 91 such men for every 100 never-married women. This reduction in marriage-eligible men, however, varies quite a bit by education level. For Americans with a college degree, the ratio is 88 employed and never-married men per 100 women. The ratio is very similar for those with some college or a two-year degree, 86 men per 100 women. But there’s actually a surplus of men with a high school degree or less. For that group, the ratio is 108 employed and never-married men per 100 women.

These ratios mean that never-married women are likely to marry men who have less education. With a relative under-supply of available college-educated men, a college-educated woman may marry a man with just a high school degree. This process would lead to a reduction in something social scientists refer to as assortative mating, or the process of similar men and women marrying each other. If highly educated workers, who tend to be high income, marry each other while less-educated workers marry each other, then that trend will amplify the trends in income inequality.

Research finds that assortative mating has increased income inequality quite a bit in the United States. But research by Lasse Eika of Statistics Norway, Magne Mogstad of the University of Chicago, and Basit Zafar of the Federal Reserve Bank of New York finds that assortative mating has increased among the less educated, but not the highly educated. This trend fits into idea that highly educated women are finding partners with less education on marriage market because the supply of eligible men is too low. Some share of these women will have to look to lower-educated men who are relatively more available.

So differences in education attainment appear to have a very short-term and mechanical effect on household income inequality than the longer-term effects we often hear about.