Saturday, February 14, 2015

Income and Wealth Distribution in the US: Are you worth $4 million? Make $392K last year?

Your net worth (assets minus debt) had to be at least $3.96 million in 2012 to join the top 1% wealth club.  Is your family income at least $392,000?  That's the minimum it took in 2013 to qualify for the top 1% income club.

Has inequality been growing over time?  What proportion of income goes to the rich? Does it make a difference if Democrats control the White House or Congress?  We now have pretty accurate answers to these questions.  All data in this post are from the links below.

The bottom 90% of all families own only 22.8% of all the wealth.  The wealthiest 1% owns 41.8% of all there is to own, up from about 23% in 1978.  Switching from wealth to income, the top 1% of all income earners rakes in almost 20% of all income.  This has more than doubled since 1986, from a little over 9%.  At the high end of income, there were 16,300 families in 2013 (.01%) earning an average income of almost $25 million apiece, with an average wealth of over $371 million apiece.

From 1993-2013 total income in the US grew 15.1%.  Had this growth been shared equally, all income levels would have earned about 15% more in 2013 than in 1993.  But the richest 1% took up well over half (59%) of total income growth during this period.  After all was said and done, the poorest 99% increased their income by an average of 7.3% while the top 1% increased their income by an average of 62.4%.

But income for the bottom 90%, adjusted for inflation, declined a little over $200 from 1993 to 2013, even as total income increased 15.1%.  Had the bottom 90% gotten an equal share of the increase, each family would have been earning over $5000 more than the $31,652 they averaged in earnings in 2013.

During the Clinton years the richest 1% took 45% of new growth. During the Bush years from 2002-2007 the richest 1% took 65%.  And during the first four years of the Obama administration the richest 1% gobbled up a whopping 91% of  new growth.  Only during the Bush recession in 2001 and during the Great Recession of 2007-2009 did the wealthiest 1% suffer any losses. Democrats and Republicans may have disagreed on everything else, but no one until very recently questioned the consequences of all those tax cuts to the wealthy.  Certainly not Barack Obama.

New Mexico is not behind Mississippi here:  we are Numero Uno in two major categories:  the gap in income between the richest 20% and the middle 20% and between the richest 20% and the poorest 20%.  And we are in the top 10 states in the worsening of income inequality over the past few decades.  Link here for the data.

The best picture we have today of income and wealth distribution in the U.S. comes from the work of two economists, Tomas Piketty and Emmanuel Saez, who have been studying these issues for about 15 years.  Here are some links:  Piketty and Saez, "Income Inequality in the U.S., 1913-1998," to update excel files to 2013 click here and then scroll down to the Jan 2015 update link.  Emmanuel Saez and Gabriel Zucman, "Wealth Inequality in the U.S. since 1913:  Evidence from Capitalized Income Tax Data," and Emmanuel Saez, "Striking it Richer:  The Evolution of Top Incomes in the United States."

Wednesday, February 11, 2015

Hall of Shame: New Mexico Trails Mississippi Again

For the first time (2013) a majority (51%) of school children attending public schools across the country come from low-income families, according to a study released by the Southern Education Foundation a couple of weeks ago, using data collected by the National Center for Education Statistics (NCES).  In Mississippi 71% of public school children are low-income; New Mexico is second, only 3 points behind, at 68%.  New Hampshire is last, at 27%.

How did they define low-income?  This study classified students as being low-income if they are eligible for free lunch or reduced-price lunches at school, based on family income.  Students are eligible for free meals if they live in households where the income is no more than 135% of the poverty threshold.  They are eligible for reduced-price lunches if household income is no larger than 185%.  In 2013, for example, a student in a single parent household with an income of $19,969 was eligible for a free lunch, and for a reduced-price lunch in a public school at an income level of $27,991.  

Perhaps more interesting than the rankings themselves is the national trend.  In 1989 only 32% of the nation's public school children were from low-income families.  It climbed six points during the Clinton years to 38% in 2000, rose four points to 42% six Bush years later in 2006, glided up to 48% (in 2011) during the first term of Obama, and sits at 51% as of 2013.  Perfectly bipartisan race to the bottom.

New Mexico has also drifted down.  In 2000, compared to national school children low-income levels of 38%,  New Mexico, at 56%, ranked third in this category, behind Louisiana and Mississippi.  By 2006, compared to a national level of 42%, New Mexico had dropped six points, to 62%, still third in the nation, and then seven years later, in 2013, compared to a national average of 51%, New Mexico had dropped to 68%, now second only to Mississippi.

Bottom line:  as national income has flowed increasingly toward the richest 1%, the national low-income school population has grown in 25 years from 32% of the total to 51% of the total.  New Mexico has continued to trail the rest of the country with the proportion of low-income students growing from 56% in 2000 to 68% in 2013.  The gap has not narrowed.  While one out of two students nationwide is classified as coming from a low-income family, in New Mexico the corresponding number is two out of three.

Monday, February 9, 2015

Mike Runnels RIP Part II

Continued from Part I:  We stayed up until about 3 am that night, calling delegates, counting votes.  Mike was alert, highly intelligent, keen sense of humor, realistic about each vote, every inch the leader of our small group.  When it became clear we didn't have a chance, we went to bed.  Next morning speeches were given as the voting was announced by each county chair.  I gave seven of my eleven votes to Dorothy, four to King, roughly proportional to the preferences among my precinct chairs.    Several county chairs who promised me they would vote for Dorothy voted for David instead, without the courtesy of the heads up Maura had given me.  I regretted their weakness; but David won the nomination.

The campaign was disastrous.  The ABQ Journal broke a story that King, the day after Runnels died, changed his voter registration from Santa Fe to Valencia County, an unnecessary action that reinforced the image of carpet-bagging.  Then another David King appeared, asserting it was he who changed his registration. This was challenged by eyewitnesses who had seen the Governor's nephew in the clerk's office in Los Lunas that day, and, as I recall, a photograph confirmed this.  Now adding to the underlying weakness of David's candidacy the issue of character emerged.  It became the story of the year.

I got a call from a friend of David's hoping to soften me up.  We argued over David vs. Dorothy.  At one point he said, "Just because Dorothy is the widow doesn't mean she's qualified for congress.  I don't believe in the divine right of kings, Jose."  I replied, "no pun intended, Bill, right?"  He paused a second or two and burst out laughing.  "Point well taken."  We both laughed heartily, knowing we were still friends.

Facing a withering assault in the news media, King announced he would quit the race, generating another round of headlines and throwing the congressional race again into tumult.  Ben Alexander, the Democratic chair in Lea County, tried to put humpty dumpty together again, still denying Dorothy the candidacy, by convening party chairs, this time safely in Santa Fe at the then-Sheraton (now Lodge) hotel, less than a mile from the Governor's office.  There, a bit theatrically, he sought our "permission" to persuade David to resume the race.  Ben phoned David at the ranch in Santa Fe county, chastised him for pulling out of the race, and asked him to get back in "for the good of the party." David immediately agreed, as if on cue.  Zora Hess, a prominent Democratic fund raiser from Albuquerque asked me, "Jose, what is your problem with David's candidacy?"  I replied "The people of the district don't want him."  Always diplomatic with me, she did not reply.  But she might as well have said, "let them eat cake."

Joe Skeen announced he would run a write-in campaign against King.  Joe was a popular conservative Republican who had lost the governorship in a tight race against Bruce King two years earlier. Dorothy also announced a write-in campaign; this would split the Democratic vote between herself and David.

On election night as I drove to different precincts, I could see long lines at 7 pm. Voters had to pull out a metal tab with a piece of paper in order to scribble a write-in name on the voting machines.  It was clumsy and took a long time.  Precinct workers said you could hear the squeak of the tabs all day long as people wrote in names.

Skeen got the most votes and David became the third person in U.S. history to be the only person on a congressional ballot and still lose the election.  Republicans held that seat for 33 of the next 35 years.  They still hold it.  Bruce King called me on New Year's eve that year and said he wanted to let bygones be bygones.  I was grateful for that.  Suddenly a genius of political foresight, I got re-elected county chair the next year.  David King was later elected State Treasurer, switched to the Republican Party in 1998 while serving as village administrator of Angel Fire, and then was elected to two terms at the PRC.

My wife Olivia and I remained friends with Mike after that.  He become Lt. Governor two years later, but then, unable to control his demons, he suffered one personal setback after another, some quite public.  He was, however, elected District Attorney for eight years, ran twice for his father's congressional district, and traveled extensively.  His place in the pantheon of New Mexico politicians is not as prominent as it might have been, given his talent and promise, and he will be remembered as much for his disappointing performance in a strong political family as for his contributions to the people of the state.

Sunday, February 8, 2015

Mike Runnels RIP Part I

I spent a long night in Grants with Mike Runnels in the fall of 1980.  I was there as chair of the Dona Ana County Democratic Party.  Eighty or so members of the Democratic Party central committee had assembled at a hotel in Grants to elect someone the next day to replace Mike's father, incumbent Democratic Congressman (Southern District) Harold Runnels, on the November ballot.  The congressman had died of lung cancer a few weeks earlier.  He was so popular and conservative that the Republican Party had not fielded a candidate in the primary to run against him in the fall.  Thus, since no one else would be on the ballot in November, whoever won the party election in Grants was certain to replace Runnels in Congress.  The competing candidates in Grants were Dorothy Runnels, the congressman's widow and Mike's mother, and David King, nephew of incumbent Governor Bruce King.

David King's candidacy was ill-advised.  He had lived in Southern New Mexico only while attending NMSU.  His residence was in Santa Fe county.  He was very young, in his early 30s, and while he had done a credible stint as head of the state planning agency, the appointment had come from his uncle and he had never run for any office .  He was also a liberal, in a conservative district.  Big labor backed him strongly; this alone stirred resentment among conservative Democrats in Southern New Mexico, even more so among Republicans.  Dorothy was well known, articulate, and attractive.  It was hard to make a case that King deserved the nomination.  But since his uncle was the Governor, how could he lose?

 I argued strenuously against David's nomination.  I had asked each of my 72 precinct chairs the same two questions:  who do you, personally, think should get the nomination, and who do you, as a party leader, believe would be the best candidate in the election?  The answers ran about three to one against David.  One precinct chair, the head of the retail clerks union in Las Cruces, told me he would support King, but "if David gets into this he will be walking into a propeller," given the growing outrage.  I spent hours on the phone with my friend Neal Gonzalez, state director of the AFL-CIO.  He begged me to support David.  My political career, he said, would be over if I did not.

Many county chairs from the South agreed with my assessment, and some vowed to swing their votes toward Dorothy.  Although I was never in touch with her I was quickly tagged as leader of the Dorothy faction.  This put me in trouble with party leaders from the North, delighted at this windfall chance to replace Runnels with a liberal.  But they didn't have to live with the fallout, and David's nomination would only add to a growing resentment in the South against the arrogance of the North, an arrogance that had, in part, led to the overthrow of Walter Martinez as Speaker of the House a year and a half earlier to a coalition of 11 Democrats and 26 Republicans.

Arriving in Grants I was greeted at the entrance of the hotel by Maura Rico, Democratic chair of Hidalgo county.  She put her arms around me and said, tearfully, "I know I promised you my votes, but I've been offered jobs and my people in Lordsburg need jobs."  I assured her I understood.  I learned that Maura and others had been flown to Grants by Betty Stahmann, a close friend of David's, in a Lear jet.  These were not good signs for my side.  Inside the hotel I met with Matt Runnels, who had been a student of mine three years earlier, and Mike.  I had never met Mike or Dorothy.  Part II tomorrow.