If your read any economic reporting in the New York Times, I hope you realize that the point of all articles is to advocate for more and bigger government and that the facts have nothing to do with this enterprise. Official Manhattan Contrarian Worst Economics Writer Paul Krugman is bad enough, but at least he appears on the opinion pages.
But then we have someone named Annie Lowrey, whose articles appear on the news pages as if they had something to do with the real world. I previously pointed out her appalling ignorance of the "poverty" statistics in an article here. But yesterday we have an even worse article, appearing on the front page of the print edition, this time titled "Cities Advancing Inequality Fight." (may be behind pay wall)
The lead example of local efforts to fight income inequality used by Ms. Lowrey in her article is the movement in Seattle to raise the minimum wage from $9.32 per hour to $15.
The Seattle City Council is intensely debating a plan to raise the minimum wage to $15 an hour from $9.32 -- forging ahead on its plan to tackle income inequality as efforts in the nation's capital have languished.
Ms. Lowrey then takes data from Trulia to illustrate the allegedly high level of income inequality in the United States. The Chief Economist of Trulia, Jed Kolko, wrote an article on March 12 titled "America's Most Unequal Metros." He came up with his data from the Census Bureau's American Community Survey for 2012 (follow link here). He then compared the income level in each metropolitan area at the 10th percentile and the 90th percentile to derive an index of inequality. By this index, the "least unequal" metro area turns out to be Lakeland-Winter Haven, Florida, where the ratio between household income at the 10th percentile and 90th is about 8. At the other end of the scale, New York and San Francisco have ratios of about 18. Now that's unequal! Ms. Lowrey then runs with this data to illustrate a story about addressing the inequality through changes to the minimum wage.
She appears to be completely unaware that a minimum wage income, even at $9.32 per hour (or even at the current federal minimum of $7.25 per hour) would put any household that has one person earning it full time for the whole year well above the 10th percentile in income. Here are the nationwide census data for the household income deciles for 2012:
Household Income at
10th percentile limit. 12,236
90th percentile limit. 146,000
If you make that $9.32 per hour for even 35 hours a week and 50 weeks, you're going to have an income around $16,000, well above the $12,236 cutoff for the bottom decile. So even if you believe that an increase in the minimum wage immediately translates into the full amount of the increase going to every minimum wage worker, the increase will have no (or nearly no) effect on the bottom decile of the income distribution.
What's amiss here is the complete lack of understanding by Lowrey and her ilk that the bottom of the income distribution largely does not consist of people who work regularly for wages counted as such by the government. It's young people with unpaid internships; it's graduate and professional students living off loans and fellowships; it's people in the informal economy (e.g., low level construction workers) or the illegal economy (e.g., drug dealers) who get paid cash and don't report it to the government; it's people taking a year off as they change careers; it's people living off government in-kind handouts; it's early retirees living by consuming savings before they take social security; it's people who are unemployed for much of the year; etc., etc., etc.
The most important thing to recognize about all these categories is that none of the policies currently advocated by those pushing the "income inequality" theme will have any effect on them whatsoever. It's not just the minimum wage. As other examples of programs being considered by local governments to fight income inequality, Ms. Lowrey cites "bolstering programs for public education, transportation, affordable housing, and wages." How, for example, is an in-kind handout like "affordable housing" going to have any effect on the position in the income distribution of a law student living on student loans? Even if she suddenly was offered one of the housing units, it's in-kind and therefore counts as zero. Her income is the same, and the income distribution remains the same, and therefore the inequality ratio remains the same. This is exactly the same game as the "poverty" rate scam, where $900 billion per year of spending does not count in the measure of "poverty" and therefore leaves the statistics exactly the same as if there was no spending at all. Another year and another trillion or so later, the advocates are clamoring for yet more supposed "anti-poverty" spending, and the "poverty" rate will never move.
My favorite quote in Lowrey's article is from Mary Jean Ryan, identified as former policy chief for the City of Seattle, and now head of an education non-profit. Says Ms. Ryan:
We have to accelerate the progressive policy adoption if we're going to help more of our community share in prosperity.
Apparently nobody pointed out to Ms. Ryan that the leaders in income inequality in this article are the progressive bastions of New York and San Francisco. Are these people capable of figuring out that something about their prescriptions is not working?