Copyright ©1999-2006 Berkeley Electronic Press. All rights reserved.
ttp://
www.ppionline.org.
27
Weinstein, Paul, “New Economy Work (NEW) Scholarships: Universal Access to Training for Dislocated Workers,”
Progressive Policy Institute, June 2002, http://www.ppionline.org.
18%
0.314
0.240
0.108
0.917
0.083
0.892
0.810
1900-2000 0.44%
0.21%
0.24%
0.229
0.303
0.048
0.936
0.064
0.952
0.888
1920-2000 0.39%
0.21%
0.20%
0.275
0.270
0.083
0.919
0.081
0.917
0.835
1940-2000 0.54%
0.25%
0.30%
0.214
0.311
0.032
0.954
0.046
0.968
0.923
1960-2000 0.33%
0.14%
0.22%
0.184
0.428
0.096
0.777
0.223
0.904
0.692
1980-2000 0.41%
0.14%
0.31%
0.113
0.555
0.063
0.689
0.311
0.937
0.663
44
1880-2000 0.35%
0.19%
0.18%
0.293
0.267
0.112
0.898
0.102
0.888
0.786
1900-2000 0.42%
0.20%
0.23%
0.229
0.310
0.057
0.923
0.077
0.943
0.867
1920-2000 0.34%
0.19%
0.18%
0.294
0.269
0.117
0.893
0.107
0.883
0.776
1940-2000 0.46%
0.23%
0.25%
0.239
0.306
0.070
0.911
0.089
0.930
0.841
1960-2000 0.33%
0.15%
0.21%
0.210
0.401
0.116
0.778
0.222
0.884
0.669
1980-2000 0.43%
0.15%
0.31%
0.123
0.523
0.063
0.730
0.270
0.937
0.696
48
1920-2000 0.34%
0.18%
0.18%
0.282
0.289
0.122
0.874
0.126
0.878
0.752
1940-2000 0.45%
0.22%
0.25%
0.236
0.310
0.070
0.908
0.092
0.930
0.838
1960-2000 0.32%
0.15%
0.20%
0.213
0.403
0.121
0.771
0.229
0.879
0.656
1980-2000 0.45%
0.15%
0.34%
0.111
0.568
0.066
0.663
0.337
0.934
0.638
51
1960-2000 0.33%
0.15%
0.22%
0.212
0.454
0.150
0.677
0.323
0.850
0.538
1980-2000 0.55%
0.17%
0.42%
0.095
0.571
0.046
0.724
0.276
0.954
0.718
1840-2000 0.19%
0.10%
0.14%
0.262
0.517
0.238
0.530
0.470
0.762
0.302
ssarily more profitable than either the acquired or non-acquiring controls.
v
Longer lags may be necessary for the exogenous variables depending on the precise assumptions made
regarding their evolution.
v
Sales replace real output/value added, as accounts data do not directly report the former. See Nickell et al
(1992) for a discussion of the use of this variable.
vii
Recently the fundamental assumption of pooling individual times series data has been questioned by
Pesaran and Smith (1995). Their basic argument is that since it is difficult to obtain valid instruments for
heterogeneous dynamic panels, it is better to average parameters from individual time series regressions.
This is not feasible in our context on two counts. Firstly, the individual time series lengths are generally
inadequate (95% of them have less than 15 observations); and secondly comparison of acquiring and non-
acquiring firms necessitate some sort of pooling. Besides, we take comfort from a recent comparative study
by Baltagi and Griffin (1997) which concluded that efficiency gain from pooling is likely to more than offset
the biases due to individual heterogeneity even with a moderately large T.
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Jobs Crisis in America
 
   

The nation's economy has nearly 79,000 fewer private-sector jobs than when This Administration took office.

During the last full month before This Administration took office in January 2001, the unemployment rate was 3.9 percent. In March 2005, the official U.S. unemployment rate was 5.2 percent—representing 7.7 million unemployed workers. The manufacturing sector has lost nearly 2.8 million manufacturing jobs since January 2001.

What’s more, the 7.7 million officially unemployed represents only about 57 percent of all U.S. workers—approximately 13.6 million, according to the U.S. Bureau of Labor Statistics—who are either unemployed, underemployed in part-time jobs out of economic necessity or who have become so discouraged that they have given up looking for work.

After the official end of the last recession in March 1991, the nation embarked on nine straight years of solid job growth. But although this recession officially ended in November 2001, jobs are coming back only slowly, economists say, because companies are sending well-paying manufacturing—and now white-collar—jobs to countries with few, if any, protections for workers and the environment. And these jobs probably aren't coming back anytime soon unless the Bush administration, Big Business and their congressional allies reform the trade and tax policies that encourage employers to send jobs offshore.

The Bush record since January 2001.

This Administration headed toward worst record for job growth in 70 years.

The crisis in manufacturing: Lost jobs, January 2001-January 2005.

America's middle class under attack.
Find out more about jobs, wages and the economy.

This Administration Record Since January 2001
The number of unemployed and underemployed persons
has jumped by 28 percent since January 2001.
Source: U.S. Department of Labor, Bureau of Labor Statistics. Marginally attached persons wanted and were available for work and had looked for work sometime in the past 12 months but are not counted as jobless and in the labor force because they have not searched recently.
 
Job Growth Under This AdministrationWorst in 70 Years

(Average Monthly Growth in Total Employment During Presidency)
Source: U.S. Bureau of Labor Statistics
Source: U.S. Bureau of Labor Statistics American Federation of Labor - Congress of Industrial Organizations
Copyright © 2006 AFL-CIO
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PLEASE BE PATIENT. 

THIS PAGE IS CURRENTLY BEING

RECONSTRUCTED, REVISED, CORRECTED AND  EDITED.

"A SOCIETY  WHICH  DEVALUES THE HOPE OF EARNING A LIVING-WAGE IS DOOMED." The Philosopher

"ALL POSSESS AN INALIENABLE RIGHT TO LIFE AND SUBSISTENCE.  OBVIOUSLY, THE CONSTITUTIONAL RIGHTS OF CITIZENSHIP  ARE INNATELY BONDED TO  THE  EXISTENCE OF LIFE.  THE RIGHT TO EXPECT TO EARN A LIVING WAGE TO SUSTAIN SELF AND FAMILY." 

The Philosopher

What is a QUINTILE?

QUINTILE MEANS FIVE

BREAKING-UP THE USA POPULATION

INTO FIVE PARTS

ALL PROPLE FIT INTO A QUINTILE

A FIVE PART [5] OR 20% GROUP

It is 20% of the US population.  All Americans fil into one of tghese 5 quintile regarding their income level.  If you are in the top quintile-  you are Rich.  If you are in the bottomn quintile - you are Poor or the Working Poor.

If you are in the top 5% and up to the top 1% [The President's tax-break people] you are really really Rich.  or Example:  People earning over $1 million  income received a $1000,000.00 tax cut break!]

THE

WALMARTIZATION OF AMERICA

1. Wal-Mart recently launched a multi million-dollar advertising campaign to silence its critics and hide the truth about the company.  The following are the REAL facts about Wal-Mart. Wal-Mart Wages and Worker Rights

2. Wal-Mart Health Care

3. Wal-Mart’s Cost to Taxpayers

4. Wal-Mart’s Community Impact

5. Wal-Mart and China

6. Wal-Mart and Worker Injuries

7. Other Wal-Mart Benefits

8. Wal-Mart Anti-Union Policy

9. Wal-Mart and Gender Discrimination

10. Wal-Mart and Child Labor

11. Wal-Mart and Undocumented Immigrants

    About | Contact Us | Privacy Policy

    © 2005 United Food and Commercial Workers International Union.
    This site is in no way connected with Wal-Mart Stores, Inc. or any affiliate of Wal-Mart Stores, Inc.

Wal-Mart Wages and Worker Rights

Download the Wal-Mart and Wages flyer - PDF

A Substantial Number of Wal-Mart Associates earn far below the poverty line

• In 2001, the last year for which Wal-Mart has released figures for most occupations, sales associates, the most common job in Wal-Mart, earned on average $8.23 an hour for annual wages of $13,861.The 2001 poverty line for a family of three was $14,630. [“Is Wal-Mart Too Powerful?”, Business Week, 10/6/03 and US Dept of Health and Human Services 2001 Poverty Guidelines, 2001]

• A 2003 wage analysis reported that cashiers, the second most common job, earn approximately $7.92 per hour and work 29 hours a week. This brings in annual wages of only $11,948. [“Statistical Analysis of Gender Patterns in Wal-Mart’s Workforce”, Dr. Richard Drogin 2003]"

Wal-Mart Associates don't earn enough to support a family

• The national median family budget in the United States for a two-person family (one parent and one child) in 1999 was $23,705, well above the average associate's annual wages of $13,861. [“Poverty and Family Budgets” online at www.epinet.org]

Wal-Mart can afford wage increases

• Wal-Mart can cover the cost of a dollar an hour wage increase by raising prices a half penny per dollar. For instance, a $2.00 pair of socks would then cost $2.01. This minimal increase would annually add up to $1,800 for each employee. [Analysis of Wal-Mart Annual Report 2005]

Wal-Mart forces employees to work off-the-clock

• As of the printing of their 2005 Annual Report, Wal-Mart faced 44 wage and hour lawsuits. Major law-suits have either been won or are working their way through the legal process in states such as California, Indiana, Minnesota, New Jersey, Oregon, and Washington. [Wal-Mart Annual Report 2005]

• Wal-Mart was recently ordered by courts to pay up to 120 workers in Gallup, New Mexico and 400 workers in 27 stores in Oregon for violating wage and hour laws.

• In 2002, statisticians estimated Wal-Mart shortchanged its Texas workers $150 million over four years by regularly not paying them for working through their 15-minute breaks. [Sources include Associated Press, "Federal Jury Finds Wal-Mart Guilty in Overtime Pay Case," Chicago Tribune, Business 3, 12/20/03 and Steven Greenhouse, “Suits Say Wal-Mart Forces Workers to Toil Off the Clock,” New York Times, A1, 6/25/02)]

Wal-Mart violates the Fair Labor Standards Act

• One week of time records from 25,000 employees in July 2000 found 1,371 instances of minors working too late, during school hours, or for too many hours in a day. There were 60,767 missed breaks and 15,705 lost meal times. [Steven Greenhouse, “Suits Say Wal-Mart Forces Workers to Toil Off the Clock,” New York Times, A1, 6/25/02]

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Wal-Mart and Health Care

Download the Wal-Mart and Health Care Flyer - PDF

Wal-Mart’s Health Care Plan Fails to Cover Over 600,000 Employees

• Wal-Mart reports that its health insurance only covers 48% of their employees. Wal-Mart has approximately 1.3 million US employees.

Wal-Mart’s Health Insurance Falls Far Short of the Industry Average

• On average, large firms (200 or more workers) cover approximately 68% of their employees. If Wal-Mart was to reach the average coverage rate, Wal-Mart should be covering an additional 260,000 employees (Kaiser Family Foundation & Health Research and Educational Trust, 2004).

Wal-Mart’s Health Care Eligibility is Restrictive

• Part-timers—anybody below 34 hours a week – must wait 2 years before they can enroll. Moreover, part-time employees are ineligible for family health care coverage. Full-time hourly employees must wait 180 days (approximately 6 months) before being able to enroll in Wal-Mart’s health insurance plan. Managers have no waiting period. (Wal-Mart 2005 Associate Guide)

• Nationally, the average wait time for new employees to become eligible is 1.6 months. For the retail industry it is 2.8 months. (Kaiser Family Foundation & Health Research and Educational Trust, 2004)

Wal-Mart’s Most Affordable Health Plan is Costly

• According to Wal-Mart, “We insure more than 500,000 associates, including many family members, who pay as little as $17.50 for individual coverage and $70.50 for family coverage bi-weekly.”

• Wal-Mart’s most affordable plan includes a $1,000 deductible for single coverage and a $3,000 deductible for family coverage ($1,000 deductible per person covered up to $3,000). An average full-time worker earns $17,114 a year.

• If a full-time Wal-Mart hourly employee elects for single coverage, the employee would have to spend on average 9% of their earnings before the health insurance provided any reimbursement.

• If a full-time employee elected for family coverage, an average employee would have to spend 27% of their average earnings before the health insurance covered any costs. (Wal-Mart 2004 Associate Guide and UFCW Analysis).

Wal-Mart Admits Public Health Care Assistance is a “Better Value”

• Despite $10 billion in profits, President and CEO Lee Scott said, "In some of our states, the public program may actually be a better value - with relatively high income limits to qualify, and low premiums." (Transcript Lee Scott Speech 4/5/05)

Wal-Mart’s Health Care is Only Getting Costlier

• Since 2000, the cost of premiums has risen 169 percent for single coverage and 117 percent for family coverage. (UFCW analysis of annual Wal-Mart Associate Guides).

• In comparison, premiums for family coverage in the U.S. have increased only by 59%, since 2000. (Employer Health Benefits: 2004 Annual Survey, Kaiser Family Foundation & Health Research and Educational Trust, 2004)

Wal-Mart Employees Pay More for Health Care Costs

• In 2003, Wal-Mart employees, in total, covered approximately 40% of the plan costs (5500 Filings). Nationally, on average employees at large firms (over 200 employees) cover only 16% of single coverage costs and 24% of family coverage costs (KFF, 2004).

• In a state analysis, the Massachusetts Department of Health and Human Services found that in 2003, Wal-Mart covered only 52% of total health care premium costs compared to K-Mart which covered 66%, Target which covered 68%, and Sears which covered 80%.

Wal-Mart Spends Less to Provide Health Care

• Wal-Mart’s spending on health care for its employees falls well below industry and national employer averages. In 2002, as reported in the Wall Street Journal, Wal-Mart spent an average of $3,500 per employee. By comparison, the average spending per employee in the wholesale/retailing sector was $4,800. For U.S. employers in general, the average was $5,600 per employee, Therefore, Wal-Mart’s average spending on health benefits for each covered employee was 27% less than the industry average and 37% less than the national average. (Bernard Wysocki, Jr. and Ann Zimmerman, “Wal-Mart Cost-Cutting Finds a Big Target in Health Benefits,” WSJ September 30, 2003 p1)

Wal-Mart Only Spends 75 Cents an Hour Per Employee for Health Benefits

• In 2003, Wal-Mart spent $1.4 billion on its health insurance. This amounts to an employer contribution of around only $0.75 an hour per employee. This accounts for approximately a half-percent of Wal-Mart's $259 billion in sales in 2003. (Wal-Mart 5500 Filings, Wal-Mart Annual Report).

Wal-Mart Increased Advertising More Than Health Care

• Over the last two years (2004 and 2003), Wal-Mart has increased its advertising budget $724 million, which is more than half the $1.4 billion it spent in 2003 on health care -- the last reported year.

• In fact, between 2002 and 2003, Wal-Mart put more new funds into advertising compared to health care. Wal-Mart increased spending on advertising by $290 million, while only increasing health care spending by $215 million for the same period. (note: this also occurred in 1999-98, 1998-97, 1995-96). (Wal-Mart Annual Reports and 5500 Filings)

• Excluding his salary of $1.2 million, in 2004 Lee Scott made around $22 million in bonuses, stock awards, and stock options in 2004.

• This $22 million could reimburse 3 states where Wal-Mart topped the list of users of state-sponsored health care programs, covering more than 15,000 Wal-Mart employees and dependents and costing state taxpayers between $21 to $24 million total. (WMT Proxy Statement and News Articles GA, CT, AL).

One Out of Seven Wal-Mart Employees Has No Health Care Coverage At All

• This is nearly double the national percentage for large firms (firms with over 100 employees). In fact, we estimate that Wal-Mart accounts for more than 1 out of every 40 uninsured workers, who are employed at a large firm. (walmartfacts.com; Wal-Mart Annual Report; “Employer-Sponsored Health Insurance Coverage: Sponsorship, Eligibility, and Participation Patterns in 2001,” Bowen Garrett, Ph.D., released by the Kaiser Family Foundation September 2004).

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Costs to Taxpayers

Download the Wal-Mart and Cost to Taxpayers fact sheet - PDF

Your tax dollars pay for Wal-Mart's greed

• The estimated total amount of federal assistance for which Wal-Mart employees were eligible in 2004 was $2.5 billion. [“Harper’s Index,” Harper’s Magazine, Vol. 310, No. 1858, 3/2005]

• One 200-employee Wal-Mart store may cost federal taxpayers $420,750 per year. This cost comes from the following, on average:

  • $36,000 a year for free and reduced lunches for just 50 qualifying Wal-Mart families.

  • $42,000 a year for low-income housing assistance.

  • $125,000 a year for federal tax credits and deductions for low-income families.

  • $100,000 a year for the additional expenses for programs for students.

  • $108,000 a year for the additional federal health care costs of moving into state children's health insurance programs (S-CHIP)

  • $9,750 a year for the additional costs for low income energy assistance.

  [THE HIDDEN PRICE WE ALL PAY FOR WAL-MART, A REPORT BY THE DEMOCRATIC STAFF OF THE COMMITTEE ON EDUCATION AND THE WORKFORCE, 2/16/04]

Your tax dollars subsidize Wal-Mart's growth

• The first ever national report on Wal-Mart subsidies documented at least $1 billion in subsidies from state and local governments.

• A Wal-Mart official once stated that “it is common” for the company to request subsidies “in about one-third of all [retail] projects.” This would suggest that over a thousand Wal-Mart stores have been subsidized. [“Shopping For Subsidies: How Wal-Mart Uses Taxpayer Money to Finance Its Never-Ending Growth,” Good Job First, May 2004]

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Community Impact

Download the Wal-Mart and Community Impact Fact Sheet - PDF

Wal-Mart wages negatively impact overall wages

• The influx of big-box stores into San Diego would result in an annual decline in wages and benefits between $105 million and $221 million [San Diego Taxpayers Association (SDCTA)]

• “[The threat of Wal-Mart's incursion into the southern California grocery market] is already triggering a dynamic in which the grocery stores are negotiating with workers for lowered compensation, in an attempt to re-level the `playing field.’” [Rodino and Associates]

Lower wages mean less money for communities

• When an employer pays low wages to its employees, the employees have less money to spend on goods and services in the community, which in turn reduces the income and spending of others in the community. In other words a reduction in wages has a multiplier impact in the surrounding area.

• For instance, in 1999, Southern California municipalities estimated that for every dollar decrease in wages in the southern California economy, $2.08 in spending was lost-- the $1 decrease plus another $1.08 in indirect multiplier impacts. [“The Impact of Big Box Grocers in Southern California” Dr. Marlon Boarnet and Dr. Randall Crane.]

Longer term effects of Wal-Mart can be disastrous

• Over the course of [a few years after Wal-Mart entered a community], retailers' sales of mens' and boys' apparel dropped 44% on average, hardware sales fell by 31%, and lawn and garden sales fell by 26%.

• In towns without Wal-Marts that are close to towns with Wal-Marts, sales in general merchandise declined immediately after Wal-Mart stores opened. After ten years, sales declined by a cumulative 34%. [Kenneth Stone at Iowa State University, “Impact of the Wal-Mart Phenomenon on Rural Communities”]

Wal-Mart stifles competition

• A Congressional Research Service report in 1994 explained that Wal-Mart builds stores in nearby connected markets in order to stifle any competition in the targeted area by the size of its presence. [Jessica Hall and Jim Troy, “Wal-Mart Go Home! Wal-Mart’s Expansion Juggernaut Stumbles as Towns Turn Thumbs Down and Noses Up,” Warfield’s Business Record 1 (July 22, 1994]

Wal-Mart destroys the environment

• In October 2004, the United States sued Wal-mart for violating the Clean Water Act in 9 states, calling for penalties of over $3 million and changes to W-M building codes. [U.S. v. Wal-Mart Stores Inc., 2004 WL 2370700]

• The United States Environmental Protection agency fined Wal-Mart $1 million, settling allegations that Wal-Mart violated the Clean Water Act with dirt discharges while building stores in Massachusetts, New Mexico, Okalahoma, and Texas. [Wal-MartLitigation.com]

• The Pennsylvania Environmental Protection Department fined Wal-Mart $100,000 for polluting rivers. [Business Week, 5/31/99]

• Wal-Mart was fined $765,000 for violating Florida’s petroleum storage tank laws at its automobile service centers. Wal-Mart failed to register its fuel tanks, failed to install devices that prevent overflow, did not perform monthly monitoring, lacked current technologies, and blocked state inspectors. [Associated Press, 11/18/04]

• In Georgia, Wal-Mart was fined about $150,000 for water contamination. [Atlanta Journal- Constitution, 2/10/05]

Wal-Mart increases vehicle traffic

• A study of estimated additional driving costs of Supercenters in the San Francisco Bay area concluded that there would be up to an additional 238 million vehicle miles traveled per year.

• These extra miles traveled could cost communities in the Bay area up $ 256 million in additional costs for infrastructure repair and environmental degradation. [Supercenters and the Transformation of the Bay Area Grocery Industry: Issues, Trends, and Impacts. Bay Area Economic Forum, 2004]

Wal-Mart desecrates sacred grounds

• In 2004, Wal-Mart built a 71,902-square-foot store near the Pyramids of the Sun and Moon in San Juan Teotichuacan, Mexico. Teotihuacan was called "the place where the gods were created" by the Aztecs. [Kinght Ridder, 10/25/04]

• In 1993 in Southern California, Wal-Mart, faced with threats of a nationwide boycott if it proceded with a development project that have destroyed Indian burial grounds, which Indians consider to be as holy as a church, synagogue or mosque. Wal-Mart was forced to compromise with the Indian activists by building a monument on store property to honor the grounds. [Los Angeles Times, 10/16/93]

• Wal-Mart reached a tentative settlement with a nonprofit group in Hawaii that alleged Wal-Mart violated state law dealing with the protection and preservation of human remains and desecration of graves while constructing a store in Honolulu. [KHNL-TV/KHBC/KOGG, HI. 7/19/2005]

Wal-Mart's empty stores are blighting communities

• Wal-Mart’s rapid expansion of Supercenters and Sam's Clubs has contributed to hundreds of vacant stores across the country. [“Wal Mart site: Use as is or rebuild?”, Dallas Morning News, 2/20/02]

• When Wal-Mart decides to convert a discount store into a larger Supercenter, it is often cheaper or easier simply to relocate entirely. David Brennan, associate professor of marketing at the University of St. Thomas, in St. Paul, Minn, notes that Wal-Mart stores relocate so regularly that, “it is not uncommon to relocate right across the street." [“Home Depot to Move from Old to New Store Next Door,” Providence News-Journal, 8/17/03]

• Wal-Mart plans to build another 55 million square feet of store space this year, or roughly the equivalent of 1,000 football fields or 15 Pentagon buildings. [Wal- Mart Annual Report 2005]

• Big box retailers will most likely enter a community, only to be among the first to consolidate or fold when conditions begin to change. [“The Impact of Big Box Stores in S. California,” Dr. Marlon Boarnet]

• In 2001, Wal-Mart controlled around 30 million square feet of vacant retail space through ownership or leases. [Arkansas Democrat-Gazette, 1/28/01]

• Vacant property drains the value from the surrounding area, whether commercial or residential.

Wal-Mart and China

Wal-Mart buys much of its merchandise from China

• Wal-Mart reports that it purchased $18 billion of goods from China in 2004.

• Wal-Mart is responsible for about 1/10th of the U.S. trade deficit with China.
  [“U.S. Stock Investors Wary of Analyst `Yuan Plays': Taking Stock, Bloomberg, 7/1/05]

• If Wal-Mart were an individual economy, it would rank as China’s eight-biggest trading partner, ahead of Russia, Australia and Canada.
  [China Business Weekly, 12/02/2004]

Many of Wal-Mart's “American Suppliers” actually manufacture most or all of their products in China

• An example of an “American Supplier” is Hasbro. Today, Wal-Mart is the largest purchaser of Hasbro products—accounting for 21 percent of all Hasbro goods or more than $600 million in sales. But Hasbro reports, “We source production of substantially all of our toy products and certain of our game products through unrelated manufacturers in various Far East countries, principally China.” Hasbro specifies that “the substantial majority of our toy products are manufactured in China.” [2004 Hasbro 10-K filed with the SEC]

Wal-Mart's Chinese factory workers are treated poorly

• Workers in China’s Guangdong Province who made toys for Wal-Mart toiled as much as 130 hours per week for wages averaging 16.5 ¢ per hour (below the minimum wage) and no health insurance. [National Labor Committee, “Toys of Misery 2004,” February 2004]

• Striking workers at a factory that supplies Wal-Mart in Shenzhen, China said they had to work 11 hour days, including mandatory 3 hours of overtime. Half of their small wages were deducted to pay for accommodation in company dormitories. [New York Times, 16 December, 2004]

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Wal-Mart and Worker Injuries

Wal-Mart cares little for the safety of its workers

• West Virginia’s Employment Programs Performance Council voted to put Wal-Mart into the “adverse risk” pool, raising the premiums by 15%. Only employers with unusually high accident rates are placed in that pool. [Charleston Gazette, 6/3/99]

• The United States Court of Appeals for the District of Columbia Circuit has upheld a $5,000 fine against a Wal-Mart store in Hoover, Ala., for blocking emergency exits. The court upheld a decision by a judge who found that Wal-Mart was guilty of a serious and repeated offense. [New York Times, Steven Greenhouse, 5/17/05]

Wal-Mart takes a combative approach to workers’ compensation claims

• Arkansas Business described Wal-Mart as “the state’s most aggressive” when it comes to challenging worker’s compensation claims. The company “stands far above any other self-insurer in challenges to employee claims.” [Arkansas Business, 1/8/01]

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Wal-Mart Non-Health Care Benefits

Wal-Mart fails to provide a secure retirement benefit for its employees.

• Wal-Mart sponsors two retirement plans — a profit sharing plan and 401(k) plan — neither of which guarantee workers a fixed monthly pension benefit.

• Wal-Mart has shifted risks to employees by concentrating investment in its own stock.

• From January 2000 to January 2005, the average adjusted share price of Wal-Mart’s stock lost more than a fifth of its value. By being concentrated in one security, employees’ retirement plans are subject to the whims of one stock rather than having the safety of a diversified portfolio.

• Wal-Mart's retirement plans are Enron-like -- in 2003, 67% of their combined assets were invested in Wal-Mart stock.

Wal-Mart shares little of its $10 billion profits with employees.

• Wal-Mart has stated that it has contributed around 4 percent of its earnings to its combined profit sharing and 401(k) accounts. For 2003, this would come out to a $302 a year contribution per employee.

Wal-Mart shifts retirement costs onto communities

• When employees retire without adequate savings and benefits, they are less able to pay for health care, housing, and food. Communities and taxpayers ultimately bear the cost.

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Wal-Mart Anti-Union Policy

Wal-Mart closes down stores and departments that unionize

• In 2000, when a small meatcutting department successfully organized a union at a Wal-Mart store in Texas, Wal-Mart responded a week later by announcing the phase-out of its in-store meatcutting company-wide. [Pan Demetrakakes, "Is Wal-Mart Wrapped in Union Phobia?" Food & Packaging 76 (August 1, 2003).]

• A Wal-Mart employee in Quebec filed a request in a Canadian Superior Court seeking a class-action lawsuit against Wal-Mart Canada, saying the retailer’s decision to close a Jonquierre, Quebec, store after its employees received union certification violated the rights of its workers, and entitles them to compensation and damages. [Quebec Union Seeks Class-Action Suit vs. Wal-Mart,” Supermarket News, April 22, 2005]

Wal-Mart has issued "A Manager's Toolbox to Remaining Union Free,"

• This toolbox provides managers with lists of warning signs that workers might be organizing, including "frequent meetings at associates' homes" and "associates who are never seen together start talking or associating with each other." The "Toolbox" gives managers a hotline to call so that company specialists can respond rapidly and head off any attempt by employees to organize. [Wal-Mart, A Manager’s Toolbox to Remaining Union Free at 20-21]

Wal-Mart is committed to an anti-union policy

• In the last few years, well over 100 unfair labor practice charges have been filed against Wal-Mart throughout the country, with 43 charges filed in 2002 alone.

• Since 1995, the U.S. government has been forced to issue at least 60 complaints against Wal-Mart at the National Labor Relations Board. [International Confederation of Free Trade Unions (ICFTU), Internationally Recognised Core Labour Standards in the United States: Report for the WTO General Council Review of the Trade Policies of the United States (Geneva, January 14-16, 2004)]

• Wal-Mart’s labor law violations range from illegally firing workers who attempt to organize a union to unlawful surveillance, threats, and intimidation of employees who dare to speak out. [“Everyday Low Wages: The Hidden Price We All Pay for Wal-Mart," A Report by the Democratic Staff of the Committee on Education and the Workforce, 2/16/04]

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Wal-Mart & Gender Discrimination

Download the Wal-Mart and Gender Discrimination fact sheet - PDF

Wal-Mart does not treat its female employees fairly

• In 2001, six women sued Wal-Mart in California claiming the company discriminated against women by systematically denying them promotions and paying them less than men. The lawsuit, Dukes v. Wal-Mart, has expanded to include more than 1 million current and former female employees, and was certified on June 21 2004 as the largest class action lawsuit ever. It is now being appealed by Wal-Mart.

• In 2001, while more than two-thirds of Wal-Mart's hourly workers were female, women held only one-third of managerial positions and constituted less than 15 percent of store managers. This is all despite women having had on average longer seniority and higher merit ratings than their male counterparts.
  [Neil Buckley and Caroline Daniel, “Wal-Mart vs. the Workers: Labour Grievances Are Stacking Up Against the World’s Biggest Company,"” Financial Times 11, 11/20/03]

• In 2001, women managers on average earned $14,500 less than their male counterparts. Female hourly workers earned on average $1,100 less than male counterparts. [Drogin 2003]

• In 2001, for the same job classification, women earned from 5 percent to 15 percent less than men, even after taking into account factors such as seniority and performance. [Drogin 2003]

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Wal-Mart & Child Labor

Download the Wal-Mart and Child Labor fact sheet - PDF

Wal-Mart violates Child Labor Laws

• An internal Wal-Mart audit found "extensive violations of child-labor laws and state regulations requiring time for breaks and meals.” (New York Times, 1/13/04)

• One week of time records from 25,000 employees in July 2000 found 1,371 instances of minors working too late, during school hours, or for too many hours in a day. There were 60,767 missed breaks and 15,705 lost meal times. (New York Times, 1/13/04)

• Wal-Mart agreed to pay $135,540 to settle child labor violation charges in January 2005 for allegedly breaking child labor laws in 24 incidents. (Wall Street Journal, 2/12/05)

• Connecticut Governor M. Jodi Rell announced that the state found 11 violations in three Wal-Mart stores in the state and that 337 minors worked at the company's 32 Connecticut stores from 2003 to 2005. The probe came after the Labor Department in February said the retailer had similar violations nationwide. (Bloomberg News, 6/22/05)

• Wal-Mart has also been fined $205,650 for 1,436 violations of child labor laws in Maine for the period 1995 to 1998. The settlement represents the largest number of citations as well as the largest fine ever issued by the Maine Department of Labor for child labor violations. (Bureau of Business Practice News)

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Wal-Mart & Undocumented Immigrants

In March 2005, Wal-Mart agreed to pay $11 million to settle federal allegations it used undocumented immigrants to clean its stores. [CNN Money, “Wal-Mart pays $11m over illegal labor”, 2005]

Since 1997, federal authorities have uncovered the cases of at least 250 undocumented immigrants who were employed by janitor contracting services and hired by Wal-Mart in 21 states. Many of the janitors - from Mexico, Russia, Mongolia, Poland and a host of other nations - worked seven days or nights a week without overtime pay or injury compensation. Those who worked nights were often locked in the store until the morning. [CNN Money, “Wal-Mart pays $11m over illegal labor”, 2005]

PART II: LEARNING OBJECTIVES

• To develop a sense about the extent of social inequality in the United States
• To consider the meaning of the concept of socioeconomic status and to be aware of its dimensions
• To be able to review the role of economic resources, power and occupational prestige, and schooling in the U.S. class system
• To be able to identify and trace the significance of various ascribed statuses for the construction and maintenance of social stratification in the United States
• To begin to see the significance of the global economy and its impact on our economic system
• To be able to generally describe the various social classes in our social stratification system
• To become aware of how health, values, family life, and gender are related to the social-class system in our society
• To begin to develop a sociological understanding about the nature of social mobility in the United States
• To develop a general understanding of the demographics of poverty in the United States
• To become aware and critical of different explanations of poverty
• To develop an awareness of the problem of homelessness in the United States
• To consider some of the dilemmas involved in public assistance and welfare reform

PART III: CHAPTER REVIEW: KEY POINTS

DIMENSIONS OF SOCIAL INEQUALITY

We in the United States tend to underestimate the extent of social inequality in our society. Four reasons are identified for why this happens. These include:

1. In principle, the law gives equal standing to all.
2. Our culture celebrates individual autonomy and achievement.
3. We tend to interact with people like ourselves.
4. The United States is an affluent society.

Income An important dimension of economic inequality is income, or wages or salary from work and earnings from investments. The median U.S. family income in 1996 was $42,300. Table 10-1 (p. 261) presents data on U.S. family income for 1996. Wealth, the total value of money and other assets, minus outstanding debts, is distributed more unequally than income. Figure 10-1 (p. 260) illustrates the distribution of income and wealth in the United States. The richest 20 percent of our population owns approximately 80 percent of the country's entire wealth. The average wealth of a U.S. family is about $40,000. However, some 40 percent of U.S. families have little or no wealth. When assets and liabilities are balanced, the lowest 20 percent of people in the United States are actually in debt. Figure 10-2 (p. 262) shows data concerning income disparities for selected industrial societies. Income inequality in the U.S. is relatively high compared to other industrialized societies.

Power Wealth is an important source of power. The "super-rich" families have a great deal of influence on the national political agenda.

Occupational Prestige One's occupation is a primary factor in determining social prestige. Table 10-2 (p. 263) presents a rank ordering of prestige scores for various occupational categories based on the responses of a random sample of U.S. adults. High income and advanced education and training requirements are positively correlated with higher prestige occupations. White-collar occupations tend to have higher prestige than blue-collar ones. Women tend to be concentrated in pink-collar occupations--service and clerical--which tend to be low in prestige.

Schooling Formal education significantly influences occupational opportunities and income. Great variation exists in terms of how much formal education different groups of people in our society receive. Table 10-3 (p. 264) indicates this fact. While more than 80 percent of adults in the U.S. have a high school education, only slightly more than 20 percent have a college degree.

ASCRIPTION AND SOCIAL STRATIFICATION

Ancestry Several ascribed statuses influence our position in our stratification system. Perhaps nothing affects our social standing more than our birth into a particular family.

Gender On average, women have lower incomes, educational levels, and occupational prestige than men.

Race and Ethnicity African American family income (median income $26,522), for example, is only 59 percent of that for whites (median income $44,756). Figure 10-3 (p. 265) shows that the typical white household has an average wealth of $46,000. The comparable figure for Hispanics and African Americans is barely one-tenth as much. In general, people of English heritage have higher status than other categories of people in the United States. The Social Diversity box (p. 266) examines differences between whites and African Americans in terms of affluence.

Religion Religion has a bearing on social standing. Among Protestants, for example, Episcopalians and Presbyterians have significantly higher social standing, on average, than Lutherans. On average Catholics have a more modest social standing than Jews.

SOCIAL CLASSES IN THE UNITED STATES

Many different criteria can be used to place an individual or family into a particular social class, but precise placement is not possible. Nevertheless, patterns do exist. Four general social classes are identified.

The Upper Class Approximately 5 percent of families in the U.S. fall into this class. Even among this group there is stratification. As a general rule, the more a family's income is derived from inherited wealth in the form of stocks and bonds, real estate, and other investments, the stronger a family's claim to being upper class.

Upper-Uppers A difference is typically made between the upper-upper class, or "old money" rich, and the lower-upper class, or "new money" rich. The former group represents about 1 percent of our population and obtains their standing through ascription.

Lower-Uppers This category of people obtains their wealth more typically through earnings. Both groups have tremendous power in society, controlling most of our nation's productive property. The Critical Thinking box (p. 268) takes a look at the castelike structure of the upper class through an analysis of the Social Register.

The Middle Class Roughly 40-45 percent of U.S. citizens fall into this category. Given its size alone, the middle class has a significant influence on patterns of U.S. culture. An important quality in the middle class is a diversity of family backgrounds.

Upper-Middles The upper third of this category is referred to as the upper-middle, being characterized by prestigious white-collar occupations, relatively high educations, nice homes, and an accumulation of property and wealth during their lifetime.

Average-Middles People at this level of our class structure typically work in less prestigious white-collar occupations or in highly-skilled blue-collar jobs.

The Working Class This category is composed of about one-third of our population. It is characterized by blue-collar families, vulnerable to unemployment and illness to a greater extent than families in the middle and upper classes. People in this category also have lower levels of personal satisfaction.

The Lower Class The remaining 20 percent of our population is identified as the lower class. Roughly 13.7 percent of the U.S. population is officially classified as poor.

THE DIFFERENCE CLASS MAKES

People with higher incomes are more than two times as likely to describe themselves as healthy than are poor people. Social class is also positively correlated with life expectancy. Mental health patterns also vary with social class.

Class and Health Poorer people seem more exposed to stressful events leading to emotional distress. Among adults with average incomes, half describe their health as "excellent." Among people earning less than $10,000 only one-fourth describe their health this way.

Class and Values The values and attitudes people support are closely associated with the type of lifestyle they live. The working class has less security than the middle and upper classes; thus they emphasize conformity to conventional beliefs and practices. Greater economic security seems to make middle-class people more tolerant than working-class people. Orientation to time also seems to vary by social class. The variation by political orientation is complicated. Generally, however, conservative views on economic issues and liberal views on social issues are found among those of higher social standing. Finally, family life is shaped by social class. Who one marries, how many children are in the family, styles of child rearing, and spousal relationships are also influence by social class.

SOCIAL MOBILITY

The United States is characterized by relatively high levels of social mobility. Social mobility can be upward or downward. Intragenerational social mobility refers to a change in social position occurring during a person's lifetime. Intergenerational social mobility is defined as the social standing of children in relation to their parents.

Myth Versus Reality Studies on intergenerational social mobility, which have focused almost exclusively on men, do show high rates of upward mobility in the U.S., especially when horizontal social mobility, or changes of occupation at one class level, are included. Four general conclusions are made about social mobility in the U.S. These include:

1. Social mobility, at least among men, has been fairly high,
2. the long-term trend in social mobility has been upward,
3. within a single generation, social mobility is usually incremental, not dramatic, and
4. the short-term trend has been stagnation, with some income polarization.

Mobility by Income Level Figure 10-4 (p. 273) shows how families during the 1980s and 1990s fared according to their income level. Families are divided into quintiles based on income. Only the top fifth showed any significant improvement.

Mobility by Race, Ethnicity, and Gender African Americans showed a decline relative to whites by income since 1980. Latino families have also dropped relative to whites. The earnings gap between men and women appears to be closing. Data for each comparison are given.

The "American Dream": Still A Reality? Historically, our society and its economy have been characterized by growth and expansion. Four important trends are identified that suggest stagnation. These include:

1. For many workers, earnings have stalled,
2. multiple job holding has increased,
3. more jobs offer little income, and
4. young people are remaining at home.

Figure 10-5 (p. 275) shows median family income for U.S. families for the years 1950-1996 in constant 1996 dollars. While rising for the first half of this time period, family income has remained fairly stable since 1973. In the Seeing Ourselves box (p. 274), National Map 10-1 illustrates patterns across the U.S. concerning fear of a falling standard of living in the U.S.

The Global Economy and the U.S. Class Structure Many of the industrial jobs which were the basis of our expanding economy in recent decades have been transferred overseas. Current patterns of change in our economy have undermined many people's expectations about improving their standard of living, even with over one-half of families having more than one breadwinner. High-paying manufacturing jobs employ only 15 percent of our work force today, with most employment opportunities found in lower-paying "service work."

POVERTY IN THE UNITED STATES

Relative poverty is the deprivation of some people in relation to those who have more. By definition this type of poverty is universal and inevitable. A more serious form of poverty is termed absolute poverty, defined as a deprivation of resources that is life-threatening. Roughly one-fifth of the world's population lives in such conditions.

The Extent of Poverty The poverty rate in the United States has generally decreased since official measurements were first taken in 1959. At present, about 36 million people, or 13.7 percent of our population, are classified as being poor. In 1996 the official poverty line for an urban family of four was $16,036. This standard approximates three times the estimated expense of food. Figure 10-6 (p. 276) indicates the official poverty rate in the U.S. since 1960.

WHO ARE THE POOR?

Age Children are more likely to be poor than any other age group in our nation. About 21 percent of the children in the United States are poor. Some 40 percent of the people living in poverty are under the age of eighteen. The Social Diversity box (p. 278) takes a closer look at the burden of poverty for children in the United States. Further, in the Seeing Ourselves box (p. 278), National Map 10-2 takes a look at patterns of child poverty across the United States.

Race and Ethnicity About two-thirds of all people living in poverty are white, but a disproportionate percentage of African Americans and Latinos are represented among the poor; about 9 percent of whites are poor, while 30 percent of African Americans and Latinos are living in poverty.

Gender and Family Patterns Poverty rates for women and men are considerably different. Of all poor people, over age eighteen, about two-thirds are women. Over one-half of all poor families are headed by single women. The widening gap in poverty rates between women and men has been labeled the feminization of poverty, referring to the trend by which women represent an increasing proportion of the poor.

Urban and Rural Poverty The highest rates of poverty are found in the central cities. In the Seeing Ourselves box (p. 279), National Map 10-3 provides a visual picture of income levels across the United States, indicating where poverty is most pronounced.

Explaining Poverty Two distinct views about who is responsible for poverty are debated. Figure 10-7 (p. 280) indicates that the public is divided about who is responsible for poverty.

One View: Blame the Poor Edward Banfield is a proponent of the view that poor people are primarily responsible for their own poverty. He believes a subculture of poverty, with a "present-time" orientation, dominates the lives of the poor. This view is an extension of the culture of poverty theory developed by Oscar Lewis.

Counterpoint: Blame Society The idea that society is primarily responsible for poverty is held by one-fourth of adults in the United States. William Julius Wilson argues that the culture of poverty perspective leads people to "blame the victim." He suggests poverty results from the unequal distribution of resources in society. Any lack of ambition among the poor is a consequence rather than a cause of poverty.

Weighing the Evidence Empirical evidence exists to support both views. For example, while over one-half of the heads of poor families do not work, about one-fifth work full-time, but because of low wages cannot climb out of poverty. Further, inadequacies in child care programs make it difficult for many single-parent women to work. The Critical Thinking box (p. 281) takes a closer look at William Julius Wilson's views about poverty. A key for improving the conditions in the inner city is the creation of jobs.

The Working Poor In 1996, 17.1 percent of the heads of poor families labored at least fifty weeks of the year and yet could not escape poverty. Another 38.1 percent of these families remained poor despite part-time work. In the Controversy and Debate box (pp. 284-85) the welfare dilemma is discussed from both the conservative and liberal viewpoints. In the Global Snapshot box (p. 285), Figure 10-8 looks at the results of a survey taken in a number of industrial societies concerning public opinion on the causes of poverty. People in the U.S. are more likely to blame the poor for their condition.

HOMELESSNESS

Counting the Homeless Though no precise count of the homeless exists, estimates range from 500,000 on any given night to 1.5 million people homeless at some time during the course of a year. The stereotype of the homeless paints an incomplete picture of the reality of today's homeless population.

Causes of Homelessness Both personal traits and societal factors are discussed as causes of homelessness. One characteristic shared by all homeless people, though, is poverty.

Openness and Poverty Reduction in the Long and Short Run

Mark R. Rosenzweig

Harvard University

October 2003

Prepared for the Conference on “The Future of Globalization”

Yale University. October 10-11, 2003

The research presented in this paper was supported by grants from the National Science Foundation and

the National Institute of Child Health and Development.

Panel household data from the 1971 and 1982 surveys indicate that there is little mobility with

3

respect to land ownership. Less than 5% of landless households in 1971 became landowners by 1982.

6

expect that school enrollment rates for children in landed households would always exceed those in

landless households. However, to the extent that boys are used in agricultural production, and the labor

market for boys is imperfect, the opportunity cost of boy’s schooling is higher in landed than in landless

households. And the survey data show that in1982 the school enrollment rate for boys in the significantly

poorer landless households was 22% higher than that in landed households. The data also indicate that

income does play a role in affecting school investment. In the same year school enrollment rates for girls,

who are not employed as much as boys in agricultural operations, were higher in the wealthier landed

than in landless households.

How would agricultural innovation and rural industrialization be expected to affect school

enrollment rates among the two land groups? First, both forces of economic growth increased incomes,

thus increasing the demand for schooling and relaxing credit constraints on investment. But, both also

increased the demand for unskilled labor - to reap a larger harvest, to apply fertilizer, to weed, or to

engage in factory work - which lowered the net benefit from increased schooling. In addition, however,

evidence suggests, consistent with hypotheses set forth by T.W. Schultz (1975) and Nelson and Phelps

(1966), that the complexities of adopting and using the new agricultural technologies raised the

profitability on farms with more educated farmers compared with those with less-educated farmers in

areas that experienced the highest rates of agricultural technical change (Foster and Rosenzweig, 1996).

Returns to schooling for farm decision-makers, those directly engaged in allocating resources, thus rose

as a consequence of the green revolution. To the extent that there are rigidities in the land market, such

that landed but not landless households expect their children to engage in farm decision-making as adults,

school investment in landed households would be expected to respond more positively to agricultural

technical change than in landless households.

3

Figures 4 and 5 depict the school enrollment rates for children aged 10-14 by gender and by land

ownership for 1982 and 1999. As can be seen, enrollment rates for boys and girls went up substantially in

The estimates are obtained from a within-village

regression of household school enrollment

4

rates of children 10-14 on a time trend, the log of the Laspeyres index of high-yielding seed variety yields

in the village, the log of factory employment in the village, interactions between the yield and factory

variables and a variable indicating whether the household owned land, the number of boys and girls in

the household, and whether there was a secondary school in the village. The estimated effects of the yield

index on enrollment and the difference between the yield effect of enrollment across landed and landless

households are statistically significant at the .001 level.

7

both household types between 1982 and 1999 - on average by 67%. However, the rates of increase were

almost twice as large in landed households - 82% versus 43%. As discussed, in 1982 boys in landed

households enrolled in school at lower rates than boys in landless households. But by 1999 school

enrollment rates in landed households exceeded those in landless households, for both boys and girls.

To what extent can we say that the observed post-1980 increases in rural school enrollment rates

are attributable to either agricultural technical change or factory employment expansion? It turns out,

only a small portion of the increase. Variations in factory expansion and rates of yield improvements

across the sample villages between 1982 and 1999 explain only a small part of the movements in school

enrollment relative to a simple time trend. However, in contrast for the results with respect to rural wage

effects, in which factory employment growth played a bigger role than did seed improvement,

agricultural technical change augmented schooling investment in rural areas while rural industrialization

did not. Figure 65 depicts the estimated effects on school enrollment rates by land ownership, based on

the survey data for 1982 and 1999, of hypothetically doubling yields and doubling factory employment

relative to the (upward) time trend. As can be seen, without agricultural productivity improvements, the

4

advance in school enrollment rates would have been 7 percentage points less in landed households and 5

percentage points less in landless households - agricultural productivity change did increase schooling

investment, but more in landowning households as expected. However, factory employment expansion

had no effect on schooling relative to the time trend. Thus increased employment brought about by

factory expansion does reduce poverty, but it does not induce an upgrade in skills.

C. Long-Run Poverty Alleviation of the Urban Poor in India: Skill Investment Among the Low-caste

Men and Women in a Transformed Urban Economy, 1980-2000

1. The urban poor. Our analysis of the effects of openness on the urban poor is based on a new

survey of households in the Dadar section of Bombay designed and supervised by Kaivan Munshi and

Mark Rosenzweig and an analysis of those data (Munshi and Rosenzweig, 2003). The survey was based

on a random sample of enrollment records in the 20 schools in the neighborhood covering the years

1982-2002 and was designed to identify the trends in schooling choices across caste groups over that

period.7,896 households who had or had had children enrolled in the schools were interviewed.

In Indian urban areas caste membership provides an exogenous indicator of resources and

endowments, akin to landlessness in the rural sector. The survey data indicate that in the year 2000

household incomes in the Bombay upper castes were almost three times those in the lower classes (5198

rupees versus 1790 rupees). Among adult males, moreover, upper-caste schooling attainment exceeded

that in the lower castes by more than four years (9.4 years versus 13.6 years). And among women, the

gap was more than five and a half years (7.6 years versus 13.2 years). Moreover the male-female gap in

schooling was more than two years in the lower castes and less than a year in the upper castes. Clearly,

women in the lower castes were the most disadvantaged in terms of schooling. These statistics based on

the schooling and earnings of adult parents, however, reflect schooling choices made prior to the Indian

reforms of the 1990's. To understand how those reforms, including a policy of openness, affected

schooling choices, one must examine how the reforms altered schooling incentives and schooling choices

in the more recent period.

2. Changing returns to English language skill. For more than a hundred years Bombay was an

industrial city, with blue-collar occupations dominated by sub-caste networks. These networks

simultaneously provided important job assistance to its members seeking work and to employers seeking

able workers, but exclusively within sub-castes whose membership was defined by birth and closed by

endogamous marriage. Starting in the mid-1980's, and accelerating during the reform period, however,

Bombay’s economy experienced an expansion of the corporate, trade and financial sectors.

One consequence of openness in today’s world is that there is an increases in transactions in

Tuition is higher in English-medium schools in

part as a consequence of the increased demand

3. Schooling investment responsiveness among the urban poor and less poor. Did the changes in

the returns to English skill alter schooling choices among the poorer, lower castes? Conventional

wisdom, stressing income barriers to schooling investment, would predict that the poorest households

would be relatively unresponsive to the changing returns for two reasons. First, as noted, tuition and fees

in the English-medium schools are higher. Second, the transformation of the economy may have actually

lowered incomes in the traditional blue-collar occupations dominated by the lower and middle castes. On

the other hand, if income and credit constraints are unimportant, Figures 7 and 8 suggest that school

enrollments in English-medium schools should rise and, most importantly, should converge between

income/caste groups.

The data indicate that income constraints did not play a significant role in affecting school

decisions, which appeared to have responded substantially to the changing returns in all caste groups.

Figure 9 displays the proportion of female students who enrolled in English-medium schools in 1982-84,

1990-92, and 1998-2000 by caste grouping (high (Brahmin) and low). In the 1980's and early 1990's,

although there was a slight increase in the share of enrollments in English-medium schools by upper-

caste girls, there was no change among lower-caste girls. During the 1990's, however, there was a

significantly more rapid shift to English-medium schools among both caste groupings, and lower-caste

girls shifted to English-medium schools significantly more than did upper-caste girls. Only 10% of

lower-caste girls enrolled in English-medium schools in the early 1990's (compared with 41% among

upper-caste girls), but by 1998-2000 this figure had risen to 35%. And by the end of the 1990's the gap in

English-medium schooling between upper- and lower-caste girls had been reduced by about a third.

There is clearly convergence between castes in the schooling choices of girls, choices which will enable

them to participate in the new economy.

The picture for boys is less clear. Figure 10 depicts the share of enrollment in English-medium

schools for boys by the caste division in the same period as for the girls. Just as for girls, there was a

substantially greater shift to English-medium schools for boys in both caste groups in the 1990’s

the urb

compared with the 1980’s. However, there is no convergence for the boys across the castes. Note that the

lack of convergence for boys is not due to income constraints - boys and girls within castes on average

come from the same families, with the same income and schooling endowments, and the enrollment rates

for girls display convergence. Rather, among the lower castes, the differences between boys and girls is

that boys are able to take advantage of the caste-based network to obtain relatively high-paying blue-

collar jobs in which English skill does not have a payoff. Such jobs were not taken by women. Munshi

and Rosenzweig (2003) explore and find evidence for the hypothesis that network externalities pervasive

in the blue-collar occupations - in which network size affects incomes - reduced incentives for boys to

shift to English-medium schools and thus to shift occupations. No such forces affected the choices of

girls.

Thus, school investment among the urban poor and less poor responded significantly to the

changing returns to the specific skills associated with openness. However, the traditional caste system

constrained the transition to the new economy of India. And in a way that made the most disadvantaged

group in the traditional economy, women in the lower castes, among the best poised to exploit the new,

globalized urban economy.

D. Conclusion

Poverty reduction in the short-run entails an increase in the rewards to unskilled labor that is the

major resource of the poor. In the longer-run, poverty reduction requires an upgrading of the skills of the

poor. The examples from India I have discussed show that opening an economy has complex and

sometimes conflicting effects on short-run and long-run poverty reduction. Such effects depend both on

what an economy opens to - capital, technical change, new product demands - and how these affect the

wages of the unskilled and their incentives to upgrade skills. The Indian experience also suggest that the

responsiveness of poverty to the forces of openness also depends on indigenous institutions, and thus will

differ across counties and historical periods. Thus, as we have seen, the effects of the green revolution on

schooling investments depended on the structure of land markets, and the effects of the globalization of

an economy on schooling were shaped by the caste system. Nevertheless, across both rural and

urban areas in India, openness has raised incomes and the accompanying changing incentives for skill

upgrading appeared to have led to significant changes in traditional patterns of schooling investment

among the poor. Finally, these effects were not purely market driven - public investments in schools and

in technical progress played important roles.

References

Behrman, Jere, Andrew D. Foster, Mark R. Rosenzweig, and Prem Vashishtha, 1999, "Women's

Schooling, Home Teaching, and Economic Growth", Journal of Political Economy,

Evenson, Robert E. and James W. McKinsey, 1999, “Technology-climate Interactions in the Green

Revolution in India,” Economic Growth Center Discussion Paper No. 805, Yale University,

August.

Foster, Andrew D. and Mark R. Rosenzweig, 1996, "Technical Change and Human Capital Returns and

Investments: Evidence from the Green Revolution", American Economic Review 86(4): 931-953,

September.

Foster, Andrew D. and Mark R. Rosenzweig, 2003, “Agricultural Development, Industrialization and

Rural Inequality,” mimeo, Harvard University.

Munshi, Kaivan and Mark R. Rosenzweig, 2003, “Traditional Institutions Meet the Modern World:

Caste, Gender and Schooling Choice in a Globalizing Economy,” mimeo, Harvard University.

Nelson, Richard R. and Edmund S. Phelps. 1966. "Investments in Humans, Technological Diffusion and

Economic Growth." American Economic Review 56:69-75.

Schultz, Theodore W., 1975, "The Value of the Ability to Deal with Disequilibria," Journal of Economic

Literature 13:3, 827-846.

The ideal that once defined how Americans lived and dreamed has gone.
John Cassidy looks at what has replaced it.

JOHN GARRETT / CAMERA PRESS

William J McDonough, the President of the Federal Reserve Bank of New York, watches his words as closely as a Savile Row tailor watches his stitches, and with good reason. Any mis-statement on his part, or even an intentional but slight deviation from the previous official line, can send the financial markets into a multi-billion-dollar tizzy.

McDonough shuns press conferences, but in November 1994 he invited 35 academics, executives and journalists to a day-long conference at the New York Fed’s headquarters in lower Manhattan. When they had assembled, some from as far away as Los Angeles and London, he addressed them as follows: ‘I am very pleased that all of you are here today to discuss what I feel is a critical issue facing our country. The issue is, of course, the growing disparity in wages earned by different segments of our labor force. It is deeply troubling that during the 1980s the real wages of low-skilled workers in the United States have fallen sharply, both in absolute terms and relative to the wages of highly-skilled workers. These dramatic wage developments raise profound questions for the United States, issues of equity and social cohesion, issues that affect the very temperament of the country.’

For a pillar of capitalism like McDonough to express concern about low wages is surprising. For him to then question, as he did, whether America ‘will be able to go forward together as a unified society’ is virtually unprecedented.

Until recently, it was an empirical law of American economics that the majority of citizens, including virtually all those who considered themselves middle class, received steadily rising wages. In the three decades after the Second World War in particular, the American dream of moving to the suburbs, buying a house and even sending the kids to college was no mere election slogan. Home ownership soared and the living standards of the middle class – idealized in television sitcoms – were the envy of the world.

Today that image is as dated as the television shows it spawned. Falling wages and rising prices have transformed the home economics of tens of millions of Americans. The trend is best illustrated with the help of a mental experiment. Imagine lining up the entire population of the US in order of ascending income, with the poorest on the extreme left and the richest on the extreme right. The person smack in the center of the line – the meridian – would be, by definition, the most middle-class American alive.

In September of 1979 this person was earning (in constant, inflation-adjusted dollars) $498 a week, or $24,700 a year. By 1995 he or she had suffered a wage cut of about a hundred dollars a month, or 4.6 per cent.

The citizens on the right of the income line-up fared very differently. In 1979 the typical full-time worker in the top third of the income distribution was earning $890 a week, or $46,280 a year. By September of 1995 his or her pay-check had swelled to $960 a week, or $49,920 a year – an increase of 7.9 per cent.

The fortunate souls on the extreme right of the income line-up were doing best of all. In 1979 the richest five per cent of American families earned, on average, $137,482, according to Census Bureau data. By 1993 their income had risen to $177,518, an increase of $770 a week, or 29.1 per cent. The top one per cent of families have made spectacular gains. According to the Congressional Budget Office, between 1977 and 1989 their average income rose from $323,942 to $576,553 – a gain of $252,611, or 78 per cent.

The numbers prove what many Americans have suspected for a long time: living standards have fallen or stagnated for the majority, while a small minority have enjoyed a bonanza. Taken together, recent wage and income trends suggest an unavoidable conclusion: America is no longer a middle-class country; indeed, the term ‘middle class’ has lost its meaning.

Vague meaning
The idea that the United States is a middle-class country is at least as old as de Tocqueville (‘The whole country seems to have melded into one middle class’) and Matthew Arnold (‘That which in England we call the Middle Classes is in America virtually the nation’). By the 1950s opinion polls showed that the vast majority of Americans referred to themselves as middle class, regardless of their income. Despite this consensus, the exact meaning of ‘middle class’ remained vague. In contrast to what it meant in Europe, it did not mean the bourgeoisie, who were clearly defined by Engels as ‘the class of modern capitalists, owners of the means of social production and employers of wage labor’.

Few inhabitants of California’s Orange County or New York’s Suffolk County owned factories or speculated on Wall Street. Most were regular employees of major corporations like McDonnell Douglas, Grumman or Hughes Aircraft. If they didn’t go to work they risked losing their livelihoods, their houses and their cars. They were, in fact, not middle class at all in the Marxian sense of the word. They were working class but, unlike similar people in Britain or Germany, they called themselves middle class.

Most commentators let them get away with the theoretical confusion, and it is easy to see why. From 1945 until 1973 – a period that economic historians now refer to as the Golden Era – the American economy resolutely refused to conform to the pattern predicted by the left-wing graybeards. Yes, the rich got richer, but almost everybody else got richer with them, and at roughly the same pace. The spoils of economic growth were divided remarkably evenly. Broadly speaking, all Americans’ incomes doubled – secretaries’, factory workers’, bank executives’.

A chart that is particularly worth examining divides the nation’s 68.5 million families into fifths, or quintiles, with the poorest fifth on the left and the richest on the right, and covers two periods: from 1947 to 1973 and from 1973 to 1993.

As Paul Krugman, an economist at Stamford University, has noted, the 1947-73 graph looks like a picket fence, which is entirely fitting: during the Golden Era income growth, like the picket fence, was an icon of middle-class America. The annual growth rate of family income was between 2.4 and 3.0 per cent, regardless of where the family stood in the income distribution.

A glance at the 1973-93 chart, however, shows that the picket fence has been replaced by a small staircase – and some of the steps are underground. The bottom two-fifths of American families saw their income fall, while the average family in the middle saw its income basically stagnate. Only the top 40 per cent enjoyed any income growth, and only the very rich enjoyed growth comparable with that of the Golden Era.

Some conservative economists have attempted to challenge these findings, but with little success. However the figures are shuffled, the basic picture remains the same: the staircase has replaced the picket fence and the country has experienced an unprecedented redistribution of income towards the rich.

The staircase graph and the changing distribution of income suggest that the country has now split into four groups. At the top there is an immensely wealthy élite, which has never had it so good. At the bottom there is an underclass which is increasingly divorced from the rest of society. And between these extremes there are, instead of a unified middle class, two distinct groups: an upper echelon of highly-skilled, highly-educated professionals who are doing very well; and a vast swathe of unskilled and semi-skilled workers who are experiencing falling wages, stagnant or declining living standards, and increased economic uncertainty. To label this group ‘middle class’ doesn’t make sense. That phrase implies two things – rising living standards and a high degree of economic security – that no longer apply.

The dramatic rise in inequality has had one beneficial side effect: it has provided gainful employment for hundreds of economists who have been burrowing away in universities and research institutes trying to solve the mystery of who killed the middle class. Sad to report, they have yet to come up with a single murderer.

One thing we do know is that the murder has nothing to do with taxation. This bit of knowledge will disappoint both conservatives who lay the blame for the middle-class squeeze on a growing tax burden, and liberals who link rising wealth concentration to regressive tax policies. But it is indisputable: the fact is that the rise in equality happened before the Internal Revenue Service got its hands on anybody’s paycheck. And, contrary to popular myth, the over-all burden of taxation has remained remarkably constant. In 1973 federal taxes swallowed 19.5 per cent of the gross domestic product and in 1993 the figure was 19.9 per cent. It was the free market that decreed that most people’s wages should fall or stagnate after 1973. And it was the free market that handed out pay bonanzas at the top of the income distribution.

Anti-capitalism
Education, global competition, technological progress and the demise of the trade-union movement have all been identified as possible suspects – some of the factors probably interacted and reinforced each other. The rise of global competition may have encouraged managers to break unions and invest in computer technology. Similarly, the threat of corporate relocation and the growth of cheap immigrant labor may have contributed to the weakness of labor unions. But what nobody has yet explained satisfactorily is the explosion of incomes at the top of the distribution. The gap between the shop floor and the executive suite has turned into a chasm.

Labor Secretary Robert Reich, somebody who understands what is happening, says that the fallout from the decline of the middle class ‘could be very divisive in this country’. He goes on: ‘You end up pitting working American against working American, or against the poor, for portions of an ever-decreasing slice of the national pie.’ The process is already visible in the rise of anti-immigration, anti-affirmative-action and anti-incumbency rhetoric. At least one Wall Street observer thinks he has spotted a new populist movement on the horizon: anti-capitalism. Stephen Roach, the chief economist at Morgan Stanley, told his clients in a circular that ‘worker backlash could be one of the key issues of the 1996 presidential campaign’.

At some point politicians are going to have to level with the voters and tell them the truth: that the postwar Golden Era is gone forever, and the great middle class has gone with it.

© John Cassidy writes for The New Yorker magazine, where a longer version of this article originally appeared.

Issue 281 Contents

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©Copyright: New Internationalist 1996

Thanks to these superior forms of capitalism, not only would these two giant countries outpace the US in per capita income and levels of productivity within a decade or two, but no less important, they would zoom ahead of the US in the new emerging technology-based industries of the future: computers and information and communications. In the extremist forms, Japan with its strong mercantilist thrust --- huge trade surpluses on a global basis with the rest of the world year-in, year-own, but especially with the US --- would end up owning much of corporate America, starting with MGM and Rockefeller Plaza and moving on in blitzkrieg fashion to the rest of American corporations.

Then too, to compound all these worries, it was argued by some international relations specialists --- above all, Paul Kennedy of Yale and Richard Gilpin of Princeton --- that the US was tumbling into a global position that bedeviled all other former imperial and hegemonic powers: imperial over-stretch, excessive military spending that strained the economy while multiplying security commitments abroad. The clever Japanese were having none of these problems: they weren't spending more than 1% of their economy on defense compared to the US average in the four decades of the cold war to around 6%. Germany, a NATO ally, husbanded its spending and commitments too, and never allocated more than half the American percentage to defense.

Poor Americans. Either we changed our ways drastically and became ersatz Germans or made-in-Japan imitators, or we would be at best also-rans in the world economic league and at worst under the thumbs of Japanese owners and managers.

The Reality?

In the last 14 years, Germany and Japan have fallen way behind the US --- not all the way back to the gap that prevailed in 1950, mind you; but back to around 65-70%, essentially the gap that prevailed in the mid-1960s. Over that decade and a half, to be more concrete, Japan has compiled the worst economic record of any industrial country since the Great Depression; its industrial production by 2000 had actually fallen further than the US’s did in the 1930 depression-era. Germany’s performance has hardly been better. It has been the sick-economy of the EU, its worst growing country. The EU average in per capita income, by the way, is about the same as Germany’s --- a little more than $26,000 in mid-2004, compared to the US’s nearly $39,000.

As for the impact of defense spending, it too doesn't have the bad effects that declinists here and abroad insisted it did. Today, for what it's worth, Japan still spends a little more than 1.0% of GDP on defense, and Germany only slightly more (1.2%). The US, by contrast, is now is spending around 4% of GDP. Yet, despite this much higher % of spending, the US GDP has been growing the last decade at around 3.5-4.0% annually; the Japanese and Germans --- while continuing to roll up trade surpluses and keeping defense spending limited --- have grown less than a third that rate annually.)

And so?

And so, to repeat, figuring out why the US has again increased its lead is what this and the next article are about. More specifically, what is there about American capitalism and American society that have continued to defy the logic of convergence theory for half the time since the industrial revolution?

A Useful Table and Diagram

Meanwhile, before we tackle this question, here are two useful ways to systematically set out the US performance compared to others.

Consider the evidence in the following table and diagram, both of which appeared in an earlier buggy article last month. The table is the buggy prof's: note that per capita income is estimated through 2004 (based on OECD projections for the last six months of the year); most of the other figures are for the start of 2004. The diagram is from IMD, a prominent Swiss Business School that, for years now, has annually ranked dozens of countries in terms of their overall competitiveness, and on four composite sets of quantitative measures: economic performance, government effectiveness, business effectiveness (including labor markets), and infrastructure quality. Generally, it and the World Economic Forum --- another Swiss-based institute (with links to Harvard) --- put out the best overall rankings of comparative economic performance . . . including prospects for the future.

Here's the IMD rankings: to save space, only the first half of the 60 countries evaluated are found in the diagram. Note how large the US lead is over the 2nd, 3rd, and 4th countries. Note too that Germany --- ranked 20th last year --- is now in 21st place; the UK is ranked just behind it, 22nd place; and Japan is ranked 23rd.

• Townsend index is evenly divided into quintiles based on the distribution of our data:

• < -2.73 (more affluent)
• (-2.73) – (-1.43)
• (-1.44) – 0.13
• 0.14 – 2.48
• 2.49 – 16.93 (more deprived)

  Conclusions:  
  Inadequate PNC & PTD 
   
  

  • Nearly 50% of all occurrences of inadequate prenatal care utilization (n=18,984) and 17.5% of all preterm births (n=8,046) in California could have been prevented if everyone experienced the risk of those living in the least impoverished census tracts.
   
  
  • For prenatal care, this effect was strongest for Whites and Native Americans (Poverty PAF’s 48.3% and 49.6% respectively) and weakest for Hispanics and African-Americans (Poverty PAF’s 25.3% and 23.2% respectively).
   
  
  • For preterm delivery, this effect was strongest for Native Americans, Pacific Islanders and Hispanics (Poverty PAF’s: 19.1%, 16.1%, 14.5% respectively) and weakest for Asians (Poverty PAF: 5.9%).
   
   
   
  
  • Rates of both inadequate PNC and PTD stratified by CT poverty displayed stepwise gradients from the least to most impoverished populations.
   
  
  • In this analysis the ABSM’s (PI & TI) had a stronger influence our access indicator (inadequate PNC) than our outcome indicator (PTD) (Poverty PAF’s 47.3% vs. 17.5%).
   
  
  • Our findings in California support the Harvard group’s (Krieger et al.) work in two important ways:
   
  
  • The Poverty Index is both easier to compute and yields similar results to other ABSM’s, including the Townsend Index.
  • The ‘Harvard Geocoding Project’ methodology was successful in identifying large socioeconomic disparities in inadequate prenatal care utilization and preterm delivery in California.
   
   
   
  

  Conclusions: Overall

   
   
   
  

  Public Health Implications 
  

  • Failure to monitor SES disparities masks important variations within and between race/ethnic groups.
   
  
  • In order to move towards achieving HP2010’s goal of eliminating health disparities, data describing SES inequalities must routinely be incorporated into the monitoring and surveillance of maternal, child health indicators.
   
  
  • Surveillance of race/ethnic health disparities can be greatly enhanced by incorporating socioeconomic census variables.
   
   
   
  
  • For More Information on the Methodology used in this study please consult the Harvard School of Pubic Health: “Public Health Disparities Geocoding Project” located at:
   
  
  • http://www.hsph.harvard.edu/thegeocodingproject/

Income Mobility and Economic Opportunity

Introduction

      Great attention has been given recently to changes over time in the average incomes of "quintiles," families or households ranked top to bottom by income and divided into fifths. However, such time line comparisons between rich and poor ignore a central element of the U.S. economy, which is the extent to which individuals move from one quintile to another. Figures on income mobility are more characteristic of the nature of our fluid society than comparisons of average incomes by quintile, which would only be statistically meaningful if America were a caste society where the people comprising the quintiles remained constant over time.

      Unfortunately, while data on average income by quintile has been plentiful, however misleading, data on income mobility has been scarce. Until now.

      This study is an analysis of newly available panel data based on income tax returns filed from 1979 through 1988, which were tabulated by the U.S. Department of the Treasury. The Treasury sample consists of 14,351 taxpayers filing returns in all of the above years. This sample tends to understate income mobility to the extent the movement of younger and older filers in and out of the population of taxpayers is missed by the requirement that returns be filed in all years. On the other hand, this understatement is at least somewhat offset at the low end of the income scale by the presence of an underclass which does not file tax returns year after year. For the purposes of this report, the bottom quintile consists of those who earn enough income to at least file income tax returns, if not to actually pay taxes.

      Earlier studies of income mobility have demonstrated a startling degree of income mobility in as short a period as one year. However, as a January 1992 study noted[1], additional data over more extended periods were needed to draw more precise conclusions about income mobility over the longer term. This need has now been largely satisfied by the provision of longitudinal panel data from tax return files. However, much more data and research on income dynamics in coming years is needed.

Level of Income Mobility by Quintile

"All is flux, nothing stays still."
- Heraclitus

      The new tax return data support the conclusion of earlier research which concluded that the degree of income mobility in American society renders the comparison of quintile income levels over time virtually meaningless. According to the tax data, 85.8 percent of filers in the bottom quintile in 1979 had exited this quintile by 1988. The corresponding mobility rates were 71 percent for the second lowest quintile, 67 percent for the middle quintile, 62.5 percent for the fourth quintile, and 35.3 percent for the top quintile.

      Of those in the much discussed top 1 percent, over half, or 52.7 percent, were gone by 1988. These data understate income mobility in the top 1 percent to the extent mortality contributes to mobility and the diffusion of income. Graph 1 displays the income mobility of the various groups.

Click here to see Graph 1.

      In all but the top quintile, at least 60 percent of filers exited their 1979 income quintile by 1988, with two-thirds or more exiting in the bottom three quintiles. Though much more stability was observed in the top fifth, over one-third had slipped downward to be replaced by others moving up. Even most of the top 1 percent had exited by 1988, to be replaced by others.

      The very high degree of income mobility displayed above shows that the composition of the various quintiles changes greatly over time. A majority of filers have indeed moved to different quintiles between 1979 and 1988. Thus intertemporal comparisons of average wages, earnings, or private incomes of quintiles cannot provide meaningful measures of changes in the income of actual families and persons only temporarily in a given quintile or percentile. Quintiles may be a convenient way of presenting snapshots of income data for a group of people at a certain point in time. Nonetheless, the notion of a quintile as a fixed economic class or social reality is a statistical mirage.

Direction of Income Mobility

"Nothing endures but change."
- Heraclitus

      Movement is important, but the direction of that movement is more important. While a strong argument can be made for a flexible and open market economy which presents opportunities to lower and middle income workers, instability alone is not necessarily a virtue. Graph 2 summarizes the income mobility data to display the direction of movement between 1979 and 1988. For example, in the third, or middle 1979 fifth, 47.3 percent had moved to a higher quintile by 1988, while 33.0 remained in this same quintile, and 19.7 percent fell into a lower quintile.

Click here to see Graph 2.

      Given the relative starting position, the very high mobility from the bottom quintile obviously reflects improvement. In addition, the upward movement in the second, third, and fourth quintiles is much larger than downward movement. For example, 60 percent of the second quintile had moved to one of the higher three quintiles by 1988. Over this same time, only 10.9 percent had fallen from the second into the lowest quintile.

      In the long overdue debate over the significance of income mobility, some may argue that mobility would tend to reflect slippage, especially among the middle class. The data contradict this contention. Of those in the middle quintile in 1979, nearly half moved upward to the fourth or fifth quintiles by 1988. Overall, in the bottom four quintiles, net improvement was the rule, not the exception.

Detail on Income Mobility, 1979-88

      Table 1 displays the movement of filers from 1979 quintiles to their positions in 1988. Each row can be read across: of 100 percent of each 1979 quintile, the table shows their dispersion among the various fifths by 1988.

Click here to see Table 1.

      About 86 percent of those in the bottom quintile in 1979 had managed to raise their incomes by 1988 enough to have moved up to a higher quintile. The data show that these were not all grouped at the bottom at the second quintile. While 20.7 percent were in the second quintile, 25.0 percent had made it into the middle fifth, and another 25.3 percent into the second highest quintile. The 14.7 percent in the top quintile was actually higher than the 14.2 percent still stuck in the bottom fifth. In other words, a member of the bottom income bracket in 1979 would have a better chance of moving to the top income bracket by 1988 than remaining in the bottom bracket.

      In the second quintile, 71 percent had exited between 1979 and 1988. Though 29.0 percent still remained in the second quintile in 1988, 29.6 percent had moved up to the third quintile, 19.5 percent to the fourth, and 11.1 percent to the top quintile. Only 10.9 percent had moved down to the lowest quintile.

      Of those in the middle quintile in 1979, 32.3 percent had moved to the fourth quintile and 15.0 percent to the fifth quintile by 1988. Over this period, 47.3 percent had moved up, while 19.7 percent had moved down. The net effect of income mobility in the middle range clearly reflected net overall improvement.

      While the fourth quintile exhibited powerful income mobility, the top quintile is the most stable. However, all income mobility from the top quintile is by definition downward mobility. The share of this group dropping into lower quintiles was 35.3 percent, while 27.2 percent of the fourth quintile also dropped at least one quintile. Many of these with declining fortunes are still better off than many of those with upward mobility from a low quintile, however, the overall pattern is that there tends to be strong upward mobility from the lower quintiles, while income mobility from a high level often reflects economic reversals.