Tag Archives: inequality

Siblings dealing with an in-family wealth gap

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Inequality by wealthy doesn’t just occur across groups or families – it can be an issue within families.

Experts see a growing trend. The same forces that have increasingly separated the richest Americans from everyone else is dividing brothers and sisters, too. It’s given rise to a mix of often conflicting emotions, jealousy and resentment, disappointment and distance, but also frequently understanding and respect…

As the wealth gap has widened, some mental health professionals say they’ve seen more patients for whom such a divide has become a personal issue.

In 35 years practicing psychotherapy, Janna Malamud Smith says she’s never had so many clients troubled by sibling wealth. The complaints have grown so familiar to her she can riff on them without pause…

A decade ago, sociologist Dalton Conley produced research suggesting that income inequality in America occurs as much within families as among them. Yet the similarities tend to end there. With siblings, “you had pretty much the same advantages and disadvantages growing up,” he says, so big difference in wealth can feel like a judgment on intelligence or drive.

How Americans feel about the wealth gap within their families shapes how they feel about it nationally, whether or not they see it as an inequity that must be addressed, says Lane Kenworthy, a sociologist at the University of California, San Diego…

Poll results suggest that many Americans feel the same way. Asked in October by Pew Research to name the most important reason for the wealth gap, 24 percent chose “some work harder than others,” more than tax policies, foreign trade or the educational system.

One review of Conley’s book The Pecking Order suggests Conley isn’t surprised to find inequality in the home:

Conley takes an opposing view, saying, “The home is no haven in a harsh world—it both creates and reflects that world” (p. 112). The problems of capitalism, racism, sexism, and bigotry that hinder and hurt people in society are the same ills that trickle unnoticed into the home.

This reminds me of Marx’s suggestion that the first exploitation occurred in the family. Also, this hints at the micro-level effects of broader conversations about inequality. It is one thing to have public discussions about the 1% or .01% but it is another to come face to face with these differences within your own family. How often do these kind of close interactions between unequal persons happen? Given our propensities to gather with people like us in our social networks plus the durability of social class in shaping our tastes and life chances, it may not be that often. Hence, the uniqueness of a show like Undercover Boss where the head of the company interacts with the average worker. Perhaps this means we need a show called Unequal Families…

Global wealth: $3,650 of wealth puts you in the top half of the world

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A new report on global wealth from Credit Suisse has some interesting statistics:

• If you have $3,650, including the value of your home, you’re among the wealthiest half of people in the world. (This is net wealth – so, once debts have been subtracted.) The other half own less than 1pc of global wealth, while 77pc of adults – that’s 3.3bn people – have less than $10,000.

• The top 10pc of people – membership requirement is $77,000 – hold 87pc of the world’s wealth.

• You need $798,000 to make it into the top percentile of the world’s wealthiest. This select group accounts for almost half – 48.2pc – of global assets.

In other words: (1) it doesn’t take much to break into the top half of the world and (2) those at the top of the distribution control significant portions of the world’s wealth.

Poorer suburbs the result of fewer two-parent families?

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One writer argues poorer suburbs ended up in this position because the suburbs were built for two-parent families in single-family homes and poorer communities have less of these families:

Before we can understand what makes some suburbs so miserable, we first have to understand what makes others succeed. The most successful suburban neighborhoods fall into two categories. First, there are the dense and walkable ones that, like the most successful urban neighborhoods, have town centers that give local residents easy access to retail and employment opportunities. These neighborhoods generally include a mix of single-family homes and apartment buildings, which allows for different kinds of families and adults at different stages of life to share in the same local amenities. The problem with these urban suburbs, as Christopher Leinberger recounts in his 2009 book The Option of Urbanism, is that there are so few of them, and this scarcity fuels the same kind of gentrification that is driving poor people out of successful cities.

The other model for success can be found in sprawling suburban neighborhoods dominated by households with either the time or the resources to maintain single-family homes and to engage in civic life. As a general rule, the neighborhoods in this latter category don’t allow for apartment buildings or townhomes on small lots. They implement stringent local land-use regulations that keep them exclusive, and they attract families that tenaciously defend the character of their neighborhoods.

There are many differences between these two models. But the most important one is that denser suburbs can accommodate family diversity relatively well while sprawling suburbs simply can’t. Living the low-density lifestyle requires that you either be rich in money or rich in time and skill.

Think about it this way. The typical postwar suburb was built to meet the needs of two-parent, single-breadwinner families. They were full of single-family homes that were rarely built to last, and their chief amenity was privacy, which generally meant a decent-sized lawn. Maintaining these houses was a heroic endeavor, but the division of labor implied by two-parent, single-breadwinner families meant that it was not an impossible one. Indeed, the very fact that maintaining these homes was such a chore made them precious to their owners, for whom they were a store of wealth as well as a place to live.

There is little doubt that the family structure in the United States has changed from the early days of the post-World War II suburban boom to today. And, numerous suburbs have going to have to respond to these changing demographics as they think about providing housing for older residents with no kids, single-parent families, and single households which are now the most common household type in the United States.

Yet, this argument seems too reductionistic. Similar to Rodney Balko’s argument about odd government dealings in St. Louis County, Missouri, I think this article ignores other important factors in the construction of suburbs, particularly policies and zoning and behaviors motivated by race and keeping non-whites out of wealthier suburban communities.

Average American net worth #4 in the world; median net worth #19

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In another case of mean versus median, looking at the average or median net worth of Americans leads to different conclusions:

Americans’ average wealth tops $301,000 per adult, enough to rank us fourth on the latest Credit Suisse Global Wealth report.

But that figure doesn’t tell you how the middle class American is doing.

Americans’ median wealth is a mere $44,900 per adult — half have more, half have less. That’s only good enough for 19th place, below Japan, Canada, Australia and much of Western Europe…

Super rich Americans skew average wealth upwards. The U.S. has 42% of the world’s millionaires, and 49% of those with more than $50 million in assets.

Both figures are true but they tell very different stories. America at #4 or #19?

Some other interesting tidbits later in the article:

1. Homeownership helps other countries pass the U.S. in median wealth since some have higher rates of homeownership (like Ireland and Spain) and their housing markets didn’t experience such a bubble.

2. Americans can borrow money more easily than some. This means we might be able to get our hands on more but leads to more debt which subtracts from our net worth.

Bill Gates could buy every home in Boston and still have $1 billion left

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Redfin suggests Bill Gates could purchase all the homes in Boston but not Seattle :

If Bill Gates took every dollar of his net worth (most of which comes from Cascade Investment, his investment firm, as well as Microsoft), he could afford to buy every home in Boston — and still be worth more than a billion dollars, according to a new report from the online real estate site Redfin.

For the report, Redfin calculated the combined cost of every single-family home, condo and townhouse in a city by looking at home sales between April 1, 2013, and April 1, 2014. These sales were used as a representative sample of all homes in a city. The combined costs were then lined up next to the net worth of billionaires on this Forbes list. (You can find more about the methodology here.)

So for Seattle, Redfin calculated that 241,450 homes in the city are worth a combined $111.5 billion dollars. Bill Gates could afford each of the 114,212 homes they included in the Boston calculation (total cost: $76.6 billion), but he couldn’t buy every home in Seattle. The Walton family that founded Wal-Mart could afford every home in Seattle, but only if they teamed up. They could also afford every home in a lot of other cities, including Miami, Dallas and Washington.

Using the combined home prices on this list, some billionaires could settle for purchasing a few smaller cities rather than picking up one of the pricier options. Mark Zuckerberg, who reportedly spend more than $30 million last year buying up homes near his Palo Alto house, could take his Facebook money ($28.2 billion) and buy every home in nearby Berkeley ($25.9 billion, according to Redfin). Or he could decide to buy up a few Zucker-bergs (sorry) across the country, purchasing Corvallis, Ore. ($9 billion), Punta Gorda, Fla. ($10.1 billion) and Oak Park, Ill. ($7.6 billion) with $1.5 billion left over.

See the full list of billionaires and cities they could buy here. The primary purpose Redfin gives for putting this together?

Given that the average American struggles to afford a home, we wanted to illustrate just how many homes the wealthiest among us could buy.

Certainly a stark comparison between the buying power of the typical American versus the wealthiest. So is Redfin pushing hard here to criticize the .01%? It doesn’t appear that way. There is no indication how the differences between Gates, the Waltons, and others might be evened out to provide homeownership opportunities for more Americans. Or, is this more about page-clicks and driving traffic to their website? This is a relatively easy way to leverage their data capabilities and capitalize on recent talk about inequality.

American poor can buy cheap consumer goods but have a harder time purchasing important items

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I argued a ways back that Americans in poverty who own electronic goods illustrate the ubiquity of these goods in American life. Here is some evidence: the relative cost of consumer goods has dropped in recent decades while goods associated with leaving poverty, like higher education, have increased.

This is the tension at the core of modern impoverishment, which Annie Lowrey takes on in the New York Times today. The wonders of globalization, modern manufacturing, and ruthless Walmart-style supply-chain management have made the stuff we buy to fill our homes and time much cheaper, and as a result the poor now enjoy a level of material well-being that would have seemed unimaginable decades ago. The safety net is also infinitely more generous compared with the early 1960s, before Lyndon Johnson launched his war on poverty. Yet, because the prices of key services are spiraling out of control, the poor’s lot is still rather hopeless. The NYT captures it in this very, very long graph…

nyt_cost_graph

New York Times

Here’s what makes this trend so treacherous: Prices are rising on the very things that are essential for climbing out of poverty.

Another way to think about it might be that most Americans have a baseline of consumer goods they own. But, to move up in status or to purchase goods and services that can help one achieve mobility, more resources are needed.

It is too bad Internet service is not indexed here.

If one were to approach this from a Marxist point of view, perhaps the purpose of cheap goods is to keep people distracted while social life and economic life declines or is more exploitative. What is there to complain about what the typical person has a smartphone or a large LCD or LED TV and lots of viewing options?

Donald Sterling and residential segregation

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ESPN host Bomani Jones suggests the Donald Sterling affair is less about his recorded comments and more about his contribution to a large issue in the United States that fewer people pay attention to: residential segregation. While others have noted Sterling’s tainted past, particularly his historic $2.725 million settlement in a housing discrimination case, Sterling is part of a bigger system where white people have generally moved out of neighborhoods that blacks and others have moved into. Jones ties Sterling’s past with the problems facing poor neighborhoods in Chicago that have a lack of economic resources and opportunities after whites left for the suburbs. As noted in American Apartheid and numerous other sociological works, the disparities in where people live affect a wide range of outcomes including jobs, social networks, educational opportunities, political power, crime rates, and health.

Of course, tackling residential segregation is much harder to address. As I noted earlier this week, whites tend to argue they should be able to move where they want and take advantage of their economic power. Others don’t have such options. Various efforts to limit some of these geographic disparities – like busing to schools or moving poor urban residents to suburbs – tend not to be met with favor with suburbanites who see such moves as intrusions on their self-rule. It is one thing for whites to tolerate other racial and ethnic groups in society but a much different thing to live in close proximity, share local institutions, and interact regularly with others.

High-powered lawyer to help sell the Milwaukee Bucks wants public money even as he lives in a McMansion

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Here is an example of how looking at the personal McMansion of a wealthy individual can be pulled into commentary regarding that person’s public actions:

Marotta will certainly not be on the sidelines as a new arena is sought and fought over. He will be faced with the task of assembling a suitable building parcel as well as financing its purchase and the construction of a new facility. The $200 million promised by the seller and the new owners will not be enough to foot the bill.

Mayor Barrett and others have called for a regional tax to help pay for the stadium. If Marotta has to help this pass, he will get a taste of the struggle ahead by reading the Resolution Opposing a Tax to Fund a New Sports Arena in Downtown Milwaukee that was passed by the Executive Committee of the Ozaukee County Board of Supervisors in September 2013. Ozaukee County contributes to the 0.1 per cent Miller Park tax, and wants no part of another…

The first task is probably to find them in this cavernous dwelling, built in 2010. It has 17 rooms, of which 7 are bedrooms. There are 6 full baths and 3 half-baths in the home, along with “5 add’l fixtures”

Oh, we’ll find them later — off to the 5,605 square foot basement, of which 4,926 square feet is a finished rec room. That is a lot of recreating. Above is a first floor with 4,623 square feet of living space, surmounted by a more modestly sized 3,821 square foot second floor. Maybe it’s time to search around the 982 square foot attached garage with lake views and see if the kids are there, transfixed by the waves below…

By contrast, the visitor is encouraged to look at the orange structure to the south of the Marotta home. It could easily be overlooked, but upon closer inspection you can see a modern full-sized home dwarfed by the giant shadow cast by its neighboring McMansion.

This argument appears similar to the critique of McMansions offered by Thomas Frank several weeks ago: how can someone who has done well in life even think of asking for public money for a sports stadium? On top of this, studies suggest public tax dollars used for stadiums tend to benefit owners, not taxpayers. The McMansion discussed here (and it could be a mansion at over 10,000 square feet with the basement) is held up as an emblem of excess: it is very large, it is a teardown, it is an expensive house (in a nice location), and it is architecturally compromised. But, this analysis goes beyond speaking in generalities and links the negative qualities of the home to a particular person.

Argument: we’ve sacrificed everything for McMansions

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Critics of McMansions are not hard to find but Thomas Frank takes the argument further: McMansions are behind a whole host of issues including sprawl and inequality.

Of course there was something different this time around. In the 2008 collapse, the real-estate bust wasn’t the result of some larger economic trend but the cause of it. Although we are accustomed to blaming it all on subprime loans, about half of the disaster was attributable to the less-well-known fiasco in Alt-A instruments which fed the McMansion market, the “liar’s loans” which were securitized and sold off stamped with a big Triple-A. The worst recession of our lifetimes, in other words, was in large part the result of our superiors’ longing to get themselves a piece of the grandiose.

That astounding reversal of the usual chain of cause and effect changed the way I thought about the McMansion. I once believed it would be amusing to track stylistic change in the tract-mansion form—how, say, the fake French simplicity of Newt Gingrich’s 1987 McMansion gave way to the complex multigabled fakery of Michele Bachmann’s 2007 McMansion, with maybe a stop in between to contemplate Ricky Bobby’s McMansion in “Talladega Nights.”

But what I discovered is that the form doesn’t really change. Yes, the houses get bigger every year, gables and gazebos come and go, but what is really striking about the McMansion is its vapid consistency as the decades pass…

This is not some absurdity at the fringe of our way of life. This is civilization’s very center, the only thing that really makes sense in “clusterfuck nation,” the tawdry telos at which all our economic policies aim. Everything we do seems designed to make this thing possible. Cities must sprawl to accommodate its bulk, eight-lane roads must be constructed, gasoline must be kept cheap, coal must be hauled in from Wyoming on mile-long trains. Middle-class taxes must be higher to make up for the deductions given to McMansion owners, lending standards must be diluted so more suckers can purchase them, banks must be propped up, bonuses must go out, stock prices must ascend. Every one of us must work ever longer hours so that this millionaire’s folly can remain viable, can be sold successfully to the next one on the list. This stupendous, staring banality is the final outcome for which we have sacrificed everything else.

This is a strong statement: we created and generally buy into a system whose goal is to grant a privileged few the ability to live in private McMansions in nice neighborhoods. The fulfillment of the American Dream at the turn of the 21st century involves living in a McMansion. It is not just about suburbs, 0wning a car, buying cheap goods at Walmart, and sending your kids to nice schools; it is about having the glitzy, architecturally-dubious but spacious home.

What I don’t see in Frank’s piece is how exactly the dots connect. The number of McMansions are still relatively limited due to their cost. Not all gated communities have McMansions. Not all suburbs are edge cities or vacuous tract neighborhoods like the ones highlighted in Suburban Nation. I’d like to see the data where half of the housing bubble of the late 2000s was due to loans for McMansions. In other words, this may be a populist argument today given the status of McMansions but the true story is likely more complicated.

DeSean Jackson illustrates how black Americans often retain ties to poorer neighborhoods, regardless of class

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Jamelle Bouie highlights sociological research that shows blacks in America tend to live closer to and have ongoing social ties with poorer neighborhoods compared to whites:

The key fact is this: Even after you adjust for income and education, black Americans are more likely than any other group to live in neighborhoods with substantial pockets of poverty.

As sociologist Patrick Sharkey shows in his book Stuck in Place, 62 percent of black adults born between 1955 and 1970 lived in neighborhoods that were at least 20 percent poor, a fact that’s true of their children as well. An astounding 66 percent of blacks born between 1985 and 2000 live in neighborhoods as poor or poorer as those of their parents…

How does this stack up to white families? Here, Sharkey is indispensable: Among white children born through 1955 and 1970, just 4 percent live in high poverty neighborhoods. Or, put another way, black Americans live with a level of poverty that is simply unknown to the vast majority of whites…

“When white families advance in economic status,” writes Sharkey, “they are able to translate this economic advantage into spatial advantage by buying into communities that provide quality schools and healthy environments for children.” The same isn’t true for black Americans, and some of the answer has to include present and ongoing housing discrimination. For example, in one study—conducted by the Department of Housing and the Urban Institute—black renters learned about fewer rental units and fewer homes than their white counterparts…

This can have serious consequences. Youthful experimentation for a white teenager in a suburb might be smoking a joint in a friend’s attic. Youthful experimentation for a black teenager might be hanging out with gang members. As Mary Pattillo-McCoy writes in her book Black Picket Fences: Privilege and Peril Among the Black Middle Class, “Youth walk a fine line between preparing for success and youthful delinquent experimentation, the consequences of which can be especially serious for black youth.”

Even as the details of the DeSean Jackson situation trickle out, the overall point is clear: blacks and whites in America continue to live in different neighborhoods and this has consequences for adult life. One consequence is that blacks tend to live in poorer neighborhoods, regardless of class, and a second is that social ties between wealthier and poorer neighborhoods often continue even when economic opportunity allows one to move elsewhere (see the work of Robert Sampson in Great American City for his social network analysis of social ties of residents who leave poorer neighborhoods – and also where they tend to end up).

All together, the impact of on-going residential segregation is not as simple as living in different places. The social conditions of different places is related to all sorts of disparate outcomes including housing options, educational attainment, safety and crime rates, economic opportunities, and life expectancy. We should not be surprised if we see this play out in arenas like the NFL which apparently has some divided opinions about how it should be addressed (one team releases a good player, another eagerly signs him).