Segregation Forever?

February 18, 2013

THIS WEEK

The U.S. Census Bureau released new figures last week on where America’s most affluent live — and don’t live. Amazingly, the two metro areas in the United States least likely to have rich people as local residents both have the same exact name. In both Danville, Illinois, and in Danville, Virginia, you’ll hardly find anyone who ranks among America’s most affluent 5 percent.

This coincidence, of course, has no significance whatsoever. We can safely file it away in our folder for totally meaningless information. But the rest of the new Census report carries plenty of significance. The study reveals an America where the most affluent are rather swiftly separating themselves from everyone else.

Good riddance, you say? Not so fast. The “spatial inequality” now rising around us endangers us all. More on this deep-seated spatial inequality, on both sides of the Atlantic, in this week’s Too Much.

GREED AT A GLANCE

Creative people always build on the creative work of others, and the creative types in the Walt Disney empire, notes analyst Jay Walljasper, have certainly been no exception. They’ve been turning creative works in the public domain into blockbusters ever since Snow White appeared in 1937. They’ve taken — at no charge — the Jungle Book from Rudyard Kipling, the Little Mermaid from Hans Christian Anderson, and Alice in Wonderland from Lewis Carroll. All these works had outlived their original copyright. What about Disney’s own creations? Disney lobbying has helped extend copyrights on Mickey Mouse and Donald Duck to over 100 years, essentially double previous limits. In fact, Disney has not yet “lost” a story to the public domain. Disney CEO Robert Iger is certainly cashing in on that victory. He took home, Disney disclosed last month, $40.2 million in 2012 . . .

Sometimes you just have to do the job yourself. Art Pope, a billionaire who owes his fortune to a discount store network his daddy built, certainly thinks so. Pope has spent over $40 million in recent years gerrymandering North Carolina, and the state this winter sports for the first time in over a century a GOP governor, a conservative state Supreme Court majority, and a GOP-dominated state legislature all at the same time. But Pope isn’t resting. He had himself appointed state budget director. Last week his budget priorities made national headlines. In North Carolina, a state with America’s fifth-highest jobless rate, lawmakers have now slashed maximum weekly unemployment benefits from $535 to $350, cut the number of benefit weeks allowed, and denied 39 percent of the state’s 438,000 jobless special federal aid . . .

One dream dies, another materializes. A deep pocket who splits her time between the United States and Britain has outbid competitors from five continents to become the new owner of a luxury private island that sits in a County Mayo bay in Ireland. For just $3.81 million, Joanne Margossian gets a 65-acre isle that features a six-bedroom main residence with a music hall, five other residences, orchards, a boat house, and, of course, a pier. The previous owner had bought the island for just $1.3 million in 2003 and reportedly spent millions trying to turn Inish Turk Beg — Irish for “small island of the wild boar” — into a luxury travel retreat where on overnight stay would run $12,000. But that owner apparently spent himself into a hole. Receivers put the island up for sale last summer.

Quote of the Week

“Working folks shouldn’t have to wait year after year for the minimum wage to go up while CEO pay has never been higher.”
President Barack Obama, State of the Union address, February 12, 2013

PETULANT PLUTOCRAT OF THE WEEK

Joe Jimenez probably figured he’d be enjoying the high life when he left the United States just over a decade ago to ply Europe's CEO circuit. But things have turned a little bumpy of late. Jimenez, the current top dog at the Basel-based drug giant Novartis, is now desperately trying to stave off passage of a March 3 Swiss ballot initiative that would ban CEO signing bonuses and golden parachutes, require shareholder approval of all CEO pay plans, and jail — for up to three years — any execs who violate the new rules. The referendum’s passage, Jimenez is arguing, would put Swiss firms at a “competitive disadvantage.” But Swiss voters have tuned Jimenez out. His 2012 CEO pay, Switzerland’s highest, quadrupled the European CEO pay average. Polls currently show 65 percent of the Swiss public supporting the CEO pay limit measure.

IMAGES OF INEQUALITY

Larry Chait, for the Billboard Project

Web Gem

The Telltale Chart/ A site devoted to visualizing American economics and economic history, often with a sense of whimsy, as in this neatly titled interactive Willie Sutton Guide to Taxes: Marginal Rates, 1913-2012.

PROGRESS AND PROMISE

Academics have generally spent much less time studying the super rich than the extremely poor — and hardly any time at all studying the super rich where they actually reside. A new research project that links University of London scholars is launching this month to start filling in the gaps. The two-year effort will look at the habitats of the “ultra high net worth” — deep pockets with over $30 million — and extend the growing class “spatialization” literature to neighborhoods the super rich dominate. Animating the new research: the “widespread social anxiety that the rich are finding ways of insulating themselves from the perceived risks of urban life, risks that may be worsening as a result of the kind of ‘post-crash’ austerity measures being put in place in cities like London.”

Take Action
on Inequality

A Wall Street watchdog offers ten steps — several in daily financial life — that Americans can consider to “help take back control from Wall Street.”

inequality by the numbers

Stat of the Week

Who’s gaining from the higher productivity of American workers? Not American workers, especially not minimum wage workers. If the federal minimum wage had grown just one quarter as fast as productivity since 1968, economist John Schmitt calculates, the minimum today would stand at $12.25. Today's actual minimum: $7.25.

IN FOCUS

Our Residential Future: Segregation Forever?

Rising inequality, newly released data make plain, has left America's metro areas — and neighborhoods — considerably less mixed by income. Are the rich about to bid the rest of us good-bye?

Our political vocabulary is changing all the time. Words that loom large in one generation’s national public discourse can almost totally disappear in the next.

Take the word “segregation.” A half-century ago, newspapers headlined “segregation” on almost a daily basis. This same word today seldom ever appears, either in print or on our computer screens. To our contemporary sensibilities, segregation seems so, well, yesterday.

But segregation still stains America, and not just the lingering legacy of the racial segregation that Americans battled decades ago. America now faces a stark income segregation as well — and this income segregation is getting worse.

Last week, researchers from the U.S. Census Bureau released a new report that details one aspect of this new segregation: the concentration of high-income households by metro area.

How concentrated have these high-income households become? The new Census study, the first ever to examine where America’s most affluent 5 percent live, offers a rather dramatic picture.

In some U.S. metro areas, the new data show, you can knock randomly on 100 doors and expect to find only one household making at least $191,469, the income threshold for entering America’s top 5 percent between 2006 and 2011.

In other metro areas, that same door knocking would turn up as many as 18 households making near $200,000 and above.

In effect, affluence in America today almost totally bypasses broad swatches of the nation, from Cumberland in Maryland to the Kingman area in Arizona. Affluence is settling instead in a relatively few pockets, places like Silicon Valley in California and the hedge-fund-happy suburbs around Stamford, Connecticut.

Our contemporary income segregation becomes even more intense when we drill down from the metro to neighborhood level. Sociologists Sean Reardon and Kendra Bischoff have been doing this drilling, using Census tract data.

Back in 1970, the pair have found, 65 percent of America’s families lived in “middle-income” situations, neighborhoods where incomes range from 80 to 125 percent of the median, or most typical, income of the larger metro area. By 2008, only 43 percent of U.S. families lived in middle-income neighborhoods.

Meanwhile, over that same span, the share of families living in either poor or rich neighborhoods essentially doubled.

In 2008, note Reardon and Bischoff, nearly one in three U.S. families in metro areas “lived in neighborhoods at the extremes of the local income spectrum,” in poor neighborhoods with incomes under 67 percent of the metro median or in affluent neighborhoods with incomes above 150 percent of that median.

Today’s affluent, Reardon and Bischoff observe, actually live more segregated lives than America's poor. These affluent have become “much less likely” to live in mixed-income neighborhoods than poor families.

Growing income inequality, the two sociologists add, is driving this increasing segregation. With the income gap between the rich and everyone else rising, mixed-income neighborhoods “have grown rarer,” affluent and poor neighborhoods “much more common.”

Average Americans, for their part, are paying a heavy price for this growing segregation. The more isolated the rich become, the more they withdraw into their own private worlds and the less interest they have in supporting public services that can benefit the wider community.

Growing inequality and income segregation impact us on a deeper level as well. The more unequal we become, notes University of Maryland political scientist Eric Uslaner, the less we feel we have “much in common” with people not like us.

Between 1968 and 2006, Uslaner’s research documents, the share of Americans who believe that “most people can be trusted” dropped from 56 to 34 percent. “Such overarching pessimism,” he observes, shreds social cohesion and invites political polarization. Finding “common ground” becomes ever more difficult.

Into this doom and gloom, Stanford historian Richard White has just brought some egalitarian sunshine. Once upon a time, White writes in a fascinating new Boston Review essay, most Americans lived in much more equal circumstances.

In the 1860 Illinois of Abraham Lincoln, for instance, Springfield “bricklayers, lawyers, stable owners, and managers lived in the same areas and were not much separated by wealth.”

Back then, White explains, “making it” meant earning an income able “to support a family and have enough in reserve to sustain it through hard times at an accustomed level of prosperity.”

“The idea of having enough,” adds White, “frequently trumped the ambition for endless accumulation.”

In other words, nothing in the American “character” hardwires us to chase mindlessly after grand fortune — or accept income segregation.

 

New Wisdom
on Wealth

Mark Provost, Protesters Confront CEO and 'Fix the Debt' Leader, Truthout, February 11, 2013. The new activism that may soon have top execs having nightmares.

Dean Baker, Fix the Debt and a Wall Street Sales Tax, Huffington Post, February 12, 2013. Deep pockets refuse to acknowledge the idea of a financial transaction tax even exists.

Lita Kurth, The Myth of the Ultra-Rich Job Creator, Classism Exposed, February 13, 2013. Did you enjoy Downton Abbey? In more typical real-life manses, servants had to turn their faces to the wall whenever a master passed them by.

Roy Poses, Non-Profit Hospital Executive Salaries Continue to Defy Gravity and Logic, Health Care Renewal, February 13, 2013. The rationale for these windfalls can withstand no scrutiny.

Timothy Egan, Downton and Downward, New York Times, February 14, 2013. What Downton Abbey can tell us about inequality and mobility in the United States today.

Annie Lowrey, Incomes Flat in Recovery, but Not for the 1%, New York Times, February 16, 2013. Only Americans at the economic summit are seeing their incomes rise.

Bud Meyers, Facebook Pays Zero Taxes, but Tips are Taxed, February 16, 2013. A riff on the unequal treatment of wealthy heirs and bartenders.

Now available to read free online: the Introduction chapter to the new book by Too Much editor Sam Pizzigati, The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970.

new and notable

Cold Water on the CEO 'Rare Talent' Myth

David Bolchover, Global CEO Appointments: A Very Domestic Issue, High Pay Centre, London, February 11, 2013.

If corporations don't pay top-dollar for CEO talent, the current corporate line goes, the CEO of their dreams will simply flit off to some other global corporation. David Bolchover, author of a highly regarded earlier book on today’s pay excess, has just completed a new study that actually examines the CEO hiring histories for the Fortune Global 500. The vast majority of major firms, 80 percent, turn out to hire their CEOs from within. In North America, not one single top exec came straight from another country. Major firms, notes Bolchover, “do not generally scour the world to locate CEO talent.” So how rare can that talent be?