Wednesday, December 18, 2013

Singles & Income Inequality (excerpt)

By most measures, income inequality has worsened in recent years. The problem with these measures is that they mask lots of structural changes. They can also exaggerate the nature of the problem. Even if they are accurately depicting a deteriorating situation, it’s not at all obvious that government policies can make things better.

In the US, demographic changes are having a significant impact on income distribution. Most significantly, in my opinion, is that for the first time ever, the number of single people in America is almost equal to the number of married ones. Let’s review the stats, which are released monthly by the Bureau of Labor Statistics in the employment report:

(1) During November, there were 124.1 million married persons and 122.5 million singles who were 16 years old or older. The percentage of singles in the total adult population (16+ years old) rose from 37.7% at the start of 1977 to 49.7% now.

(2) The adult population that has never been married rose to a record high of 74.5 million during November, accounting for 30.2% of the adult population, up from 22.4% at the start of 1977.

(3) The adult population that is divorced, separated, and widowed was 48.0 million during November, accounting for 19.5% of the adult population, up from 15.4% at the start of 1977.

It stands to reason that these demographic trends might be having a significant impact on income distribution and exaggerating the extent of inequality. On average, a young or senior single is likely to earn less than the combined income of a married couple.

Today's Morning Briefing: Singles & Income Inequality. (1) Obama set to fight inequality. (2) It’s here to stay. (3) Governments can impose equality by spreading poverty. (4) Populist ruling classes and their capitalist cronies. (5) Demography is driving income distribution in US. (6) Single persons could soon outnumber married ones. (7) Two earners make more than one. (8) The Fed is struggling to communicate. (9) Low inflation provides great opportunity to taper. (10) Technology finds more commodities. (11) Mexico deregulates crude and should produce more of it. (12) Focus on underweight-rated S&P 500 Materials. (More for subscribers.)

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