--- title: Poverty and wealth description: >- Stub — absolute poverty, inequality, middle-income cost of living, and generational fortunes; mostly outside the core GSS/ANES survey spine. --- # Poverty and wealth *Stub chapter — objective series (Q1–Q4) plus a short survey spine; notes collect here until ready to write.* **Plan:** [`poverty_plan.md`](poverty_plan.md) · **Inventory:** [`notebooks/inventories/poverty_inventory.md`](../notebooks/inventories/poverty_inventory.md) · **Board:** Task **127** · **Outline:** [`outlines/outline_v4.md`](../outlines/outline_v4.md) § Chapter 9 · **Status:** [`outlines/book_status.md`](../outlines/book_status.md) Four things we can take Obama's challenge to refer to: 1. **Absolute conditions of poverty** — Are the poor better off than in the past (U.S. and global): consumption, health, housing quality, food security, not only the official poverty rate? 2. **Inequality and relative standing** — Are they better off *relative* to the rich / the median — and does relative position matter for the veil-of-ignorance argument even when absolute levels rise? 3. **Cost of living for a typical middle-income person** — Food, housing, education, medical care: burdens for the median household (e.g. housing cost as a share of median income), not only the poor. Is there a genuine “squeeze,” or mainly sticker shock against rising real incomes? 4. **Generational fortunes** — Did Boomers hit a rare trifecta (entering a strong job market, buying housing near a low, and riding the long peacetime equity expansion)? If so, are younger cohorts comparing themselves to lottery winners? Look across generations for which cohorts were lucky or unlucky on jobs, housing, and assets — not a single Boomer-vs-everyone scorecard. People care most about 2, 3, and 4, and I'm going to talk primarily about 1. **Attitude strand (survey):** Do beliefs about welfare, redistribution, mobility, and “life worse than 50 years ago” track the material trends — or diverge? ## Intro hooks - Obama veil: “whether you’d be rich or poor” - Skeptic objections: increasing inequality, food / housing / education / medical costs ([`intro.md`](intro.md)) - Global poverty decline narrative in intro (UN / World Bank framing) — connect or contrast with U.S. survey attitudes ## That is a very big TV There are three ways I find out what my neighbors houses are like. First, when I walk around my neighborhood in the evening, I can often see through their windows that some of them have very large televisions. Second, when my children used to play at other children's houses, I would often hear about the wonders they encountered there. But those are biased samples: I live in an affluent suburb of Boston, and one of my children has a classmate whose father was the CEO of a Fortune 500 company that used to make good donuts. So I heard a lot about *that* house. The third, less biased way to find out about housing conditions in the United States is the American Housing Survey... ## Income Decreasing chance of unemployment, even during an interval when the number of people in the labor pool more than doubled: population increased by xx%, women's labor force participation rate increased by xx%, men's decreased by xx% the product of these factors is 2.x, And the probability of income below a particular threshold decreased by... ## Wealth The following figures show homeownership for White, Black, and Hispanic households since 1970, median family net worth for White, Black, and Hispanic families since 1949, and wealth per person for Black and non-Black Americans since 1860. Like the other measures of economic condition, these are population averages, not comparisons adjusted for age, education, household composition, or other differences between groups. ```{figure} figs/race_general_condition/homeownership_by_race.png :name: wealth-homeownership-by-race :align: left Homeownership rate: percent of households that own their home, by race and Hispanic origin of the householder. White and Black are non-Hispanic; Hispanic is any race. Decennial census through 2000, then the American Community Survey (IPUMS USA). ``` Homeownership rates are computed from census and American Community Survey microdata, distributed by [IPUMS USA](https://doi.org/10.18128/D010.V16.0). In 1970, 66.1% of White households owned their home, compared with 41.8% of Black households and 43.5% of Hispanic households; in 2024 the rates were 73.3%, 45.5%, and 50.9%. The gap between White and Black households was 24.3 percentage points in 1970 and 27.8 in 2024; it was smallest in 1980, 23.6 points, and largest in 2018, 30.4 points. The gap between White and Hispanic households was 22.6 points in 1970 and 22.4 in 2024. ```{figure} figs/race_general_condition/net_worth_by_race_1949_2022.png :name: wealth-net-worth-by-race :align: left Median family net worth, in thousands of 2022 dollars, by race and ethnicity. From 1989, Survey of Consumer Finances (Federal Reserve), by race and ethnicity of the respondent: White and Black are non-Hispanic; Hispanic is any race. Before 1989, the SCF+, which harmonizes historical waves of the survey, by race of the household head; it has no Hispanic category, so White includes Hispanic White families. ``` Net worth since 1989 is from the Federal Reserve's [Survey of Consumer Finances](https://www.federalreserve.gov/econres/scfindex.htm); earlier values are from the [SCF+](https://doi.org/10.1086/708815), converted to 2022 dollars using the ratio of the two sources in 1989. The SCF+ has no Hispanic category, so before 1989, White includes Hispanic White families. In 1949, median net worth was \$54,400 for White families and \$700 for Black families, in 2022 dollars. In 1970 it was \$90,100 and \$11,000; in 1989, \$166,400 and \$9,900; and in 2022, \$284,300 and \$44,100. Median net worth for Hispanic families was \$11,500 in 1989 and \$62,100 in 2022. The gap between White and Black families was \$53,800 in 1949, \$79,100 in 1970, \$156,500 in 1989, and \$240,200 in 2022. The gap between White and Hispanic families was \$154,900 in 1989 and \$222,200 in 2022. The SCF+ starts in 1949. For earlier years, Derenoncourt, Kim, Kuhn and Schularick combined census records, state tax records, and historical surveys of household finances into a series of wealth per person for Black and non-Black Americans from 1860 to 2019.[^dkks] [^dkks]: Ellora Derenoncourt, Chi Hyun Kim, Moritz Kuhn, and Moritz Schularick, "[Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860–2020](https://doi.org/10.1093/qje/qjad044)," *Quarterly Journal of Economics* 139, no. 2 (2024): 693–750. Data from [the authors' replication archive](https://www.elloraderenoncourt.com/us-inequality-data). Their non-Black wealth is total wealth minus Black wealth; per person, it is close to White wealth throughout the period. ```{figure} figs/race_general_condition/wealth_per_capita_1860_2019.png :name: wealth-per-capita-by-race :align: left Wealth per person, in thousands of 2019 dollars, for Black and non-Black Americans, 1860–2019. Since 1950, three-survey moving averages from historical and modern Surveys of Consumer Finances. Data from Derenoncourt et al. (2024). ``` In 1860, wealth per person was \$340 for Black Americans and \$19,000 for non-Black Americans, in 2019 dollars. In 1900 it was \$3,000 and \$33,900; in 1950, \$8,700 and \$62,500; and in 2019, \$60,100 and \$338,100. In dollars, the gap grew from \$18,600 in 1860 to \$31,000 in 1900, \$53,700 in 1950, and \$278,000 in 2019. As a ratio, which is how the authors report it, non-Black wealth per person was 56 times Black wealth per person in 1860, 11 times in 1900, and 7 times in 1950; since 1983 it has been between 4.8 and 5.8.