Fed Study: Poor Falling Farther Behind Rest of U.S.
Tish Wells/MCT via Getty Images
By Ann Saphir

The rise in the number of Americans out of work for long periods of time has helped push U.S. income inequality to a 50-year high and has particularly hurt low-income households, according to a study by the Federal Reserve Bank of Minneapolis.

Fed Chair Janet Yellen has called the growing income gap between rich and poor "one of most disturbing trends facing the nation." She has also said she is especially concerned with the "devastating" effects of long-term unemployment.

The share of unemployed U.S. workers unable to find jobs after looking for six months or longer more than doubled to 45.3 percent as a result of the Great Recession.

A government report Friday showed a decline in the ranks of the long-term unemployed since that peak, but in April they still accounted for more than one-third of all unemployed.

Households in the bottom fifth are suffering the most from the situation, Minneapolis Fed monetary adviser Fabrizio Perri wrote in his analysis of income inequality posted on the bank's website Wednesday.

"The increase in inequality at the bottom seems tightly linked to the very large increase in long-term unemployment, which has depressed income for the bottom," Perri said.

Perri's study also showed that taxes and government programs such as unemployment insurance have narrowed some of the inequality gap but have benefited middle-income Americans more than the poor.

Overall, disposable income for all income levels has fallen over the past 15 years, the study found. But while the gap between the top 5 percent of households and that of middle-income household rose sharply in terms of pre-tax income, the gap in post-tax income has been fairly stable, the study found.

By contrast, the gap in disposable income between the bottom 20 percent and middle-income households widened after the recession, "and it is now as high as it has ever been over the past half century," Perri wrote. "This will be an important trend to monitor in coming years."

Minneapolis Fed President Narayana Kocherlakota has been trying to convince his fellow policymakers, including Yellen, of the need to keep rates lower for longer to get the jobless back to work faster.

Although on Wednesday he supported the Fed's decision to continue to dial down the central bank's massive bond-buying stimulus, Kocherlakota has said he still believes the central bank should do more to boost both employment and inflation.

The Minneapolis Fed published Perri's analysis as the lead essay in its 2013 annual report, which also includes a letter form Kocherlakota calling it a "dispassionate analysis" that will contribute to public policymaking.


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awisec

The answer to all this financial crises is to (1). STOP BUYING THOSE BANK OWNED PROPERTIES AND SHORT SALES homeowners are forced into!! (2). EVERYONE SHOULD CLOSE THEIR CHECKING, SAVINGS AND CREDIT CARD ACCOUNTS WITH THESE BIG BAD BANKS!!!!! If we all did this,with no funds coming, it would put these banks out of business (as they allowed everyone to lose their homes) They would then have to drop to their knees begging for our business and then we the consumers would have control again.

May 05 2014 at 6:50 PM Report abuse rate up rate down Reply
ha6ai

Its Obama's economy, his policies, and his disasters.

HuffPuff loons .... you are fools.

May 04 2014 at 5:50 AM Report abuse rate up rate down Reply
1 reply to ha6ai's comment
republicanslostagain

Nice fox news spin you be really dizzy from saying that comment.

May 05 2014 at 12:03 AM Report abuse rate up rate down Reply
republicanslostagain

Obama Created More Jobs in 2010 than Bush Did in 8 Years

Jobs are growing in the U.S. They've grown for 12 straight months under Obama's economic stimulus policies and, in 2010 alone, more jobs were added than in Bush's 8 years as president.

Oh, the lies. How many times have you heard Republicans or even the media say that climate change, clean energy, and environmental policies are job killers? How many times have you heard the claims that Obama's efforts to improve the economy aren't working? How many times have you been told that peanut butter doesn't taste good with jam? (Okay, scratch that last one, that's a matter of opinion.)

If you haven't heard yet, new data out by the U.S. Bureau of Labor Statistics show that in 2010 the economy saw an increase of 1.1 million jobs. But what is a number like that without a reference point, right? Turns out that if you look back at the same stats over the past decade, you can see that is more than the total number of jobs created in Bush's 8 years as president.

Furthermore, the 0.4% drop in the unemployment rate in December from 9.8% to 9.4% "was the steepest one-month fall since 1998." Yes, 1998, when Clinton was president.

http://ecopolitology.org/2011/01/12/obama-created-more-jobs-in-2010-than-bush-did-in-8-years/

May 03 2014 at 10:27 AM Report abuse rate up rate down Reply
republicanslostagain

Says in the last six months of the Bush administration, the U.S. lost 3.5 million jobs, including 760,000 jobs during January 2009 alone.

Joe Biden on Tuesday, May 22nd, 2012 in a speech at Keene State College
Joe Biden says 3.5 million jobs lost during Bush administration
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Vice President Joe Biden spent a lot of time in New Hampshire during the 2008 election, both as a candidate himself and as President Barack Obama’s running mate. So, when he returned to the Granite State earlier this month, he looked back to 2008 and the economic turmoil that year.

Speaking May 22 to a crowd at Keene State College, Biden referred to the start of the national recession in the fall of 2008 and to the failing economy he and Obama inherited when they came into office.

"In the last six months of the Bush administration, we lost 3.5 million jobs," Biden told the crowd. "As a matter of fact, on that magnificent day … when we were sworn in, before I lowered my hand that day after taking the oath … we’d already lost over 760,000 jobs that month."

Claims and blames like this have become a rallying cry of sorts for Obama’s re-election campaign. But, are they true? PolitiFact decided to take a look.

The source of the numbers wasn’t hard to find. The U.S. Department of Labor’s Bureau of Labor Statistics tracks employment numbers from month to month dating back to 1939.

The data from the last six months of the Bush administration supports Biden’s claim. A search of the job figures from July 2008 through January 2009 shows the country lost 3.47 million jobs during that time, falling from 137 million from July 2008 to 133.6 million in January 2009, according to the bureau’s monthly count.

Those figures, which are seasonally adjusted, are based on payroll surveys collected the 12th of each month from 141,000 businesses and government agencies across 486,000 locations, according to Gary Steinberg, a spokesman for the labor statistics bureau.

The labor statistics show that job losses started to mount before the end of the Bush administration. Driven by the bursting housing bubble, the country lost 84,000 jobs between January and February 2008. But the job losses grew, reaching 200,000 in April. And by September, when Lehman Brothers collapsed in the largest bankruptcy filing in U.S. history, job losses spiked again, reaching 489,000 in October and 803,000 in November.

When Obama and Biden took office in January 2009, the country had already lost 818,000 jobs from the prior month, falling from 134.4 million in December 2008 to 133.6 million in January. But, if you pro-rate those figures to the Jan. 20 inauguration date referenced by Biden, the economy would have lost about 527,000 jobs, roughly two-thirds of the month’s total. That number falls below Biden’s claim of 760,000 jobs lost by the time he took office.

The steep job losses continued through the first few months of the Obama presidency, which lost 3.4 million from February through July 2009, according to the labor data. In October 2010, the economy started adding jobs, and job growth has been evident for 19 consecutive months, according to the labor figures.

In total, the economy has lost 1.4 million jobs since Obama and Biden took office.

"It had gotten bad by (the time they came into office)," said Heidi Shierholz, an economist with the liberal Economic Policy Institute in Washington, D.C. "Regardless of political leanings, it is not ambiguous that Obama inherited a labor market in free fall."

Our ruling:

The economic recovery and job creation during the Obama administration will be a leading point of contention throughout the 2012 election. As for the labor situation Obama and Biden inherited when they came to office, there’s little room for debate. Federal labor statistics support Biden’s claim that the country lost 3.5 million jobs in the last six months of the Bush administration, but they show he overstated the losses reported by inauguration day, Jan. 20, 2009. We rate this claim Mostly True.

May 03 2014 at 10:00 AM Report abuse +1 rate up rate down Reply
1 reply to republicanslostagain's comment
republicanslostagain

How many of those jobs that were lost were good paying jobs ?

May 03 2014 at 10:06 AM Report abuse -1 rate up rate down Reply
1 reply to republicanslostagain's comment
republicanslostagain

Why didn't Bush go to the RNC to boast about his economic record ? Don't you think that would have helped the Republican party more in 2012 ?

May 03 2014 at 10:21 AM Report abuse +1 rate up rate down
toosmart4u

The poor do not vote in droves is why the republicans are trying to balance the budget on the backs of the poor. People are going to bed hungry in this country. we are going backwards in our standard of living. To fix this problem is at the polls and send the GOP home for good.

May 03 2014 at 5:40 AM Report abuse -1 rate up rate down Reply
Garfield Whittak

classof68gto if everyone did what you have done ironically they would all be poor based on the realities of supply and demand. In other words, if many more people became millionaires then millionaires would all be poor due to hyperinflation!

May 03 2014 at 2:57 AM Report abuse rate up rate down Reply
Garfield Whittak

Tom Harrell, be careful that folks here don't label you a communist for calling for greater income equality!

May 03 2014 at 2:53 AM Report abuse +1 rate up rate down Reply
Tom Harrell

It's AMAZING that people Still don't "Get It" ! !

A Nation of POOR People CONtrolled by the "RICH" is "HEAVEN" for the 1%ers.

They tried it at the turn of the 20th Century and ran into TEDDY and tried it in the 30s and ran into FRANKLIN Roosevelt.

They're CLOSE to Finally Doing It. The only thing that stands in their way are "US", the People, the Voters, the Workers, the "MIDDLE CLASS" ! !

"VOTE" ! !

May 03 2014 at 12:49 AM Report abuse +2 rate up rate down Reply
republicanslostagain

1. Who Gets Food Stamps:

Children: 45%
Disabled: 11%
Elderly: 8%
Veterans: 2%
Adults /c Children 20%
------------------------------
Total 87%

47% of the remainder were working at least one job.

By Race:

White: 36%
Black: 22%
Hispanic: 10%

2. Who gets entitlement benefits:

Elderly: 53%
Diabled: 20%
Working Poor: 18% (Below poverty level)
-----------------
Total: 91%

3. Who Get Tax Expenditure Benefits:

Top 1% = 23%
Top 20% = 66%
Middle 60% = 31%
Bottom 20% = 2.8%

4. Cost of welfare = $282.9-billion, includes TANF, Medicaid, Food Stamps, Public Housing, WIC, Head Start, and the Social Service Block Grant.

5. Annual Subsides To Industries:

Farm = $16 billion
Airline = $68 billion
Oil = $35 billion.
Coal = $86 billion
Natural Gas = $100 billion
Ethanol = $173 billion
Flood Insurance = $12 billion

Total = $490 billion

Indirect Oil/Gas Subsidies: Federal, State and Local Subsidies including Tax breaks, Delpletion Allowance, Oil Pipelines, Monitoring, Remote Sensing/Mapping (USGS), etc. less environmental costs: per gallon = $2.25

Gas consumption: 138-billion gallons per year.

Total Cost of Oil subsidies = $310 billion.

Total Direct/Indirect Subsidies to Business: $800 billion

http://usatoday30.usatoday.com/news/politics/story...
http://www.lacrossehtf.org/pdf/SNAP-11252013.pdf
http://www.fns.usda.gov/pd/snapmain.htm
http://www.cbpp.org/cms/?fa=view&id=4036#_ftn1
http://www.cbpp.org/research/index.cfm?fa=topic&id...
http://thinkprogress.org/economy/2014/02/18/329997...
http://www.fns.usda.gov/ora/SNAPCharacteristics/de...
http://www.cbpp.org/research/index.cfm?fa=topic&id...

http://tonto.eia.doe.gov/energyexplained/index.cfm...
http://www.progress.org/2003/energy22.htm
http://www.nytimes.com/2006/10/06/business/06booni...
http://en.wikipedia.org/wiki/Agricultural_subsidy
http://priceofoil.org/fossil-fuel-subsidies/
http://www.gpoaccess.gov/usbudget/fy08/pdf/hist.pd...
http://www.dot.gov/bib2009/crosswalk.htm
http://cleantech.com/news/node/554
http://www.heritage.org/Research/welfare/Test08010...

May 02 2014 at 11:51 PM Report abuse +2 rate up rate down Reply
classof68gto

A lot of people do not save and invest like they should. I have saved and invested in the stock market since 1980 and have done very well and no debt. We just do not wast money.

May 02 2014 at 11:50 PM Report abuse rate up rate down Reply