Why the Gender Pay Gap Won’t Go Away. Ever.

"Because women prefer the mommy track." 

From Kay Hymowitz writing in City-Journal (emphasis added):

"Early last spring, the White House Council on Women and Girls released a much-anticipated report called "Women in America." One of its conclusions struck a familiar note: today, as President Obama said in describing the document, “women still earn on average only about 75 cents for every dollar a man earns. That’s a huge discrepancy.”

It is a huge discrepancy. It’s also an exquisite example of what journalist Charles Seife has dubbed “proofiness.” Proofiness is the use of misleading statistics to confirm what you already believe. Indeed, the 75-cent meme depends on a panoply of apple-to-orange comparisons that support a variety of feminist policy initiatives, from the Paycheck Fairness Act to universal child care, while telling us next to nothing about the well-being of women.

Women work fewer hours, choose less demanding jobs, and then earn less than men do? Why? The answer is obvious: kids. A number of researchers have found that if you consider only childless women, the wage gap disappears. June O’Neill, an economist who has probably studied wage gaps as much as anyone alive, has found that single, childless women make about 8 percent more than single, childless men do (though the advantage vanishes when you factor in education). Using Census Bureau data of pay levels in 147 of the nation’s 150 largest cities, the research firm Reach Advisors recently showed that single, childless working women under 30 earned 8 percent more than their male counterparts did.

That’s likely to change as soon as the children arrive. Mothers, particularly those with young children, take more time off from work; even when they are working, they’re on the job less. The AAUW's "Behind the Pay Gap" study found that “among women who graduated from college in 1992–93, more than one-fifth (23 percent) of mothers were out of the work force in 2003, and another 17 percent were working part time,” compared with under 2 percent of fathers in each case. Other studies show consistently that the first child significantly reduces a woman’s earnings and that the second child cuts them even further.

So it makes no sense to think of either the mommy track or the resulting wage differential as an injustice to women. Less time at work, whether in the form of part-time jobs or fewer full-time hours, is what many women want and what those who can afford it tend to choose. Feminists can object till the Singularity arrives that women are “socialized” to think that they have to be the primary parent. But after decades of feminism and Nordic engineering, the continuing female tropism toward shorter work hours suggests that that view is either false or irrelevant. Even the determined Swedes haven’t been able to get women to stick around the office."

New Fees: Bookstore Admission, Big Bank Deposits

1. NY Times -- "Bookstores, including some of the most prominent around the country, have begun selling tickets or requiring a book purchase of customers who attend author readings and signings, a practice once considered unthinkable. Bookstore owners say they are doing so because too many people regularly come to events having already bought a book online or planning to do so later. Consumers now see the bookstore merely as another library — a place to browse, do informal research and pick up staff recommendations. 

“They type titles into their iPhones and go home,” said Nancy Salmon, the floor manager at Kepler’s. “We know what they’re doing, and it has tested my patience.” 

2. NPR -- Bank of New York Mellon said Thursday that it will charge its customers a fee to hold cash deposits over $50 million. The bank said it has seen such a large increase in deposits over the last month that it will charge a 0.13 percent fee to clients with "extraordinary high deposit levels." Normally, banks pay interest to customers for deposits. But with short-term interest rates near zero, and increased FDIC insurance premiums on deposits, it hurts banks when they hold large amounts of cash on their balance sheets.

"This is a historic precedent in the U.S. banking system," said Dan Geller, Executive Vice President at Market Rates Insight, a firm that analyses bank pricing.

Another Chart: Home Size Bubble

According to the Census Bureau, the average size of new single-family homes built in 2010 was 2,392 square feet, the lowest average new home size since 2004 (2,349 square feet).  Another housing bubble that is now deflating - the "home size bubble."

Charts of the Day

For U.S. only (1970 to 2005):

Source: Heritage Foundation (here and here).

Map of the Government War on Lemonade Stands

The map above from the Freedom Center of Missouri shows the "Government War on Kid-Run Concession Stands," where the 24 red flags indicate a town that has shut down a kid-run concession stand (the list goes back as far as 1990, but there were nine just so far this year), the four yellow flags are cities that require kids to get at least one city permit to operate a concession stand, and the the green flags are the only two cities in America that have officially stated that they will allow kids to operate concession stands without any permits: Chadron, Nebraska, which actually encourages kid-run lemonade stands, and Nashville.

MP: What's next, a "lemonade czar"?

HT: Buddy Pacifico

Monster Employment Index Increases 4.4% in July

The Monster Employment Index for July was released yesterday with the following highlights:

• U.S. annual growth in online job demand was 4.4% in July, marking the 18th consecutive month of positive year-over-year growth
• The Index edged down 2 points on a monthly basis, in-line with seasonal expectations
• All metro markets tracked by the Index exhibit positive annual growth
• Transportation and warehousing recorded the most notable improvements as recruitment demand strengthens
• Public administration continued to register the steepest annual declines on a year-over-year basis

Intrade Odds for Obama's Re-Election Drop to 52%

Intrade odds for the contract "Barack Obama to be re-elected in 2012" have fallen to 52.4% in the last few days, the lowest level yet this year (see chart above), and down about ten points in the last two months.

HT: Steve Bartin

Lemonade Freedom Day: August 20

From blogger Ryan Young (featured in today's WSJ):

"Kids have been setting up lemonade stands for as long as there has been lemonade. But in recent years, regulators have started shutting them down. Robert Fernandes, a father of two, has had enough. That’s why he has declared August 20, 2011 to be Lemonade Freedom Day."

Big Eight Computer Reported Huge Profits in Q2

Big 5 - Q2 2011	Sales (b)	Profits (b)	Profit Margin	Tax Rate
Exxon	$125,486	$10,898	8.68%	41.47%
Shell	$124,562	$8,759	7.03%	41.19%
Chevron	$68,948	$7,760	11.25%	41.24%
BP	$103,848	$5,620	5.41%	35.10%
ConocoPhillips	$65,627	$3,402	5.18%	44.91%
Totals ($) / Avg. (%)	$488,471	$36,439	7.46%	40.80%
Big 8 - Q2 1011
Apple	$28,570	$7,310	25.59%	23.46%
Microsoft	$17,370	$5,870	33.79%	7.05%
IBM	$26,666	$3,663	13.74%	25.03%
Intel	$12,847	$3,160	24.60%	27.71%
Google	$9,030	$2,500	27.69%	18.83%
HP	$31,632	$2,304	7.28%	20.33%
Cisco	$10,866	$1,807	16.63%	16.81%
Dell	$15,017	$945	6.29%	19.23%
Totals ($)/Avg. (%)	$151,998	$27,559	25.08%	19.81%

Sources: Yahoo! Finance and MSNBC

U.S. companies have been reporting second quarter earnings recently, and as usual, it's open season for the usual media attacks on America's big oil companies.  For some balance, here's some editing of a recent Huffington Post article "Big  Oil Computer Companies Post Huge Profits On High Gas Prices Strong Consumer Demand:" 

WASHINGTON -- The sputtering economy, high unemployment rate and punishing gas prices are taking a huge toll on average Americans, but at least somebody is doing well: The Big Five oil Big Eight computer companies (see list above) this week announced they had made a whopping $36 $28 billion in profits in the second quarter of 2011.

According to second-quarter earnings reports, ExxonMobil Apple, Inc. alone made $10.7 $7.3 billion in the most recent three months. That's a 41 a whopping 138 percent increase over the same period last year and an 161 astronomical 504 percent increase over 2009.

A good chunk of these profits is coming right out the pockets of the American public, thanks in part to astronomical gas prices and to $4 billion to $8 billion a year in deficit-increasing tax subsidies that oil companies continue to get, long after the incentives those subsidies were designed to create ceased to make economic sense. stong demand from consumers for Apple's incredibly successful new products like the iPad and iPhone.  

Compared to other industries like U.S. major oil and gas producers in the Big Five (see list above), the Big Eight enjoyed much higher profit margins on average (25%, or more than three times the average 7.5% for the Big Five, see chart above) and also benefited from much lower overall income tax rates (19.81%), less than half the rate for the Big Five (40.8%). 

July Employment Report

The BLS website must be down, I can't get the full employment report, but here's a summary from the WSJ:

"Friday's report showed private-sector employers, which account for about 70% of the work force, added 154,000 jobs in July, up from 80,000 in June. Several major industries showed job gains.

Manufacturing employment increased by 24,000 in July, more than double the gain from the previous month. Economists had been expecting a bounce as disruptions to production stemming from Japan's earthquake have been easing. Even the battered construction sector showed a gain, with employment rising by 8,000. However, the housing sector remains a drag on the economy.

Meanwhile, government employment continued to fall—by 37,000—for the ninth month in a row. State and local governments, which are struggling to close budget gaps, showed job losses."

Related: From Reuters, "Canada jobs rise, unemployment rate fell to 7.2% in July, the lowest since 2008."

Markets in Everything: Cutting Cars in Half

From the "Today I Learned Something New Blog":

"People who import cars to Ukraine sometimes [pay to have] the car cut in two separate pieces and carry it through customs this way (see photo). By doing this, they save a fortune on import tax. A car carried in two pieces is seen as spare parts and therefore is taxed at a much lower rate than a normal car.  When in Ukraine, the [owner pays to have the] car welded back into one piece." 

MP: The economic lessons here are: a) people respond to incentives, b) if you tax something, you get less of it, and c) taxes (and regulations) are distortionary because people change their behavior to find ways around them.  

HT: Tyler Cowen via Pete Friedlander

Amid All of the Bad News, a Few Positive Items

1. Luxury Goods Fly Off Shelves -- "The luxury category has posted 10 consecutive months of sales increases compared with the year earlier, even as overall consumer spending on categories like furniture and electronics has been tepid. In July, the luxury segment had an 11.6 percent increase, the biggest monthly gain in more than a year." (HT: Cabodog)

2. July Monster Employment Index Europe Gains 21% Year-over-Year. 

June Seattle Existing Home Sales Highest in 4 Years

DQ News -- "Seattle area's resale market posted the highest sales for the month of June in four years. Existing single-family house and condo sales combined rose 19.6 percent compared with May and increased 5.5 percent from June 2010. That's significant, given that the June 2010 sales were boosted by outgoing federal homebuyer tax credits, which ceased to have a significant impact on the market by the following month, July 2010. This June's 3,822 house and condos resales were the highest since 5,647 homes resold in June 2007."

The Brokers with Hands on Their Faces Blog

The "Brokers with Hands on Their Faces Blog" was updated today, August 4, with the photo below:

NY Fed Model: 1-in-125 Chance of 2012 Double-Dip

The New York Federal Reserve updated its "Probability of U.S. Recession Predicted by Treasury Spread" this week with treasury yield data through July 2011, and the Fed's recession probability forecast through July 2012 (see chart above). The NY Fed's Treasury model uses the spread between the yields on 10-year Treasury notes (3.00% in July) and 3-month Treasury bills (0.04%) to calculate the probability of a U.S. recession up to twelve months ahead (see details here) using the spread between those two yields (2.96% in July).

The Fed's model (data here) shows that the recession probability peaked during the October 2007 to April 2008 period at around 35-40% (see chart above), and has been declining since then in almost every month. For July of this year, the Fed's recession probability was less than 1% (0.97%) and for July of next year the recession probability is even lower, at only 0.80% (8/10 of 1%).  According to the NY Fed Treasury Spread model, the chances of a double-dip recession through the summer of next year are essentially zero (a 1-in-125 chance for July 2011).

The Jobless Recovery and the Education Gap, II

Here's more evidence that the weakness in the current job market is directly related to educational attainment, and job losses have been greatest for workers without a high school degree (almost a 20 percent loss of jobs since 2007), and to a lesser extent for those workers with only a high school diploma (almost 10 percent).  In contrast, employment of college graduates is actually higher now than in January 2007 by about 5 percent.  

I haven't checked yet for the last two jobless recoveries in 1991-1992 and 2002, but it's possible that the current jobless recovery will be more severe and will last longer than the previous two because of the weak demand today for workers with less than a high school diploma.  And it's also possible that the weakness in job growth during the last two jobless recoveries reflected weak demand for workers with no high school diploma, much more than weak demand for college graduates.   More to follow.

More Good News About the Shale Gas Revolution

From the James A. Baker III Institute for Public Policy at Rice University:

"The past decade has yielded substantial change in the natural gas industry. Specifically, there has been rapid development of technology allowing the recovery of natural gas from shale formations. The Baker Institute study "Shale Gas and U.S. National Security," sponsored by the Department of Energy, investigates the role that U.S. shale gas will play in global energy markets as global primary energy use shifts increasingly to natural gas. 

Specifically, the study concludes that shale gas will diminish the petro-power of major natural gas producers in the Middle East, Russia and Venezuela, and it will be a major factor limiting global dependence on natural gas supplies from the same unstable regions that are currently uncertain sources of the global supply of oil. In addition, the timely development of U.S. shale gas resources will limit the need for the United States to import liquefied natural gas for at least two decades, thereby reducing negative energy-related stress on the U.S. trade deficit and economy."

From the press release: 

"The Baker Institute study dismisses the notion, recently debated in the U.S. media, that the shale gas revolution is a transitory occurrence. The study projects that U.S. shale production will more than quadruple by 2040 from 2010 levels of more than 10 billion cubic feet per day, reaching more than 50 percent of total U.S. natural gas production by the 2030s."

New Retro Government Policy, How Nostalgic

Alex Tabarrok at Marginal Revolution points to this item at the American Economic Association website:

Announcement:

Job Openings for Economists (JOE) has been published only electronically for the past decade. Starting with the August 2011 issue, JOE will resume publishing in print format to ensure compliance with U.S. Department of Labor regulations for obtaining work visas for non-citizen economists. Print issues will be distributed via the U.S. Postal System two to three weeks after they are published electronically. 

MP: Maybe it's a government plot to help save the Post Office?

HT: Mike Kelley

Natural Gas Production is Booming, So is Demand for Shale Sand; Drill, Drill, Drill = Jobs, Jobs, Jobs

The EIA released data yesterday on U.S. natural gas production and reported that 2,414,685 million cubic feet of natural gas was produced in May, second only to the all-time monthly record set in March of 2,422,763 million cubic feet.  On a three-month moving average basis to smooth out variability, the three-month average for March-May was the highest natural gas production on record (see chart above).

As a follow-up to yesterday's post about how the shale gas boom has boosted the demand for steel tubes and brought new life, investment and 400 jobs to Youngstown, Ohio comes this story today from National Public Radio "Natural Gas Extraction Creates A Boom For Sand":

"The rise of fracking as a method for extracting natural gas from shale rock has triggered demand for a key ingredient in the process: silica sand. In parts of the upper Midwest, there's been a rush to mine this increasingly valuable product.

Sandstone deposits are plentiful and accessible across the upper Midwest and in Texas and Oklahoma. Dozens of companies are ramping up production and expanding their mines and quarries to meet the huge demand.

At the Pattison Sand Co. in Iowa, business has been booming. Over the past 6 months, the company has hired 50 workers. To meet fracking demand, it's running 24 hours a day, 7 days a week, all year long."

Bottom Line: The "natural gas revolution" is not only creating thousands of new U.S. jobs directly involved with the exploration, drilling and extraction of shale gas, but it's also creating thousands of new jobs in the domestic industries that support shale gas production, like steel tubes and shale sand, to highlight just a few.  

Markets in Everything: The Cruzin Cooler

Official Cruzin Cooler website here.

HT: Mike Carlson

The U.S. is Drunk on Ethanol: Where's the Outrage?

From a Scientific American article "Intoxicated on Independence: Is Domestically Produced Ethanol Worth the Cost?" (emphasis added):

"Ethanol remains more expensive than petroleum-derived gasoline.  And that means subsidies: $7 billion in 2010 alone, once tax credits, tariffs and other incentives are added together. In fact, between 1980 and 2000 the U.S. government has devoted some $19 billion in tax breaks alone to the ethanol-from-corn effort, according to the U.S. Government Accountability Office, and ethanol subsidies per liter of the biofuel have often been larger than the total cost of a liter of gas the biofuel replaced. A significant portion of the profits made by agribusiness giants like Poet or Archer Daniels Midland—which, along with oil company Valero, are responsible for the bulk of ethanol produced in the U.S.—can be attributed to this government largesse with taxpayer dollars.

As the USDA noted in a report on gasohol in 1986: ethanol "cannot be justified on economic grounds" and "had no long-term prospect for survival without massive new government assistance." More recently, the Congressional Research Service noted in a report last October that if the entire all-time record U.S. corn crop of 2009 was used to make ethanol—it would only replace roughly 18 percent of national gasoline use. "Expanding corn-based ethanol to significantly promote U.S. energy security is likely to be infeasible," the researchers wrote."

MP: Given all of the attention and scrutiny that oil companies like ExxonMobil get, where's the equivalent outrage about the windfall/obscene/excessive profits, taxpayer subsidies, and tax breaks for ethanol producers like ADM?

ADP Reports 114,000 Jobs Added in July, But There's Still a 6 Million "Private Job Deficit"

From  today's ADP National Employment Report:

"Employment in the U.S. nonfarm private business sector rose 114,000 from June to July on a seasonally adjusted basis. The advance in employment from May to June was revised down modestly to 145,000, from the initially reported 157,000.

Employment in the service-providing sector rose by 121,000 in July, marking 19 consecutive months of employment gains. Employment in the goods-producing sector fell by 7,000 in July, the second decline in three months. Manufacturing employment decreased 1,000 in July, which has seen growth in seven of the past nine months. Employment on small payrolls (<50 workers) rose 58,000 in July, while employment on medium payrolls (50 to 499 workers) rose 47,000. Employment on large payrolls (500 or more workers) rose a smaller 9,000.

Today’s ADP report suggests that employment continued to advance at a moderate pace in July. This gain of employment growth is moderately above the consensus forecast for Friday’s jobs number from the BLS, and this pace of job creation usually implies a steady unemployment rate. However, employment growth is decelerating. Since February, the three-month percent change has declined every month, from 0.60% then to 0.27% in July.

The slowdown in employment makes more sense in light of last week’s revised GDP numbers showing the economy grew slower late last year and this year than initially reported.

MP: The chart above of monthly changes in private payrolls shows that the U.S. economy has added almost 2 million jobs since February 2010, at an average pace of about 106,000 new jobs per month.  But there were almost 8 million private jobs lost in 2008 and 2009, so it would take more than four more years of job creation at the current pace just to replace the remaining 6 million "private job deficit." 

Shale Gas Rocks the World in Youngstown, Ohio

From Amy Myers Jaffe's article in the Wall Street Journal last year "Shale Gas Will Rock the World":

"We've always known the potential of shale; we just didn't have the technology to get to it at a low enough cost. Now new techniques have driven down the price tag—and set the stage for shale gas to become what will be the game-changing resource of the decade (see map above of shale gas areas in the U.S.).

I have been studying the energy markets for 30 years, and I am convinced that shale gas will revolutionize the industry—and change the world—in the coming decades. It will prevent the rise of any new cartels. It will alter geopolitics. And it will slow the transition to renewable energy."

An article in today's Wall Street Journal "Left for Extinct, a Steel Plant Rises in Ohio" highlights some new ways that shale gas is rocking and changing the world of Ohio:

"Demand for steel tubes is being fueled by natural gas drilling in the Marcellus Shale. That has brought life to Youngstown, an Ohio steel town that had lost thousands of jobs over the decades. On the edge of the Mahoning River, where once stood dozens of blast furnaces, more than 400 workers are constructing what long has been considered unthinkable: a new $650 million steel plant. When complete, it will stand 10 stories tall, occupy one million square feet and make a half million tons of seamless steel tubes used in "fracking" or drilling for natural gas in shale basins.

France's Vallourec & Mannesmann Holdings Inc., one of the world's largest makers of steel tubes for the energy market, has decided to build the plant here next to an existing facility for two main reasons. Youngstown has an experienced steelmaking work force and the city is at the door of the Marcellus Shale, a natural-gas basin beneath New York, Pennsylvania, West Virginia and Ohio.

 

Shale drilling, with its network of horizontal pipes, consumes huge amounts of steel tubes and pipe. Steel also is needed to build rigs and excavators for extracting gas.

Meanwhile, increased natural-gas production helps push gas prices lower. That makes steelmakers, which use natural gas for heating, more competitive in global markets as energy costs decline. Forging companies, which make components for drilling equipment and other machines and tools, rely almost entirely on natural gas to heat ovens to 2,300 degrees.

"They need natural gas to make products, which are needed to get the gas that services them," says Roy Hardy of the Forging Industry Association trade group. 

The outgoing mayor admits, "I never envisioned a new steel mill in Youngstown." 

MP: But that was before the shale gas revolution, Mr. Mayor! 

Police Shut Down 4-Year Old's Lemonade Stand in Iowa and Shut Down a Veggie Garden in Michigan

HT: Jeff Jacoby

Nanny of Month video from Reason.tv: "Plant a Garden, Go to Jail":

4 Fin. Stress Indexes Stable - No Cause for Concern

The nearby charts show four Federal Reserve Bank measures of financial stress and economic conditions, from the top are: 1) Kansas City Financial Stress Index, b) National Financial Conditions Index (Chicago Fed), c) St. Louis Financial Stress Index, and d) Aruoba-Diebold-Scotti Business Conditions Index (Philadelphia Fed, measures overall business conditions).  Each of these four index measures of financial stress/economic conditions are at pre-recession, 2007 levels, and none are showing any indications of evelated risk or stress in U.S. financial markets or the economy with data through July 2011.  While there have certainly been signs of moderating economic growth lately, and some reasons for concern, the underlying conditions in the financial markets remain stable and this would weaken the case for a pending double-dip recession. 

Hiring for Professional/Business Workers is Strong

A CD post yesterday highlighted the huge differences between workers with a college degree and those without a high school degree, in terms of employment levels and jobless rates.
  
Here's more evidence that might support the idea that college graduates are doing much better in the labor market today compared to workers without a high school degree.  The chart above shows that there has been more hiring activity for the job category "Professional and Business Services" than for hiring activity overall (data are from the BLS' "Job Openings and Labor Turnover" division).  

Since the recession ended in June 2009, hiring for "Professional and Business Services" has increased by 39%, which is more than three times the rate of overall hiring (12.4%).  Assuming that most jobs for "Professional and Business Services" require a college degree, the increased hiring activity for this group of workers would support the notions that a) it's the less educated workers that are struggling in today's job market and b) the jobless recovery is affecting college educated workers much less than workers without a high school degree. 

Thanks to Juandos for the idea.  

Global Economy Links for Tuesday

1. From Serbia to Cape Cod.  In Provincetown, Massachusetts, foreign workers are saving the tourism industry. 

2. From Aberdeen, Washington to China.  The 100-year-old Port of Grays Harbor in Washington state is bouncing back, thanks to China's surging demand for U.S. products. (HT: Nick Schulz)

June Restaurant Index Highest Since August 2007

The National Restaurant Association released its monthly report on the health of America's restaurant industry last week for the month of June, here are some highlights:

1. The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 100.5 in June – up a solid 1.4 percent from May’s level of 99.2 (see chart above). The Current Situation Index has been above 100 in three of the last four months, which signifies expansion in the current situation indicators. 

2. The Current Situation Index in June was at the highest level since August 2007, almost five years ago. 

3. The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 100.7 in June – up slightly from May’s level of 100.6. June represented the 11^th consecutive month above 100 for the Expectations Index, and the modest improvement came on the heels of three consecutive monthly declines.

The Jobless Recovery and the Education Gap

The charts above show the differences in: a) monthly employment levels and b) monthly unemployment rates between 1992 and 2011 for: a) college graduates and b) workers with less than a high school diploma.  The differences are quite striking and interesting, and might help explain some of the labor market dynamics in the current "jobless recovery."  

Note that the employment level for college graduates flattened during the 2008-2009 recession, but is now at a record high level.  In contrast, the employment level for workers without a high school diploma is about 2.5 million below the pre-recession peak.  Likewise the jobless rate for college graduates has increased by a few percentage points because of the recession (and is now at 4.4%), but the jobless rate for workers with less than a high school diploma has increased by more than six percentage points (now at 14.3%), and was recently almost ten percentage points above its pre-recession level. 

Bottom Line: The current jobless recovery, compared to the last two, is more severe and persistent, largely because of: a) the falling employment level and b) elevated jobless rate for workers lacking a high school diploma.  While lacking a high school dimploma has always been a liability for workers, that liability has gone from a minor liability to now a major setback as we move increasingly into a knowledge-based economy.  Comparatively, college-educated workers are doing quite well, it's the less educated workers that are struggling, and will continue to struggle, to find employment and keep a job. 

Safeway to Open 100 Retail Clinics in California

From Merchant Medicine:

"Although there is no official announcement yet, Mer­chant Medicine has learned that Safeway is building retail clinics in its stores in California, from the Bay Area to south of Los Ange­les. We have learned from our sources that the company could have plans for 100 or more clin­ics. Some are nearly completed, and furniture has been ordered. Based on one of the building per­mits we reviewed online, which listed the clinic at 399 square feet, we anticipate that retail clinics will open inside Safeway stores this fall. A spokesperson for Safe­way was not immediately avail­able for comment.

We were unable to confirm who will operate the clinics. Given California’s tough corpo­rate practice of medicine laws, it is unlikely Safeway will operate the clinics themselves through a wholly owned sub­sidiary, as is done by Target, CVS, Walgreens and Kroger. Among the options would be local area phy­sicians, regional multispecialty groups, or national or regional health systems."

Income Mobility for All Income Groups is Significant

From a 2010 St. Louis Fed report "U.S. Income Inequality: It’s Not So Bad":

"One big problem with inferring income inequality from the census income statistics is that the census statistics provide only a snapshot of income distribution in the U.S., at a single point in time. The statistics do not reflect the reality that income for many households changes over time—i.e., incomes are mobile. For most people, income increases over time as they move from their first, low-paying job in high school to a better-paying job later in their lives. Also, some people lose income over time because of business-cycle contractions, demotions, career changes, retirement, etc. The implication of changing individual incomes is that individual households do not remain in the same income quintiles over time. Thus, comparing different income quintiles over time is like comparing apples to oranges, because it means comparing incomes of different people at different stages in their earnings profile.

The U.S. Treasury released a study in November 2007 that examined income mobility in the U.S. from 1996 to 2005. Using data from individual tax returns, the study documented the movement of households along the distribution of real income over the 10-year period. The study found that nearly 58 percent of the households that were in the lowest income quintile (the lowest 20 percent) in 1996 moved to a higher income quintile by 2005 (see top chart above). Similarly, nearly 50 percent of the households in the second-lowest quintile in 1996 moved to a higher income quintile by 2005. Even a significant number of households in the third- and fourth-lowest income quintiles in 1996 moved to a higher quintile in 2005.

The Treasury study also documented falls in household income between 1996 and 2005. This is most interesting when considering the richest households. As shown in the bottom chart above, more than 57 percent of the richest 1 percent of households in 1996 fell out of that category by 2005. Similarly, more than 45 percent of the households that ranked in the top 5 percent of income in 1996 fell out of that category by 2005.

Thus it is clear that over time, a significant number of households move to higher positions along the income distribution, and a significant number move to lower positions along the income distribution. Common reference to “classes” of people (e.g., the lowest 20 percent or the richest 10 percent) is quite misleading because income classes do not contain the same households and people over time."

Thomas Sowell sums up the issue of income inequality and income mobility this way:

"Only by focusing on the income brackets, instead of the actual people moving between those brackets, have the intelligentsia been able to verbally create a "problem" for which a "solution" is necessary. They have created a powerful vision of "classes" with "disparities" and "inequities" in income, caused by "barriers" created by "society." But the routine rise of millions of people out of the lowest quintile over time makes a mockery of the "barriers" assumed by many, if not most, of the intelligentsia."