14 ms·

Economic mystery: Why is the American midwest more equal than rest of the US?

28 points by nkurz 11y ago

Broken_Hippo 11y ago
I find it odd to not talk about the effects of minimum wage compared to cost of living in the area. I am from Indiana. It is common for people to take paycuts when they move to the area - the basis being that in most of the places, the cost of living is quite a bit lower (metro areas, especially chicago, aside). Many places have headquarters in mid-sized hub towns of 40-60k people. Sometimes people are quite happy because it lets them live pretty comfortably at the top without costing as much money. Moving to a coast for a payraise and then moving back can grant an overall lifestyle and payraise. Yet minimum wage is the same in the midwest as it is other places, sometimes lower. Most of the available jobs are in the minimum - $13/hr zone. Had it not been for federal regulation, I speculate it would have stayed around the $5/hour zone. When minimum wage rises in Indiana, only those legally affected tend to get a raise. We get told that it theoretically isn't supposed to work that way. It really has lessened the gap between workers and management because they don't tend to get any raises, unless they are lucky enough to get a cost of living or performance raise each year.
emanuer 11y ago
As a non-American I am less than qualified to provide an answer, but one possible hypothesis is Race and ethnicity. The midwest has according to Wikipedia with 79% the highest Non-Hispanic White ratio of any region.[1] As Blacks have the highest rate of poverty 27%, followed by Hispanics 25% compared to 10% for non-Hispanic Whites. [2] Income equality might be explained by having less poor people. A follow up hypothesis would be that racial homogeneity might lead to less ghettoisation resulting in less competition for the lowest paying jobs. One might feel less compelled to pay only the lowest possible wage if one can relate to the other person, by race, neighbourhood, etc. Now, as to why Blacks and Hispanics have higher poverty rates; one explanation may be that the American social system relies very heavily on both parents present (and working) for a child to grow up in an advantageous situation. This is something I have observed to a much lesser extend in more socialist societies in Europa. And famously in all but 11 states, most black children do not live with both parents. In every state, 7 in 10 white children do. [3] [1] https://en.wikipedia.org/wiki/Race_and_ethnicity_in_the_United_States https://en.wikipedia.org/wiki/Race_and_ethnicity_in_the_Unit... [2] http://www.csgmidwest.org/policyresearch/1012incometrends.aspx http://www.csgmidwest.org/policyresearch/1012incometrends.as... [3] http://www.washingtontimes.com/news/2012/dec/25/fathers-disappear-from-households-across-america/?page=all http://www.washingtontimes.com/news/2012/dec/25/fathers-disa...
- a_humean 11y ago
  In the case of Black poverty in the US there are probably better places to look first than the issue of single parent households. The main reason for the high poverty rates among the black population is pretty well understood. Firstly, the legacy of slavery and legally mandated segregation that amounts to 300 years of outright state sanctioned oppression. Secondly, historical and ongoing discrimination in employment and educational opportunities, discrimination over housing, discrimination over the availability of credit with good terms, and institutional discrimination in the criminal justice system and beyond. After that you might then say something about how single parent households are typically less stable than two parent households, and the rate of single parent households is higher than the norm among black households. By this point though you might need to re-think the direction of causation. The kind of analysis you put forward can easily start looking like its saying that poverty among black people is a moral failing of black people, rather than a moral failing of society. The latter is where most, but of course not all (black people are individuals with moral agency as well of course!), of the blame lies. Example: The crack cocaine epidemic hit black communities quite hard, and although there are individual moral failing that lead to addiction and further societal breakdown (single parent households, highschool dropout rates etc...), the vulnerability of black populations due to historic systematic oppression played a large role in making those individual moral failings much more likely.
  - humanrebar 11y ago
    > In the case of Black poverty in the US there are probably better places to look first than the issue of single parent households. With all due respect, you have a lot to say on an empirical claim (does race matter much more than parental status with respect to poverty?) without any data to back it up. One could argue that broken families today is part of the legacy of slavery from 150 years ago, or disagree with the sources already cited, but I don't see you making those arguments. Or citing factual sources otherwise. > The kind of analysis you put forward can easily start looking like its saying that poverty among black people is a moral failing of black people, rather than a moral failing of society. Yes, prejudice is a danger. Do we ignore the analysis because of the risk of bigotry? Or is there a way to phrase the issue that lets us presume good faith, have an honest discussion, and perhaps correct subtle bigotry if it becomes clear?
jkot 11y ago
Is it possible there are no rich people in midwest? How many billionaires live there?
- imgabe 11y ago
  That was my first thought. Warren Buffet? I'm not sure how many others. Most of the finance wealth is concentrated around New York and Connecticut. Most the tech wealth is in California and Washington. Oil money and Mark Cuban are in Texas. I think most of the 1% and especially the .01% simply don't live in the Midwest.
- Joof 11y ago
  The article is asking why this is the case. My guess is lack of ports, which would have facilitated business in the past and created a cultural tradition of business in other areas.
- DougN7 11y ago
  Like I mentioned below, Johnson Couty, Kansas is one of the richest im the country: https://en.m.wikipedia.org/wiki/Johnson_County,_Kansas https://en.m.wikipedia.org/wiki/Johnson_County,_Kansas
  - JBReefer 11y ago
    19th richest is not particularly rich, especially when the median household income is only $73,733. Power law distributions are really critical here. EDIT: In fact I'd argue that this supports point that the Midwest is very equal - one of the wealthiest counties is really not that rich.
andrewclunn 11y ago
So it's more equal because they are all poorer together. It's really not that hard. Hard to be unequal if you're pretty much without wealthy people.
- vinay427 11y ago
  > Hard to be unequal if you're pretty much without wealthy people. Clearly you haven't visited places like India, where in many cases the low economic status and illiteracy of the poorest are used to make the wealthy even wealthier.
- DougN7 11y ago
  Johnson County, Kansas is one of the most affluent in the US: https://en.m.wikipedia.org/wiki/Johnson_County,_Kansas https://en.m.wikipedia.org/wiki/Johnson_County,_Kansas
marincounty 11y ago
The all consuming quest to be the richest guy on the block is less important than on the coasts. Religion plays a part? I've been to a few Midwestern states, namely Missouri, and Ohio. There's a morality they have that's missing here. When I was there, I never felt like I was being lied to, or taken advantage of. Here, on the west coast, I'm leary of most people daily--regardless of socio-economic class. I'm not claiming the Midwest is some utopia, but it's less about the almighty Buck. I've met a few women in my days. The only two I ever considered marrying just happened to be from the Midwest. I would have done anything for Gena at one point in time; she shot me down pretty quick. I still think about her.
alanwatts 11y ago
Less diversity, less natural wealth (agriculturally speaking), less industry, and it's land locked, meaning less ease of access to global markets via oceanic transport. Both the east and west cost have provided great agricultural wealth due to climate favoriability and nutrient rich soils, are home to many traditionally poorer immigrant cultures and have a greater means for increasing their by using the ocean for trade and transport.
csense 11y ago
Having grown up in the Rust Belt, I think the answer is that there's a talent drain. Smart, ambitious kids with prospects tend to leave -- it's not something that just affects CEO's and the 1%, it's something that affects the lower-upper and upper-middle classes as well.

28 points by nkurz 11y ago

I find it odd to not talk about the effects of minimum wage compared to cost of living in the area. I am from Indiana. It is common for people to take paycuts when they move to the area - the basis being that in most of the places, the cost of living is quite a bit lower (metro areas, especially chicago, aside). Many places have headquarters in mid-sized hub towns of 40-60k people. Sometimes people are quite happy because it lets them live pretty comfortably at the top without costing as much money. Moving to a coast for a payraise and then moving back can grant an overall lifestyle and payraise. Yet minimum wage is the same in the midwest as it is other places, sometimes lower. Most of the available jobs are in the minimum - $13/hr zone. Had it not been for federal regulation, I speculate it would have stayed around the $5/hour zone. When minimum wage rises in Indiana, only those legally affected tend to get a raise. We get told that it theoretically isn't supposed to work that way. It really has lessened the gap between workers and management because they don't tend to get any raises, unless they are lucky enough to get a cost of living or performance raise each year.

emanuer 11y ago

As a non-American I am less than qualified to provide an answer, but one possible hypothesis is Race and ethnicity. The midwest has according to Wikipedia with 79% the highest Non-Hispanic White ratio of any region.[1] As Blacks have the highest rate of poverty 27%, followed by Hispanics 25% compared to 10% for non-Hispanic Whites. [2] Income equality might be explained by having less poor people. A follow up hypothesis would be that racial homogeneity might lead to less ghettoisation resulting in less competition for the lowest paying jobs. One might feel less compelled to pay only the lowest possible wage if one can relate to the other person, by race, neighbourhood, etc. Now, as to why Blacks and Hispanics have higher poverty rates; one explanation may be that the American social system relies very heavily on both parents present (and working) for a child to grow up in an advantageous situation. This is something I have observed to a much lesser extend in more socialist societies in Europa. And famously in all but 11 states, most black children do not live with both parents. In every state, 7 in 10 white children do. [3] [1] https://en.wikipedia.org/wiki/Race_and_ethnicity_in_the_United_States https://en.wikipedia.org/wiki/Race_and_ethnicity_in_the_Unit... [2] http://www.csgmidwest.org/policyresearch/1012incometrends.aspx http://www.csgmidwest.org/policyresearch/1012incometrends.as... [3] http://www.washingtontimes.com/news/2012/dec/25/fathers-disappear-from-households-across-america/?page=all http://www.washingtontimes.com/news/2012/dec/25/fathers-disa...

a_humean 11y ago
In the case of Black poverty in the US there are probably better places to look first than the issue of single parent households. The main reason for the high poverty rates among the black population is pretty well understood. Firstly, the legacy of slavery and legally mandated segregation that amounts to 300 years of outright state sanctioned oppression. Secondly, historical and ongoing discrimination in employment and educational opportunities, discrimination over housing, discrimination over the availability of credit with good terms, and institutional discrimination in the criminal justice system and beyond. After that you might then say something about how single parent households are typically less stable than two parent households, and the rate of single parent households is higher than the norm among black households. By this point though you might need to re-think the direction of causation. The kind of analysis you put forward can easily start looking like its saying that poverty among black people is a moral failing of black people, rather than a moral failing of society. The latter is where most, but of course not all (black people are individuals with moral agency as well of course!), of the blame lies. Example: The crack cocaine epidemic hit black communities quite hard, and although there are individual moral failing that lead to addiction and further societal breakdown (single parent households, highschool dropout rates etc...), the vulnerability of black populations due to historic systematic oppression played a large role in making those individual moral failings much more likely.
- humanrebar 11y ago
  > In the case of Black poverty in the US there are probably better places to look first than the issue of single parent households. With all due respect, you have a lot to say on an empirical claim (does race matter much more than parental status with respect to poverty?) without any data to back it up. One could argue that broken families today is part of the legacy of slavery from 150 years ago, or disagree with the sources already cited, but I don't see you making those arguments. Or citing factual sources otherwise. > The kind of analysis you put forward can easily start looking like its saying that poverty among black people is a moral failing of black people, rather than a moral failing of society. Yes, prejudice is a danger. Do we ignore the analysis because of the risk of bigotry? Or is there a way to phrase the issue that lets us presume good faith, have an honest discussion, and perhaps correct subtle bigotry if it becomes clear?

jkot 11y ago

Is it possible there are no rich people in midwest? How many billionaires live there?

imgabe 11y ago
That was my first thought. Warren Buffet? I'm not sure how many others. Most of the finance wealth is concentrated around New York and Connecticut. Most the tech wealth is in California and Washington. Oil money and Mark Cuban are in Texas. I think most of the 1% and especially the .01% simply don't live in the Midwest.
Joof 11y ago
The article is asking why this is the case. My guess is lack of ports, which would have facilitated business in the past and created a cultural tradition of business in other areas.
DougN7 11y ago
Like I mentioned below, Johnson Couty, Kansas is one of the richest im the country: https://en.m.wikipedia.org/wiki/Johnson_County,_Kansas https://en.m.wikipedia.org/wiki/Johnson_County,_Kansas
- JBReefer 11y ago
  19th richest is not particularly rich, especially when the median household income is only $73,733. Power law distributions are really critical here. EDIT: In fact I'd argue that this supports point that the Midwest is very equal - one of the wealthiest counties is really not that rich.

andrewclunn 11y ago

So it's more equal because they are all poorer together. It's really not that hard. Hard to be unequal if you're pretty much without wealthy people.

vinay427 11y ago
> Hard to be unequal if you're pretty much without wealthy people. Clearly you haven't visited places like India, where in many cases the low economic status and illiteracy of the poorest are used to make the wealthy even wealthier.
DougN7 11y ago
Johnson County, Kansas is one of the most affluent in the US: https://en.m.wikipedia.org/wiki/Johnson_County,_Kansas https://en.m.wikipedia.org/wiki/Johnson_County,_Kansas

marincounty 11y ago

The all consuming quest to be the richest guy on the block is less important than on the coasts. Religion plays a part? I've been to a few Midwestern states, namely Missouri, and Ohio. There's a morality they have that's missing here. When I was there, I never felt like I was being lied to, or taken advantage of. Here, on the west coast, I'm leary of most people daily--regardless of socio-economic class. I'm not claiming the Midwest is some utopia, but it's less about the almighty Buck. I've met a few women in my days. The only two I ever considered marrying just happened to be from the Midwest. I would have done anything for Gena at one point in time; she shot me down pretty quick. I still think about her.

alanwatts 11y ago

Less diversity, less natural wealth (agriculturally speaking), less industry, and it's land locked, meaning less ease of access to global markets via oceanic transport. Both the east and west cost have provided great agricultural wealth due to climate favoriability and nutrient rich soils, are home to many traditionally poorer immigrant cultures and have a greater means for increasing their by using the ocean for trade and transport.

csense 11y ago

Having grown up in the Rust Belt, I think the answer is that there's a talent drain. Smart, ambitious kids with prospects tend to leave -- it's not something that just affects CEO's and the 1%, it's something that affects the lower-upper and upper-middle classes as well.