Session 2
— Equilibrium in the Labor Market
Case Study 5.2e "Women and Minorities in the Economy"
Directions: Complete the following case study and record your answers on a separate sheet of paper.
Topic: Women and minority households as part of the overall economy.
Objective: To understand the indicators of median incomes of women and minorities. To analyze their access to discretionary income and ability to own assets. To understand the correlation between education levels and income levels.
| Key Terms: | minority | bachelor's degree |
| poverty | poverty line | |
| percent | income | |
| Careers: | economist | political scientist |
| Web Site Links: | http://www.census.gov/ | |
| http://www.careerexposure.com/hdiw.html | ||
The median income level for the American household in 1999:
| Income | Percent of total population | |
| Asian and Pacific Islander median | $51,205 | 3.8% |
| White median | $44,366 | 71.4% |
| Overall median | $40,816 | ------- |
| Hispanic median | $30,735 | 11.8% |
| African American median | $27,910 | 12.2% |
| Minority median (the median for all the above groups, excluding whites) | $32,293 | 27.8% |
| The poverty line for a family of four | $17,029 | 11.8% |
The above data indicates that the median household income for minorities is $8,523 below the overall median and only $15,264 above the poverty line. The poverty line is the minimum income level required to maintain a household's basic needs. The poverty line is established for the purpose of determining who is eligible for welfare and other social benefits. Since the median minority household income is $15,264 above the poverty line, these families are able to make some choices regarding discretionary income. These choices are more limited than those of the white household median, which has $27,337 of discretionary income above the poverty line.
CS Question #1: What is the difference between discretionary income (the amount above the poverty line) of the Asian and Pacific Islander median household income and the Hispanic median household income?
The median household income level by gender and marital status:
| Income | Percent of total households | |
| Married couple household median | $56,827 | 52.8% |
| Male householder, no wife present median | $41,838 | 3.8% |
| Non-family, male householder median | $30,753 | 13.9% |
| Overall median | $40,816 | ------- |
| Female householder, no husband present median | $26,164 | 12.1% |
| Non-family, female householder median | $19,917 | 17.2% |
| The poverty line for a family of four median | $17,029 | 11.8% |
| Individual minimum wage yearly income | $10,712 | ------- |
Based on this information, you can see that a woman earns on average about 63 percent of what a man earns. This means that for every $10.00 a man earns, a woman earns $6.30. The median female householder supporting a family and without a spouse earns $26,164. This is $14,642 below the overall median and $9,135 above the poverty line.
CS Question #2: What is the difference between the discretionary income of the median married couple household and the individual who earns minimum wage?
The data presented shows that, overall, women and minorities earn less income. This limits the economic choices of these individuals. Assets, savings and investments must be carefully budgeted. Increases in the prices of necessity goods and services such as rent and childcare can also create a financial burden.
The following is a chart of assets and the percentage of households that own these types of assets. The percentage is based on the total number of individuals in the income range similar to that of women and minority households. The percentage is based on the median income range. Those above the median may have a higher percentage of assets. Those below the median may have a lower percentage of assets.
| Asset |
Percentage
of households with ownership
|
| Interest earning assets at financial institutions |
62.9%
|
| Other interest-earning assets |
5.1%
|
| Stocks and mutual fund shares |
11.6%
|
| Equity in own home |
55.9%
|
| Equity in motor vehicles |
85.1%
|
| IRA or Keogh accounts |
14.0%
|
As you can see, women and minorities make significant contributions to the economy. They are consumers and members of the labor force. There is also a fairly high degree of asset ownership - this, even though their income is significantly lower than the overall median.
CS Question #3: What are some of the challenges to asset ownership for women and minority median income levels?
One of the main determinants of the level of income earned has to do with the individual's level of education. Review the following chart of education levels.
|
High school
graduate or more
|
Some college
or more
|
Bachelor's
degree or more
|
|
| Men |
83.4%
|
51.6%
|
27.5%
|
| Women |
83.4%
|
48.6%
|
23.1%
|
| Asian and Pacific Islander |
84.7%
|
62.3%
|
42.4%
|
| White |
87.7%
|
53.4%
|
27.7%
|
| African American |
77.4%
|
41.4%
|
15.5%
|
| Hispanic |
56.1%
|
29.2%
|
10.9%
|
Now, compare the education statistics with the income statistics. You can see that higher incomes are directly proportional to higher levels of education.
CS Question #4: Determine the median percentage of high school graduates of the following groups: Asian and Pacific Islander, white, African American, and Hispanic. Is there a bigger difference based on minority status than on gender difference?
Further Thought:
Data sources: Used Census Bureau: 1999 income statistics and Used Census Bureau: second quintile form "Asset Ownership of Households:1993"