Datapoints: Income Gap Grows Wider (and Faster)

The median wage is straightforward: it’s the midpoint of everyone’s wages. Interpreting the average, though, can be tricky. If the income of a handful of people soars while everyone else’s remains the same, the entire group’s average may still rise substantially. So when average wages grow faster than the median, as happened from 2009 through 2011, it means that lower earners are falling further behind those at the top.

One way to see the acceleration in inequality is to look at the ratio of average to median annual wages. From 2001 through 2008, during the George W. Bush administration, that ratio grew at 0.28 percentage point per year. From 2009 through 2011, the latest year for which the data is available, the ratio increased 1.14 percentage points annually, or roughly four times faster.

The reasons for the widening income gap aren’t entirely clear. Yes, the nation has had a big recession, but recessions typically tend to lessen inequality rather than increase it.

“We’re seeing the continued effects of the weak labor market and the long-term trends involving technology and globalization,” said Lawrence Katz, an economics professor at Harvard, “Our self-inflicted wounds from austerity are also exacerbating things.”

It’s always possible that the data for 2012 will show a narrowing of the gap, but Professor Katz says he wouldn’t count on it.

Wider Asia Is Seen as Falling Prey to Slowdown

HONG KONG — A diminished forecast from the Asian Development Bank and another weak economic number from China on Wednesday emphasized that the days of double-digit growth in Asia are a thing of the past as global economic turmoil and slowing momentum hobble the region’s economies.

Emerging Asia — which includes countries like China, India, Indonesia and Thailand, but not developed Japan — is likely to grow just 6.1 percent in 2012, little more than in 2009, when the world was still reeling from the global financial crisis, the development bank said in its latest economic update for the region. Next year, it said, growth is expected to edge up to 6.7 percent.

Both numbers represented sharp cuts from the bank’s previous forecasts, made in April, of 6.9 percent for 2012 and 7.3 percent for 2013, highlighting the deterioration in global conditions this year.

“Growth is slowing down much more rapidly than expected,” the bank’s chief economist, Changyong Rhee, said at a news conference in Hong Kong.

Moreover, the slowdown was particularly marked in the region’s economic heavyweights, China and India, where growth is expected to reach 7.7 percent and 5.6 percent, respectively, this year.

Again, both figures were well below both the Asian Development Bank’s previous projections and the rates of expansion recorded last year; India has been hit especially hard by homegrown issues like the slow pace of change.

China, which depends more on exports than India, has slowed rapidly during the past year, though policy makers appear comfortable with a growth rate of about 7.5 percent, rather than the double-digit jumps in the years before the financial crisis.

Data from the Chinese service sector Wednesday showed expansion at its weakest pace in many months in September: A purchasing managers’ index released by the statistics office slumped to 53.7 for the month, from 56.3 in August. Figures higher than 50 indicate expansion.

The service sector accounts for about 40 percent of China’s overall growth and about one-third of employment, according to the development bank, and analysts commented that the weak September figure showed that domestic demand, not just exports, was suffering.

“We still see growth in Asia bottoming out” in the third quarter, Klaus Baader, an economist at Société Générale in Hong Kong, wrote in a note, “but the degree of uncertainty has risen.”

The Asian Development Bank stressed that growth in Asia — even at the slower pace it now projects — remained “enviable.”

“There is no need to panic,” said Mr. Rhee, the chief economist, adding that China’s wait-and-see approach on measures to prop up growth appeared to be “the right approach right now.”

Analysts have long argued that China and other emerging economies must focus more on the quality rather than the pure speed of expansion, reduce their economies’ reliance on exports and manufacturing for growth and shift the focus toward fostering domestic demand, improving productivity and encouraging the services sector.

The service sector in the region is already much larger than widely believed, Mr. Rhee said, but poor infrastructure and a lack of qualified staff hamper development, while poorly designed and inconsistently executed regulations often stifle the business environment .

“A slew of regulations restrict competition and hamper development of the services sector, affecting everything from the corner shop to mobile telephones,” Mr. Rhee said. “These barriers need to be dismantled.”