LESTER C. THUROW
Manpower Programs as Income Redistribution
All income-redistribution programs have to be seen in the context of the changes that are occurring in the market distribution of earnings (Table 6- 1). In the economy, the fourth quintile of the work force has made large gains in its share of total income (up from 23.4 percent in 1948 to 26.4 percent in 1977) at the expense of everyone else. While everyone has lost ground relative to the fourth quintile, the losses are particularly sharp for those in the lowest quintile and diminish as you go up the income scale. The poorest quintile's share of earnings has been cut 35 percent from 2.6 percent to 1.7 percent of total earnings. In contrast the share of the richest quintile fell by only 2 percent.
The net result is a situation where the earnings gap has risen between each of the bottom three quintiles of the population and the top two quintiles of the population. Between the poorest quintile and the richest quintile of the population, the gap in average earnings has risen from nineteen to one in 1948 to twenty-eight to one in 1977. Between the poorest quintile and the fourth quintile, the difference in average earnings has risen from nine to one in 1948 to sixteen to one in 1977. Given an economy where earnings differences between the bottom 60 percent and the top 40 percent are expanding rapidly, income-redistribution programs have to expand very rapidly just to hold the distribution of income constant.