The Gini is out of the bottle
It’s time to take advanced metrics and apply them to economic issues that actually matter to working families
By Ted Cox and Ameya Pawar
In October, thoughts turn inevitably to baseball, at the end of its long season, even as the day-to-day routine grinds on with people going to work, sending kids to school, paying the bills, and shopping for dinner.
Just Tuesday, we couldn’t resist running a story on the centennial of the infamous Black Sox scandal, in which the 1919 World Series was thrown by White Sox players in “the sports crime of the 20th century,” as one person put it at a centennial symposium held last weekend by the Society for American Baseball Research at the Chicago History Museum.
As it turned out, in our defense, it did have quite a bit to do with labor-management relations.
But it’s funny: thoughts of baseball turn inevitably back on the day-to-day grind, and we’ve been thinking about how not just baseball, but football, basketball, and hockey have changed in recent decades with the development of so-called advanced metrics — deep statistical analysis that shines new light on hidden elements of the game. Baseball stats guru Bill James labeled that “sabermetrics,” after the aforementioned SABR.
And it’s time to bring that approach not just to sports, but to all labor.
Advanced statistical analysis in baseball tries to determine what players do as individuals that actually benefits the team, that makes it function with more efficiency. Batting average is found to be a largely empty stat, except as a function of getting on base, because a baseball team has to put runners on to score. Thus, on-base percentage becomes more influential. Wins for a pitcher and runs batted in for a hitter tend to reflect the overall strength of a team — in putting runners on and scoring them to win games — rather than individual qualities that have even more impact on the outcome, such as, say, how effective a catcher is at framing pitches to get strikes called, or how good a pitcher actually is if all the things fielders typically do behind him are discounted.
It’s time for the same sort of reforms to be accepted in labor an economic statistics, to achieve a greater efficiency and equity in the larger society. Every newscast still mentions the New York Stock Exchange and the Dow Jones Industrial Average as key economic indicators, but as The New York Times reported last year: “A whopping 84 percent of all stocks owned by Americans belong to the wealthiest 10 percent of households. And that includes everyone’s stakes in pension plans, 401(k)’s, and individual retirement accounts, as well as trust funds, mutual funds, and college savings programs like 529 plans.” It pointedly added: “Roughly half of all households don’t have a cent invested in stocks, whether through a 401(k) account or shares in General Electric.”
Likewise, the unemployment rate. The percentage of people employed, even measured at the lowest level in 50 years, doesn’t mean much when some people are working two jobs and still living in poverty, while others have given up job searches entirely and are no longer counted against the ranks of the working.
Somehow, it figures that President Trump would tout both the stock market and the unemployment rate as signs of how the economy is booming — even as more and more people feel busted by the economic system.
We’ve seen some recent progress on economic data. Just last week, the U.S. Census Bureau released new figures on what’s called the Gini index. Named after Italian statistician Corrado Gini, it attempts to measure income inequality on a scale of 0 to 1, with 0 being a totally equal society in which everyone has the same and 1 being a totally inequitable society in which all wealth is concentrated in a single person.
As we reported earlier this week, the U.S. Gini index rose “significantly higher” from 0.482 in 2017 to 0.485 last year, according to the U.S. Census Bureau. When the bureau began compiling the Gini index in 1967 it stood at 0.397. Last year, no European nation had an index higher than 0.38.
Although last week’s census report didn’t give state-by-state breakdowns on the Gini index, The Rock Island Dispatch-Argus went about trying to create its own method of demonstrating the level of income inequality in the Quad Cities. It reported that “the gap between the rich and poor is widening in the Quad Cities,” according to the census data. “Incomes are up, particularly in the middle class and in the highest income brackets, but so are the number of people living in poverty.”
That’s putting statistics together in a meaningful way, and the story went on to even cite that “the Gini index, a measurement of income distribution and inequality, inched upward in the Quad Cities area, also suggesting a growing gap between rich and poor.”
It wasn’t included in last week’s news release, but it turns out the Census Bureau does have breakdowns on the Gini index by state, metro area, and congressional district. The Quad Cities might have “inched up” to 0.4504 in 2018, but that was actually lower than any of the major metro areas within Illinois.
It’s worth noting that Illinois was the nation in miniature on the Gini index. The U.S. Gini index went from 0.482 in 2017 to 0.485 in 2018, while Illinois’s went from 0.4818 to 0.4852 — highest in the Midwest. By comparison, California stood at 0.4912, with New York highest at 0.513, although that was actually down from the 0.5157 the Empire State posted in 2017.
Illinois cities showed remarkable consistency. Decatur posted a 0.465 Gini index in 2018, and Bloomington-Normal a 0.4749. Chicago was at 0.4853, but even higher than that were Carbondale-Marion, at 0.4879, and Champaign-Urbana, at 0.4933. Still, no metro area topped the 0.5 barrier.
That wasn’t true of congressional districts. In the 14th, west of Chicago and home to U.S. Rep. Lauren Underwood, the Gini index was 0.4097, lowest of the state’s 18 districts, and the 14th, home of U.S. Rep. Raja Krishnamoorthi in the northwest Chicago suburbs, had a 0.4103.
Yet the 5th and 9th districts, stretching from the city into the suburbs, both had Gini indices above 0.5, as did the 10th in the far-north suburbs. The 7th District, compromising vast stretches of Chicago’s South and West sides and the near-west suburbs and represented by U.S. Rep. Danny Davis, had the highest Gini index in the state at 0.5636. That only made sense, especially with Chicago’s booming West Loop sandwiched in the middle.
Hidden within this data are other issues. The state’s rural congressional districts outside Chicago and its suburbs all had Gini indices hovering just above or below 0.45. That reflects relative balance within those farm districts, but then the state’s 0.4852 Gini index has to be coming from somewhere, most likely in the divide between urban and rural regions — which University of Chicago economist Allen Sanderson has called one of the most pressing political issues facing the state.
No one gets that sort of meaningful data from a basic stock index or unemployment rate.
So meet the Gini index, a measure of income inequality and sort of the on-base-plus-slugging percentage of economic statistics. It tells us where problems lie and where work really needs to be done.
Let’s get to it.