Friday, November 16, 2012

Growth Of Income Inequality In The U.S.

The chart above shows the inequality of income in the United States between the top 20% of income earners and the bottom 20% of income earners. Note that in at least 15 states the top 20% earners more than eight times as much as the bottom 20% (an average of $164,490 to an average of $20,510 per year). And more than half of all the states have a ration higher than seven to one.

Some of you may be thinking that there has always been a difference in income between the top 20% and the bottom 20% -- and you would be right. But the difference is much more stark now than it was just a few decades ago. For instance, in the 1970's, there was not a single state that had a situation where the average of the top 20% was eight times as much as the average of the bottom 20%. Of course, that was a time when unions were strong and workers were allowed to share in the rise in productivity through higher wages. Everyone shared in the economic pie.

That is no longer true. Since the imposition of "trickle-down" economic theory, corporate greed has been held out to be a good thing. Productivity gains are no longer shared with workers, but hogged by executives for ever-growing salaries and bonuses. Union power has diminished and wages for workers have been stagnant for the last three decades. And this has been forced upon workers through the threat and realization of outsourcing American jobs to foreign countries. The government played its part in this redistribution of income to the wealthy by allowing the minimum wage to fall far below the buying power it had in 1970, and by giving massive tax cuts to the richest Americans.

In the last 30 years, the top 20% has seen its income grow by $76,500 (a gain of $2,550 each year of that 30 year period). But the bottom 20% has only seen a gain of $1,330 (or about $44.33 a year -- far below the rate of inflation). This means the top 20% are doing better than they were in the 1970's, while the bottom 20% are doing worse (with their buying power actually significantly below what it was 30 years ago).

This is a recipe for disaster, and it must be changed. We are already a country with greater inequality of income and wealth than many third-world countries, and that inequality is still growing larger. The Republicans want to give the rich new tax cuts, which would only make the wealth and income gap grow faster. That is economic insanity.

What is needed is just the opposite. The country needs to tax the rich more -- and use that money to give the poor and disadvantaged a leg up (through education, new jobs, decent food and housing, help with college funding, etc.). And union power must be restored and enhanced, so that workers once again share in the rise of productivity. And outsourcing must be stopped (by removing tax benefits for doing it and instituting tax penalties for it).

Right-wingers would scream in horror that is "income redistribution". Big deal! Income is always being redistributed in this country. For the last three decades, too much has been redistributed to the already rich people and corporations. It is time for a fairer distribution of the nation's economic pie.

NOTE -- this post has been about the inequality between the top and bottom quintiles in America. If you look at the incomes of the top 10%, 5%, or 1%, it gets far worse.

1 comment:

  1. I still think that a significant cause of income inequality is caused by too many people sitting around waiting for the government to do something for them. If workers want to unionize, instead of sitting around waiting for government to pass laws, get off your asses, grab your axe handles and man the gates. The workers in Poland took on the entire Soviet Army, and our workers won't even take on the local police department.

    The oligarchy is not going to give you anything; what you want from them you will have to take - by force or by fear. Occupy Wall Street? Don't make me laugh. They are not afraid of guitars and barbecue grills. Bring a similar group armed with axe handles and pitchforks and you will see different results.

    The government is not going to change until the government is afraid of us, physically afraid for their lives and fortunes.


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