During the recession of 2007 through 2009, households at all income levels, including the wealthiest, saw declines in real income due to widespread job losses and the loss of realized capital gains. But the incomes of the richest households have begun to grow again while the incomes of those at the bottom and middle continue to stagnate and wide gaps remain between high-income households and poor and middle-income households. [...]
• In the United States as a whole, the poorest fifth of households had an average income of $20,510, while the top fifth had an average income of $164,490—eight times as much. In 15 states, this top-to-bottom ratio exceeded 8.0. In the late 1970s, in contrast, no state had a top-to-bottom ratio exceeding 8.0.
• The average income of the top 5 percent of households was 13.3 times the average income of the bottom fifth. The states with the largest such gaps were Arizona, New Mexico, California, Georgia, and New York, where the ratio exceeded 15.0.[...]
Similarly, income gaps between high- and middle-income households remain large.
Nationally, the average income of the richest fifth of households was 2.7 times that of the middle fifth.
• The five states with the largest such gaps are New Mexico, California, Georgia, Mississippi, and Arizona. [...]
• In these 11 large states, the average income of the top 5 percent rose between the late 1970s and mid-2000s by more than $100,000, after adjusting for inflation . (In New Jersey and Massachusetts, the increase exceeded $200,000.) By contrast, the largest increase in average income for the bottom fifth of households in these states was only $5,620. In New York, for example, average incomes grew by $194,000 among the top 5 percent of households but by less than $250 among the bottom fifth of households.
The report's authors also confirm what we know about why this inequality is on the rise: stagnant wages (or only modest growth) on the bottom and middle segments of the scale and big leaps for those on top; high levels of long-term unemployment; government policies that include trade liberalization and deregulation; off-shoring of jobs; failure to maintain the value of the minimum wage; the increase among top earners of investment income and dividends from higher corporate profits.
What should be done about this? CBPP recommends raising and indexing the minimum wage, improving the unemployment insurance system that some states have recently weakened, making state tax systems more progressive instead of more regressive as many started doing in the 1990s, strengthening the safety net.
All these are good ideas as far as they go. But in the aggregate they require a coordinated progressive push in an era when the Right is spending much of its time calculating how to dismantle and otherwise ruin the programs of the New Deal and Great Society. When we should be innovating new programs, we're stuck fighting to hang onto the still-needed old ones, and some of the elected folks who should be on our team ain't. In fact, we're not getting much fresh conversation on the subject at all.
As Beverly Gage wrote earlier this year, a century ago there wasn't tepidness in discussing income inequality. Indeed, a Republican president in his last months in office established the Commission on Industrial Relations to investigate the conditions of labor throughout the country. Motivated partly by fear that revolt might arise from the inequalities, the CIR's report, when issued in 1916, answered a resounding "No!" to the question “Have the workers received a fair share of the enormous increase in wealth which has taken place in this country?"
Ultimately, the report providing the foundation for two things: an inheritance tax and support for union organizing. As Gage notes, we're going the opposite direction these days.
But today’s lawmakers could do worse than to follow the Industrial Commission’s broader example of democratic debate. The national conversation about inequality is already underway. The least they could do is listen.Indeed. First step? Getting those who say they are on our team to open their ears.