The gap between rich and poor in the United States is the largest it’s been since the Census Bureau started monitoring income inequality more than 50 years ago. Yet, the nation’s poverty and unemployment rates are at all-time lows. On top of that, the U.S. is in the midst of the longest economic expansion in American history. A booming economy does not appear to lessen economic inequality.
When asked about the inequitable distribution of wealth generated by this economic expansion, William M. Rodgers III, a professor and chief economist at the Heldrich Center for Workforce Development at Rutgers University, told NPR that the decline of labor unions, increasingly global competition for jobs as well as tax policies that benefit businesses and higher-income families likely all contribute to the concentration of wealth in society’s upper crust.
Income inequality is most pronounced in affluent regions on the coasts such as New York, Connecticut, California and Washington, D.C., and places struggling with poverty, such as Puerto Rico and Louisiana. The states with the most economic parity were Utah, Alaska and Iowa. The data appears in a report released by the Census Bureau in September.
The top 1 percent of earners increased their income by approximately 242 percent compared with an average of 46 percent for middle-level earners between 1979 and 2015. The gap is growing widest between the very wealthy and middle-income Americans.
Worldwide, about 70 percent of countries have more equal income distribution than the United States. That’s bad news because countries with more equal incomes tend to have stronger economic growth than countries with unequal incomes.
Economists say one of the reasons for the widening income gap is the stagnant federal minimum wage, which has remained parked at $7.25 for a decade while wages for executives have skyrocketed.
There is no quick fix for this economic fissure, but studies show that early education programs such as universal pre-K, along with access to affordable higher education could prepare youth for jobs of the future and help boost household income for Americans on the wrong side of the gap.
What might be surprising is that this isn’t the same thing as reducing income inequality. The top 1 percent is so much richer than everyone else that bettering the circumstances for those at the bottom won’t make much of a statistical dent. That’s because improving access to education won’t bring down the wages of those at the top of the pyramid, Melissa Kearney, a senior fellow at the Brookings Institution, told The Atlantic.
Her point is that poverty and inequality are two different problems and creating better access to education addresses poverty, not income inequality. Only policies like tax reform aimed at reducing the concentration of wealth in the top 1 percent can hope to make a dent when it comes to income inequality.