Thursday, April 29, 2010

Parade, April 11, 2010, Sunday


April 11, 2010, Sunday


Income Gap Grows During Recession

Even as the economy shrank last year, the income gap—the divide between the country’s richest and poorest citizens—kept growing. In 1978, CEOs at the largest U.S. companies earned 35 times as much as the average worker. Today, that figure is more than 300:1, according to the Harvard Business Review.

In 2008, the U.S. Census Bureau reported that income inequality had reached a modern high, with the wealthiest 10% of the population earning 11.4 times as much as the poorest 10%. Research by Kevin Hallock, a professor at Cornell University, indicates that the trend persists: “From 1979 to 2009, after adjusting for inflation, the highest earners in the U.S. saw dramatic growth in their earnings while the lowest earners now make less than they did 30 years ago.”

Income inequality tends to be high in places with large populations of the very rich, like southern Connecticut, or the very poor, like Brownsville, Tex. It is also high in cities like New York, Miami, and Chicago, where middle-class people have fled to the suburbs over the years.

A gap between society’s rich and poor can have ugly consequences. Countries with greater income inequality have higher rates of teen pregnancy, infant mortality, obesity, mental illness, drug use, imprisonment, and homicide than countries where wealth is more evenly distributed, according to research by epidemiologists Richard Wilkinson and Kate Pickett.

In the U.S., measures like the progressive income tax, Medicaid, and welfare are used to address income inequality, but some economists and advocates say that we should go further. Nations like Austria, Belgium, and the Netherlands spend 7% to 8% of national income on social services for working-age people, compared to 2% in the U.S.

That figure is unlikely to change, however, as polls show that Americans believe people get ahead in life by virtue of their own efforts. “If you think the process is just, you might think the outcome is just, even though some people are homeless and others are very comfortable,” says Gary Burtless of the Brookings Institution.

— Rebecca Webber