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Gap Between America’s Rich and Poor Worsened in Past Two Decades |
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The gap between the wealthiest and the rest of us grew significantly during the past two decades, leaving lower- and middle-class families at more risk during the current economic downturn/recession confronting the nation, a new study by the Economic Policy Institute (EPI) and Center on Budget and Policy Priorities (CBPP) finds.
The report says that lower- and middle-income families are much more vulnerable to rough economic times and income loss because they have higher debt loads and are seeing the value of their homes plummet while wealthier families are likely to have savings and other assets to ride out the storm.
In nearly every state in the nation, the rich continue to get richer, the middle class barely treads water and the poor get poorer.
The analysis, Pulling Apart: A State-by-State Analysis of Income Trends, measured and compared income trends among the highest- middle- and lowest-income families from the late 1980s, the late 1990s and the mid 2000s. It found income inequality—now at record levels—began growing more quickly in the 1980s, slowed somewhat in the 1990s and accelerated after 2001, the beginning of the first Bush recession.
The report notes that despite recent years of economic prosperity, lower- and middle-income families have reaped few of the gains. Average incomes for those in the bottom fifth of the income scale fell by 2.5 percent and rose just 1.3 percent for those in the middle fifth. Who did well? The top fifth saw their incomes rise 9 percent.
Jared Bernstein, EPI senior economist and co-author of the report, says:
Before the recent downturn hit, our economy was generating solid income gains. The problem was that high levels of inequality meant these gains failed to reach middle- and low-income families, whose living standards stagnated or even declined. As we head into an economic downturn, these families are ill prepared to weather the storm.
Incomes were calculated using U.S. Census Bureau figures and adjusted for inflation and other factors.
Families in the top fifth have an annual average income of $132,131, about two-and-a-half times more than middle-income families ($50,434) and nearly seven-and-a-half times the $18,116 families in the bottom fifth earn a year.
The current disparity is greater today than during the 1980s, when income for the wealthiest was slightly more than twice that of middle-class families and six times that of the lowest-income families.
Elizabeth McNichol, a senior fellow at CBPP and report co-author, says:
Raising inequality raises basic issue of fairness and harms the nation’s economy and political system. It dampens economic prosperity as incomes stagnant for tens of millions of average Americans and it threatens to widen the nation’s political cleavages, generating more cynicism about political institutions.
Growing income inequality is due to both economic trends and government policies, the report says.
Wages and salaries grew faster for those at the top of the income scale. Various factors explain growing wage inequality including long periods of higher-than-average unemployment, globalization, the shift from manufacturing jobs to low-wage service jobs, immigration, the weakening of unions, and the declining value of the minimum wage.
Those in the highest reaches of the income scale also reaped the benefits of the growth in the stock market through income from interest, dividends, and the sale of assets such as stocks.
States with the biggest increases in income disparities since the late 1980s are Connecticut, Rhode Island, Massachusetts, Alabama, New York, Kentucky, Maryland, Kansas, New Jersey and Washington State.
The states with the largest gaps between high-income and middle-income families are Oklahoma, Mississippi, California, New York, Texas, New Mexico, Florida, Arizona, Louisiana and Virginia.
With the Bush administration resisting any new efforts to assist families struggling with the mortgage and foreclosure crisis, rising unemployment, soaring fuel prices and other economic dangers, Pulling Apart offers several ways states can address income inequality.
Specifically, states can close the budget gaps that the downturn has caused without widening income gaps. For example, states can avoid raising sales taxes and fees that hit low-income families hardest, and rely more on income taxes. Or, they can enact or expand tax credits to low-income taxpayers to offset the impact of regressive tax increases.
State policy makers can also bolster the safety net in order to improve economic opportunity for those struggling to make ends meet. States can:
Update unemployment insurance systems to better reflect today’s workforce.
Extend the amount of time workers receive benefits during an economic downturn.
Raise the state minimum wage and index it for inflation.
Maintain or improve support services such as transportation, child care and health coverage.
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What bothers me is that the number of people who have to take emergency “loans” from their 401K’s just to try and make ends meet now is rising fast. They are taking from their future to survive the present. With Social Security and Medicare’s futures getting iffier and iffier, (thanks to some stupid moves by past and current administrations) they are losing the only safety net they have for retirement and later years. Every time I fill the gas tank , or buy groceries, or see property taxes based on the inflated value of property, I really wonder how people can survive much longer.
Then you see the news about the megamillion “bonuses” and golden parachutes for rotten CEOs who have tried to make the bottom lines of their company look better by dumping jobs and benefits for working people. If they fail, they still get their “bonuses” and walk away with millions. Isn’t this a robbery without a mask and gun? Or embezzlement of company funds? No one in the Bush administration seems to think there is anything wrong with this scenario, and in fact, defend it by saying that the CEOs have contracts with the company that protect their financial interests in these arrangements, even in a bankruptcy. Why should they be protected, since the responsibility of running the company efficiently and financially solvent is their job? If they fail, or sell out to another company, why should they be rewarded? They reap the good and workers get the shaft…..They have no shame and feel that they have “earned” everything. How about “earning” some prison time for themselves?
I think the AFL-CIO is starting to understand why it is necessary to send illegal aliens back to their country of origin. In 1986 president Reagan gave amnesty to 4,000,000 illegal aliens, now there are at least 20 million in the U.S. undercuting wages for the average American worker and sucking up any social programs that the unions were primarily responsible for. I’m sure most union members agree with me, but it takes awhile till the information to get to the top. Hang on it’s going to be a rocky road and if we don’t do something quick, we’ll all be going down together.
to the Tinman:
The gap between the wealthy and poor is the work of undocumented immigrants?
The nation is run by Corporations, they control the oil, the food we eat, the insurance we purchase and then given limits to coverage, they tell us they no longer want to pay for our pensions, health care, ship the work overseas and move corporate hdqtrs. overseas, don’t pay taxes, yet get “govt. assistance” to stay afloat, while 47 million Americans don’t have health care, millions don’t eat at night, have no roof over their heads and you blame undocumented immigrants who you claim our undercutting our wages? When is the last time you applied for a job as a back breaking crop picker and got turned down because you were overqualified, how many landscape job bosses turned you down?
These people take these jobs because lazy Americans don’t want them and Americans feel this is beneath them to do!
What social programs are these people sucking up?
Your pResident has cut funding for many to fund his war game in Iraq! He is spending more of yours, mine and everybody elses tax dollars for killing innocent people! We invaded their country! The immigrants coming over our just trying to find work, pay their share of taxes, and survive!
It IS a rocky road, blame it on conservatives who are in bed with Corporate America, to those NOT in unions to make us stronger, to unions who are in bed with the employers, and to those union members who plan to vote for John McCain!
“I think the AFL-CIO is starting to understand why it is necessary to send illegal aliens back to their country of origin.”
This statemnt supporting the wholesale deportation of “illegal aliens” (undocumented workers that are mainly from Mexico), misses entirely the question: WHY ARE MILLIONS OF WORKING PEOPLE SO DESPERATELY TRYING TO LEAVE MEXICO? WHAT IS THE CAUSE?
The majority of people in Mexico are in desperate poverty and have been for generations primarily due to U.S. foreign policy favoring U.S. corporate exploitation in Mexico. The local ruling elite makes immense profits by working with U.S. corporations to exploit their own people to maximize corporate profit and their own wealth.
[The world's second most wealthiest billionaire (next to Warren Buffet) is Mexico's #2 Carlos Slim Helu & family. "Slim made his first fortune in 1990 when he bought fixed line operator Telefonos de Mexico (Telmex) in a privatization."
Quote from Forbes.com http://www.forbes.com/lists/2008/10/billionaires08_Carlos-Slim-Helu-family_WYDJ.html
[Treaties such as NAFTA and U.S. foreign policy continually works to privatize essential social services originally created by governments to create income to aid the poorest. Privatization destroys this wealth distribution function, turns the public utility and essential social institution into a profit-making business maing a few individuals super rich and impoverish the rest of society.]
The most recent wave of Mexican immigrants was cause by the dumping of subsidized corn surpluses from the U.S. into Mexico, undercutting and destroying about 1 million local peasant farmers. These farmers and peasanta were driven off the land, into the cities, and finally “al norte” to the U.S. The alternative for these people is simple: emigrate or die.
Why not talk about ending NAFTA? The U.S. should stop subsidizing U.S. agriculture (corn in particular), and pressure Mexico to raise living standards, wages, teacher salaries, etc.(something we should be doing in the U.S. as well!)
The barbaric response of the Bush gang to stop the massive immigration has been to build walls (billions of dollars to Halliburton etc.) and to conduct police-state 2am raids terrorising families and children, often rounding up U.S. citizens of Mexican origin in the process. Breaking up of families, leaving children in the U.S., creating several concentration camps, etc.
There are domestic corporations who need desperately need “slave wage” farm and slaughter house workers. But local governments are unwilling to supply these impoverished workers with essential health care, education,etc. that are essential human rights needed for human survival.
The “immigration problem” is a global problem as millions of people worldwide are forced out of their countries by desperate conditions caused by global capitalism and profiteering local elites that are out to plunder local economies.
Corporations worldwide consider humanity simply as “human resources” useful only when immediately profitable in securing profit. When humanity gets in the way of securing diamonds, precious metals, oil etc. they are simply destroyed. The wars for oil and profit in the Middle East are a ghastly example of the war of genocide against the unprofitable that is taking place throughtout the world AND IN THE UNITED STATES.
The victims of Katrina suffered not just because they were black, but essentially because they were poor. Corporate capitalism simply cannot make money from poor people. Nor can they any more provide jobs for poor and uneducated and unskilled jobs to American workers. (These jobs have gone over seas to China, etc. Or workers are actually IMPORTED to work at impoverished wages American workers cannot possibly accept.)
The ever deepening economic crises facing working people today in the U.S.
must be met with a new perspective based on an understaning that global capitalism is now the enemy of working people throughout the world.
Here in the U.S. the labor movement, armed with a new understanding of what we are facing, must develop a new mass media to educate working people to understand the many crises that are destroying us all. We need a new political party, a people’s peace party, to represent our economic interests independent of the corporate controlled Democratic and Republican Parties.
Anything less that this full mobilization against corporate capitalism will be ineffective and just further delude working people that some simplistic reform will take care of everything.
The income gap between the rich and the poor today is the result of the switch of welfare from the poor to the rich. That switch has begun after the passage of welfare reform legislation passed in the mid-1990. At that time, there were few protests because poverty was on the decline. Everyone who wanted to work could find a job easily!
To cut the story short, today, we have a government which provides welfare to wealthy individuals, to corporations like Wal-Mart, to investment firms through tax cuts, bailouts, and lax labor standards enforcements.
Many Union members have been laid off or worse, their factories have been closed. Others have taken massive pay cuts. Some have received new contracts with penny and nickel raises while the cost of everything around us has gone up in whole dollars!
Either cut prices to reflect our 1985 pay or give us a raise!
$150,000 for a home. $20,000 for a car. Groceries, utilities, insurance for the life, home, car and health. Clothing and books for the kids. Maintenance on everything! Savings for an emergency fund, college fund and retirement.
And as if by magic, you’re supposed to go to work for $8 an hour!