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Res earc her Published by CQ Press, a Division of SAGE CQ www.cqresearcher.com Income Inequality Is the gap between rich and poor getting wider? recent Census Bureau report brought a flurry of press attention to the widening gap between rich and poor. The gap in New York City is widening A — and is now bigger than in India, noted the New York Daily News. Indeed, most analysts agree incomes of the very rich have been pulling away from all others in recent decades. The average pretax income for the bottom 90 percent of house - holds is almost $900 below what it was in 1979, while the average pretax income for the top 1 percent is $700,000 higher. Having a A homeless woman asks for money amid the affluence of New York City, where the gap between rich and poor wealthy class with very large amounts of disposable money is is said to be greater than in India. valuable — not harmful — to society, some argue. But others say the recent winner-take-all economy helped trigger the massive re - cession, leaving most people with stagnant incomes. Meanwhile, I Republicans argue that Bush-era tax cuts on top earnings should N THIS REPORT S be extended to stimulate the economy, while many Democrats THE ISSUES ....................991 I back extensions only for lower earners. BACKGROUND ................998 D CHRONOLOGY ................999 E CURRENT SITUATION ......1004 CQ Researcher • Dec. 3, 2010 • www.cqresearcher.com AT ISSUE ......................1005 Volume 20, Number 42 • Pages 989-1012 OUTLOOK ....................1007 RECIPIENT OF SOCIETY OF PROFESSIONAL JOURNALISTS AWARD FOR EXCELLENCE N AMERICAN BAR ASSOCIATION SILVER GAVEL AWARD BIBLIOGRAPHY ..............1010 THE NEXT STEP ............1011 INCOME INEQUALITY CQ Re search er Dec. 3, 2010 THE ISSUES SIDEBARS AND GRAPHICS Volume 20, Number 42 • Is income inequality Richest Americans Have MANAGING EDITOR: Thomas J. Colin [email protected] 991 growing in the United 992 Biggest Share of Income States? The rich control 18 percent ASSISTANT MANAGING EDITORS: Kathy Koch of Americans’ total income. [email protected] • Does increasing econom - Thomas J. Billitteri, [email protected] ic inequality harm society? • Should the government 993 Tax Rates Drop for ASSOCIATE EDITOR: Kenneth Jost act to limit inequality? Highest Earners STAFF WRITERS: Marcia Clemmitt, Peter Katel Taxes for richest Americans dropped to 17 percent. CONTRIBUTING WRITERS: Roland Flamini, BACKGROUND Sarah Glazer, Alan Greenblatt, Reed Karaim, Barbara Mantel, Patrick Marshall, All That Glitters 996 Rich Got Richer While Tom Price, Jennifer Weeks 998 Corruption and income in - Poor Lagged DESIGN /P RODUCTION EDITOR: Olu B. Davis equality reached new America’s top 1 percent earned an average of $1.3 million in ASSISTANT EDITOR: Darrell Dela Rosa heights during the Gilded 2007. Age. FACT-CHECKING: Eugene J. Gabler, 997 Bleak Futures Await Those Michelle Harris Inequality Rises with Limited Education INTERN: Maggie Clark 1000 An increase starting in “You need to target kids around 1980 took econo - who are coming out of mists by surprise. prison for the first time.” Winners Take All Chronology 1004 Some scholars blame the 999 Key events since 1868. A Division of SAGE competitive U.S. economy PRESIDENT AND PUBLISHER: for income disparities. Is Upward Mobility Still John A. Jenkins 1000 Possible? Research suggests it’s becom - DIRECTOR, REFERENCE SOLUTIONS: CURRENT SITUATION ing more difficult. Todd Baldwin Policies Debated 1002 Courts Open Door to Big- Copyright © 2010 CQ Press, a Division of SAGE. 1004 Income inequality simmers Money Political Donors SAGE reserves all copyright and other rights herein, Do the rich wield more po - unless pre vi ous ly spec i fied in writing. No part of this beneath many of the litical power than the poor? hottest election-year publication may be reproduced electronically or economic debates. otherwise, without prior written permission. Un - 1005 At Issue au tho rized re pro duc tion or trans mis sion of SAGE copy - Should tax cuts on high right ed material is a violation of federal law car ry ing Ambivalent Public? earnings be extended? 1006 Polls suggest there is sup - civil fines of up to $100,000. port for propping up CQ Press is a registered trademark of Congressional lower-income people. FOR FURTHER RESEARCH Quarterly Inc. CQ Researcher (ISSN 1056-2036) is printed on acid- For More Information 1009 free paper. Pub lished weekly, except; (Jan. wk. 1) OUTLOOK Organizations to contact. (May wk. 4) (July wks. 1, 2) (Aug. wks. 2, 3) (Nov. wk. 4) and (Dec. wks. 4, 5), by CQ Press, a division Progressive Era Redux? Bibliography of SAGE Publications. Annual full-service subscriptions 1010 Selected sources used. 1007 In the early 20th century, start at $803. For pricing, call 1-800-834-9020. To pur - the nation came together to chase a CQ Researcher report in print or electronic The Next Step rein in rampant inequality. 1011 Additional articles . format (PDF), visit www. cqpress.com or call 866-427- 7737. Single reports start at $15. Bulk purchase dis - Citing CQ Researcher counts and electronic-rights licensing are also avail - 1011 Sample bibliography formats. able. Pe ri od i cals post age paid at Wash ing ton, D.C., and ad di tion al mailing of fic es. POST MAST ER: Send ad dress chang es to CQ Re search er , 2300 N St., N.W., Suite 800, Wash ing ton, DC 20037. Cover: Getty Images/Spencer Platt 990 CQ Researcher Income Inequality BY MARCIA CLEMMITT Citigroup, the financial - THE ISSUES services conglomerate, con - curs. As of 2006, “the richest Census Bureau report 10 percent of Americans ac - released in September count for 43 percent of in - A brought a brief flurry come, and 57 percent of net of press attention to rising in - worth,” based on Federal Re - come inequality in America. serve data, says a Citigroup “The gap between rich and analysis. The United States, poor in New York is getting Canada, Australia and the worse,” noted the New York United Kingdom “have seen Daily News. In 2009, 18.7 per - the rich take an increasing share cent of New York City’s pop - of income and wealth over the ulation lived in poverty, and last 20 years, to the extent that the median household income the rich now dominate income, fell to $50,033, from $51,116 wealth and spending.” The in 2008, even as the combined distribution of wealth — the worth of the city’s 58 richest value of one’s assets such as w e residents rose by $19 billion. N real estate and stocks, minus c M As a result, the earnings gap one’s debts — “continues to be d i among New Yorkers “is now v even more aggressively skewed” a 4 larger than the gap in India D than income, it said . / s and the African nation of e But having an economic g a Burkina Faso,” Joel Berg, ex - m class with very large amounts I y ecutive director of the New t of disposable money is valu - t e York City Coalition Against G able — not harmful — to so - Hunger, told the paper. 1 A Ferrari complements the conspicuous consumption on ciety, some argue. That’s be - The finding that income display along Rodeo Drive in Beverly Hills, Calif. Experts cause only the very richest inequality is increasing is agree the rich are pulling away from other Americans, but not all think it’s a problem. Some say investments by can make the investments vital generally accepted by ana - the wealthy stimulate the economy by building to building businesses and dri - lysts across the political spec - businesses and driving demand for labor, but ving demand for labor, wrote trum, with the exception of others say the result has been a severe recession and George Reisman, a professor libertarian commentators, stagnant incomes for most Americans. emeritus of economics at who argue that no existing data set Center on Budget and Policy Priori - Pepperdine University, in Malibu, Calif. accurately depicts how money is dis - ties (CBPP) a liberal-leaning think “In a market economy, the wealth of tributed. What provokes debate in all tank. 2 the rich . is overwhelmingly invest - quarters, however, is whether steep After-tax incomes also have risen ed in means of production, that is, in income inequality in an industrialized more for the highest earners, says CBPP. factories, machinery and equipment, nation is something to worry about and, From 1979 to 2007, the average after- farms, mines, stores, and the like.” 5 if it is, what policies would address it tax income of the top 1 percent of Other analysts question that propo - effectively. earners “nearly quadrupled, from sition. “We’ve had a natural experi - The main story is that the very rich $347,000 to over $1.3 million,” a 281- ment recently with what can happen have been pulling away from all others percent increase, based on data from to the economy” when the richest peo - in income over the past three decades, the nonpartisan Congressional Budget ple make extraordinary gains com - most analysts agree. Office. Over the same period, the after - pared to others, says Yale University “The average pretax income for the tax income of the middle fifth of the political scientist Jacob S. Hacker. “We’ve bottom 90 percent of households is population rose from $44,100 to had a winner-takes-all economy for a almost $900 below what it was in $55,300, or 25 percent, while the bot - while, and it’s provided limited bene - 1979, while the average pretax income tom fifth saw its average after-tax in - fits,” leaving the country with a severe for the top 1 percent is over $700,000 come grow from $15,300 to $17,600, recession and virtually stagnant in - above its 1979 level,” according to the or 16 percent.
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