Study Finds Rich-Poor Income Gap Growing

[Muscletang]

SOURCE

ALBANY, N.Y. - The disparity between rich and poor is growing in America as the federal minimum wage has remained flat for years, union membership has declined and industries have faced global competition, according to a study released Thursday.

The report by the Center on Budget and Policy Priorities and the Economic Policy Institute, both liberal-leaning think tanks, found the incomes of the poorest 20 percent of families nationally grew by an average of $2,660, or 19 percent, over the past 20 years. Meanwhile, the incomes of the richest fifth of families grew by $45,100, or nearly 59 percent, the study by the Washington-based groups said.

Families in the middle fifth saw their incomes rise 28 percent, or $10,218.

The figures, based on U.S. Census data, compare the average growth from 1980-82 to 2001-03, after adjusting for inflation.

The poorest one-fifth of families, the report said, had an average income of $16,780 from 2000-03, while the top fifth of families had an average income of $122,150 — more than seven times as much. Middle-income families' average income was $46,875.

Trudi Renwick, an economist with the union-backed Fiscal Policy Institute in New York, said globalization, the decline of manufacturing jobs, the expansion of low-wage service jobs, immigration and the weakening of unions have hurt those on the lower end of the economic scale.

In 38 states, the incomes of high-income families grew by a higher percentage than those of the lowest-income families; Alaska was the only state in which the reverse was true. The 11 states where the high and low incomes increased at about the same rate were mostly in the West and Midwest.

The greatest disparity between rich and poor was in New York, where the top 20 percent of wage earners had average incomes 8.1 times larger than the poorest 20 percent in the early 2000s. Texas had only a slightly smaller gap; Wyoming had the smallest disparity at a 5.2 to 1 ratio.

Matthew Maguire, a spokesman for the Business Council of New York state, said the money earned by the state's wealthiest residents is "something that everybody who cares about New York should be pleased about."

"New York's wealthy pay huge sums in taxes and those wealthy people and their taxes make it possible for New York to provide the nation's most generous social service programs to less fortunate New Yorkers," he said. "It also reflects the fact the state is a magnet for immigrants who come from the four corners of the globe to a state they see as symbol of economic activity."

Renwick said the government "needs to continue its commitment to correcting the natural outcomes of the marketplace" by raising the minimum wage with inflation and by tax policies like the earned income tax credit.

Renwick also suggested that governments, when giving tax breaks to companies, insist those companies provide jobs that pay higher wages.

A fixable problem or something that could cause us problems down the road?

[thrasher]

I know the solution...more tax cuts for the super rich and more tax hikes for the poor and middle class. That way, the poor will be more motivated to get off their lazy asses and quit collecting welfare, and the rich get to keep more of their money that they have rightfully earned, yah.

[tenguzero]

Unfortunately, this is one of those issues where everyone has an answer, and all of them are different. I think this is clearly going to effect us down the road (as it has been at an increasing rate for the last 2 or 3 decades.) It's such a multi-tiered issue though, that it's hard to tell which solution might actually work best. Is it related to dropout rates or general education levels? Is it the result of globalization and an increasing technology-based world that just isn't for everyone? (anyone who works in a tech-support position will tell you there is an incredible percentage of people who really know NOTHING about computers and the like, despite the fact that our society would literal collapse without them at this point.) Are companies giving the stiff one to their employees?

The questions are many indeed. Personally, I feel it has less to do with any educational related problems (as the dropout rate has continually declined since the 70's, with each newer generation naturally becoming more technically-adept) and more to do with the new business environment. Now, part of this problem is just a result of the economics of today, but a part of it is something the companies could EASILY control -- if one of the key components of the problem didn't start at the top. It's difficult NOT to come across articles in the news exposing just how much top executives in companies actually make. How is it that these companies can get away with cutting benefits and keeping wages low, while the higher-ups make MILLIONS of dollars a year? How come we're seeing more and more instances of CEOs literally failing UP -- leaving companies in turmoil, but grossing multi-million dollar severance packages and pensions, only to take that capital and goon to start another company? Businesses in this country are seeing record profits right now, but their employees just aren't being compensated fairly. Look at any economic trend over the past fifty or so years, and you'll see that employee pay rate just hasn't kept up with cost of living hikes. Admittedly, people are spending more on big houses and flashy gizmos than ever before, but isn't this a reason why companies are making more money, and hence seeing greater profits? How come this isn't passed on to the worker?

I think too much of today's economy (and the companies that are part of it) are more than happy to function around utter BS like Trickle-down Economics policies and whatnot, because it means the big-wigs are going to make a lot more money. And what if your company ISN'T doing that well? Why not cook-the-books a bit -- as long as you don't go overboard chances are good you'll get away with it.

There's plenty of money to go around today, it's just that the money is being siphoned off into politicians pet-spending projects, a war halfway around the world, a costly and ridiculously mis-directed "war on drugs", CEO mega-paychecks, etc. We've all read the stories of Homeland Security funds going to towns who don't need the money and businesses that have nothing to do with security. Massive funds are being spent on a population of illegal immigrants (I'm sorry Mr. President -- "Temporary Guest Workers" ) that are here because our minimum wage jobs suit them nicely when spent in their country, and our employers will turn a blind eye to their status, because it's cheap labor -- which means more $$ in the pockets of the head honchos. We hear the statistics of how much it actually costs just to keep otherwise harmless low-level drug offenders incarcerated. We continue to throw the majority of our energy spending behind an outdated and increasingly disputed fossil fuel, when we could be spending the money on speeding up the entry of affordable technology to the market that could allow more consumers to produce their own energy.

To put it bluntly, our country's leaders SUCK at managing money, our country's employers SUCK at providing for their employees, many of our towns SUCK at correctly appropriating funds for schooling and social programs, and we consumers SUCK at rationing our spending.

At least CEOs, politicians and lobbyists, credit card companies, pharmaceuticals, and illegal immigrants are happy.

[TexasF355F1]

The government needs to quit handing out money for free. Instead spend it on sending people to poor areas to explain to people about hard work and doing something for themselves and not expecting something for nothing. But Bill Cosby has been quit vocal about this, however his own race think he's white now.

The rich will always continue to get richer b/c of investments, taking risks into new business ideas and because they are able to save a dollar.

My dad worked with a guy who was of a poorer background, but was a hard worker(this was at least 30+ years ago). The guys car broke down keeping him from getting to work. My dad bought him a car (which he didn't technicnally have the money for himself) and the guy paid him back in payments. Once the car was paid off my dad explained to him and tried to teach him to save money.

The guy just couldn't do it. It basically taught my dad that savings a mindset and it goes along with the adage "you can't teach and old dog new tricks". Since then my dad has tried with others to get them to understand, my own cousin for that matter, and it doesn't work. We've given him love and support even when he really didn't deserve it. He just keeps getting thrown in jail (he's now gonna be there for a good while again). For some people there is just no hope. They have to want to help themselves before they can succeed.

[clawhammer]

One thing that this study does not take into effect is mobility. Somoene who was in the bottom 20% 20 years ago could very easily be in the top 20% today.

Also, if you look at minimum wage workers, most are young, under 25, and that's the way it should be.

There are plenty of opportunities in this country for growth, it just seems to me like the bottom 20% didn't take advantage of it as well as the top 20% did.

Raising the minimum wage is NOT the answer. All it will do is drive up inflation. We really need to get rid of the minimum wage altogether.

[AlmostStock]

Originally Posted by tenguzero

At least CEOs, politicians and lobbyists, credit card companies, pharmaceuticals, and illegal immigrants are happy.

Don't forget the oil companies!

I don't think that government handouts to the poor, or minimum wage issues, are driving the growing economic disparity as much as government handouts to the rich are. (call it with you want, but when tax and other policies are set in place which favor the biggest $$$ political contributors, that's what it is)

It's the already rich helping the already rich get richer.

[tenguzero]

I find it interesting that supporters of trickle-down style economics always claim that they "like the thought of the wealthy getting tax breaks, because the wealthy are the employers -- the ones who make the jobs and invest in the industry." This, to me, is laughable simply because that's exactly what a majority of the wealthy AREN'T doing. It's the average citizens -- the ones working 45 hour weeks in a low to mid-level position, busting their asses day in and day out -- who make the economy work. To put it another way, look at the big trend of people going into business for themselves. It takes a lot of hard work, a lot of personal investment, and a good amount of loans FROM THE BANK to make the thing work, and though there's almost always a gamble involved, if they're determined enough, they can usually make it work. They can throw as much money at the thing as they want, but in the end SOMEBODY has to do the leg work. My point? When talking about the labor force, money does NOT make money -- the workers make money, and hence they should be entitled to their fair share. So why should anyone assume that giving breaks to the wealthy will trickle down through the levels? These people are in the BUSINESS of making money, and holding onto a benefit from a tax break is a guaranteed profit -- passing it on to the workers is more of a gamble. Plus, the wealthier the person, the more likely they are to have a larger company. The larger the company, the more is involved between the transmission of benefits from the top level to the workers, and the easier things can get tied up.

One only has to look at the current boom to see what I mean. There's some pretty hefty profits being posted across the board for many companies, but average wages haven't kept up (employment numbers have been pretty questionable as well.) Healthcare is being cut back or hiked-up cost wise as well, but I'd be interested to see what happened to the rates of people needing medical treatment if they weren't being required to work longer hours, doing more mentally stressing work (we're all aware of the fact that mental stress leads to physical stress) at an increasingly faster pace in order to keep up with technology and the speed of business. Why are more and more people turning to self-help materials and prescription medications like anti-depressants and sleep aids?

I think the answer to this problem starts with the way society structures itself and the government looks after the welfare of its citizens in respect to the things that they can't control through their own efforts -- namely how companies do business. I'm as much against government intervention in the private sector as the next person, but as a result of lobbyists, government contracts, political financing, overseas interests, etc., "private" business has over the last century or so become almost a parallel government to the federal body, with (some would argue) just as much say over domestic policy, foreign policy, and our own lives -- and to me that's very unsettling.

[tenguzero]

Don't forget the oil companies!

http://news.yahoo.com/s/nm/20060130/...ss_gasoline_dc


Oh yeah, sorry.

[fredjacksonsan]

True....the rich get richer.

Flat tax, for everyone including businesses and large corporations is my vote.

[YogsVR4]

Since the poor don't pay any income taxes, there's not a whole lot left to cut for them. Perhaps most of them should have paid a little more attention in school or maybe learned a marketable trade. I don't have a lot of sympathy for the multitudes of layabouts waiting for a handout paid by someone elses work.

I fully support more tax cuts for the middle class and the rich as they're the only ones actually paying income taxes.

[TexasF355F1]

Originally Posted by YogsVR4

Since the poor don't pay any income taxes, there's not a whole lot left to cut for them. Perhaps most of them should have paid a little more attention in school or maybe learned a marketable trade. I don't have a lot of sympathy for the multitudes of layabouts waiting for a handout paid by someone elses work.

I fully support more tax cuts for the middle class and the rich as they're the only ones actually paying income taxes.

TRUE TRUE TRUE. Cut my taxes more, please.