Skyrocketing income inequality in America over the past 30 years
From the report:
"In the United States as a whole, the poorest fifth of households had an average income of $20,510, while the top fifth had an average income of $164,490 — eight times as much, this top-to-bottom ratio exceeded 8.0. In the late 1970s, in contrast, no state had a top-to-bottom ratio exceeding 8.0."
The United States currently has more income inequality than Pakistan or the Ivory Coast, according to a study by ThinkProgress using data from the CIA factbook. Income inequality in the United States is actually higher than at any other time in modern history since the Great Depression, according to a Huffington Post article.
What circumstances created these disparate conditions?
Wage stagnation is part of the equation, according to a study by the Economic Policy Institute. For example, from 1989 to 2010, real wages for high school-educated workers in the private sector grew by just 4.8 percent, compared with 2.6 percent in state government. During the same period, real wages for college graduates in the private sector grew 19.4 percent, compared with 9.5 percent in state government.
Nationally, the richest fifth experienced $2,550 in income gains each year during the three decades while the bottom fifth experienced gains of just $1,330 over the entire 30 years. In 11 states, the study noted the average incomes for the top 5 percent rose by more than $100,000. The largest increase any state experienced for the bottom 5 percent was just $5,620.
Another driver of this widening gap is unequal growth in earnings by those at the top. The average annual earnings of the top 1 percent of wage earners grew 156 percent from 1979 to 2007; for the top 0.1 percent, they grew 362 percent, according to a study by the Economic Policy Institute.
At the same time, over the past 12 years tax rated for the richest 400 Americans have effectively been cut in half, according to data from the IRS. In 2007, the last year for which the IRS has released data, the richest 400 Americans paid a tax rate of 16.63 percent.