Income inequality called severe in U.S.

Published: Thursday, Feb. 14 2013 1:00 p.m. MST

Income inequality is a global problem. A new UNICEF report estimates the richest population quintile gets 83 percent of the global income with just a single percentage point for those in the poorest quintile. However, there is a case to be made that income inequality in the United States is exceptionally severe, according to Atlantic associate editor Jordan Weissmann.

A graphic from a 2008 Organisation for Economic Co-operation and Development report shows that "in many developed countries, a rising tide has truly lifted all boats, with the wealthy rising a bit faster," Weissmann wrote in Jan. 28 article for the Atlantic Wire. The problem is that "in the United States, the tide is lifting up the rich while drowning many of the poor."

The OECD chart shows the average annual rate at which earnings rose for full-time working women (light blue) and men (dark blue) for each 10 percent income bracket from 1980-2005. The poorest men and women are on the left of the chart while the richest are to the right.

In a 2011 blog post, economist Timothy Taylor discusses some of the reasons behind growing income inequality in the United States compared to other OECD countries. He argues that "public cash transfers, as well as income taxes and social security contributions, played a major role in all OECD countries in reducing market-income inequality."

Income inequality is a persistent problem in America, according to Taylor, because "U.S. policy does relatively little to reduce the disparity." For example, in Denmark redistribution from the mid-1980s to the mid-2000s offset more than 100 percent of the rise in inequality of market incomes. By comparison, in the U.S. the rise in government redistribution from the mid-1980s to the mid-2000s offset just 9 percent of the rise in market inequality.

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