"Despite Strong Economic Growth, Study Claims Income Disparities Significantly Greater in U.S."

“In spite of a lengthy period of strong economic growth and the tight labor markets of recent years, income disparities in most states are significantly greater in the late 1990s than they were during the 1980s, according to an analysis released by the Center on Budget and Policy Priorities and the Economic Policy Institute.In two-thirds of the states, the gap between the top 20 percent of families and the bottom 20 percent of families grew between the late 1980s and the late 1990s. In three-fourths of the states, income gaps between the top fifth and middle fifth of families grew during the last decade, according to the report.Income inequality only declined significantly in three states – Alaska, Louisiana and Tennessee.Over the long term, the report found that income disparities between high and low-income families increased in all but four states. The report also found that in 45 states, the gap between the average incomes of middle-income families and the richest 20 percent of families also expanded between the late 1970s and the late 1990s.A state-by-state analysis of income trends using the latest Census Bureau data to measure pre-tax changes in real incomes among high, middle, and low-income families in all of the 50 states at similar points in the business cycle, from the late 1970s to the late 1980s and from then until recently.Key report findings include:- For the U.S. as a whole in the late 1990s, the average income of families in the top 20 percent of the income distribution was $137,500 – more than 10 times as large as the poorest 20 percent of families, which had an average income of $13,000.In nine states – New York, Arizona, New Mexico, Louisiana, California, Rhode Island, Texas, Oregon and Kentucky – the average income of the richest fifth of families was more than 11 times as great as the bottom fifth of families.- From the late 1970s to the late 1990s, in all states but three, the incomes of families in the top 20 percent of the income distribution have grown, with average growth exceeding $34,000 in 1997 dollars, after adjustment for inflation. In 31 states, the incomes of the upper fifth of families rose by more than 30 percent over the past two decades.- Incomes of the poorest fifth of families declined in 18 states between the late 1970s and the late 1990s. In some states the decline was markedly steep.In six states, the average income of the bottom fifth of families declined by over $2,000 per family in 1997 dollars. Wyoming was down $5,600; Arizona down $3,900; New York and California both down $2,900; New Mexico down $2,400; and West Virginia down $2,200.- In eleven large states, income increases for the top 5 percent of families ranged from 35 percent in Texas, to 75 percent in Pennsylvania. In contrast, the incomes of the bottom fifth of families either declined or grew slightly between the late 1970s and the late 1990s in ten of these 11 large states. For example, the highest-income 5 percent of New York families gained nearly $108,000 per family, while the lowest-income 20 percent of New Yorkers lost $2,900 per family.The report shows that with few exceptions economic growth in the 50 states has not been broadly shared, said Jared Bernstein of the Economic Policy Institute. The strong economic growth in the U.S. results from the contributions of people in all walks of life, from laborers to corporate executives. The fact that many families are not sharing in the resulting prosperity stands as our nation’s most serious economic problem.The report notes that several factors have contributed to the large and growing income gaps in most states. The growth of income inequality is primarily due to the growth in wage inequality.Wages at the bottom and middle of the wage scale have only recently grown after having stagnated or declined for nearly 20 years. Wages of the very highest paid employees, however, have grown significantly, according to the study.Factors identified in the report as contributing to increasing wage inequality include globalization, the decline of manufacturing jobs coupled with the expansion of low-wage service jobs, immigration, the lower real value of the minimum wage, and fewer, weaker labor unions.During the past several years, persistent lower unemployment and increases in the minimum wage have helped to fuel wage gains at the bottom. As a result, there has been a lessening of wage inequality between the bottom and the top, although the gap between middle and high-wage workers continues to grow, according to the report. Recent wage growth for low-wage workers has not, however, been anywhere near sufficient to counteract the two-decade long pattern of stagnant or declining incomes.The report notes that government – at all levels – can play a role in mitigating the growth of income inequality. It notes that the role of state governments, in particular, has been increasing.Through policies such as raising minimum wage, strengthening unemployment insurance, implementing supports for low-income working families, and reforming regressive state tax systems, the report says the growing income divide can be moderated.”