U.S. Wealth Gap Grows During ‘Lost Decade’ For Middle Class
The Economic Policy Institute (EPI), a non-profit think tank focusing on the needs of middle- and low-income workers, this week released a new report that shows the U.S. Wealth Gap has continued to grow over the past decade. It also calls the first 10 years of the 21st century a “lost decade” for middle class Americans. A summary of the report can be seen in the slideshow below.
By “lost decade,” the report means that real median income for working-age families has dropped to $63,000 in 2010, down from $69,233 in 2000. This is during the same time period in which overall economic productivity has continued to rise steadily. The report warns of another lost decade, if unemployment continues to stay at high levels.
As for wealth disparity, the report shows that real annual household income for the top 1% in income has risen 240% since 1979, and has skyrocketed the past decade. For the bottom 20% in income, their real annual household income has risen only 11% since 1979.
When it comes to real annual household capital income, the top 1% have increased their take by 309% since 1979, while the bottom 60% bring in less real annual household capital income than they did in 1979. An interesting graph in the report shows why 1979 is used as a cut-off. From 1947 to1979, the income rate for all income groups rose fairly evenly. From 1979 to 2007, the average family income growth rate for the top 5% income group rose 2%, while the bottom fifth income group had no family income growth rate change.
The report blames the growing disparity on a number of factors. EPI shows that CEO and executive compensation have grown dramatically since around 1985, while effective tax rates on those with the highest incomes have dropped dramatically since around 1970. As for the middle class, the report shows that wages, including minimum wage, have stagnated over the past four decades. It blames this stagnation partly on a drop in union coverage, and partly on growing trade with less-developed nations.