The average real income of the poorest 20 percent of families in the United States increased less than 1 percent in the 1990s. It is more than 6 percent lower than in the late 1970s. Incomes rose about 2 percent for the middle fifth of U.S. families over the last decade, while the wealthiest 20 percent gained 15 percent since the late 1980s and 30 percent since 1978.
The numbers are even starker when you look at the richest 5 percent of families, whose average annual income shot up to $237,568, a 27 percent increase over the last decade.
In all but four U.S. states, the gap between the richest 20 percent of families and the poorest 20 percent is wider than two decades ago. The greatest increase in disparity--and the greatest absolute gap in incomes--is in the U.S. capital. The average income for the worst-off fifth of families in the District of Columbia fell to $7,498 from $9,007 over the last decade, while the top 20 percent averaged $203,110--a ratio of more than 27 to 1.
Among the 50 states, New York tops the list, with a ratio of 14 to 1. Average income for the poorest 20 percent of families in the state has dropped by $2,900 over the last two decades.
There have been a spate of articles in the big-business press in response to this study insisting the figures shouldn't worry anyone. Investor's Business Daily writer Charles Oliver stated in a January 24 article that a major cause of the disparity is those at the bottom of the income distribution curve work fewer hours. Many are retired and have a "decent standard of living," Oliver asserted. He also claimed the figures for the bottom 20 percent are offset by the fact that "big sources of income to the poor--such as food stamps and housing subsidies--are excluded."
The same day the New York Times ran an opinion column titled "Why Decry the Wealth Gap?" by W. Michael Cox and Richard Alm, co-authors of a book titled Myths of Rich and Poor. They say the widening gap in income comes from "non-nefarious" causes, including immigration and higher education rates in states with the biggest gap. Cox and Alm repeat the well-worn myth that under capitalism all boats will rise, even if at different speeds. "What Americans ought to care most about is maintaining our growth, not the red herring of gaps in income and wealth," they conclude.
Far from all boats rising during the current upturn in the business cycle, the figures in the Economic Policy Institute study reflect attacks by the employing class both on real wages and on the social wage--gains working people won over decades of struggle that give some measure of social security to all.
Another factor is the slashing of social welfare programs, including the elimination of Aid to Families with Dependent Children under the Clinton administration. Those who have been dumped from the welfare rolls and found jobs average $8,000-10,800 in annual income, according to the study, which is well below the official poverty line for a family of three.
Unemployment benefits have also been eroded. In 1998, just 36 percent of jobless workers received benefits. Throughout the 1970s, the percent of unemployed workers receiving compensation never fell below 40 percent.
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