ECONOMIC PERSPECTIVES

There are many potential causes of income inequality in the United States.  They include market factors, tax and transfer policies, and other causes. Market Factors: Globalization - Low skilled American workers have been losing ground in the face of competition from low-wage workers in Asia and other "emerging" economies. While economists who have studied globalization agree imports have had an effect, the timing of import growth does not match the growth of income inequality. Superstar Hypothesis - Modern technologies of communication often turn competition into a tournament in which the winner is richly rewarded, while the runners-up get far less than in the past. Education - Income differences between the varying levels of educational attainment (usually measured by the highest degree of education an individual has completed) have increased.  Skill-Biased Technological Change - The rapid pace of progress in information technology has increased the demand for the highly

When we think about and discuss economic inequality in this country, we usually focus on income inequality: The CEO who makes 300 times more than his workers, or the fact that the top 20 percent of earners rake in over 50 percent of the total earnings in any given year. But there's another type of inequality that gets a lot less attention. It arguably contributes far more to the divide between the haves and have-nots in this country, and it's been highlighted in a huge new report from the Organization for Economic Cooperation and Development: wealth inequality. Income is the amount of money you earn from your work or your investments. But wealth is the amount of stuff you own: your house, your car, savings, retirement accounts, etc. The great thing about wealth is that it's self-perpetuating. Your house gains value over time (so you hope). You can take $1,000, invest it in something that yields a 10 percent return, and have $1,100 by the year's end. Cool! ... ... ... ht

September 22, 2015 The many ways to measure economic inequality By Drew DeSilver ... ... ... ... http://www.pewresearch.org/fact-tank/2015/09/22/the-many-ways-to-measure-economic-inequality/

http://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality

Here are 35 soul-crushing facts about American income inequality.  For example, the money given out in Wall Street bonuses last year was twice the amount all minimum-wage workers earned combined. http://www.salon.com/2015/07/15/35_soul_crushing_facts_about_american_income_inequality_partner/

http://www.reuters.com/subjects/income-inequality

In June 2013, President Obama acknowledged that inequality is on the rise "even though the economy is growing." That growth hasn't helped many people who lost mid-wage jobs during the recession. Half of the U.S. population is now considered poor or low-income, and income has been redistributed from the middle class to the very rich faster under Obama than under George W. Bush. Income inequality in the U.S. is much worse than it is in other industrialized countries, where it is also an alarming problem, according to a new report from the International Labour Organization. The gap is only getting wider as the median wage continues to fall. http://www.huffingtonpost.com/2013/06/12/inequality-us-_n_3421381.html

An OECD study in 2013 found that the U.S. had the highest income inequality in the developed world. Read more here: http://www.oecd.org/els/soc/OECD2013-Inequality-and-Poverty-8p.pdf

In her Huffington Post  article, Kathleen Miles suggests that the "Next Time Someone Argues For 'Trickle-Down' Economics, Show Them This." February 6, 2014 Conservatives like to say that "a rising tide lifts all boats." In other words, if an executive makes $20 million a year, his income will eventually trickle down into the rest of the economy and ultimately benefit poor people. But that theory hasn't exactly proven true. The highest-earning 20 percent of Americans have been making more and more over the past 40 years. Yet no other boats have risen; in fact, they're sinking. Over the same 40 years, the lowest-earning 60 percent of Americans have been making less and less. Imagine the lines below as tides. As you can see, one is rising, while the others are falling (and one is stagnant): The chart comes from the Stanford Center on Poverty and Inequality's recently released 2014 report. The researchers looked at rising poverty and inequality in th

The chart above, from the Organization for Economic Co-operation and Development (OECD) using the World Top Incomes Database, shows how income gains between 1975 and 2007 were divvied up in 18 OECD countries for which the researchers had data. Nowhere did the rich benefit as much as in America. As you can see, in some countries like Denmark the vast majority of income gains went to the bottom 90 percent -- SOCIALISTS! -- while nearly half of U.S. income gains went to the richest one percent because freedom, baby. America’s top 1 percent of earners accounted for 47 percent of all pre-tax income growth over that time period. And that’s excluding capital gains, for God's sake. Throw in the rest of the top 10 percent, and you’re looking at a group that got four-fifths of all income growth between the Ford and George W. Bush administrations. The rest of us were left to scramble for the last one-fifth of extra income. If you add in capital gains, which typically accrue to the highest ear

The American Middle Class Is No Longer the World’s Richest By David Leonhardt and Kevin Quealy April 22, 2014 The American middle class, long the most affluent in the world, has lost that distinction. While the wealthiest Americans are outpacing many of their global peers, a New York Times analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades. After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans. The numbers, based on surveys conducted over the past 35 years, offer some of the most detailed publicly available comparisons for different income groups in different countries over time. They suggest that most American families are paying a steep price for high and rising income inequality. Although economic growth in the United States continues to be

In her December 1, 2014 article, Laura Tyson, the form chair of the U.S. President's Council of Economic Advisers, explains "The Rising Costs of U.S. Income Inequality." BERKELEY, Calif. - During the last several decades, income inequality in the United States has increased significantly -- and the trend shows no sign of reversing. The last time inequality was as high as it is now was just before the Great Depression. Such a high level of inequality is not only incompatible with widely held norms of social justice and equality of opportunity; it poses a serious threat to America's economy and democracy. Underlying the country's soaring inequality is income stagnation for the majority of Americans. With an expanding share of the gains from economic growth flowing to a tiny fraction of high-income U.S. households, average family income for the bottom 90 percent has been flat since 1980. According to a recent report by the Council of Economic Advisers, if the share o

Amendment One to the Constitution of the State of Florida promised to provide residents with property tax relief.  But a primary consequence has been to shift the overall tax burden from the wealthy to everyone else. http://econperspectives.blogspot.com/search/label/Florida%20amendment%20one

As the sociologists Stephen McNamee and Robert Miller Jr. point out in their book, The Meritocracy Myth , Americans widely believe that success is due to individual talent and effort.  The book challenges that widely held American belief in meritocracy - that people get out of the system what they put into it based on individual merit. http://www.amazon.com/Meritocracy-Myth-Stephen-J-McNamee/dp/0742561682/

Rubio: "We have never been a nation of haves and have-nots. We are a nation of haves and soon-to-haves, of people who have made it and people who will make it. And that's who we need to remain." During a Senate floor speech on December 16, 2011, U.S. Senator Marco Rubio offered his perspectives on his first year in office and the challenges that remain unsolved.  Excerpts from the speech and a link to his full remarks can be found her: http://www.rubio.senate.gov/public/index.cfm/press-releases?ID=66bd09d9-2acc-41c0-b853-b43ee6f27ad2 Rubio's views may reflect the popular opinion that upward economic mobility is primarily just a matter of working hard.  We love a good rags-to-riches story.  But perhaps we tolerate vast income and wealth inequality in the U.S. because we think these success stories happen more than they actually do.

In "The Lottery Mentality," a 2011 editorial in The New York Times , Chrystia Freeland explains that "Americans are mistaken about income inequality because of national self-confidence and the lottery effect." http://www.nytimes.com/roomfordebate/2011/03/21/rising-wealth-inequality-should-we-care/the-lottery-mentality Americans actually live in Russia, although they think they live in Sweden. And they would like to live on a kibbutz. This isn’t the set-up for some sort of politically incorrect Catskills stand-up joke circa 1960. It is the takeaway from a remarkable study by Michael Norton and Dan Ariely on how Americans think about income inequality. The right likes to argue that income inequality as an issue doesn’t win elections because Americans don’t begrudge the rich so much as they want to join them. The Norton and Ariely study suggests otherwise. Given a choice, the authors find, Americans would prefer to live in a society more equal than even highly egalitar

According to a 2014 national survey by the Pew Research Center and USA TODAY, there is broad public agreement that economic inequality has grown over the past decade. But there are wide partisan differences over how much the government should – and can – do to address these issues. Read more here: http://www.people-press.org/2014/01/23/most-see-inequality-growing-but-partisans-differ-over-solutions/

There are two ways of measuring economic mobility: absolute and relative. Each offers an understanding of the health and status of the American Dream; however, neither measure can be taken in isolation for a complete picture of economic mobility in our country. This video animates the difference between these two measures. http://www.pewtrusts.org/en/multimedia/video/2011/economic-mobility-and-the-american-dream

In the article "Economic Inequality: It’s Far Worse Than You Think" published in  Scientific American on March 31, 2015, Nicholas Fitz discusses "the great divide between our beliefs, our ideals, and reality." http://www.scientificamerican.com/article/economic-inequality-it-s-far-worse-than-you-think/

In the article "Wealth and Generations" in the June/July/August 2015 edition of Washington Monthly , Philip Longman explains that by focusing on the growing riches of the “1 percent,” we miss another form of inequality that is bigger, and arguably even more dangerous. Longmans writes: "These vastly different economic trajectories experienced by today’s living generations are basically unprecedented. Throughout most of our history, inequality between generations was large and usually increasing, to be sure, but for the happy reason that most members of each new generation far surpassed their parents’ material standard of living. Today, inequality between generations is increasing for the opposite reason. Though much more productive and generally better educated, most of today’s workers are falling farther and farther behind their parents’ generation in most measures of economic well-being." http://www.washingtonmonthly.com/magazine/junejulyaugust_2015/features/wealth

In the article "It's the Inequality, Stupid" in the March/April 2011 issue of Mother Jones , Dave Gilson and Carolyn Perot provide "eleven charts that explain what's wrong with America." http://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph

https://www.youtube.com/watch?v=QPKKQnijnsM Published on Nov 20, 2012 Infographics on the distribution of wealth in America, highlighting both the inequality and the difference between our perception of inequality and the actual numbers. The reality is often not what we think it is.

According to a June 11, 2015 Fortune article by Chris Matthews, there are four things you didn't (but should) know about economic inequality in the United States: 1. Americans don’t like the way wealth is currently distributed in this country. But they dislike wealth redistribution policies even more. 2. There’s no such thing as the 99% and the 1%. 3. The American economy has treated older generations much better than the younger ones. 4. It’s the older, richer Americans that are increasingly benefitting from the distribution we do have. Read more here: http://fortune.com/2015/06/11/income-inequality/