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The Income Divide

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The Income Divide is a term used to describe the growing disparity between the incomes of high-income earning individuals and those of low-income earners. This divide is increasing for many countries around the world and has been steadily widening in recent decades. This inequity can have a multitude of causes, including differences in education, access to technology, economic environment, and social context.

The income divide is a major issue of social and economic inequality due to its implications for social stability, economic growth, and public policies. It is thus important to analyze the factors that contribute to the increasing divide and consider potential solutions.

The Income Divide

All men are created equal… then divided

The Ever-Widening Gap

● 65% of Americans believe the distance between wealthy and poor has increased in the last 3 years
● Only 3% of them think the widening gap is a good thing

Share of Total Annual Income:
● U.S. income inequality has not been this high since 1928

Distribution of Income:
○ 1982: top 1% received 10.8% of all pre-tax income
■ Bottom 90% received 64.7%
○ 2012: top 1% received 22.5% of all pre-tax income
■ Bottom 90% received only 49.6%

Wealth vs. Income:
○ The highest-earning fifth currently earns 59.1% of all income
○ But the richest fifth holds 88.9% of all wealth

Wealth Stagnation:
○ 2/3 of children born in the top 20% will stay there
○ 1/20 Children born in the bottom 20% will climb to the top

Between 1979 and 2011, wages grew by:
○ 37% for those in the top 5%
○ 113% for those in the top 1%
○ 6% for median workers

Location, Location, Location

The Best and Worst:
○ Chance of making it to the top 20%:
○ A child born in the bottom 20% in Charlotte, NC only has a 4.4%
○ A child born in the bottom 20% in San Jose, CA has a 12.9%

● Global Status
○ The US is ranked 44th out of 86 countries in the US Palma ratio for minimum wage, far below other developed countries

Race is still a major factor
● Median Household Income by Race/Ethnicity

Are we ready for change?
● As of February 24, 2014 – 32 states are considering raising minimum wage
● 58% of Americans are more likely to support politicians who want to raise minimum wage to $10.10

It’s been 50 years since Lyndon Johnson began the “War on Poverty.” Is it too late to restore the American Dream?

income inequality

Sources:
http://prospect.org/article/minimum-wage-crash-course
http://www.washingtonpost.com/blogs/the-fix/wp/2014/03/18/10-numbers-that-explain-why-income-inequality-is-a-hot-topic/
http://www.bls.gov/news.release/empsit.t12.htm
http://www.ncsl.org/research/labor-and-employment/minimum-wage-legislation-2014.aspx
http://www.pewresearch.org/fact-tank/2014/01/07/5-facts-about-economic-inequality/
http://online.wsj.com/public/resources/documents/WSJNBCpoll03052014.pdf


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Rowan Jones
Chief Editor