A 2011 study by the Congressional Budget Office found that from 1979 to 2007, the richest Americans saw an increase in wealth of about 275 percent, while the bottom 80 percent of Americans saw their incomes increase by a mere 13 percent after adjusting for inflation.
During this time, the most fortunate Americans have experienced a substantial increase in wealth while regular Americans have seen their median household incomes flat line. Between 1967 and 2009, the annual median income for regular Americans went from $40,000 to $49,000, a 13 percent rise in real income after adjusting for inflation.
That’s not the case for the top one percent. While the average CEO earned about 20 times more in 1965 than an average employee, that same CEO earns 380 times more today than regular employees. According to the AFL-CIO's 'Executive Pay Watch', in 2011 the average worker made about $34,000 per year while the average CEO made around $12.9 million.
Nobel Prize winning economist Paul Krugman defines these past 35 years as 'The Great Divergence' - where regular Americans have seen their household incomes flatline or decline while the top one percent have seen a substantial increase in wealth.
"Since the late 1970s the America I knew has unraveled. We’re no longer a middle-class society, in which the benefits of economic growth are widely shared: between 1979 and 2005 the real income of the median household rose only 13 percent, but the income of the richest 0.1% of Americans rose 296 percent."Unfortunately Krugman is right, we’re no longer a middle-class society in which the benefits of economic growth are widely shared.
The Gini Index, used to measure income distribution, ranks the United States among the most economically unequal when compared to similar highly developed nations. According to the findings of the Gini Index, income inequality is now more severe in the United States than in nearly all of Europe, Asia, and North & West Africa.
The 400 richest Americans control more wealth than the bottom 60 percent (150 million) of Americans combine.
The United States is more economically unequal than Japan, India, Bulgaria, Norway, Italy, Belgium, Poland, and the United Kingdom - to name a few. The United States is currently on par with China and Mexico when it comes to a fair distribution of wealth.
As inequality increases, so does poverty.
As the income inequality gets worse, poverty also rises correspondingly. In 2011, the U.S. Census Bureau announced that the 2010 median household income declined while the poverty rate increased.
The Human Poverty Index - developed by the United Nations - ranks the United States 17 out of 19 similar highly developed countries.
It's now estimated that around 46 million Americans are living below the federal poverty level of $22,350 a year for a family of four. Of those 46 million Americans, 15 million are children. This means that 21 percent of all children in the United States are now living below the federal poverty line.
The nation's official poverty rate in 2010 was 15.1 percent, up from 14.3 percent in 2009 ─ the third consecutive annual increase in the poverty rate. There were 46.2 million people in poverty in 2010, up from 43.6 million in 2009 ─ the fourth consecutive annual increase and the largest number in the 52 years for which poverty estimates have been published.Plain and simple: among other first world nations, we are at the bottom of the list when it comes to a fair distribution of income. This has created a substantial increase in poverty and a weak economy.
Income inequality creates poverty and a weak economy for 99 percent of Americans.
As income inequality has gotten worse, so has the economy. When more people have less money, consumer spending goes down. When consumer spending decreases the economy suffers. And when the economy suffers, who suffers most? Regular middle and working class Americans.
In order for the economy to recover from its recent anemic performance, we must support serious solutions to income inequality: raising the minimum wage to a livable wage, ending wage theft, supporting unions and organized labor, strengthening labor laws, getting the money out of politics, enforcing the necessary regulations on Wall Street and the rest of the financial industry, and treating white collar crime more seriously. Employee ownership of enterprise should also be encouraged whether through ESOP's, stock options, or cooperative businesses.
These are serious solutions that would help put an end to rampant income inequality in the United States, fueling economic growth, creating jobs, alleviating poverty, and strengthening a weak economy.