Sunday, December 10, 2006

The New Inequality

Here's a report in the New York Times magazine which tells us that recent economic figures show that income inequality, which has been increasing for thirty years among blue collar workers in this country, now extends to white collar, college educated workers, too.

Over the last five years, the average pay of college graduates grew at only a little better rate than inflation. For now, most holders of bachelor’s degrees appear to be on the wrong side of the inequality divide, which suggests that the slice of the American work force on the right side of the divide has become extremely narrow. Even families at the 90th percentile of the income distribution (now earning about $110,000 a year) have received only a marginally bigger raise over the last decade than those in the middle of the distribution.

... two economists in their mid-30s, Emmanuel Saez and Thomas Piketty, have ... discover[ed] that at the very highest levels of the income ladder, inequality has indeed continued to accelerate. The top 0.1 percent of earners — that’s one out of every 1,000 families — made 6.8 percent of the nation’s pretax income in 2004, up from 4.7 percent a decade earlier and about 2 percent in the ’60s and ’70s.

... From World War II through the 1970s, while most Americans were getting solid raises every year, the incomes of the richest 1 percent were doing only a little better than inflation. Since the 1980s, the two groups have switched places. The affluent have received huge gains, and everyone else’s pay growth has slowed down. For the last six decades, in other words, the American economy has been much more of a zero-sum game than we might like to believe.

Looks like Jim Webb and the progressives are not far off base when they talk about the rising inequalities in our society. Whatever the causes are, and I think it's only logical that they be tied to rampant deregulation, globalization, tax advantages for outsourcing, illegal immigration, abuse of the H1-B visa process, the "winner take all" mentality present in our nation's boardrooms, it's time to start taking this problem seriously.

The New Inequality

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