Early Evidence That Inequality is (Unfortunately) Back on Trend

December 14th, 2011 at 12:17 pm

As I noted in this post from yesterday, the recent downturn in income inequality is very likely cyclical—a function of the temporary declines in the earnings and asset values of those at the top of the pay scale.  But, I hypothesized, the structural forces driving inequality relentlessly higher in recent decades remain in place, meaning any downturn is likely temporary.  That certainly was the case after the last bubble burst in the early 2000s.

It’s the “shampoo economy” at work; bubble, bust, repeat.

Well, in walks the redoubtable Larry Mishel from EPI with proof of that hypothesis.  He’s got data on wage earnings from the Social Security Administration through 2010, and the two figures below tell the same story I projected extrapolating from rising corporate profits.  Note particularly the divergence in earnings growth in the second figure toward the end of the series.  Already, we’re seeing what meager growth there is elude the bottom 90%.

What we really don’t need is another decade where economic growth is a spectator sport for the middle class.  How to prevent that should be at the heart of our long-term economic policy agenda.  More on that later today.

Print Friendly, PDF & Email

One comment in reply to "Early Evidence That Inequality is (Unfortunately) Back on Trend"

  1. Jhon says:

    I don’t care if rich people are making money. I don’t think that most Americans care either. What is really fustrating is when we see that money is flowing to the top while the middle has seen no improvement in their wages. Point is we do not care if the rich are getting super rich, just as long as the middle class sees a significant improvement in their wages as well. Well a significant change in wages after taxes because the country is on our backs alone -__-