Are the Rich Really Getting Richer?
September 15, 2010 by Elizabeth
According to a series of articles by Timothy Noah posted on Slate.com, yes, the rich really are getting richer. In the series, titled “The Great Divergence: What is causing America’s growing income inequality?“, Noah explores why the top 1% of earners’ incomes are increasing while the income of the other 99% are not. In the series he has or will look at race, gender, education, trade, immigration, the fall of organized labor, and political parties as possible reasons for the shift (there are still a few new pieces left before the series is concluded). I recommend the articles to anyone with an interest in income inequality in the US, but if you don’t have time to read the entire series, the accompanying slide show by Visualizing Economics is a great way to get an overview.
Figure One: Income Share Over Time
Figure One lays out the two trends in income inequality over the past 60 years. The first occurred from 1940 to 1979 and is was termed the Great Convergence by economists because the income gap shrunk. In 1979, that trend began to reverse though, giving way to the Great Divergence. Since 1979, the income gap has widened significantly.
Figure Two: Income Share Ratios
Figure Two shows how the bottom 20% and middle 20% compare to the top 20%. The top line shows that the income gap between the richest and the poorest Americans has nearly doubled since 1979, while the gap between middle class and the richest Americans has widened only slightly. The author attributes this to the increasing importance of a college degree in the current job marketplace. In other words, those with college degrees (upper and middle-income Americans) have higher incomes that those without a college degree.
From my perspective this kind of information further emphasizes the need for more and better education, job training, and jobs to fight poverty in the US.
The read Timothy Noah’s series on the Great Divergence, click here
To view Visualizing Economics’ entire slide show, click here