Income Trends 2: Problems from the Income Gap

This continues our series analyzing the income gap

Studies released in the last month revealed a growing gap between incomes of the average and richest Americans. Too many of the former middle class were pushed into poverty. Yet, too many people, like the frog in the pot of water slowly coming to a boil, do not recognize the major problems with the income gap.

Consequences of the Income Gap

Pulling Apart a State-by-State Analysis of Income Trends cites several challenges:

“It is a basic American belief that hard work should pay off — that individuals who contribute to the nation’s economic growth should reap the benefits of that growth. Over the past three decades, however, the benefits of economic growth have been skewed in favor of the wealthiest members of society. Rising income inequality not only raises basic issues of fairness but also adversely affects our economy and political system.

A widening gulf between the richest Americans and those at the bottom or middle of the income scale can reduce social cohesion, trust in government and other institutions, and participation in the democratic process.:

• “Discrepancies in political influence in federal, state, and local government”
• “Richest Americans have less contact with everyone else—and thus familiarity with their problems”
• “Increased disparity in the quality of schools…makes it harder for children in low-income families to acquire the skills they need to succeed”
• Richer families living in the suburbs—and sending their children to private schools—“lose sight of the need to support public schools”
• “A link between higher levels of inequality and poor schools, substandard housing, and higher levels of crime”
• “A strong connection between income inequality and social problems such as mental health, violence, drug abuse, and poor educational performance”
• “Widens the gap between housing costs and what households particularly renters with very low incomes—can afford to pay”
• “When low-wage jobs do not pay enough to lift a family our of poverty and when the incomes of the poorest families grow only slowly or not at all, policies that encourage work cannot succeed”

Friday we examine long-term and short-term income trends that created gaps