Income Trends 3: Long-Term & Short-Term 10-30 Years

This continues our review of recent studies about income gaps between rich and poor

The study described how they measured trends, “To assess how households at different income levels have fared, this report measures income inequality at four points in time: the late 1970s, the late 1990s, and the mid- and late 2000s.”

Gap Widened Significantly Since the Late 1970’s

They outlined the following nationwide trends since 1970:

• “Income gaps between the richest households and both the poorest households and middle-income households have widened significantly since the late 1970s.”
• “The incomes of the country’s richest households have climbed substantially over the past three decades”
• “But middle- and lower-income households have seen only modest increases or actual declines after adjusting for inflation.”
• “This trend is in marked contrast to the broadly shared increases in prosperity that prevailed between World War II and the 1970s.”
• “On average across the 50 states, incomes fell by close to 6 percent among the bottom fifth between the late 1990s and the mid-2000s while rising by 8.6 percent among the top fifth.”

Short-term Trends Since 1990s

They continue “In the latter half of the 1990s, a number of factors helped boost the incomes of low- and moderate- income families. Economic growth sped up, and productivity and average real wages grew more quickly.”

• “Low- and moderate-income wage earners did not fare nearly as well in the 2001-2007 expansion.”
• “Even though productivity grew more quickly during this period than in the latter 1990s, slow job creation led to stagnating or declining real wages for these workers.”
• “Even as high-income families recovered from the hit their incomes took as a result of the stock market decline and saw their incomes grow rapidly.”
• “Average household incomes fell among all income classes during the 2007-2009 recession”
• “The large capital losses associated with the stock market crash — which disproportionately affected wealthier households — drove inequality down.”
• “The economy has since begun to grow again, and while incomes at the top have begun to rebound,”
• “Incomes among poor and middle-income households have not.”

Monday we analyze causes and consequences of rising inequality