New Report Documents 'The Increasingly Unequal States of America'

Posted Feb. 4, 2015

MP3 Interview with Mark Price, labor economist with the Keystone Research Center, conducted by Melinda Tuhus

wealthgap

There’s been a lot of talk recently by U.S. politicians, both Democrats and Republicans, about the growing gap between America’s super rich and everyone else. Now a new study again confirms what many economists and Occupy Wall Street activists have been saying for years, that incomes have become so lop-sided that in some states, all the income gains since the start of the economic recovery in 2009 have gone to the top one percent. That's why for many Americans it doesn't feel like a recovery at all.

The report published by the Economic Policy Institute, titled, “The Increasingly Unequal States of America," examined federal tax data from each of the 50 states. The research was led by Estelle Sommeiller, a socioeconomist from France and Mark Price, a labor economist at the Keystone Research Center in Harrisburg, Pennsylvania.

Among other findings, the report found that since 1979, almost every state in America has witnessed more growth in income for the top 1 percent, than for the bottom 99 percent. In 18 states, the study observed, the income of the bottom 99 percent actually fell between 2009 and 2012, the last year for which there is data. New York and California were among those states that saw the incomes of the bottom 99 percent decline. Between The Lines' Melinda Tuhus spoke with Mark Price, one of the authors of the new study. Here, Price explains there are both short-term and longer-term factors at work, and why he sees some hopeful signs in the demand by low-wage workers for a $15 hourly wage.

MARK PRICE: The main finding in the report is that over the course of this economic recovery, in 39 states in the U.S., the top 1 percent have accounted for half or more of income growth. In fact, in 18 states, only the incomes of the top 1 percent grew, and that includes places like Pennsylvania, California, Connecticut, Washington and Nevada.

BETWEEN THE LINES: Can you say any reasons why specific states are worse off than others?

MARK PRICE: Sure. Well, there are states like Pennsylvania, which have had very weak job growth relative to the rest of the country over this period, so that was certainly a factor in the fact that incomes of the bottom 99 percent actually fell in that state. But there are also states in there like California and Nevada, two states that have struggled a little bit because they were the epicenter of the housing bubble, so they've had a longer period to have to climb back from what really was a deep recession.

The short-term trends are really troubling because they show how lop-sided growth has been. But when you look back over the last few recoveries – and this is true across the states, it's worse in some, better in others – but what we are observing across the country is a rising share of income growth being accounted for by that tiny fraction of households right at the top of the income distribution. The economy just isn't throwing off as much income to the bottom 99 percent as it used to, and that is pretty startling.

BETWEEN THE LINES: Mark Price, what explains this trend?

MARK PRICE: That is a combination of factors that are explaining that. In the short run, we have coined the phrase "jobless recovery." It's somewhat incorrect because in recoveries we do actually get jobs back, but it's a term that captures the fact that people notice that the recoveries we've experienced in the last couple of decades have been slow and it takes a long time for us to get back to full employment. And that matters a lot, because the faster you get back to full employment, the more likely that workers in the middle and the bottom are going to see wage increases. So certainly one of the factors explaining why the economy has performed so poorly for the 99 percent over the past 30 years is that we've been sort of tortured by these very slow recoveries where especially public policy officials – Congress and the president – haven't done enough to push the economy back to full employment quickly, and that has hampered the growth in earnings for most people.

But there are also other factors at play across the states, among them, the minimum wage today has a lot less purchasing power than it used to. Relative to 1979, the minimum wage has 17 percent less purchasing power and that's a big hit for workers at the bottom. We know that's one of the more important factors why the bottom 20 percent of workers are worse off today than they were in 1979. So that's certainly one factor that helps explain this very uneven income growth.

Another factor is, of course, that folks in the middle haven't done terribly well, either. Middle class families, when they've seen growth, it's been pretty small in their earnings over time, and they're really been sort of treading water over the last decade. The middle class – one of the problems there – is that unions are less important in the economy than they used to be. There was an era when unions represented one out of three workers in the economy. Today that number, especially if you're thinking about the private sector, is well below 10 percent, and that has sapped a lot of the ability of middle-class families to see rising growth in the economy – which we've experienced over the last three decades. It is growing, generating a lot of wealth and income, but that income and wealth is not showing up in people's paychecks.

BETWEEN THE LINES: Connecticut raised the minimum wage to $10.10, which will kick in over the next couple of years, and $10.10 is the minimum wage that President Obama supports. That seems woefully inadequate. What do you think of efforts to raise the minimum wage at the federal or state levels and what about these very grassroots movements for $15 an hour?

MARK PRICE: Yeah, I think the grassroots movement to raise the minimum wage that has sprung up in cities across the country. In many states, I think that's in response to frustration that federal policymakers – you know, the federal minimum wage is set by Congress and the president – and they haven't been able to resolve to raise it as often as they used to, and by as much, and that's why the minimum wage has lost purchasing power. So I think that frustration with federal inaction has generated a lot of effort at the state level and at the city level in many states to fill the gap that's been left by the federal government's inability to raise the minimum wage further.

I think that's a positive thing, people getting organized and trying to shape the economy. And, I think that's quite hopeful, because these trends in income are very scary, in a way, because we're now returning to a level of inequality – if we're talking about the share of income that is earned by the top 1 percent – it's quite similar to what it was at its previous peak in 1928, just before the Great Depression. So we've had this kind of return to very high inequality, and that's scary, but I think the responses we're seeing across the country – whether it's a movement to raise the state minimum wage or an effort in some cases to have a $15 minimum wage, say in fast food. It's very encouraging because I think it signals that people do care about this issue. They do get that it takes a movement, it takes people working together to try and encourage policymakers to make better decisions that will help raise incomes for folks at the bottom and in the middle.

For more information on the Keystone Research Center, visit or for more information on rising income inequality, read the center's report, "The Increasingly Unequal States of America." .

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