Income inequalities

This Financial Times article has some good numbers describing how the benefits of economic growth over the past few decades have been distributed among U.S. households:

Between 1979 and 2005 the pre-tax income for the poorest households grew by 1.3 per cent a year, middle incomes before tax grew by less than 1 per cent a year, while those of households in the top 1 per cent grew by 200 per cent pre-tax and, more strikingly, 228 per cent post-tax.

The result of this lopsided distribution of income growth was that by 2005 the average after-tax income for the bottom fifth of households was $15,300, for the middle fifth $50,200 and for the top 1 per cent just over $1m.

Looked at from another perspective, in 1979 the post-tax income of the top 1 per cent was 8 times higher than that of middle income families and 23 times higher than the lowest fifth. By 2005 those ratios grew respectively to 21 and 70. The process reached its extreme point with US President George W. Bush’s tax cuts. Emmanuel Saez of the University of California at Berkeley estimates that in the economic expansion of 2002-06 the plutocratic top 1 per cent captured almost three-quarters of income growth.

Figures for wealth, derived from the Federal Reserve Board’s Survey of Consumer Finances, are less up-to-date but the picture is similar. The share of US wealth owned by the top 1 per cent of households rose steadily from 20 per cent in 1976 to 38 per cent in 1998.


5 thoughts on “Income inequalities

  1. And the rich just get righer. What do the poor get? A tax rebate that they will have to spend at Wal Mart to feed their children or it will go to the credit cards which were maxed out in an effort to fill up their gas tanks so they could continue to go to work.

    I’m very glad that you posted this for us all to see. Let’s hope that Washington will catch on.


  2. Ooops, hit the thingy too fast!

    We ought not turn to the government for our solutions. They cause messes most of the time.

    Also, there is no biblical mandate that there should be equal distribution of wealth. In fact, the bible is very clear that wealth brings its own problems and responsibilities. God determines who is wealthy and who is poor. Either way, we ought not to puff against those He gave wealth. Instead, let us be content with what we have been granted. It is much more that poverty. It is Eternal Life.

    “A good name is rather to be chosen than great riches, and loving favour rather than silver and gold. The rich and poor meet together: the LORD is the maker of them all.” (Proverbs 22:1-2, KJV)

    See also Psalm 49, Proverbs 10:15, 13:11, 13:22-23, Ecclesiastes 5:19, 6:2, etc., etc.

  3. But the Scripture also mentions not favoring the rich on the basis of their riches, and not oppressing the poor, and espcially condemns doing the latter in order to do the former. This is the essence of justice, equity, so in that sense it is something the civil authorities are responsible for.

  4. Jim,

    I’ll be among the last to suggest that government (or anyone else) should occupy themselves with finding ways to distribute wealth more equitably. But I think there is some benefit in understanding whether given aspects of our culture are good or bad, just as I think the Israelites should have been very aware of the wickedness that surrounded them in Egypt and Babylon, while at the same time accepting the hardships that their bondage put them under, rather than working within the system to improve things.

    This particular article interested me because, contrary to the usual conservative Christian belief that modern industrial economies has been on balance a blessing to those who labor within them, it gives evidence that the fruits of our labors are increasingly concentrated into the hands of a few; rather than lifting all boats, the rising tide has lifted only a few, leaving the rest stranded.

    Whether or not we should occupy ourselves trying to change the system, I think it’s fair to ask ourselves whether such a system is just.

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