Inequality, both regarding income and wealth, is slowly getting back to our national debate. The benefits of economic growth in the past three decades have increasingly been going to those at the top of the income distribution, while wages remain flat for the middle class or even slowly decline for the poor.
Although inequality has been trending up in most developed nations, the United States is an outlier on the magnitude of this shift. Consider this, using data from Atkinson, Piketty and Saez (original graph):
In this graph there are two outliers with growing inequality in the past two or three decades: Sweden (that goes from being extraordinarily equal to just very egalitarian) and US. In our case, the US goes from having more or less average levels of inequality to being far and beyond any other developed nation.
Today at the CLASS conference we gave a presentation on the rise of inequality both in the US and in Connecticut, offering a lot more data and graphs showing how things have changed in the country in the last 30 years, and offering some policy ideas on the effects of these growing disparities and how we can address them. You can download the Powerpoint from our presentation here (PDF) o you can have a look at the slides after the jump.
Inequality in Connecticut:
Via Kevin Drum, a quick look at the share of national wealth in the hands of the top 3% of Americans, as compared to the bottom 90%:
The data comes from the Federal Reserve´s 2013 Survey of Consumer Finances. In 1989 the top 3% were already ahead by 11 points. 24 years later, the distance has climbed to 30.
It is important to stress that this is something fairly new. The United States was in 1970 one of the most egalitarian societies in the developed world, with an income distribution not that different from what we could see in Germany or Sweden. Starting in the early eighties things suddenly changed, and the US became a remarkable outlier in this regard, with only the UK coming even close. The rise of inequality in the United States was certainly not inevitable, by any means.