Category Archives: Income Inequality/Gap

The Widening Canada-US Income Gap

Source: Benjamin Tal, Consumer Watch Canada, June 9, 2009

For every dollar increase in Americans’ real per capita disposable income during the past four years, Canadians have seen their income rise by two dollars. Since 2005, per capita real disposable income in the US has risen by just over $1,300 (US). In Canada, it has risen by $2,600 (Cdn). And the good news is that the post-recession economy will see this trend continue.

Do Rising Top Incomes Lift All Boats?

Source: Dan Andrews, Christopher Jencks, Andrew Leigh, Harvard University – John F. Kennedy School of Government, HKS Working Paper No. RWP09_18, June 15, 2009

From the abstract:
Pooling data for 1905 to 2000, we find no systematic relationship between top income shares and economic growth in a panel of 12 developed nations observed for between 22 and 85 years. After 1960, however, a one percentage point rise in the top decile’s income share is associated with a statistically significant 0.12 point rise in GDP growth during the following year. This relationship is not driven by changes in either educational attainment or top tax rates. If the increase in inequality is permanent, the increase in growth appears to be permanent, but it takes 13 years for the cumulative positive effect of faster growth on the mean income of the bottom nine deciles to offset the negative effect of reducing their share of total income.

The Gender Pay Gap

Source: American Association of University Women, April 22, 2009

From the press release:
To commemorate Equal Pay Day, April 28, 2009, AAUW has released a new state-by-state earnings comparison by gender that shows that the wage gap is stubbornly in place despite the overall positive effect a college degree has on women workers. Observing Equal Pay Day reminds the nation of the gross inequities facing women, who must work from January 2008 through April 2009 to earn what their male counterparts received in 2008 alone.
See also:
Map data explained
Map data table

Income Gaps Hit Record Levels In 2006, New Data Show

Source: Arloc Sherman, Center on Budget and Policy Priorities, April 17, 2009

New data from the Congressional Budget Office (CBO) show that in 2006, the top 1 percent of households had a larger share of the nation’s after-tax income, and the middle and bottom fifths of households had smaller shares, than in any year since 1979, the first year the CBO data cover. As a result, the gaps in after-tax incomes between households in the top 1 percent and those in the middle and bottom fifths were the widest on record.

Is “Tax Day” Too Burdensome for the Rich? – The U.S. Tax System Is Not as Progressive as You Think

Source: Citizens for Tax Justice, April 13, 2009

Many politicians, pundits and media outlets have recently claimed that the richest one percent of American taxpayers are providing a hugely disproportionate share of the tax revenue we need to fund public services. New data from Citizens for Tax Justice show that this simply is not true. CTJ estimates that the share of total taxes (federal state and local taxes) paid by taxpayers in each income group is quite similar to the share of total income received by each income group in 2008.

Working for Cents on the Dollar : Race and Ethnic Wage Gaps in the Noncollege Labor Market

Source: Gregory Acs, Pamela J. Loprest, Urban Institute, March 23, 2009

From the abstract:
This paper uses data from the 2007 Survey of Employers in the Low-Skill Labor Market to analyze whether wage differences among workers of different races and ethnicities in the low-skill labor market remain after controlling for individual, job, and employer characteristics. The employer-provided data include detailed information on job requirements and employer characteristics rarely available in household surveys. We find that black workers earn significantly less than white workers in the less-skilled labor market, and a significant difference (12 percent) remains even after controlling for worker, job, and employer characteristics.

From the Crisis of Distribution to the Distribution of the Costs of the Crisis: What Can We Learn from Previous Crises about the Effects of the Financial Crisis on Labor Share?

Source: Özlem Onaran, Political Economy Research Institute, 3/11/2009

From the abstract:
The working paper analyzes the possible distributional consequences of the global crisis based on the lessons of past crises. The decline in the labor share across the globe has been a major factor that led to the current global crisis. Onaran argues that this is a crisis of distribution, and similarly the policy reactions to the crisis are part of a distributional struggle. The paper presents the effects of the former crises in the developing countries and in Japan on income distribution, wages, and unemployment. This comparison is important not only because it compares developing and developed country cases, but also because it highlights the differences between the currency crises and domestic financial crises as to the distributional consequences.

Despite differences, the cumulative effect is in both cases a dramatic pro-capital redistribution. Building on these lessons, the paper discusses the possible different effects of the current global crisis in the developed countries, Eastern Europe, and developing countries, and concludes with policy alternatives to avoid the socialization of the costs of the crisis.

Political Economy: Cash on Delivery

Source: John Cranford, CQ Weekly, April 5, 2009

It’s becoming evident that overpaying executives, or anyone for that matter, shouldn’t be seen as routine. Pay for performance is becoming a watchword for teachers and other rank-and-file employees. It should be even truer for those at the top.

For too long, the way in which we compensate company executives, financial whiz kids — even sports and entertainment figures — has been out of hand. But events of the past few weeks are shining a harsh spotlight on that fact, and the consequences that come from overpaying people.