Inequality in America: The Challenges of Growing Inequality

"To put in context how large these education gaps are relative to the top 1 percent," Katz said, "if you are a full-time full-year worker with a college degree, your income gap relative to someone with a high school degree for a male grew by about $20,000 from 1979 to the present, and for females by $13,000." Katz estimates two-thirds of the growth of inequality in the bottom 99 percent is associated with the education gradient.

Harvard University's Institute of Politics hosted a discussion earlier this month on inequality in America. The panel included RSF trustee (and Harvard economist) Lawrence Katz, as well as former trustee William Julius Wilson. You can watch the panel's discussion below, but here are some of the highlights from Katz's introduction to the issue (which starts about 8 minutes into the video):
• There is little doubt about inequality trends. "Any way you slice or dice data on income earnings or wealth," Katz said, "one has seen large increases in inequality over the last 30 years."
• The share of the national income going to the top 1 percent more than doubled from 1979 to the present, from 10 percent to 23.5 percent. "If, magically, we could have kept the share of income of the top 1 percent where it was in 1979 and redistributed all that income to the bottom 90 percent," Katz said, "everyone would have 9,000 more dollars, or about 27 percent higher income."

You can learn more about the Russell Sage Foundation's efforts to examine the effects of inequality on its Social Inequality page. Here is the video:

Why We Need a Buffett Rule

Seven Convincing Reasons

 Warren Buffett, who disclosed that he pays a smaller percentage of his income in federal taxes than his secretary. The Buffett Rule holds that no millionaire should pay a lower effective tax rate than middle-class families.

 

The incomes of the top 1 percent have skyrocketed over the past three decades, nearly quadrupling and leaving middle-class incomes far behind. Rising inequality has meant that the very rich have captured an outsized share of the country’s economic gains.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

While many at the top continue to pay lower taxes than those below them on the income scale, the entire burden of deficit reduction falls on investments and services for the middle class.

 

© Center for American Progress 

Making It In The U.S.: More Than Just Hard Work | Minnesota Public Radio News

Making It In The U.S.: More Than Just Hard Work | Minnesota Public Radio News
Morning Edition, September 15, 2011

Here's a startling figure: The typical white family has 20 times the wealth of the median black family. That's the largest gap in 25 years. The recession widened the racial wealth gap, but experts say it's also due to deeply ingrained differences in things such as inheritance, home ownership, taxes and even expectations.

And that's the difference. Study after study shows that white families are more likely than blacks and Hispanics to enjoy certain economic advantages — even when their incomes are similar. Often it's the subtle things: help from Mom and Dad with a down payment on a home or college tuition, or a tax break on money passed from one generation to the next.

Tom Shapiro of Brandeis University has tracked hundreds of families for almost 30 years and says the gap perpetuates itself.

"The larger the amount of financial wealth a family starts with, the more financial wealth it accumulated over that period of time," he says.

In other words, it's easier to get richer if you already are. Since blacks and Hispanics are less likely to have much wealth to begin with, they're less likely to have money to invest in the stepping stones to success — a small business, college or home.

Shapiro says inheritance is a big factor when it comes to the racial wealth gap. White families are four times more likely than blacks to inherit. When they do, the median inheritance is 10 times greater.

This means no home equity to draw upon and no mortgage interest deduction to ease the cost of housing. recent study by the Pew Research Center
Hispanics and blacks are the nation’s two largest minority groups, making up 16% and 12% of the U.S. population respectively.


Wealth Gaps Rise to Record Highs Between Whites, Blacks, Hispanics

Moreover, since the official end of the recession in mid-2009, the housing market in the U.S. has remained in a slump while the stock market has recaptured much of the value it lost from 2007 to 2009. Given that a much higher share of whites than blacks or Hispanics own stocks— as well as mutual funds and 401(k) or individual retirement accounts (IRAs)—the stock market rebound since 2009 is likely to have benefited white households more than minority households.

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• Making It In The U.S.: More Than Just Hard Work (npr.org)
• Documentary on Largest U.S. Mass Execution (indiancountrytodaymedianetwork.com)