A January poll by the Pew Research Center found that while 62 percent of Americans believe there is too much income inequality, only 40% believe that reducing it should rank as a top priority. Furthermore, most Americans feel that some amount of income inequality is acceptable.

To address income and wealth disparity, 67% of Americans feel that major changes are needed. 14% feel that the system needs to be rebuilt.

The share of American adults who live in middle-income households has decreased from 61% in 1971 to 51% in 2019.

Democrats are more likely than Republicans to point to structural problems as causing income inequality. Democrats highlight our tax policies, problems with our educational system, racial discrimination and regulatory failures as causes of income inequality. In sharp contrast, Republicans cite lifestyle choices, work ethic and a growing number of immigrants as causes for income disparity.

In 1980, households near the top enjoyed incomes nine times greater than the household incomes of those near the bottom. By comparison, in 2018, the ratio is 12.6 times.

American household income has trended up since 1970. In 2018, the median income of U.S. households was $74,600. This represented 49% more than the level in 1970, $50,200.

Since 1970, upper-class income rose 64% to $207,400. Their share of aggregate income has risen from 29% to 48%.

Since 1970, middle-class income increased 49% to $86,600. Their percentage of aggregate wealth declined from 62% to 43%.

Since 1970, lower-class income rose from $20,000 to $28,700. Their percentage of aggregate wealth declined from 10% to 9%.

What factors have caused economic inequality?

  • Technological change
  • Globalization
  • Decline of unions
  • Eroding value of the minimum wage. Congress set the current federal minimum wage at $7.25 per hour in 2009.

Possibly more important than income is wealth, because it represents financial security, retirement income and protection against financial shocks. Wealth is the value of assets owned by a family, such as a home or a savings account, minus outstanding debt. The wealth of U.S. families has not recovered from the Great Recession (2008), when housing and stock market prices crashed.

The gaps in wealth between upper-income vs. middle- and lower-income families have widened since 1983. Wealth of upperclasses has risen from $344,100 to $848,400. The top 5% have seen an increase from $2.5 million to $4.6 million, some 88%. By contrast, the wealth of middle-income families has risen from 102,200 to 115,200, 12.7%. Lower-income families have experienced a decline in wealth from $12,300 to $11,300.

According to the World Bank, America’s wealth inequality is highest of G-7 countries, the most economically advanced states.

There is no consensus on the major contributors to economic inequality. A large percentage of Americans cite the following as contributing: outsourcing of jobs to other countries, the tax system, problems with the educational system, different life choices, and some people start with more opportunities than others.

Our economic system needs tweaking, not a total overhaul. That is, our capitalist model with all of its faults has provided superior results to the other G-7 countries. Failure to deal with the growing income and wealth disparities will undermine the American Dream. The American Dream is a set of ideals — Life, Liberty and Pursuit of Happiness — that is the cornerstone of our Constitution. Providing all citizens appropriate medical care and the opportunity to receive an affordable quality education is sine qua non. Only by addressing our shortfalls can we assure that revolutionary measures will not be adopted. Our shrinking middle class and decline of net worth remains troublesome.

Originally published in the Sarasota Herald-Tribune