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The gap widens: The rich continue to get richer while others don’t

September 21, 2015By Editorial Board

Four years ago this month a group of people took over New York City’s Zuccotti Park to protest the disparity in income between the nation’s wealthiest people and everyone else. Within three weeks, similar protests had spread to nearly a thousand cities in more than 80 countries. The large public protests have since subsided but the movement persists. Its catch phrase — “We’re the 99 percent” — has been embedded in our social consciousness.

The “99 percent” reference grew from economic studies that found a widening gap — referred to as “income inequality” — between the nation’s top income earners and the rest of the workforce. The gap has periodically widened and narrowed over the past century. However, since the 1970s, it’s grown steadily wider. One study found that if the United States now had the same income distribution it had in 1979, each family in the bottom 80 percent of income earners would be making an average of $11,000 more per year.

A report by the nonpartisan Congressional Budget Office said between 1979 and 2007, before the Great Recession hit, after-tax incomes for households in the top 1 percent grew by 275 percent while incomes of the bottom one-fifth of wage earners rose only 18 percent. Last year, the U.S. Census Bureau reported that the number of low-income people and those living in poverty now make up a combined 48 percent of the U.S. population.

The degree of income inequality in the United States isn’t the global norm. The 2013 Credit Suisse Research Institute Global Wealth Databook said the United States ranked sixth-worst among 173 countries as measured by the Gini index, the most widely accepted measure of income inequality.

There’s a lot of debate among economists and politicians as to why income inequality has grown. The Oregon Center for Public Policy, an economic research group, has singled out one reason: the decline in membership and influence of unions.

In a report released earlier this month, the OCPP said in 1979 unions represented one-third of the Oregon workforce but today that number has shrunk by almost half, to 17 percent of the state’s nearly 1.6 million workers, including 9 percent of workers in the private sector and 57 percent of public employees.

Partly or largely as a result of that, the report says, “For more than three decades, income gains [including profits from investments] have bypassed most Oregonians and flowed primarily to those at the top of the income scale.” In 2013, the OCPP said, the wealthiest 1 percent of Oregonians made an average of $770,000 per year, more than double their inflation-adjusted income in 1979, while the median household income in Oregon was $32,537, about $1,500 more than in 1979.

The OCPP said Oregon lawmakers need to confront the issue of income inequality and make “significant changes in public policy to once again allow the typical Oregonian to experience economic progress.” What’s needed, it said, is more investment in education and other public services “that create economic opportunity” and tax policies “that reduce, not exacerbate, income inequality.”

But also needed, it said, is a reversal of employer actions of the past couple of decades that have aggressively opposed workers’ right to unionize, including “coercive and punitive tactics such as threats of plant closures, actual plant closings, discharges, harassment, disciplinary action, surveillance and alteration of benefits and working conditions.”

Reversing the rise in income inequality, which President Obama and others have called the “defining challenge of our time,” won’t be easy. Unions are viewed with disfavor in many segments of our society and today’s concentration of wealth has been accompanied by a concentration of political power.

Social unrest over income inequality isn’t going to go away — and may intensify if, or when, the economy turns sour again. But beyond that, there’s something fundamentally wrong with a country that prides itself on promoting individual equality having an increasingly unequal distribution of income.

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