Before the arrival of COVID-19, the richest Oregonians had set a new record in terms of their yearly income haul. A new analysis by the Oregon Center for Public Policy (OCPP) found that, in 2018, the average income of the richest 0.1 percent — the richest 1 out of every 1,000 — taxpayers topped $5 million, the highest amount ever.
“COVID-19 struck with Oregon already in a situation of extreme imbalance, with so much income flowing to the top and too little to the rest,” said OCPP analyst Daniel Hauser. “Extreme inequality has meant that many Oregonians had little or no economic cushion to soften the blow of the economic downturn triggered by the pandemic.”
Income inequality in Oregon has soared over the past four decades, according to OCPP’s analysis of tax return data. From 1980 to 2018, the average income of the richest 0.1 percent increased more than 400 percent, in inflation-adjusted terms. Over that nearly four-decade period, Oregon’s median income — the income of the taxpayer in the middle — inched up not quite 10 percent. It stood at $38,800 in 2018, just $3,400 more than in 1980.
“The economic gains produced by workers and communities have gone almost entirely to the rich,” said Hauser. “Rising inequality has cost the typical Oregon dearly.”
OCPP estimated that if inequality had held steady from 1980 to 2018 — if everyone’s incomes had grown in tandem with the Oregon economy during that period — then the typical Oregon taxpayer would have earned 60 percent more in 2018. Under that scenario, the taxpayer in the middle would have earned about $23,000 more in 2018.
“It’s no wonder that so many Oregonians found themselves in an economically vulnerable position when the pandemic hit,” Hauser said. “One of the many detrimental effects of rising income inequality has been that families have been too cash-strapped to save for emergencies.”
A report by the Federal Reserve in May 2019, for instance, found that 39 percent of Americans did not have enough savings to handle a $400 unexpected expense, such as a car repair or broken appliance.
OCPP urged both Congress and the Oregon legislature to address rising income inequality, citing former President Barack Obama in describing inequality as “the defining challenge of our times.”
“Some of the actions to take are obvious, like repealing tax breaks and loopholes showered on the rich and large corporations,” Hauser said. “This would signal that our elected leaders are finally confronting the challenge posed by income inequality.”
The Oregon Center for Public Policy (www.www.ocpp.org) is a non-partisan, non-profit institute that does in-depth research and analysis on budget, tax, and economic issues. The Center’s goal is to improve decision making and generate more opportunities for all Oregonians.