Income inequality in Oregon remains vast, even with a decline in the average incomes of the rich in 2023, the year with the most recently available data. Despite the recent moderation, the decades-long trend of rising inequality persists. Moreover, the job-market factors that underlie the decline in inequality since its peak in 2021 have disappeared – a development that could presage a return to higher levels of inequality. And going forward, the enactment of the Republican budget bill in Congress earlier this year – which showers the wealthy with new and expanded tax breaks – will likely worsen inequality in the coming years.
Economic inequality undermines the well-being of Oregonians and society. The harms include worse health, less social mobility, and a less stable nation, just to name a few.
The good news is that history shows that income inequality is not inevitable. It also shows progressive tax policy and a strong labor movement are essential to create an economy of broadly shared prosperity.
Income inequality narrowed in 2023, but the gap remains vast
The gap in income between the richest 1 in every 100 Oregonians (the top 1 percent) and the median Oregonian (the typical Oregonian) has grown for decades. On average, a member of the top 1 percent took home $1.3 million in 2023.[1] The typical Oregonian, or median, earned slightly over $49,000 that year.
In inflation-adjusted terms, between 1980 and 2023, the average member of the top 1 percent in Oregon saw their incomes rise by more than $843,000. The typical Oregonian saw their incomes rise by about $6,300 over that same span.
A lot of the gains at the top have been driven by the gains of the top 0.1 percent, or richest 1 in every 1,000 Oregonians. When viewed on their own, the gains of the ultra-rich leave the rest of the top 1 percent behind.
The average member of Oregon’s top 0.1 percent took home more than $5 million in 2023. That was down from their peak in 2021, where on average they took home nearly $9 million, after adjusting for inflation. The spike in income for the ultra-rich in 2021 was driven largely by increases in capital gains income, as the stock market soared in the wake of the pandemic, “reinforcing wealth concentration at the top.”[2] Since each dollar of capital gains is largely only claimed once, it’s rational for capital gains income to decline in years after remarkably high profits.
From 1980 to 2023, the average income of an Oregonian in the top 0.1 percent increased by about 347 percent, after adjusting for inflation. Over the same span, the typical (median) Oregonian saw their inflation-adjusted income rise by about 15 percent. In other words, the income of the superrich has gone up nearly four-and-a-half times over the past four decades, while the income of the typical Oregonian has barely budged.
If income inequality had stayed at 1980 levels, the Oregonian in the middle would fare far better today. The average member of the richest 1 percent earned about 9.9 times as much as the median Oregonian in 1980. Had that gap remained constant, the Oregonian in the middle would have earned nearly $128,500 in 2023. Instead, they took home about $49,000.
These gains at the very top are extreme. One way to consider them is to look at how many years a typical Oregonian would need to work in order to earn as much money as someone in Oregon’s top 0.1 percent took home in 2023. The Oregonian in the middle would need to work more than a century – 103 years – in order to earn as much as the average member of Oregon’s top 0.1 percent took home in 2023.
Wealth Inequality Is Even More Extreme
As concentrated as the income gains are at the top, it pales in comparison to inequality on the basis of wealth. Income refers to the amount of money a person earns in a given year. Wealth refers to all the assets someone owns — homes, financial assets, businesses, etc. — minus their debts. In terms of wealth, inequality in Oregon is even more extreme. In recent years, Oregon’s three billionaires are estimated to collectively own about twice as much as the bottom half of all Oregonians.[3]
Dip in income inequality has likely reversed by now
A key factor driving the dip in income inequality from its peak in 2021 to 2023, a tight labor market, has now reversed.[4] The weakening labor market, coupled with booming stock market, point to a rebound in income inequality at present time.
In the years following the onset of the COVID-19 pandemic, a tight labor market resulted in real gains for workers. “The bottom 90% experienced the only [wage] growth of any group in 2023, while the top 5% and the top 1% experienced losses of 2.0% and 3.3%, respectively.”[5] Still, from 1979 to 2023 real wages for the bottom 90 percent of workers increased by nearly 44 percent, while the top 1 percent saw their wages increase nearly three times over.[6]
Gains for workers in the early pandemic years were due in part to the “great resignation,” where workers were more willing to quit their jobs. In turn, many employers raised wages to attract and retain workers. But by mid-2023, Bureau of Labor Statistics data showed a return in the “quits rate” data to pre-pandemic levels, signaling a softening of the labor market.[7]
In the years since, the labor market has weakened further. Job growth has slowed, unemployment has risen to levels not seen since 2021, and many sectors of the economy have seen increased job losses.[8]
Meanwhile, the stock market has continued to soar to record levels, a good indicator of the direction of inequality.[9] Research has long shown the gains from a booming stock market are concentrated amongst the already wealthy, as rich households are more likely to earn their income from stocks.[10] According to Federal Reserve data, by the end of 2023 the, “top 10 [percent] of Americans held 93 percent of all stocks, the highest level ever recorded.”[11]
With the stock market setting record highs and with a labor market weaker than it was a couple of years ago, it is unlikely that inequality has been reined in.
Vast inequality undermines the well-being of Oregonians
Vast inequality is harmful to the well-being of Oregonians. Research shows more than two in five Oregonians lack the income necessary to afford their basic needs.[12] Recent surveys have found that nearly half of families with young children face economic hardship nationwide.[13] A more equitable distribution of economic gains would mitigate this poverty and hardship.
The concentration of income among the already rich means hardworking Oregonians struggle to afford the basics such as food, rent, child care, and other essentials. In 2023, the richest 1 percent of Oregonians took home about 14 percent of all income earned in the state. That was nearly as much as the bottom half of all Oregonians – some 956,000 tax filers – combined.
The harm from inequality extends beyond the diminished paychecks of Oregonians working to get by. Recent studies point to inequality as a driving force behind a rise in chronic illness and premature death in the United States.[14] Research also shows that income inequality limits social mobility, hindering the possibility for a child born into poverty to move out of it. It leads to worse physical and mental health outcomes, particularly for those lower on the economic ladder. Moreover, income inequality slows economic growth, innovation, and investment.[15]
Research also shows rising inequality and the erosion of democracy itself are deeply linked. “The more unequal income distribution is in a democracy, the more at risk it is of electing a power-aggrandizing and norm-shredding head of government. Even wealthy and longstanding democracies, like the United States, are vulnerable if they are highly unequal,” one study concluded.[16]
Congress just poured more fuel into the fire that is income inequality
Tax policy has been a key driver of inequality over the last several generations. While much of this analysis focuses on 1980 as a starting point due to data limitations, the 1980’s also saw the beginnings of successful concerted efforts by anti-government groups to slash tax rates for the rich and corporations. As effective tax rates for the ultra-rich fell precipitously starting around 1980, the share of income and wealth going to the top 0.1 percent skyrocketed.[17]
Earlier this year, the Republican majority in Congress enacted the largest tax cuts in the nation’s history — tax cuts that heavily favor of the rich, threatening to worsen inequality. All told, H.R. 1 cuts $3.7 trillion in taxes over the next decade, with the rich as the main beneficiaries.[18] In 2026, the richest 20 percent of Americans together will get nearly three-quarters of all the tax benefits from the new law. The top 1 percent alone will take home 22 percent. Meanwhile, the lowest-earning 60 percent of all Americans together will receive just 14 percent of the benefits, with the bottom 20 percent seeing little to no benefit from the cuts made in the Republican budget.[19]
Another way to see the lopsided nature of the tax cuts is to consider the dollar amounts received by tax filers in different income groups. In Oregon, an average rich person — the average member of the top 1 percent — will see more than $42,000 in new tax benefits in 2026, more than what many people earn in an entire year. The average Oregonian in the bottom 20 percent, on the other hand, will see about $70.[20]
These tax cuts are fuel for inequality. Middle- and low-income families are likely to spend all or most of their modest tax benefits on essentials, but not the rich. They likely will steer the tax windfalls into buying more stocks, bonds, or other income producing assets, which in turn will further worsen inequality. As the past four decades have shown, inequality begets more inequality.
The Republican budget law makes matters even worse by offsetting some of the cost of the massive tax cuts by slashing nutrition assistance and health care. H.R. 1 makes more than $900 billion in cuts to Medicaid and $186 billion more in cuts to the Supplemental Nutrition Assistance program, making it even harder for millions of families to get by.[21] While the impact of these cuts may not show up directly in the tax return data used to produce this analysis of income inequality, the cuts to healthcare and nutrition assistance will further widen the economic divide afflicting the nation.[22]
A much more equal, healthy society is possible
Vast, relentless inequality is not predestined. In fact, the history of this country offers a blueprint for reining in inequality and building a fairer economy.
In the wake of the Great Depression, the New Deal reforms of the 1930s set the nation on a course of declining inequality and a much broader, more prosperous middle class. The New Deal era saw the top marginal tax rate rise from 25 percent to 63 percent in 1932, then to 79 percent in 1936.[23] Throughout the New Deal Era and into the 1960’s, the corporate tax rate was raised to nearly 53 percent, at one point accounting for more than a quarter of federal revenues.[24] Between 1928 and 1976, the share of all income nationally going to the top 1 percent declined by 63 percent.[25] After decades of tax cuts, America finally surpassed the 1928 peak in 2021, when nearly 28 percent of national income went to the top 1 percent.
These taxes paid for massive public works projects to modernize the nation’s infrastructure and put Americans back to work amidst a depressed economy. They also helped finance Social Security, which remains the nation’s largest social insurance program helping millions of Americans meet their basic needs nearly a century later. Taxes would be raised again to finance the war effort during World War II. The results were some of the highest effective tax rates on the highest earners that extended into the 1960’s. During this time, our country also saw the greatest expansion of the middle class.[26]
The New Deal also strengthened the bargaining power of workers, a powerful antidote to inequality. Cornerstone legislation protecting the right of workers to organize and join unions, setting a national minimum wage, and establishing a 40-hour work week with overtime protections was enacted during this time.[27] Following the passage of the National Labor Relations Act, the share of workers belonging to a union nearly tripled.[28]
As the past shows, the keys to shrinking inequality and creating a broad middle class are not a mystery. They involve increasing the bargaining power of workers, as well as much higher tax rates on the rich, and investing the proceeds of those taxes on the public services that benefit everyone. It has worked in the past, and will work again if the people’s representatives have the courage to push through these reforms.
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[1] This issue brief uses the terms “Oregonians” and “taxpayers” interchangeably. Unless otherwise noted, these refer to all Oregon income tax filers. In some instances, Oregon Department of Revenue data is only available for full-year resident income tax filers. In those instances, we note that the data is for full-year filers in the chart’s footer with an endnote. Unless otherwise noted, all figures are OCPP analysis of Oregon Department of Revenue data.
[2] Kartashova, Katya and Xiaoqing Zhou, Wealth Inequality and Return Heterogeneity During the COVID-19 Pandemic, Federal Reserve Bank of Dallas.
[3] Mac Innis, Tyler and Juan Carlos Ordóñez, Wealth Inequality in Oregon is Extreme, Oregon Center for Public Policy.
[4] For more on how a tight labor market improved wages for low-wage workers see Gould, Elise and Katherine deCourcy, Fastest wage growth over the last four years among historically disadvantaged groups, Economic Policy Institute.
[5] Gould, Elise and Jori Kandra, Wage inequality fell in 2023 amid a strong labor market, bucking long-term trends, Economic Policy Institute.
[6] Ibid.
[7] Iacirci, Greg, The ‘great resignation’ – a trend that defined the pandemic-era labor market – seems to be over, CNBC.
[8] Riccadonna, Carl, Oregon’s Economic Reality and Trends.
[9] See the Federal Reserve Bank of St. Louis’s dashboards for the S&P 500, Dow Jones Industrial Average, and NASDAQ Composite Index.
[10] Kuhn, Moritz, Moritz Schularick, and Ulrike I. Steins, Income and Wealth Inequality in America, 1949-2016.
[11] Sor, Jennifer, The wealthiest 10% of Americans own 93% of stocks even with market participation at a record high.
[12] United Way, United for ALICE: Oregon.
[13] Geduld, Amanda, Survey: Nearly Half of Families with Young Kids Struggling to Meet Basic Needs.
[14] See Achenbach, Joel, Dan Keating, Laurie McGinley, Akilah Johnson, and Jahi Chikwendiu, “Dying Early: America’s Life Expectancy Crisis,” The Washington Post, October 3, 2023. See also Stephen Bezruchka, Inequality Kills Us All: COVID-19’s Health Lessons for the World (New York: Routledge, 2023); Kuo, Chun-Tung and Ichiro Kawachi, “Inequality, Social Mobility, and Deaths of Despair in the US, 2000-2019,” JAMA Network Open, July 12,2023; Lewer, Dan, Wikum Jayatunga, Roberty W Aldridge, Chantal Edge, Michael Marmot, Alistair Story, and Andrew Hayward, “Premature mortality attributable to socioeconomic inequality in England between 2003 and 2018: an observational study,” National Library of Medicine, January 2020.
[15] See Polacko, Matthew. “Causes and Consequences of Income Inequality – An Overview” Statistics, Politics and Policy, vol. 12, no. 2, 2021, pp. 341-357; Berg, Andrew G. and Jonathan D. Ostry, “Equality and Efficiency,” Finance & Development, Vol. 48, No. 3, September 2011; Ostry, Jonathan D., Andrew Berg and Charalambos G. Tsangarides, Redistribution, Inequality, and Growth, International Monetary Fund, February 2014; Boushey, Heather and Carter C. Price, How Are Economic Inequality and Growth Connected? A Review of Recent Research, Washington Center for Equitable Growth, October 2014; Ryder, Guy, Urgent Action Needed to Break Out of Slow Growth Trap, International Monetary and Financial Committee, International Monetary Fund, Thirty-Third Meeting, April 16, 2016; Dabla-Norris, Era, Kalpana Kochhar, Nujin Suphaphiphat, Frantisek Ricka, Evridiki Tsount, Causes and Consequences of Income Inequality: A Global Perspective, June 2015; “Trends in Income Inequality and its Impacts on Economic Growth,” OECD Social, Employment and Migration Working Papers, No. 163, OECD Publishing, 2014; Orrson, James, Income Inequality in America: A Call for Action and Effective Policy, White Paper, May 2015; Chetty et al. “The Association Between Income and Life Expectancy in the United States, 2001-2014”, Clinical Review and Education, 2016. On the intersection between the COVID-19 pandemic and economic inequality, see Heather Boushey and Somin Park, The coronavirus recession and economic inequality: A roadmap to recovery and long-term structural change, Washington Center for Equitable Growth, August 31, 2020.
[16] Rau, Eli G., and Susan Stokes, Income inequality and the erosion of democracy in the twenty-first century.
[17] Inequality.org, Inequality and Taxes.
[18] Congressional Budget Office, H.R. 1, One Big Beautiful Bill Act (Dynamic Estimate).
[19] Wamhoff, Steve, Carl Davis, Joe Hughes and Jessica Vela, Analysis of Tax Provisions in the Trump Megabill as Signed into Law: National and State Level Estimates, Institute on Taxation and Economic Policy.
[20] Institute on Taxation and Economic Policy, Impact of Trump Megabill in Oregon.
[21] For more on cuts to Medicaid, see Mudumala, Anna, Maiss Mohamed, Jennifer Tolbert and Alice Burns, The Impact of H.R. 1 on Two Medicaid Eligibility Rules, KFF. For more on cuts to SNAP, see Coffey, Ameila and Heather Hahn, SNAP Cuts in One Big Beautiful Bill Act Leave Almost 3 Million Young Adults Vulnerable to Losing Nutrition Assistance, Urban Institute.
[22] An area of particular concern is how Oregonians who lose their health coverage could become saddled with medical debt. For more, see Nuñez, Stephen, The US Medical Debt Crisis: Catastrophic Costs of Insufficient Health Coverage, The Roosevelt Institute.
[23] Tax Policy Center, Historical Highest Marginal Income Tax Rates.
[24] Avi-Yonah, Reuven S., Emily DiVito, Niko Lusiani, Fifty Years of ‘Cut To Grow’: How Changing Narratives around Corporate Tax Policy Have Undermined Child and Family Well-Being, Roosevelt Institute.
[25] OCPP analysis of data compiled by Emmanuel Saez, using IRS data.
[26] Pizzigati, Sam, The Two Decades That Created Our World’s First Mass Middle Class.
[27] For more on the National Labor Relations Act, which established the right of certain private sector workers to unionize, see National Archives, National Labor Relations Act (1935). For more on the minimum wage and overtime protections, see U.S. Department of Labor, Wages and the Fair Labor Standards Act.
[28] Romero, Paul D. and Julie M. Whittaker, A Brief Examination of Union Membership Data.
