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People’s frustrations run deeper than these most recent political battles, their frustrations rooted in their own daily battles to make ends meet, to pay for college, buy a home, save for retirement. They experience in a very personal way the relentless, decades-long trend that I want to spend some time talking about today. And that is a dangerous and growing inequality and lack of upward mobility that has jeopardized middle clas. America’s basic bargain: that if you work hard, you have a chance to get ahead. I believe this is the defining challenge of our time.

Juan Carlos (host): That was then President Barack Obama speaking in 2013 about the dangers posed by the decades long trend of rising income inequality. 

So where are we now? What’s the latest news on income inequality in Oregon? 

To explore this, I spoke with my colleague from the Oregon Center for Public Policy Tyler Mac Innis. Tyler is a policy analyst with the Center, and he recently published a paper breaking down the most recently available information on income inequality in our state.

As Tyler explains, while the most recent figures show that income inequality has eased off a bit from its all-time high, inequality remains vast. Making matters worse, the budget bill enacted by the Republican majority in Congress earlier this year – a bill that included massive tax cuts mainly benefiting the rich – adds fuel to the fire that is income inequality.

Here is my conversation with Tyler Mac Innis

Juan Carlos:  Hi, Tyler. How are you? 

Tyler: Hi Juan Carlos. I’m doing well. How are you? 

Juan Carlos: I’m doing fine. And, we’re going to talk about one of my favorite topics to discuss, which is income inequality. And you recently published a paper with the latest data on income inequality in Oregon. What is the main takeaway of your analysis? 

Tyler: Well, I think the main takeaway in this report is that income inequality in Oregon remains vast. That’s despite the fact that we have seen some tapering off, in income for folks at the very, very top of the income ladder and in some of the more recent years worth of data.

But even despite that dip, the decades-long trend of rising inequality remains intact. The report also gets into the fact that a lot of the gains that we saw for workers, particularly in the middle of the income ladder, are the result of a tight labor market in recent years, particularly in 2020 and 2021. And the labor market today looks very different.

Not to mention the fact that this past summer, the Republican majority in Congress enacted the so-called One Big, Beautiful Bill. This creates trillions of dollars worth of new and expanded tax cuts over the next decade. And those are overwhelmingly going in favor of the rich. And so, that bill in particular is fuel on the fire of this decades-long trend of worsening inequality.

So our piece looks at why we think, that despite these, these, you know, dips at the top in the recent years worth of data, that it’s too early to say that we’ve turned the tide on inequality. And in fact, we may see it expand in future years.

Juan Carlos: So before we get to the other details of your analysis, maybe we should start by defining a key term that we’ll be using, which is “income” in income inequality. Can you define those for us? 

Tyler: Yeah. So when we talk about income, usually we’re talking about how much money someone earns. Usually we look at that in a typical year, right. So most folks work for wages, right. Their labor, they get paid an hourly wage or a salary. And so they make their income in the form of a wage.

Some people have earnings from things like capital gains. Right. That would be the income generated from the sale of a stock or an investment of some kind. Those are more passive kinds of income. Those are forms of income that we see, you know, concentrated amongst folks at the top. When we talk about income inequality, where we’re talking about the, the, uneven distribution and the increasingly uneven distribution of income throughout our economy.

So if we look at all the income, whether it’s from wages or capital gains, rental properties, dividends, whatever you want to look at, take that all together. And look at who’s earning what. And then if we look at that, over time, we see an increasing concentration of income earned by folks at the very top. 

So to give you some examples: The data set that we have at the state level runs from about 1980 to 2023. When we look at the richest one in every 100 Oregonians, that’s what we mean by the top 1%. Back in 1980, the average member of that group was making about $460,000 a year. And that’s in inflation adjusted terms. Fast forward to 2023, the average member of that group is earning more than $1.2 million a year in inflation adjusted terms.

When we look at the typical Oregonian, the Oregonian in the middle of the income ladde,r back in 1980, they were earning a little shy of $45,000 a year. Again adjusted for inflation. And by 2023, they were earning a little shy of $50,000 a year. So if we look at the very top, we see incomes have nearly tripled while over that same span of time we’ve seen some modest gains for folks in the middle, but really have remained stagnant, when you consider the fact that that’s a 43 year time span, right.

And I think it’s important to note that the richest 1% didn’t become somehow three times more productive over the span of time. But really, this is the fact that we have an economy that is set up that if you own things, if you have assets, you’re rewarded in the form of favorable tax rates or other kinds of tax breaks, that results in greater concentrations of income.

Juan Carlos: Why is inequality a problem? Why should the listeners care that we’ve been seeing this, as you say, uninterrupted trend in terms of rising inequality over the past four plus decades? 

Tyler:  I think it’s a fundamental issue that has far reaching implications across our economy, across our society. Fundamentally, it undermines the well-being of Oregonians.

We have a situation today where more than two in every five Oregonians earn too little to be able to regularly afford their basic needs. There are surveys at the national level that are finding that families with young kids, about half of them, are facing some sort of economic hardship. So we have a situation where families are having a hard time just meeting the basics.

And they could stand to have some more income in their family budgets. But we look at the research more broadly, we find these wide ranging impacts from inequality and other parts of our lives. So, for example, research has found that rising inequality is a driving force behind the rise of chronic illness in our country.

As you might imagine, with, you know, the cost of co-pays and rising premiums for health care, if you’re trying to manage a chronic illness, that becomes very expensive. And if your wages aren’t keeping up with the rising cost of your health care, people will forgo going to the doctor and seeking out the medical care that they need to manage chronic illness.

Researchers also found that inequality stymies social mobility. So kids who are born into poor families are more likely to remain poor as adults. And research shows that rising inequality can slow overall economic growth. Right. It can stymie investment and innovation in our economy. So as these broad reaching impacts throughout our society. There’s also impacts on our democracy itself. There’s some research into what happens when societies become increasingly unequal.

What does that mean if they’re, you know, a democracy. One study determined that rising inequality puts societies more at risk of electing leaders who are willing to undermine democratic norms or democratic systems. And I think, you know, that may not sound unfamiliar to listeners, given that some of the norms that we’re seeing the current administration undermine. So, fundamentally, rising inequality is bad for all of us, regardless of where you land on the income ladder.

It undermines our well-being collectively. And it undermines the health of our state, economy and society.

Juan Carlos: Interestingly, President Obama, more than a decade ago, called income inequality the defining challenge of our time. But it certainly seems, given the data in your report, that we haven’t really confronted that challenge.

You said earlier that inequality narrowed in the most recent analysis, in the most recent data. But we’re still facing a very serious gap. Can you talk to us about that? 

Tyler: Yeah. So for context, the most recent data that we are looking at is for the 2023 tax year. And what we see is the peak in income inequality, at least on record that we have happened in 2021.

And so that’s kind of in that economic boom during the early pandemic years where we saw this massive spike, particularly in capital gains income, for folks at the very top. And so we saw, you know, really significant gains for the top 1% and especially at the top one tenth of the 1% in 2020, in 2021.  In 2022 and 2023, we’ve seen a tapering off as that capital gains income has come back to level, so to speak. 

So we’ve seen a tapering off at the top. We also saw during that time in the early pandemic years that there was a tight labor market. Workers were able to demand better wages for their labor. And so particularly in 2020 and in 2021, we saw some real gains for workers at the bottom and the middle of the income ladder.

So together, these two dynamics at play, create that narrowing that we see in some of the more recent years of data. But when we look back at that longer trend dating back to 1980, the picture is very clear that rising inequality remains vast and remains a challenge for our economy and our state. 

Juan Carlos: Can you talk about how vast that inequality remains?

Tyler: So we talked earlier about some of the gains that we’ve seen for the richest 1%. I think to really put into perspective how vast inequality is, it’s important to kind of hone in on the gains at the very top. So usually we look at the top one-tenth of the 1%, or the richest one in every 1000 Oregonians.

So if we look back to 1980, the average member of this group, the top one-tenth of the 1%, was making about $1.1 million a year in inflation adjusted terms. And by 2023, they were making about $5 million a year on average. That’s down from the peak that we saw in 2021, where they were making nearly $9 million a year, just to give you a sense of how high that peak got in the wake of Covid. 

Juan Carlos: $9 million?

Tyler:   $9 million in 2021, you know, on average. So compare that to the gains that the Oregonian in the middle saw, right? It was about $45,000 a year in 1980, with an increase to about $50,000 in 2023. So when you consider the nearly five fold increase for the top one-tenth of the 1% between 1980 and 2023.

Compare that to the, you know, few thousand dollars that the typical Oregonian saw over that 43 year span. That just gives you a sense of just how vast that gap has become between those at the very top, and the Oregonian in the middle. 

And I will say, you know, up to this point, we’ve been talking about income inequality. We’re talking about  the money that people earn in a typical year. And that is vast. But when we look at wealth, which is kind of zooming out and seeing the broader picture of all the stuff that someone owns, the picture is even more skewed. And so when we talk about wealth, we’re talking about all of the things that someone might own.

So it could be, you know, homes, it could be businesses, it could be stocks or investments, all of that stuff that has value that they own, minus any of their debts. And, you know, put those things together and you get their net worth or their wealth. Right. We’ve published analysis in recent years that shows that the three billionaires that have called Oregon home in recent years collectively own about twice as much as the bottom half of all Oregonians combined.

So I share that to just say that, you know, income inequality in Oregon is vast. But when we zoom out and look at this broader picture of wealth, we see an even more extreme picture. 

Juan Carlos: Tyler, one of the more interesting data points in the paper is how much more income the typical Oregonian would have if inequality had basically stayed the same as the levels in 1980. How much more income would the typical Oregonian have in that case? 

Tyler: The short answer is they would be earning more than twice what they earned in 2023. So when we look at the gap between the top 1% and the Oregonian in the middle at 1980 levels, had that remained constant through 2023, the typical Oregonian would be earning nearly $130,000 a year. I think the figure is  like $128,000 and change. In reality, in 2023, the typical Oregonian was earning less than $50,000 a year. It’s just an eye popping figure, right? Just to consider, what would life look like for that typical Oregonian had inequality remained constant over that time? And the answer is, you know, folks would have tremendous amounts of income, relative to what they have today.

Juan Carlos: I want to go back to something you said before, and that is this narrowing of inequality that we’ve seen in the most recent data, may have reversed by now. Why is that? 

Tyler: Well, I think when we look at gains for workers, particularly those at the bottom or in the middle of the income ladder in those early pandemic years, those gains were really the result of a tight labor market. Listeners may recall this term that was being used, the Great Resignation.  At that time, workers for a variety of reasons were more willing to quit their jobs. It may have been unsafe working conditions as a result of the pandemic. It may have been they were suddenly working from home, and their work life balance was preferable.

They wanted to maintain a hybrid or remote work situation. Some people dropped out of the labor force for caretaking responsibilities or health issues during that time. Right. There were a variety of reasons in which workers were choosing to leave their jobs, and as a result, employers had to raise wages to attract and retain employees during that time.

So in those early pandemic years, we see some real gains in terms of income being earned by folks at the bottom in the middle of the income ladder in particular, when we look at the data by like mid 2023 or so, the Bureau of Labor Statistics tracks this thing, called it quits rate. It’s kind of just looking at the rate at which workers are voluntarily quitting their jobs, leaving the workplace, or leaving their job.

The quits rate by mid 2023 had returned to pre-pandemic levels. So that was a signal that that Great Resignation era was over. And in the years since, the labor market has continued to soften. We see slow job growth overall. We see increased unemployment rates at levels that we haven’t seen since 2021. And we see throughout a variety of sectors in the economy rounds of layoffs and thousands of jobs being lost in the economy.

Meanwhile, in those subsequent years, in 2024 and 2025, we see the stock market continue to rise. And that’s long been a good indicator of rising inequality. Research has shown continually that a booming stock market, the gains from a booming stock market, are really concentrated amongst those at the very top. 

So when we look at those signals, you know, (again, we don’t have the income data yet for 2024 and 2025), but when we look at those signals of a softening labor market, a booming stock market, which usually means gains for those at the top, those are indicators to us say that we likely have not turned the tide on inequality.  And in fact, we may see in future years that inequality has continued to rise.

Juan Carlos:  You mentioned earlier that going forward, things could get worse as a result of actions that Congress took this year. Can you explain to us what Congress did and why this could make matters worse when it comes to income inequality?

Tyler: Yeah. So earlier this year, the Republican majority in Congress enacted the largest tax cuts in our nation’s history, paid for in part by the largest cuts to food assistance and Medicaid in our nation’s history.

And that’s important to note, too. But on the tax side, the law cuts about $3.7 trillion worth of taxes over the next decade, and the rich are the main beneficiaries of those tax cuts. So to give you some figures to put this into perspective, next year in 2026, the richest 20% of Americans will together take home about three quarters or 75% of all the tax benefits in the so-called One Big Beautiful Bill act.

The top 1% alone will take home about 22% of those tax benefits. Meanwhile, the bottom three-fifths, the bottom 60% of all Americans, together will see about 14% of all the benefits, and the bottom 20% of Americans will see little to no benefit whatsoever. In dollar terms, here in Oregon, the average member of the top 1%, that richest one in every 100 Oregonians, they’ll see a tax break of about $42,000 next year.

The bottom 20% of Oregonians will see a tax break worth about $70. That’s before we take into consideration the cuts to Snap and Medicaid. So someone in that bottom 20% very well may be relying on SNAP to be able to put food on the table. They may need Medicaid to be able to access their health care.

And so that $70 is nowhere near going to make up for the fact that they can no longer afford groceries on a monthly basis or can’t afford their co-pays to go see their, you know, their physician. The tax bill that was passed by Congress earlier this year, is incredibly skewed to the folks at the top.

And it will almost certainly make inequality much worse in the years to come. So when we look at these tax cuts that are coming our way for those rich Oregonians, they very likely are going to just, you know, park that money in a place where it can continue to generate more passive income for them, which only fuels this continuing rise of inequality over time.

Juan Carlos: And it’s not hard to predict what happens when you cut taxes for the rich, especially so significantly, and you give small bits to the middle class and low income Oregonians when it comes to tax cuts. Why do you think Congress, knowing that, moved forward in terms of making these tax changes in the H.R.1., the so-called One Big Beautiful Bill?

Tyler: Unfortunately, I’m not a mind reader. I can’t understand the motivations behind those in Congress who voted for it. But I think earlier we mentioned how researchers found that increasingly unequal societies are at risk of becoming less and less democratic.

I think this is an example of those in Congress who have been able to be elected to their position as a result of getting donations from likely rich individuals in their communities. And this is a way of rewarding those folks. It’s a form of concentrated power. It continues to kind of concentrate the gains of our economy amongst an ever narrowing group of the haves and the expense of the have nots. 

It’s hard to justify. I mean, when we look at the last half a century, we have example after example of these waves of large tax cuts that overwhelmingly favor the rich, with the promise that the money will trickle down, spur investment, and do all these great things for the rest of you. But we have nearly half a century of data now to show that just simply doesn’t happen. 

Juan Carlos: You point out in your paper that relentless rising inequality is not inevitable, that we’ve had periods of much lower levels of inequality than we do today. Talk to us about what history shows, in terms of levels of income inequality and what can be done to address that problem.

Tyler: Yeah, I think this is a really important lesson in that we don’t have to look far right, to figure out a way to course correct here, to figure out a way out of this situation. If we look back about a century ago, the country was going through the Great Depression. In the wake of the Great Depression, we had the New Deal era under President Roosevelt in the 1930s that really set a course on reversing the rising tide of inequality at that time and created a much more prosperous and broader middle class as a result.

And that was made possible by raising taxes on the rich, raising taxes on corporations, and strengthening worker power, among other reforms that happened during that time. The new revenues that our country was raising during that time enabled us to invest in massive public works projects. We put people back to work. We modernized our infrastructure at that time.

We created Social Security, which remains our largest social insurance program to this day. Nearly a century later, we strengthened the bargaining rights for workers. We gave workers a greater say in the workplace. We set a national minimum wage and a 40 hour workweek with overtime protections. There were a number of these reforms that both raise the revenue needed to invest in these long term investments, like improving our infrastructure and in strengthening the position of workers in relation to capital.

And we saw as a result of that really significant declines in inequality alongside that broadening middle class. If you look at the share of all income that was earned nationally between 1928 and 1976, the share of all income at the national level going to the top 1% declined over that time by nearly 63%. 

Then in 1980, we see the Reagan administration come in. There are several rounds of tax cuts, and there’ve been many rounds of tax cuts since then. And we see almost a mirror image of that trend now, where we see a reversal of what we accomplished over that time. But all that is to say, there is evidence and examples from our own history, not so long ago that provide us a way out of this trend and a path forward. 

We need to be looking to raise revenues by taxing those at the top, taxing corporations and strengthening the power of workers to make sure that they have a greater say in the workplace. 

Juan Carlos: Tyler, any final thoughts you want to share with us regarding what the latest figures on income inequality here in Oregon show, and perhaps what the way forward is?

Tyler: I think the fundamental lesson or the fundamental take away from me, from the data here is that none of this is inevitable. I think oftentimes when we think about these massive economic forces at play, it feels overwhelming and daunting and that we don’t have any agency or ability to do anything about it.

But we know that that isn’t the case. We have evidence from our country’s history that there are very clear policy solutions in place, that if enacted, can help us stem the tide on rising inequality, which will have a widespread positive impact throughout our society. So that’s the main takeaway for me, is that we can do something about this. None of this is inevitable. And so we should take this seriously. And lawmakers, policymakers, all of us as Oregonians, should maintain a focus on, stemming the tide of inequality for our state.