United States of worsening income inequality and rising poverty

Posted: 20 December 2012 in Uncategorized
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inequality-1989 inequality-2011

Reuters is in the midst of an important series on worsening income inequality and rising poverty in the United States.

What they’ve shown thus far are the following:

1. Inequality has increased in 49 of 50 states since 1989 (e.g., in all 50 states, the richest 20 percent of households made far greater income gains than any other quintile—up 12 percent nationally) and federal policies have been helping the rich get richer.

The federal government does redistribute wealth down to struggling Americans. But in the years since President Lyndon Johnson took aim at poverty in his first State of the Union address, there has been an increasingly strong crosscurrent: The government is redistributing wealth up, too – especially in the nation’s capital.

The beneficiaries are not the billionaire financiers and celebrities who have come to personify income inequality in the 21st century. Yet the Washington elite are just as much part of the trend, having influenced laws and decisions that alter the entire country’s distribution of income.

2. Education, once a force for advancement of those at the bottom, is now serving to make the nation more unequal.

Just to stay even, poorer Americans need to obtain better credentials. But that points to another rich-poor divide in the United States. Educators call it the scholastic “achievement gap.” It has been around forever, but it’s getting wider. Lower-class children are getting better educations than before. But richer kids are outpacing their gains, which in turn is stoking the widening income gap.

3. The American welfare state has grown but so have the ranks of the poor.

Nationally, the federal government put a record $506 billion last year into its five major means-tested programs for low-income, able-bodied Americans. Outlays on these programs – food stamps, Medicaid, cash welfare, housing assistance and tax credits – were up more than triple since 1989, adjusted for inflation. The 50 states spend tens of billions more.

If it weren’t for such assistance, the poverty rate would be much worse. Some economists say the rate is somewhat overstated, too, because it doesn’t count non-cash aid such as food vouchers.

Today, the elderly, the disabled and the working poor get most means-tested assistance. Higher Medicaid spending – driven by expanding rolls but also by soaring healthcare costs – eats up a growing piece of the overall budget. Part of this shift toward the elderly and disabled is no doubt due to the aging baby boomer population.

Still, people who don’t fall into favored categories are getting pinched, especially jobless adults

All in all, Reuters has produced a damning portrait of a nation in the midst of worsening income inequality and rising poverty.

  1. […] United States of Worsening Income Inequality and Rising Poverty Reuters is in the midst of an important series on worsening income inequality and rising poverty in the United States. […]

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