Income Inequality in The United States

Income Inequality In The United States

Distribution of income in the United States has been the subject of study by scholars and institutions. Data from a number of sources indicate that income inequality has grown significantly since the early 1970s, after several decades of stability. While inequality has risen among most developed countries, and especially English-speaking ones, it is highest in the United States.

Studies indicate the source of the widening gap (sometimes called the Great Divergence) has not been gender inequality, which has declined in the US over the last several decades, nor inequality between black and white Americans, which has stagnated during that time, nor has the gap between the poor and middle class been the major cause—though it has grown. Most of the growth has been between the middle class and top earners, with the disparity becoming more extreme the further one goes up in the income distribution. Upward redistribution of income is responsible for about 43% of the projected Social Security shortfall over the next 75 years.

A 2011 study by the CBO found that the top earning 1 percent of households gained about 275% after federal taxes and income transfers over a period between 1979 and 2007, compared to a gain of just under 40% for the 60 percent in the middle of America's income distribution. Other sources find that the trend has continued since then. However, only 42% of Americans think inequality has increased in the past ten years. Income inequality is not uniform among the states; as measured by the Gini coefficient: after tax income inequality in 2009 was greatest in Texas and lowest in Maine.

Scholars and others differ as to the causes, solutions, and the significance of the trend, which in 2011 helped ignite the "Occupy" protest movement. Education and increased demand for skilled labor are often cited as causes, some have emphasized the importance of public policy; others believe the cause(s) of inequality's rise are not well understood. Inequality has been described both as irrelevant in the face of economic opportunity (or social mobility) in America, and as a cause of the decline in that opportunity.