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Thursday, October 27, 2016

A new report from the Economic Policy Institute, released Tuesday, highlights the increasingly prevalent and disparate effects of wage inequality. With a focus on same-gender wage gaps, the report demonstrates that income inequality affects all Americans, and reminds us that the implications and scope of the widening wage gap are not limited only to the poorest citizens.

The EPI notes that “since the late 1980s . . . the top has pulled away from everyone else.” As the nation’s wealthiest continued to make more money at the turn of the century, the wages of middle- and lower-class Americans remained relatively stagnant — effectively resulting in a decrease when adjusted to meet higher inflation rates — or increased at a rate slower than that by which the wages of the upper class grew.

According to the EPI, in 1979, the wages of those in the top 95th percentile were 2.2 times higher than the wages of the “typical worker,” or those considered “middle-wage earners,” at the 50th percentile. This “95/50 gap” applied to both men and women.

Over time, however, the disparity has widened.

As shown in the chart below, by 1999, men in the 95th percentile were making 2.7 times more than men in the 50th percentile. The same gap existed among women. Ten years later, in 2009, the wage gap among men had dramatically widened: The top earners were making 3.1 times more than middle-wage earners. The wage gap among women also grew wider, but not as dramatically. The top female earners made 2.8 times more than their middle-wage counterparts.

By 2013, the typical 95th percentile man’s wage was 3.3 times higher than the typical 50th percentile man’s. The same year, the typical 95th percentile woman’s wage was three times higher than the average 50th percentile woman’s wage.

The EPI’s most obvious finding is that inequality is increasing at a quicker pace among male earners than it is among female earners. But other concerns arise from the data. If men and women are disproportionately impacted by income inequality, can one assume that income inequality facilitates more general, societal inequality? Is it possible that the slower rate of income inequality experienced by women is a result of female earners making less than their male counterparts? The notion is alarming because it would prove a direct correlation between the gender pay gap, income inequality and the other forms of inequality that result directly from income inequality.

Today, the data at least prove one thing: The wage gap is widening, and both men and women are feeling it — including those who are in a better position than the nation’s lowest-wage earners.

“The enormous increase in inequality among both men and women over the last 35 years is a testament to the fact that skewed wage growth has become a core economic challenge of our time,” writes economist Heidi Shierholz in the EPI report.

High-wage inequality is, as Shierholz states, the “key wedge between a successful economy … and an unsuccessful economy,” and it is also one of the greatest threats to America’s middle class.

Photo: Brad_crooks via Flickr
Chart via Economic Policy Institute
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  • Dominick Vila

    Income inequality influenced, in part by effective anti-labor policies and sentiments, and in part by the economic schism between the top 2% who own 2/3 of our national wealth and the rest of us, ought to be our top priority.
    Instead, we spend our time debating whether or not Benghazi was an unprecedented terrorist attack much worse than 9/11 and the 12 attacks against U.s. diplomatic facilities that preceded it because Obama thought, initially, that it may have been prompted by a provocative film conveniently released two months before a presidential election, and the emergence of a “Pastor” promising to burn the Quran, or the propriety of going after the right wing organizations that lied in their applications for tax exempt status, instead of letting them do as they pleased.
    Opposition to proposals such as raising the minimum wage, whichIn addition to helping hundreds of thousands of fellow Americans overcome poverty, would increase their disposable income and help strengthen the economy, reveals the level of cynicism by those who have it all and want to preserve it, and if possible increase it, at the expense of those who barely have enough to get by.

    • Independent1

      Unfortunately, the problem in America goes far beyond just income inequality, it goes to the destruction of the working environment in America itself. The labor movement that had taken place in the early 1900s, had gotten employers to understand that they needed to do right by employees who showed loyalty and worked hard for them; they needed to do what they could to provide secure jobs, a livable wage and future retirement security for employees that worked hard for them. It’s all this that Ronald Reagan began the destruction of while he was president.

      I know I sound like a broken record, but it was Ronnie’s summary firing of the Air Traffic Controllers, after he had deviously given them the idea that he was going to negotiate with them even though legally they couldn’t strike, that began the change in the mindset of company owners and management across the nation: if the President of the United States didn’t feel obligated to bargain in good faith with a union, why should they? If the president could summarily fire all the members of a union, why were they honoring the decades held concept that company owners should do what’s best for the people who work them?

      And Ronnie not only fired all the ATCU members, when it came time to appoint people to the National Labor Relations Board, he appointed two known union haters to it. This too had to send a message to company managements across the country. The NM posters who are old enough to have been employed in the 1980s should remember that it was around 1983 when companies suddenly started letting their best workers go, just so they could replace them with cheaper help in order to cut salaries and improve their bottom line. The fanatical focus on being subservient to the stock holders for publicly held companies was just beginning.

      Ronnie’s constant drumming on his nonsensical tickle-down theories had also caused virtually all publicly held corporate managements to decide that it was far more important to focus on their stock price by increasing their profits; improving the bottom line to look good to their stock holders, which more often than not, required reducing expenses anyway they could – including by reducing the amount of monies allocated for raises to employees (other than the CEO and board) and by eliminating employee benefits like healthcare and pension plans (other than for the CEO and board).

      The focus on the bottom line, and what the stockholders would think about corporate actions, became so fanatical, that most corporate owners and managements began to care very little about their employees overall welfare and futures; such that corporate employees today have little or no bargaining power which is why workers pay has been so stagnant for the past 10-15 years.

      Even today, 20 plus years after Reagan’s presidency, the trickle-down fanaticism continues, such that even though retail sales analysts have contended with Wal-Mart, that it is loosing billions in sales revenue each year by maintaining such a low pay scale for its employees; it refuses to listen because of the trickle-down fantasy that has been so imbedded in the minds of its management and certainly the Walton Family itself. Wal-Mart, by maintaining such low pay and working its stores with primarily part-time help, has employees now who are not loyal to the company nor are the majority of them very knowledgeable about company policy nor are they knowledgeable abot products Wal-Mart sells. Sales analysts stay this has been turning off customers because of store shelves that are not stocked, employees who cannot answer customers questions or actually assist them; or even keep their stores in presentable conditions.

      As I mentioned above, analysts say this has been costing Wal-Mart billions in sales revenue each year, which could be used to provide better working conditions for its employees, including wages, but Wal-Mart refuses to go that route; and many other companies are following along with Wal-Mart. So America will never get back to a more reasonable level of income inequality, unless somehow we can get American companies to get back to realizing that’s its in their best interests to do a better job of balancing company expectations between corporate profits, the companies stock holders and providing better working conditions for company employees – including better salaries and better benefits.

      • Dominick Vila

        No, you don’t sound like a broken record. I share your opinion. The effectiveness of the anti organized labor campaign that has taken place during the last three decades has changed the expectations of our workforce from better income and benefits, to feeling fortunate to have a job…and nobody seems to care!

        However, I believe there are other factors that have contributed to the demise of the middle class, especially blue collar workers, in the USA. The outsourcing of assembly line work and automation have devastated blue collar work. The deliberate decision to transition from a manufacturing to a service oriented economic model in the 1970s, without taking into consideration that service work can be often performed from abroad, at a fraction of the cost, and without educating the populace to meet the requirements associated with high tech work, condemned a large segment of our population to low paying jobs in grocery stores, retailers, and the hospitality sector. To make matters worse, the Internet allowed savvy entrepreneurs to sell the same products offered by most stores from the comfort of our recliner and delivered to our door steps at competitive prices.

        We live in a constantly changing world, and unless we evolve with it and adjust, we are going to continue to struggle for many years to come, making warfare an attractive option for many.

  • Allan Richardson

    If the GOP were a team in the NFL, they would demand that the rules, officials and officiating practices be placed under THEIR jurisdiction, so they could prevent any other team from beating them.