Income inequality in the United States is at an all-time high, surpassing even levels seen during the Great Depression, according to a recently updated paper by University of California, Berkeley Professor Emmanuel Saez. The paper, which covers data through 2007, points to a staggering, unprecedented disparity in American incomes. On his blog, Nobel prize-winning economist and New York Times columnist Paul Krugman called the numbers “truly amazing.”
Though income inequality has been growing for some time, the paper paints a stark, disturbing portrait of wealth distribution in America. Saez calculates that in 2007 the top .01 percent of American earners took home 6 percent of total U.S. wages, a figure that has nearly doubled since 2000.
As of 2007, the top decile of American earners, Saez writes, pulled in 49.7 percent of total wages, a level that’s “higher than any other year since 1917 and even surpasses 1928, the peak of stock market bubble in the ‘roaring” 1920s.'” [continued…]
The costs of income inequality are clear. The most equal countries are Japan, Sweden, Norway and Finland, and the most unequal are the US, Portugal, the UK and New Zealand. Similarly, the most equal US states include Alaska, Utah, New Hampshire and Wisconsin, and New York, Louisiana, Massachusetts and Connecticut are among the most unequal.
In those countries and states where income differentials are larger, social relations deteriorate and levels of trust are lower. In the US during the 1980s and 1990s, for example, increasingly popular sports utility vehicles began to bear macho names including Outlander, Cherokee, Defender, Shogun and Crossfire.
In the most unequal countries and states, there is more gender inequality, too, and these places are less generous. A higher proportion of people suffer from mental illness, and more use drugs.
Less egalitarian countries have six times as much obesity. Educational attainment is poorer, with higher dropout rates, shorter periods of paid maternity leave and less early childhood education. Teenage birth rates are higher, and it is young men from disadvantaged neighbourhoods who are most likely to be the victims and perpetrators of violence.
In more unequal countries, children experience more bullying, fights and conflict, and rates of imprisonment are five times higher. Although it is possible that heath and social problems cause bigger income differentials, inequalities are the common denominator.
Wilkinson and Pickett argue that social structures that create relationships based on inequality, inferiority and social exclusion must inflict social pain, and that we need to allow a more “sociable” human nature to emerge. Inequalities ratchet up the competitive pressure to consume; indeed, our compulsive need to shop is itself a reflection of how social we are. Reducing inequality, they suggest, is “about shifting the balance from the divisive, self-interested consumerism driven by status competition towards a more socially integrated and affiliative society”. [continued…]