When it comes to the rise of economic inequality in the United States, the question is no longer: Has it really gone up? It’s 1) why has it gone up, 2) what does it mean, and 3) what can be done about it?
If you look under enough rocks, it’s still possible to locate a few inequality deniers, but the evidence of higher inequality — of wages, incomes, wealth, even political influence — is found across every major dataset that tracks these variables, as we’ll show in a moment.
I’ve been tracking these trends for decades, and when I started telling people about them back in the 1980s, I’d put up a graph or two (using an overhead projector (!)), say “see…I told ya!” and call it a day. Until finally someone said, “Okay…inequality’s going up a lot. So what?”
That led to a broader research agenda targeting questions 1-3 above, which my CBPP colleague Ben Spielberg and I have now put into the PowerPoint presentation you can download here. We’re hoping the presentation can serve as a comprehensive resource for anyone interested in the questions posed above.
Part 1 of our presentation illustrates the trend in economic inequality. It does so, however, using many more data sources and income definitions than were around when I first started looking into the issue. The basic facts of the case are important and revealing: Virtually every data source shows an upward trend in inequality since the late 1970s.
Part 2 of the presentation discusses why inequality matters. We’ve identified four main reasons and the mechanisms behind them: current levels of inequality 1) reduce economic mobility and opportunity such that too many of those stuck at the bottom and comfortably ensconced at the top tend to stay there; 2) reduce representative democracy, 3) create a “wedge” between economy-wide growth and paychecks for working Americans, and 4) may contribute to the economic shampoo cycle (“bubble, bust, repeat”) that has characterized the U.S. economy in recent years. For those who want to dig deeper, we’ve also compiled some of the research in support of each claim.
Part 3 offers ideas about policy measures we can take to address the causes of inequality and counter its effects (those familiar with CBPP’s full employment project will recognize many of these proposals). Our slides in this section are by no means exhaustive. The development of robust, long-term solutions to such high levels of inequality is an evolving endeavor based on data, politics, and policy evaluation.
Ben and I hope you find the presentation a useful one-stop shop for much of what you want to know about inequality, as well as guidance toward a large and growing literature. The rise of inequality to historically high levels presents a serious challenge to many of our basic values regarding opportunity, democracy, and broadly shared prosperity. Fortunately, it’s a challenge we can meet if we’re willing to work together to do so.