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Frank Bernheisel: The View From Here
Frank Bernheisel
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Frank Bernheisel
Posted 11.27.19
Just Outside Washington

FRANK BERNHEISEL

On American Income Inequality

Recently the Census Bureau reported that income inequality in the U.S. is at its highest point since it started collecting data more than 50 years ago, according to Census Bureau numbers. The census reported income overall increased by 0.8 percent from 2017 to 2018 to a median household income of almost $62,000. (Note: In 2018 the median individual income was $39,048 or $19.14 per hour for a 40 hour week, which indicates more than one individual working in each family.) Even though the income increased, it was not distributed evenly.

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Nine states experienced increases in inequality from 2017 to 2018: Alabama, Arkansas, California, Kansas, Nebraska, New Hampshire, New Mexico, Texas and Virginia, according to a census release.

Five states: California, Connecticut, Florida, Louisiana and New York, plus the District of Columbia and Puerto Rico had higher income inequality than the country as a whole. These areas usually either have high amounts of wealth, poverty or both.

States that had the most equal incomes were Utah, Alaska, Iowa, North Dakota and South Dakota. An interactive state data map is located at: https://www.census.gov/library/stories/2019/09/us-median-household-income-up-in-2018-from-2017.html

Income disparities have become so pronounced that America’s top 10 percent of families now average more than nine times as much income as the bottom 90 percent. Americans in the top 1 percent tower stunningly higher. They average over 39 times more income than the bottom 90 percent.

One more point: productivity is measured by GDP, so the blue line on the chart below shows growth in U.S. productivity by household of 55 percent since 1984. The red line shows household income growth of about 20 percent for the period. In economics, distribution is the way total output, income, or wealth (GDP) is distributed among individuals or among the factors of production (such as labor, land, and capital). So, if labor did not get the gain in GDP; who did? Clearly land and capital; without getting into the economic swamp about 'Rent', it is clear to me that some are gaming the system.

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Elizabeth Warren, Bernie Sanders, and other Democratic candidates have proposed measures to change the U.S. tax structure to capture some of this income, lower inequality and pay for social security and increased health care. Elizabeth Warren goes a step further and points out that the high-income people (and corporations) use that income (money is power) to change the system in their favor. But it is worse than that, as Larry Summers points out in the article below, they rig the system so they can cheat on paying what is now deemed, their 'fair share'. He offers a solution: fully fund the Internal Revenue Service and let them do their job.

https://www.washingtonpost.com/opinions/yes-our-tax-system-needs-reform-lets-start-with-this-first-step/2019/11/17/4d23f8d4-07dd-11ea-924a-28d87132c7ec_story.html

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