by German Lopez
Posted In: News
at 02:41 PM | Permalink
State follows nationwide trend between wealthiest and poorest
Occupy Wall Street may have been onto something. A new report
from left-leaning Center on Budget and Policy Priorities (CBPP) found
Ohio’s income gap — the income difference between the rich and poor — is
wide and growing.
Since the 1970s, the poorest 20 percent saw no change in real
income, the middle 20 percent gained 21.1 percent, the top 20 percent
gained 50.6 percent and the top 5 percent gained 85.1 percent.
In terms of real dollars, low-income and middle-income
Ohioans have actually seen their income drop since the 1990s. The drop caused a “lost
decade” for Ohio’s lower and middle classes, according to the report.
The bottom 20 percent saw a 6.9 percent drop in real income from the
late 1990s to the mid-2000s, while the middle 20 percent saw a 2.9
percent drop. Real incomes for the top 20 percent and top 5 percent
remained the same.
The shifts have caused a startling difference in real
income, which the report calculated by looking at real dollars after federal taxes and including the value of the Earned Income Tax Credit, housing subsidies and food stamps. The poorest 20 percent make on average about $20,500, and the
middle 20 percent make on average about $58,100. Meanwhile, the top 5
percent make about $221,800 — 10.8 times as much as the bottom 20
percent and 3.8 times as much as the middle 20 percent.
Real dollars are a measurement used to gauge the value of
money and income after inflation. If a family sees its income in real
dollars drop, it means income increases, if they exist, are not keeping up with
The widening income gap is part of a nationwide trend. In
comparison to other states, Ohio mostly did better than the national
average. Ohio was not included in any of the six top 10 ranks for
inequality, which ranked states for rises in inequality during different time periods. During the late
2000s, New Mexico, Arizona, California, Georgia and New York had the
greatest gaps between the wealthiest and poorest. In the same time
period, New Mexico, California, Georgia, Mississippi and Arizona had the
biggest gaps between the wealthiest and middle.
Part of the cause for the widening gap is the recent
recession, but the CBPP report found that the wealthiest have seen their
incomes rise again in the recession’s aftermath, while middle and lower
incomes have not. The report also blamed government policies —
deregulation, trade liberalization, the weakening safety net, the lack
of effective laws regarding collective bargaining and the declining real
value of the minimum wage — and the expansion of investment incomes,
which the CBPP says “primarily accrue to those at the top of the income
The report finished with some suggestions for states:
raise minimum wage and index it for inflation, improve unemployment
insurance systems, make state tax systems more progressive and
strengthen safety nets.
Policy Matters Ohio, which pointed to the findings in a
statement, says the report warrants action. “Poor and middle-income
families are seeing their income fall in real dollars and relative to
higher earners,” said Amy Hanauer, executive director of Policy Matters
Ohio, in the statement. “When households already subsisting on less than
$23,000 a year see their incomes drop, that means hunger, instability,
poor school performance and worse. Ohio needs to do more to improve the
lives of families in this state.”
Little-known facts and the big lie of supply-side economics
6 Comments · Wednesday, April 20, 2011
For three decades the United States has conducted a massive economic experiment, testing a theory known as supply-side economics. The theory goes like this: Lower tax rates will encourage more investment, which in turn will mean more jobs and greater prosperity — so much so that tax revenues will go up, despite lower rates.