Updated on January 28, 2014
On Tuesday, President Obama is expected to make inequality and limited upward mobility the centerpiece of his State of the Union address.
He’s not the only one talking about inequality. In the past month, Sen. Marco Rubio (R-FL) and conservative budget maven Rep. Paul Ryan (R-WI) have both addressed the issue– a departure for Republican politicians. And across the aisle, Democrats are reportedly making inequality their “top issue” in the lead-up to the 2014 midterms.
Just how bad is American inequality? How did we arrive at this new Gilded Age? And how might we create an economy of broadly shared prosperity?
To these and other questions, you’ll find interesting and useful answers in our Essential Reader…
Inequality in America: How bad is it? In 2011, Mother Jones published a series of charts capturing the depth of inequality in the US, which remains one of the best big-picture looks at the problem out there. We have greater inequality of accumulated wealth than income, and University of California sociologist William Domhoff’s “Who Rules America” provided the details. In The Atlantic, Max Fisher offered a map of global inequality that named the US among the most unequal wealthy countries, and Mark Gongloff reported in the Huffington Post about a study that found that we have the fastest growth in inequality in the developed world. Thomas Shapiro, Tatjana Meschede and Sam Osoro wrote a brief on the black/ white wealth gap at the Institute on Assets and Social Policy, and Brookings’ Benjamin Harris and Melissa Kearny offered 12 facts about America’s struggling lower middle class.
I’m not poor. Why should I care? Richard Wilkinson and Kate Pickett argued in The Spirit Level: Why More Equal Societies Almost Always Do Better that greater inequality correlates with, and may cause, all sorts of social harms – from crime to obesity to alcoholism. John Crace interviewed the authors for The Guardian, and Wilkinson penned an article for CNN. A study conducted by Sir Michael Marmot, a professor of epidemiology at University College London, found that high levels of inequality cause stress and harm the health of both rich and poor. Justin Wolfers noted that higher inequality correlates with less upward mobility. A report by the UN found that higher levels of inequality were accompanied by slower overall growth. World Bank economist Branko Milanovic found that it’s more “fun” to live in more equal societies.
How do we perceive inequality? Almost two-thirds of respondents to a January 23 Pew poll said that inequality is growing, but there were stark partisan differences over the causes and possible solutions. A now-classic study by Michael I. Norton of Harvard Business School and Dan Ariely of Duke University found that most Americans preferred Sweden’s much flatter income distribution to our own and also thought that our economic stratification was similar to Sweden’s. Yale psychologist Paul Bloom wrote in Salon about a series of studies that found children have an inherent attraction to what they perceive as fairness. Even capuchin monkeys have been shown to react with anger to unequal distribution of resources.
You may ask yourself, well, how did I get here? A variety of factors helps explain our spiraling levels of income and wealth inequality. Daron Acemoglu and James A. Robinson, the authors of Why Nations Fail: The Origins of Power, Prosperity, and Poverty, took the bird’s-eye view, connecting income inequality with vast differences in political power. Dylan Matthews wrote in The Washington Post that public policy is entirely responsible for the trend. University of Texas scholar Thomas McGarity linked growing inequality with deregulation. Economic Policy Institute’s Andrew Fieldhouse looked at how changes in the tax code have widened the gap between the haves and the have-nots. His colleague Lawrence Mishel chronicled the role of declining union membership in increasing many Americans’ economic security.
Do we just have to live with it? Nope. Jason Sattler rounded up five ways to reduce inequality in The National Memo. Back in 2003, the New America Foundation’s Ray Boshara proposed combating wealth inequality by giving a $6,000 ‘opportunity account’ to every baby born in the US. New York University economist Daniel Altman suggested replacing the income tax with a levy on accumulated wealth. Peter Edelman, Mark Greenberg, Steve Holt and Harry Holzer argued that expanding tax credits for the working poor with children would go a long way toward reducing inequality. Paying people a fair wage is an obvious approach, and Demos suggested it’s possible to do so for workers in the retail and fast food industries. Alan Berube of Brookings offered some ideas about what mayors of major American cities could do to narrow the gap.