The 2008 figures come from the Current Population Survey and the American Community Survey (sample size 3 million households, data set starts 1967) show that the household income gap grew in 2008:
The . . . 10 percent of Americans — those making more than $138,000 each year — earned 11.4 times the roughly $12,000 made by those living near or below the poverty line in 2008, according to newly released census figures. That ratio was an increase from 11.2 in 2007 and the previous high of 11.22 in 2003. . . .
Median income fell last year from $52,163 to $50,303 . . . the lowest level since 1997.
Poverty jumped sharply to 13.2 percent, an 11-year high. . . . Analysts attributed the widening gap to the wave of layoffs in the economic downturn that have devastated household budgets. They said while the richest Americans may be seeing reductions in executive pay, those at the bottom of the income ladder are often unemployed and struggling to get by. . . . .
Among other findings:
_Income at the top 5 percent of households — those making $180,000 or more — was 3.58 times the median income, the highest since 2006. . . .
_Between 2007 and 2008, income at the 50th percentile (median) and the 10th percentile fell by 3.6 percent and 3.7 percent, respectively, compared with a 2.1 percent decline at the 90th percentile. Between 1999 and 2008, income at the 50th and 10th percentiles decreased 4.3 percent and 9 percent, respectively, while income at the 90th percentile was statistically unchanged. . . .
_Use of food stamps jumped 13 percent last year to nearly 9.8 million U.S. households. . . . The increase was most evident in households with two or more workers.
In the most recent French national election, the American economic model was derided because while it did well for those at the top, the majority of people were seeing their standards of living decline. American politicians are afraid to engage in that kind of "class war" analysis or even to really admit that it is a problem that has to be solved. Yet, men who have not gone to college have seen their lot stagnate and decline for several decades, with no clear signs of hope for improvement on the way.
Too few people are even asking whether this inequality primarily reflects productivity, comparative advantage as the world economy globalizes, or an ossifying social structure that those at the top are exploiting notwithstanding issues that arguably should matter, like productivity. These numbers cast light on those questions. If the highest income earners are receiving merely a "residual" after everyone else is paid, their income should be plummeting in this hard economic times. Why aren't we seeing their incomes fall fast, rather than slower, than the rest of the population?
UPDATE (9-30-09): Why is this such a big deal? Because it is "contrary to the almost universal expectations of economists," (and me) that income inequality would decline in the Great Recession.
The Geography of Income Inequality in America
Large cities such as Atlanta, Washington, New York, San Francisco, Miami and Chicago had the most inequality, due largely to years of middle-class flight to the suburbs. Declining industrial cities with pockets of well-off neighborhoods, such as Pittsburgh, Cleveland and Buffalo, N.Y., also had sharp disparities.
Up-and-coming cities with growing middle-class populations, such as Mesa, Ariz., Riverside, Calif., Arlington, Texas, and Henderson, Nev., were among the areas showing the least income differences between rich and poor.
"During the years of the housing bubble, there was middle-class movement from unaffordable metros with high-income inequality," Frey said. "Now that the bubble burst, more of the population may be headed back to the high-inequality areas, stemming their middle-class losses."
_Twenty-one states and the District of Columbia had higher poverty rates than the national average, many of them in the South, such as Mississippi (21.2 percent), Kentucky, Arkansas and Louisiana (each with 17.3 percent). . . .
_Use of food stamps jumped . . . led by Louisiana, Maine and Kentucky.
_Pharr, Texas, and Flint, Mich., each had more than a third of its residents on food stamps, at 38.5 percent and 35.4 percent, respectively. . . .
_Plano, Texas, a Dallas suburb, had the highest median income among larger cities, earning $85,003. Cleveland ranked at the bottom, at $26,731.
Will a return to urban centers reduce the economic inequality that people experience there? Is the South just perrennially behind, or is something getting worse there, and if so what? There is some indication that the South is more manufacturing base than people accustomed to thinking about the "Rust Belt" understand, and that industrial malaise is finally catching up to the South.
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