Income Gap Between Rich, Poor the Widest Ever

CULVER CITY, CA - JUNE 02: Actor Andy Samberg (L) presents actor Adam Sandler with the award for Brass Balls onstage during Spike TV's 6th Annual "Guys Choice Awards" at Sony Pictures Studios on June 2, 2012 in Culver City, California. (Photo by Kevin Winter/Getty Images) / Kevin Winter

The income gap between the richest and poorest Americans grew last year to its widest amount on record as young adults and children in particular struggled to stay afloat in the recession.

The top-earning 20 percent of Americans - those making more than $100,000 each year - received 49.4 percent of all income generated in the U.S., compared with the 3.4 percent earned by those below the poverty line, according to newly released census figures. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968.

A different measure, the international Gini index, found U.S. income inequality at its highest level since the Census Bureau began tracking household income in 1967. The U.S. also has the greatest disparity among Western industrialized nations.

At the top, the wealthiest 5 percent of Americans, who earn more than $180,000, added slightly to their annual incomes last year, census data show. Families at the $50,000 median level slipped lower.

"Income inequality is rising, and if we took into account tax data, it would be even more," said Timothy Smeeding, a University of Wisconsin-Madison professor who specializes in poverty. "More than other countries, we have a very unequal income distribution where compensation goes to the top in a winner-takes-all economy."

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Lower-skilled adults ages 18 to 34 had the largest jumps in poverty last year as employers kept or hired older workers for the dwindling jobs available, Smeeding said. The declining economic fortunes have caused many unemployed young Americans to double-up in housing with parents, friends and loved ones, with potential problems for the labor market if they don't get needed training for future jobs, he said.

Rea Hederman Jr., a senior policy analyst at The Heritage Foundation, a conservative think tank, agreed that census data show families of all income levels had tepid earnings in 2009, with poorer Americans taking a larger hit. "It's certainly going to take a while for people to recover," he said.

The findings are part of a broad array of U.S. census data being released this month that highlight the far-reaching impact of the recent economic meltdown. The effects have ranged from near-historic declines in U.S. mobility and birth rates to delayed marriage and the first drop in the number of illegal immigrants in two decades.

The census figures also come amid heated political debate in the run-up to the Nov. 2 elections over whether Congress should extend expiring Bush-era tax cuts. President Barack Obama wants to extend the tax cuts for individuals making less than $200,000 and joint filers making less than $250,000; Republicans are pushing for tax cuts for everyone, including wealthy Americans.

The 2009 census tabulations, which are based on pre-tax income and exclude capital gains, are adjusted for household size where data are available. Prior analyses of after-tax income made by the wealthiest 1 percent compared to middle- and low-income Americans have also pointed to a widening inequality gap, but only reflect U.S. data as of 2007.

Among the 2009 findings:

• The poorest poor are at record highs. The share of Americans below half the poverty line - $10,977 for a family of four - rose from 5.7 percent in 2008 to 6.3 percent. It was the highest level since the government began tracking that group in 1975.

• The poverty gap between young and old has doubled since 2000, due partly to the strength of Social Security in helping buoy Americans 65 and over. Child poverty is now 21 percent compared with 9 percent for older Americans. In 2000, when child poverty was at 16 percent, elderly poverty stood at 10 percent.

• Safety nets are helping fill health gaps. The percentage of children covered by government-sponsored health insurance such as Medicaid and the Children's Health Insurance Program jumped to 37 percent, or 27.6 million, from 24 percent in 2000. That helped offset steady losses in employer-sponsored insurance.

The 2009 poverty level was set at $21,954 for a family of four, based on an official government calculation that includes only cash income. It excludes noncash aid such as food stamps.

Arloc Sherman, a senior researcher at the left-leaning Center on Budget and Policy Priorities, noted the effects of expanded government programs in cushioning the impact of skyrocketing unemployment. For example, the Census Bureau estimates that 3.6 million people would have been lifted above the poverty line if food stamps were counted - a number that would have reduced the 2009 poverty rate from the official 14.3 percent to 13.2 percent.

Sheldon Danziger, a University of Michigan public policy professor, said while the U.S. has developed policies to combat poverty, it has trouble addressing ever-widening income inequality - even with a growing federal deficit and previous warnings by former Federal Reserve Chairman Alan Greenspan about soaring executive pay.

An Associated Press-GfK Poll this month found that by 54 percent to 44 percent, most Americans support raising taxes on the highest U.S. earners. Still, many congressional Democrats have expressed wariness about provoking the 44 percent minority so close to Election Day.

"We're pretty good about not talking about income inequality," Danziger said.
By Associated Press Writer Hope Yen

[h_huestis]

Lets face it. Then middle class is disappearing, thanks to the Corporations shipping good middle class jobs overseas. When inflation in China takes its hold (as it is right now), maybe American labor will wind up being more cost competitive, and the jobs will come back to the USA. But that is a long time coming, so don't hold your breath. Reaganomics never did work to help the middle class, and trickle down is nothing but a good joke. It is there to fatten up the wallets of the richest 1 percent of Americans, and has done nothing to help the US economy. Republican Tea Party is another joke, as this is just another variant of Reaganomics, while hurting the poorest of our society. I would NEVER vote for a Republican Tea Party candidate.

[bluecollarman]

You hit the nail right on the head. I just wonder why hardly anybody seems to realize this. This is only going to get worse. I can't see how any Republican would ever get elected to office. They are so blatantly anti-middle class and anti-worker, it's disgusting.

[noloyalisti]

We got some new roads paved in my area because of the stimulus. The problem with the stimulus was it should have been 3 times larger. If we can waste $2 trillion on illegal wars for oil, we can pay that much for union jobs and other workers.

By the way, there is NO doubt the failed GOP economic policies since the Reagan disaster are 99% to blame for the current depression.

[carlos4731]

When Hewlett-Packard?s Chief Executive Mark Hurd resigned last month he received something few regular workers see when they quit their jobs under a cloud: A massive payout. Turns out Hurd is far from the only top executive to be rewarded with a rich package despite a management performance that could be considered less than optimal ? especially by rank-and-file workers. A new report concludes that chief executives of the 50 firms that have laid off the most workers since the onset of the economic crisis in 2008 took home 42 percent more pay in 2009 than their peers at other large U.S. companies. The report, from the Institute of Policy Studies, found that the 50 layoff leaders received $12 million on average in 2009, compared with an average compensation of $8.5 million for chief executives of companies in Standard & Poor's 500. Each of the 50 companies examined in the report laid off at least 3,000 workers between November 2008 and April 2010. ?Our findings illustrate the great unfairness of the Great Recession,? said Sarah Anderson, lead author of the study, ?CEO Pay and the Great Recession,? the latest in a series of annual ?Executive Excess? reports published by the institute, a progressive think tank. ?CEOs are squeezing workers to boost short-term profits and fatten their own paychecks.? Those CEOs include HP?s Hurd, who slashed 6,400 jobs in 2009 ? a year when his compensation amounted to $24.2 million. Hurd made headlines last month when he suddenly resigned after an investigation into a sexual harassment claim against him found he had falsified expense reports related to meetings with a female contractor. Despite the findings, he walked away with a severance package that reportedly could be worth more than $40 million.

http://groups.yahoo.com/group/FREEDOMSFORUM/message/142402

[editgirl1]

$40 million is enough money to pay 1,500 workers a $26,000 salary for one year. Not exactly the greatest wage, but I'm sure many of the workers laid off by this company would happily accept it over unemployment. That much money going to pay out one person is disgusting. There is simply no excuse or explanation for the choices these companies are making outside of sheer greed.

[carlos4731]

While the harrowing economic hardship that started in late 2007 and early 2008 rages on, and countless people in the United States, Europe and other parts of the world are losing their jobs, their homes and their sources of livelihood, policy-makers in the advanced capitalist countries of the West are standing idly by without lifting a finger to alleviate the onerous burden of the crushing recession. On the contrary, they have embarked on an orchestrated series of cruel belt-tightening austerity policies that have, indeed, contributed to the worsening of the recession. The question is why? How can the policy makers? callous indifference to the plight of the people, or their pathetic inability to carry out effective policies of economic recovery, be explained? The official explanation for not investing in the revival of the economy is that, due to the already huge debt and deficit, additional public spending would be ?fiscal irresponsibility.? In light of the fact that governments in the US, EU and other debt-ridden countries have showered the powerful international banksters and other financial moguls with trillions of dollars, this explanation falls miserably short of credibility; indeed, it can more appropriately be called an excuse than an explanation. Explanations offered by most of the left, liberal, or Keynesian critics of the Neoliberal austerity policies are not satisfactory either. As I have argued in an earlier essay, these critics tend to characterize such policies simply as ?shortsighted,? ?reckless,? ?misguided,? ?unwise,? and the like?as if the governments that make such policies do not know what they are doing; or as if policy making is a simple matter of technical expertise or personal proclivities of policy makers, that is, a matter of choice.

http://groups.yahoo.com/group/FREEDOMSFORUM/message/142400

[Lifeson2112]

We've already spent over $700 billion dollars. And we didn't have it to spare I might add. Most countries are broke and simply can't put more into the economy. Aside from that, government stimulus has proven to be a failure anyway.

[noloyalisti]

I want my money back from these filthy rich criminal crooks who have infiltrated my government and corrupted it. I am sick of giving them my money so they don't have to pay taxes or do anything constructive for society. I urge everyone to join together and take it back from the corporations. We can start with impeaching the Supreme Court for Citizens United. And getting out the vote to get rid of ALL of the rest of the criminal Republican party.

[noloyalisti]

The bankster corporations colluded with the government (mostly Republicans) to sell rotten and phony securities. This caused mayhem in the marketplace. It crashed the economy which cost me wages, 401K value and housing value. I suppose I could document at least $300,000 in losses.

Meanwhile the filthy rich have MORE THAN EVER and the Wall Street and bankster crooks are getting multi-million dollar bonuses. So I suppose those people "EARNED" and DESERVE" this money because they were able to steal it and get away with it.

[Lifeson2112]

I believe the crash was started by people not paying their mortgages. This is because they weren't qualified to receive the loan they got but the bank gave it to them anyway because the government forced them to. See the Clinton administration for the beginnings of this being put on the banks. So what do you do with all these bad loans you were forced to make? You bundle them and sell them off. Its the only way you can make any money off them. This all started with REGULATION!!! Get the government out of it.

[noloyalisti]

Remember Bushoccio of the Bushoccio Crime Family saying that he wanted everyone to own a house whether they could afford it or not.

Well the war criminal turned the dogs (the greedy banksters and Wall Street hucksters) loose. Word DO have meaning and consequences. Well maybe not for fake Christian, dumber than dirt, violent, incompetent morons like Bushoccio.

[noloyalisti]

It is OK to have big corporations. But they need to be regulated so that this fiasco that American has become cannot happen. The corporations should serve the best interests of the people and respect labor and environment along with the profits.

Now that the top 1% has taken so much, it is time for them to give something back now that we all need it. I think we should start with the top 1% giving reparations to all of us for our losses.

[Lifeson2112]

Stop looking for money you didn't earn. Corporations haven't taken anything from me that I didn't give them through purchasing what they're selling. If you don't like a company, don't do business with them. That's simple enough isn't it?

[noloyalisti]

It's not that simple when they are able to bribe the polticians and but the government to make it legal to get billions in profits without paying their fair share of taxes and costs to society.

[Overruled1]

This article plainly shows how the middle class in America has suffered and the so called upper classes have enjoyed the benefits for at least the last 30 years of low taxes and substantial "materialism".
The greed is seeping not trickling down, but not to Americans.

I am appauled by some of you greedy or mislead people here posting....calling obviously patriotic americans names like socialists and marxists while I bet you sip away at that $5 coffee cup.

The policies of government have been manipulated by big corporations that have not risked their livilehoods as some of you have stated.
Instead what we have here is large corporations shutting down american factories to move to where cheap labor can be found, where it's ok if you cant breath from the pollution, or where reality is what the "political officer" says it is.

I am offended by the nonsense excuses that we as individuals have to take the responsibility of not providing for our families, while the factories our fellow workers bid to purchase were shipped away as government policy....enhanced by lobbyists bankrolls.


Where were you when the factory gates were being shut down and the workers outside were protesting the fact they could not buy the factory themselves?

This is war now............Those of you out there, who understand....prepare....

The government has gone lobbyist, which means (FASCIST).
Any accusation of marxism is only the mouthings of a fascist who refuses to see the truth.

Dont be confused by these people, they wave the flag of patriotism, and throw the bible at you.....these people are mislead, crazy and extreme....some even want to rewrite history books, social studies, and change laws that govern our basic rights....
Religous zealots of all sorts are extreme.
Remember Religion = Power * (ignorace of facts/masses of people unwilling to face facts) + 1/2 truths.

[jayrh]

Overruled, you throw words around like fascist and don't even know what they mean.. ======================================================================= When you have an administration that punishes success, it just makes everyone poorer... How could you deny that Obama is an actual Marxist when every bill that's been going through has wealth redistribution as part of it, while he's grabbing control or more and more of our economy at the same time?==========================================================================The only thing I really agree with is that we need to stop jobs from going overseas... You certainly don't do that by punishing businesses though.

[markr1957]

'Fascist' means government run for the benefit of corporations,, and typically uses authoritarian methods to do so. What we have here is the wholesale corruption of Congress by corporate lobbyists, after they convinced said Congress to legalize corporate bribery of itself by the means of lobbyists. I'd say our Congress is just about as fascist as it is possible to be under our system of democracy. The real problem is simply that both parties are made up almost entirely of members who have accepted corporate bribes, so that it just doesn't matter who you vote for any more. That is why we need to stop voting D or R, and just vote for the guy or girl you'd simply never heard of before, especially the ones who placed no TV, radio or newspaper ads - the one who have no money from anyone, not the ones who pay for all their own ads.

[crabbylady-2009]

This is a left-right political problem. It did not exist until Ronald Regan was elected. He did more to help the rich than even George W. Bush did. This will not be fixed while President Obama is in office
because the right wing is so racist they will vote for nothing he wants and to hell with the people. They have had this attitude since the 60's and it will not change until we fix the champaign finance rules. Right now every politician trash takes bribes from the PAC's. At least the 3rd world countries take the cash from even the poor and middle class while American poli-trash only take the big bribes. I am wondering why if the government is so bad why all these idiots want to take the governments money and health benefits? I guess they really don't think Government is bad, they just want to get thier piece of the pie.

[miami_don]

Well said --- let's add lobbiest and special interest groups.

[Synergy011235813]

crabbylady-2009, don't get me wrong, I'm not defending Reagan by any stretch of the imagination. I can certainly understand where you are coming from. However, there is a better way that goes beyond politics. Address the root causes. We need to start approaching this problem differently and thinking outside the box. Technological Unemployment and Peak Oil haven't been given the proper attention they deserve. These relate to the wealth gap through the global financial infrastructure that is inherently corrupt. This further goes on to connect with the source of most crime (as outlined in the Merva-Fowles study) as well as correlations to mental illness among many other things in countries with a large wealth gap (the name of the study has slipped my mind at the moment). I could even go on about how this system leads to corruption in health practices regardless of which policy you put in place. The point is, we need an entirely NEW SYSTEM updated to present day knowledge and technology, not age old financial policy preferences.

[Synergy011235813]

It doesn't matter if the man in charge is a Republican or a Democrat, don't fool yourselves, the problem will persist because it is systemic, not policy oriented. The long term consequences can only be postponed, not prevented. Let's drop this false left-right paradigm and recognize what the real problem is. We are on the brink of a new revolution, the technological revolution. Our old world values need to change, and fast.

[Synergy011235813]

That doesn't explain where the jobs will go. Technological Unemployment doesn't get any press, but it's a bigger problem than most think. It is no longer simply the "job displacer" that it once was throughout the 1900's, when there were other sectors to absorb job loss. Many of the jobs we have lost and will continue to lose in the coming years won't be coming back. However, automation increases productivity and lowers expenditure. We shouldn't ignore this greater efficiency for the sake of jobs, but embrace it and slowly transition to a more sustainable system. You won't hear that in the Mainstream Media, though! It's all about perpetuating old world values, and having the same philosophy debates over and over that go nowhere because they are matters of preference, not facts. We need to embrace a more scientific approach to decision making.