Income Inequality in America: An Analysis of Trends

Income Inequality in America: An Analysis of Trends

Income Inequality in America: An Analysis of Trends

Income Inequality in America: An Analysis of Trends

Synopsis

Paul Ryscavage, a noted labor economist, seeks to analyze various aspects of a major contemporary economic problem: the growing inequality of income in society.

What is income inequality? How is it measured? Is the middle class really declining? How does it relate to poverty? How long has inequality been rising in the US? Have there been other periods in history when income differences were as large as they are today? What are the causes of growing income and wage inequality? The author addresses these and other conceptual issues in eight carefully reasoned and clearly presented chapters. Concluding with an analysis and comparison of trends in wage inequality in other developed countries, he asks the final speculative question: How much more growth in inequality can our society withstand?

Excerpt

Income inequality has become a major policy concern. The rise in inequality, by various measures, invokes an image of a society divided between "haves" and "have-nots." In turn, that image suggests the possibility of eventual political repercussions and, perhaps, social unrest. Will events such as the Los Angeles riots of 1992 become a feature of the American scene? At a less dramatic level, the rise in inequality suggests revisiting such long-standing policies as welfare programs, minimum wage laws, and laws that regulate collective bargaining. And it leads to examination of new programs, such as "living wage ordinances," applicable to contractors of municipal governments.

In this volume, Paul Ryscavage reviews the various indexes of income inequality. Unfortunately, there is no one theoretically correct measure of the concept of inequality. Thus, it is best to look at several measurement tools and approaches. Even the definition of "income" must be examined. Apart from money income, individuals may receive various in-kind subsidies from government programs. And they may receive non-wage benefits--such as health insurance--from employers. The fact that all approaches to measurement suggest widening inequality is important, since it allows discussion to proceed to factors associated with this trend.

Finding an explanation for the widening of inequality after the early 1970s has challenged economists and other researchers. International trade competition, especially in products that displace low-skilled/low-wage workers is a commonly cited candidate for causing widened inequality. The trade argument has been echoed across the political spectrum by presidential candidates as varied as Pat Buchanan, Ross Perot, Richard Gebhardt, and Jerry Brown. But many scholars believe changing technology, which moves demand away from those at the bottom of the wage scale, is a more significant factor. This debate has yet to be resolved.

What is known, Ryscavage points out, is that there have been fluctuations in income inequality before the post-World War II period. It appears . . .

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