Newspaper article St Louis Post-Dispatch (MO)

Nicklaus: Inequality Is Happening on Main Street, Not Just Wall Street

Newspaper article St Louis Post-Dispatch (MO)

Nicklaus: Inequality Is Happening on Main Street, Not Just Wall Street

Article excerpt

When we think about the top 1 percent of the income distribution, it's easy to conjure up an image of pinstripe-clad Wall Street bankers mingling with Hollywood stars and Silicon Valley venture capitalists.

The reality of inequality isn't so simple. A new study makes clear that nearly every state has a large and growing gap between its own top 1 percent and bottom 99 percent.

To be sure, the gap is largest in New York and Connecticut, home to the biggest concentrations of investment bankers and hedge-fund managers. And there's a lot of variation in how much income is needed to join a state's top 1 percent. The threshold is $309,262 in Missouri and $424,473 in Illinois, compared with $677,608 in Connecticut.

The gap is growing nearly everywhere. In 17 states, including Missouri, the top 1 percent captured all of the income growth between 2009 and 2012. Average incomes fell 3 percent for Missouri's bottom 99 percent, but grew 33 percent for the 1 percenters.

(In Illinois, the top 1 percent didn't quite capture all of the income growth, but they got 97 percent of it. Their average income rose 34.5 percent versus 6.5 percent for everyone else.)

This study, by the left-leaning Economic Policy Institute, should come with caution flags.

It's based on income tax data, similar to what French economist Thomas Piketty used in his best-selling book "Capital in the Twenty- First Century." It doesn't count some forms of compensation, from welfare benefits to employer-provided health insurance.

Highlighting the three years after the 2009 recession also skews the results. High-income earners tend to have volatile incomes. They drop more during downturns and recover faster afterward.

The study reveals, though, that inequality has been growing for decades in most states. In 1979, the top 1 percent earned just under one-tenth of all income, and the figure didn't vary much from state to state. …

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