By Cliff Montgomery – Dec. 11th, 2011
America’s growing income inequality now can be more easily understood, thanks to a simple guide recently released from a top budget policy organization.
“The Center on Budget and Policy Priorities (CBPP) is one of the nation’s premier policy organizations working at the federal and state levels on fiscal policy and public programs that affect low- and moderate- income families and individuals,” declares the Center’s mission statement.
Below, the American Spark has reprinted the introduction to that fine study:
“The broad facts of income inequality over the past six decades are easily summarized:
- The years from the end of World War II into the 1970s were ones of substantial economic growth and broadly shared prosperity. Incomes grew rapidly and at roughly the same rate up and down the income ladder, roughly doubling in inflation-adjusted terms between the late 1940s and early 1970s. The income gap between those high up the income ladder and those on the middle and lower rungs — while substantial — did not change much during this period.
- Beginning in the 1970s, economic growth slowed and the income gap widened. Income growth for households in the middle and lower parts of the distribution slowed sharply, while incomes at the top continued to grow strongly. The concentration of income at the very top of the distribution rose to levels last seen more than 80 years ago (during the ‘Roaring Twenties’).
- Wealth (the value of a household’s property and financial assets…[minus] the value of its debts) is much more highly concentrated than income, although the wealth data do not show a dramatic increase in concentration at the very top the way the income data do.
“Data from a variety of sources contribute to this broad picture of strong growth and shared prosperity for the immediate postwar generation, followed by slower growth and growing inequality since the 1970s. Within these broad trends, however, different data tell slightly different parts of the story, and no single source of data is better for all purposes than the others.
“This guide consists of four sections.
“The first describes the commonly used sources and statistics on income and discusses their relative strengths and limitations in understanding trends in income and inequality.
“The second provides an overview of the trends revealed in those key data sources.
“The third and fourth sections supply additional information on wealth – which complements the income data as a measure of how the most well-off Americans are doing – and poverty, which measures how the least well-off Americans are doing.”
