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Income and Wealth Inequality No. 304

Adopted 1997
Amended 1998
Amended 1999
Amended 2001
Reaffirmed 2002
Amended 2003
Amended 2004
Amended 2005
Amended 2006
Amended 2007

Inequality in the distribution of income and wealth and persistent poverty continue to jeopardize equal opportunity and democracy as the United States begins the 21st century. Extreme inequality of income and wealth gives vast economic and political power to big corporations and wealthy families and weakens the sense of community and common purpose essential to a democracy.

The rise in income inequality results from shifting policy choices and power favoring the wealthy. Each reinforces the other. Capital has taken power from labor, and local, state and national governments have pursued changes in policy that strengthen corporations and weaken workers.

Income inequality is worse in the United States than in other major industrial countries. Australia, Canada, and 10 European countries have much more equal distribution of income.

Recent U.S. Census Bureau statistics show the rich are getting still richer; middle income Americans are just barely raising their incomes; and the poor are falling still lower on the income ladder. The gap between rich and poor is now bigger than it has been since the 1930s. An incredible 98% of the 1979-92 gain in total household income went to the wealthiest 20% of households. The remaining 2% gain in total household income was shared by the remaining 80% of households.

In 2005 the richest fifth of families received 48.1% of total income and the poorest fifth received only 4.0% - a national income ratio of 12 to 1. The richest 5% of families received 21.1% of income, which is approximately equal to the income of the lower 50% of families.

In 1995 the richest 10% of the population owned 70% of all the wealth - up from 50% in 1976 - and the richest 1% owned 35.1% of all wealth, while the bottom 80% owned 31.5%.

In 2005 36.9 million Americans (12.6% of the population) lived in poverty: a rise of 1.1 million from 2003. A reported 12.8 million children under the age of 18 lived in poverty in 2005, a number that is still higher than the poverty rate for 18-64 year olds and people 65 and over. One out of every three Black and Hispanic children live in poverty- and the average income for families in poverty is half the poverty threshold; in fact, the number of families in poverty increased to 7.9 million in 2004 from 7.6 million in 2003.

Average hourly wages for private, non-farm production and non-supervisory workers (about 80% of all workers) were $16.13 in 2005. By contrast, in the last years of the 1970s, average hourly wages were about $15.00 expressed in 2004 dollars to adjust for inflation. In other words, the purchasing power of hourly wages rose only 7% in more than two decades (1978-2005) - scarcely ¼ of one percent a year while Corporate profits have been expanding rapidly and taking an ever rising share of national income.

The tax legislation promoted by President Bush has sharply worsened the already existing inequitable distribution of income and wealth through the elimination of the estate tax, disproportionate cuts in income tax rates, and other provisions favoring the most affluent families and powerful corporations.


  1. Deep cuts in programs designed to serve low-income families and individuals, the working poor, the disabled, and the elderly must be reversed. Needed funds can be gained through cuts in corporate welfare legislation, cuts in military spending, and a reversal of tax cuts for the wealthiest.
  2. The federal government must assume a role in expanding job opportunities through such programs as public works and public service and increasing access to year-round full-time jobs. In the spirit of President Franklin D. Roosevelt's Economic Bill of Rights, the federal government must create year-round, full-time living-wage jobs when private industry does not provide enough jobs for all who want to work. All new programs must include strong anti-displacement and wage protection language.
  3. Laws must be passed to require equal benefits for those at the top and bottom of employment rolls. Corporate executives should not be permitted to increase their pension and health care packages at the same time that they are cutting those for lower-income workers. The federal government also should require employers to provide a minimum level of health, pension and other benefits, as it does for the minimum wage. Additionally, corporations must be required to offer paid parental leave to all workers so that parents do not have to choose between their jobs and the best interests of their children.
  4. The federal government also must play a constructive role in elementary and secondary education, and ensure equality of educational opportunity across all income levels.
  5. The extremely regressive tax cuts of 2001 give the top 1% of taxpayers almost 40% of the reduction. These cuts will cost the Treasury at least $1.8 trillion over the next decade. The tax bills of 2002 and 2003 add additional revenue losses. That huge drain has more than absorbed the surplus, and will force sharp erosion of funds needed for vital social and domestic programs, such as health, welfare, education, housing, and the environment. This reflects the Republican policies of curtailing a broad range of federal programs for meeting basic social and economic needs. The U.S. must return to a progressive system of taxation to mitigate inequality. Currently pending additional tax cuts, with the greatest benefit going to the wealthiest Americans, must be rejected in favor of a fairer system.
  6. International trade pacts should be designed to bring other workers up to U.S. standards rather than pulling down the wages of U.S. workers. The U.S. must require its trading partners to adhere to environmental, labor and human rights standards at least equal to internationally recognized standards. U.S. companies that manufacture goods outside the U.S. and import them into the U.S. should be treated in the same manner as U.S. companies which manufacture goods in the U.S., paying their full share of taxes. Subsidies to corporations that export jobs must be ended. This will discourage companies from moving jobs overseas and across borders to increase profits and avoid taxes; any increase in revenue should be used to provide job training for displaced workers in the U.S. and to monitor conditions for workers in developing countries.
  7. The Federal Reserve Board must focus on high employment/high growth instead of focusing only on potential higher inflation.
  8. The federal government must act to encourage the growth of unions and to protect the rights of unorganized workers. Unions can thrive only when the rights to organize and collectively bargaining are guaranteed effectively and enforced by the government.
  9. The government should fund the Trade Adjustment Assistant Reform Act of 2002 more fully to ensure that workers displaced by imports receive increased benefits, training and rapid assistance as they adjust to their new status.


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No. 3043