Income and Wealth Inequality No. 304
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.
THEREFORE ADA RESOLVES THAT:
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Federal Legislation Introduced
S.1181 : A bill to amend the Securities Exchange Act of 1934 to provide shareholders with an advisory vote on executive compensation.
Sponsor: Sen Obama, Barack [IL] (introduced 4/20/2007) Cosponsors (7)
Committees: Senate Banking, Housing, and Urban Affairs
Latest Major Action: 4/20/2007 Referred to Senate committee. Status: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.