The Economic Analysis and Research Network (EARN) released a report today published by the Economic Policy Institute on the latest data on income inequality in the states. The data is unique in providing assessments of how the top 1 percent are faring compared to the bottom 99 percent. The findings are consistent though with what we know about the pulling apart of our nation’s income earners: the very top are capturing the largest share of income growth while everyone else is seeing their incomes stagnate or fall.
The problem with this outcome, which is driven by policy choices at both the national and state levels, is that when everyone doesn’t enjoy the benefits of a growing economy and increasing incomes despite having contributed by being more productive, the economy can’t reach its full potential.
Equitable growth is increasingly seen as superior to growth that concentrates the winnings in the hands of those at the top. That is because more equitable growth can be sustained for longer periods because it sustains consumer spending and doesn’t require reliance on debt to finance basic needs. And while improved data to quantify the relationship between inequality and growth is needed, the emerging evidence demonstrates that in the long-run a stronger economy is built on a foundation of broadly shared income growth. Read More