Income Inequality Grows, Middle Class Erodes
Median household income nationwide fell in 2010 to levels not seen since 1996. And with this overall loss in income, there was a slight growth in income inequality and the continued erosion of the middle class.
The result is what analysts are calling the hourglass economy where the wealthy do well, those with low-incomes fare poorly, and the middle-class disappears. Others have described the most recent income trends as the Great Slide where more and more Americans fall out of the middle-class because of job loss, rising foreclosure, and dwindling savings for retirement.
So what does the change in income look like in North Carolina? From 2006—the last year before the Great Recession—to 2010, all households saw a decline in their income. The chart below shows that households in the top 20 percent by income saw incomes fall by 3.3 percent, while those in the bottom 20 percent saw incomes fall by 7.2 percent. Incomes are in 2010 inflation-adjusted dollars.
The benefits of economic growth should be shared broadly, not bypass all but a handful of families. Not only does widening income inequality raise important questions of fairness but it carries serious economic and social costs. Policymakers should work towards launching all families towards a path of upward mobility through efforts to create jobs that pay family-sustaining wages.