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.



  1. James

    October 5, 2011 at 5:45 pm

    Hour glass evokes an inappropriate image of balance, top and bottom. The bottom of our hour glass is hundreds of times larger than the top. More like a Hershey Kiss, with “kiss” applying to the hind parts of the ruling class elite.

  2. Chris

    October 5, 2011 at 9:28 pm

    This is why I don’t see this as a demand recession. It is actually now a structural employment problem that started in the early 90’s, and was heightened by technology,bad trade agreements, and globalization, all of which cut huge numbers of jobs in this country. The tech bubble and real estate bubble simply masked these problems and prevented any real solutions. Easy credit allowed us to live beyond our means , and made us think we could live with consumer spending at 70% of GDP which was unsustainable. We are looking for short-term answers, short-term stimulus, and none of this will solve the wealth problem.

  3. david esmay

    October 6, 2011 at 11:27 am

    I have to agree with Chris, while our economy is consumer driven, the high unemployment rates we are experiencing have become self perpetuating. Beginning in the 1980’s, almost all of the economic growth we sustained was debt leveraged, the .com bubble of the late 90’s, the housing bubble, and deregulation of the financial industry, basically exposed our expansion as a house of cards. There is no one single factor, but many combined to create a recession that is too large to correct itself. The lower and middle classes will always bear the brunt of economic turn downs, the mitigating factors that households were and are carrying more debt than at any other time in history, middleclass wages have been stagnant for the past 30 years, and the increase in the percentage of income that must be devoted to cover the cost of basic necessities have exacerbated the situation. Everyone has an opinion on the course we should take, unfortunately partisanship has trumped the welfare of the country. I don’t know about you, but give me the congresses of the past, more vets, alot more drunks, less educated survivors of the great depression, who despite their differences in ideology did what was best for everyone.

  4. The Jobs Irony | Tim Nault

    October 7, 2011 at 7:31 am

    […] Waiting for Government to do something. Waiting for big business to start hiring. Meanwhile the economic gap grows. Meanwhile we have protests brewing. Meanwhile the United States looses its footing as both an […]

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