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Income inequality in America has been building for decades. Just last year, income inequality set a  modern record—and the roots of the problem are the jobs deficit, the acceleration of low-wage jobs, and the tax code. As discussed in the latest issue of Prosperity Watch, income inequality is widespread and growing in North Carolina, with the top fifth of households holding over half of all state income. For more details, visit Prosperity Watch.

In this space yesterday, I provided an overview of how widespread income inequality is in North Carolina. As a brief reminder, North Carolina households in the top fifth hold more income than all of the remaining households combined in the state. Although income inequality hit a modern high last month in the United States, a 2011 study found that a lot of Americans’ hold a perception that does match up with this reality.   

Duke Professor Dan Ariely and Harvard Professor Michael Norton asked approximately 5,500 Americans (whose median income was $45,000) how they thought wealth is actually distributed in the nation. The study found that Americans perceived the distribution of wealth to be more equal than it actually is. In fact, 92 percent of respondents said their optimal level of inequality was even more equitable than their flawed perceptions, meaning they want to live in much more equal communities. Read More

Income inequality—the extent to which income is distributed unevenly—is widespread and growing in North Carolina, according to a recent report by the Budget and Tax Center. In a free market economy, a certain level of inequality is to be expected. However, we are experiencing historically high levels of income inequality—levels that are limiting and eroding the equality of opportunity, a core tenet of the American Dream.

Research shows that 42 percent of Americans born into the bottom fifth of the income distribution remain there as adults. This means that one’s financial standing as an adult is largely dependent upon their parents’ financial standing. This is certainly problematic considering 1 in 4 of North Carolina’s children live in poverty. More troubling, the average North Carolinian experiences lower-levels of absolute and upward mobility compared to the average Southeasterner and American. Read More

Millions of North Carolinians continue to cope with the Great Recession’s aftermath, according to data released yesterday by the Census Bureau. The North Carolina Budget and Tax Center (BTC) published a brief today showing that the state’s poverty rate held steady, household income fell, and income inequality grew. While policymakers fail to enact policies that support good jobs and reduce poverty, a middle-class life is increasingly out of reach for many North Carolinians. Read More

Data released Wednesday by the Census Bureau show that the middle class lost ground in terms of income for the fourth consecutive year. This slump occurred even though the economy was growing, albeit modestly. In 2011, real household income in the middle of the income distribution was $50,054, a 1.5 percent ($780) decline since 2010. These households are bringing home less real income than they did in 1996. Since 2007, the year the Great Recession began, median household income dropped by 8.1 percent ($4,400).

Working age households in the middle of the income distribution were hit even harder in 2011. Median household income for this group was $55,600, falling by 2.4 percent ($1,400) since 2010 and 9 percent ($5,700) since 2007. Workers’ wages are falling behind even though productivity is up in the nation. Budget and Tax Center research shows that North Carolina’s workers’ pay growth is also lagging far behind productivity gains.

Well, if the middle class lost ground and the poverty rate was unchanged during the same time period, to whom did the economic gains accrue? Read More