Jan. 28 2015 09:41 AM

This land is their land

incomegap

Hey, remember Occupy Wall Street a few years ago? And its little offspring around the country, including Occupy San Diego? Weren't they cute?! In case you forgot, or weren't paying attention, the point was to raise awareness of growing income inequality in the United States, with a focus on how much money the financial-services sector was raking in and what it was doing to the overall economy (ruining it).

You probably won't be shocked to learn that the Occupy movement didn't accomplish a damn thing. Yes, politicians of various stripes are now giving lip service to income inequality, but since the recession ended, that gap is back to widening at its previous high rate. That's the news from the Economic Policy Institute (EPI), a left-leaning think tank that, on Monday, unveiled a report, "The Increasingly Unequal States of America: Income Inequality by State, 1917 to 2012."

The report notes that between the end of the recession in 2009 and 2012, the year for which the most recent data are available, the top 1 percent of income earners in the U.S. wrangled all of the income growth. The bottom 99 percent of earners saw incomes fall by an average of .4 percent while incomes for the top 1 percent grew by an average of 36.8 percent. That has to be startling even for the most cynical among us. The story's even worse in California, where, because income has fallen for the lowest 99 percent of earners by an average of 3 percent, the top 1 percent of earners has captured 136 percent of income growth. The richest Californians have seen their income increase by an average of 49.6 percent.

California has the fifth-largest gap in the country between the average incomes of the 1 percent and the 99 percent—here, the wealthiest folks make, on average, 35 times what the rest of us make.

There are only nine states where the average income for the 99 percent grew and the 1 percent captured less than half of the income growth: Indiana, Mississippi, Montana, North Dakota, Vermont, New Mexico, Kentucky, Alaska and Hawaii. That used to be the norm across the country; in fact, the numbers used to be reversed. But that was a long time ago—the 1970s.

The last time we saw the level of income inequality we're seeing now was 1928, before the Great Depression. From then until 1979, things leveled considerably. In that time in the U.S., the 1 percent captured just 9.5 percent of the income growth during six economic expansions. Things exploded for the 1 percent after 1979, when, during four economic expansions until the collapse of 2007, the richest among us captured 64 percent of the growth. In California, that figure is 85.4 percent.

To put it all more simply, in 1928, the top 1 percent collected roughly 24 percent of the total income in the U.S. That fell to roughly 10 percent in 1979. By 2012, it was back up to roughly 24 percent. Assuming the trend has continued in the last two years, economic inequality is worse now than ever, and the gap will grow as the economy recovers and expands.

All of this matters only if the concept of the "American Dream" appeals to you—the idea that if you work hard, you can rise in society, regardless of your parents' place in the economic spectrum.

In 2012, Timothy Noah, writing for the New Republic, covered a speech given by Alan Krueger, chair of the White House Council of Economic Advisers, during which Krueger confirmed what Noah said had previously been suspected: Growing income inequality decreases the chances that folks can rise out of their economic class. "Translation: If we don't get growth in income inequality under control," Noah wrote, "the next generation will see about 25 percent less upward mobility than the current one."

You may not like the phrase "redistribution of wealth," but that's what's been happening since the 1980s—wealth is being redistributed upward, and the trend is unsustainable.

California must have a serious and frank conversation about this soon and figure out what to do about it. And we don't see any reason why San Diego can't lead the way. Get on that, Mayor Kevin Faulconer.


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