Question: Is the income gap growing?
Paul Krugman: The income gap is huge. It’s growing. Over the last 35 years, it’s . . . there’s . . . There’s some real argument about whether the income of the typical family has gone up. There are . . . The median income is up a little bit, but that’s because of an increased number of working wives. And if you take into account the time . . . It’s not a question you need to resolve. The point is that we can even argue about it. In 35 years, we’re talking about over the period when personal computers, and the Internet, and even for that matter fax machines, and freight containerization and bar code scanners – all these things have come along to make us more productive, and yet we’re not sure if workers have gained. That’s telling . . . The reason, of course, is huge gains at the top – a few people achieving huge wage gains. Or non-wage gains, but few . . . you know a small minority explosion of income. And that’s a . . . that’s a problem. And in the . . . In the United States economy the last four years, we’ve had . . . finally we started to get reasonable job growth. And by the top line measures – by GDP – it’s a growing economy. But it hasn’t done much for the typical worker. And it’s . . . it’s really been the left behind economy. Great . . . great growth in corporate profits, surge in compensation at the very highest levels, but very little for workers.
I mean there’s always a kind of, you know, shuffling, although not as much as people think. So that’s, you know . . . I’d like to say Horatio Alger has moved to Europe. It’s actually harder to make your way from a relatively poor background into the upper middle or above classes in the United States than it is in most European countries. And the reason is inadequate public education; lack of public funding for college tuition; just the . . . and just the fact that our income gaps are so large that it’s a much steeper climb for people to make.
Given time a lot of people are both rising and sinking. And it’s . . . Put it this way. If you’re a middle class household, your chance of having a series of unfortunate events plunge you into the . . . into the poor or the near poor is a lot higher than your chance of being lucky enough to make it into the small, favored elite.
Discuss
P Conner on January 9, 2008, 1:24 PM
I agree with Paul Krugman. The Middle class in America are feeling left behind. The corporations and corporate executives are making record profits,but the American worker is seeing a huge increase in food, shelter, and transportation costs. The income inequality is growing wider.
P Conner on January 9, 2008, 6:24 PM
I agree with Paul Krugman. The Middle class in America are feeling left behind. The corporations and corporate executives are making record profits,but the American worker is seeing a huge increase in food, shelter, and transportation costs. The income inequality is growing wider.
Scott Pratt on January 11, 2008, 3:26 PM
Undeniable, but not very insightful. What are causes of growing gap? I would guess the following:
1. lower/middle income folks discover 1 billion people willing to do their work for $1/hour
2. Immigrants compete and drive down wages for service-sector jobs
3. Rising cost of health insurance
4. Increasingly regressive tax structure
5. Rising cost of rent and gas
Any more? Does anyone know of quantitative analyses of relative effect of the above?
Scott Pratt on January 11, 2008, 8:26 PM
Undeniable, but not very insightful. What are causes of growing gap? I would guess the following:
1. lower/middle income folks discover 1 billion people willing to do their work for $1/hour
2. Immigrants compete and drive down wages for service-sector jobs
3. Rising cost of health insurance
4. Increasingly regressive tax structure
5. Rising cost of rent and gas
Any more? Does anyone know of quantitative analyses of relative effect of the above?
John Rose on January 16, 2008, 9:39 AM
Absolutely agree. America has become inequitable and we need to vote for candidates that support the middle class and wage earners.
John Rose on January 16, 2008, 2:39 PM
Absolutely agree. America has become inequitable and we need to vote for candidates that support the middle class and wage earners.
Denis Drew on December 18, 2008, 3:45 PM
pratfall,
I see it a little differently than most
- probably because I am “under-priced” American labor. :) To wit:It is not under-priced labor — in the sense of people here and overseas willing to work for less — that is dragging down American wages and causing whole-segment unemployment (see very many American born cab drivers or fast food workers lately?). It is the under-pricing of labor that is causing America’s Great Wage Depression (my term covering both lost pay and lost jobs).
If Australia had a 1000 mile land border with China — open, Mexican-American style — Australian labor would need powerful wage support legislation to maintain its native pay and employment at maximum levels: a solid minimum wage (1/2 the “real” average wage — USA “real” meaning $25/hr; reported AWI up only 20% since 1968) plus the most up to date collective bargaining structure known as sector-wide labor agreements (not the card check attempt to wring one more drop of life out of all but dead labor law — Australian could actually consider sector wide now that its once effective if eccentric wage support structure has badly eroded).
America’s is the only modern OECD labor market facing the double whammy of globalization and yearly immigrating millions; and yet remains the only modern OECD market seriously devoid of legislative defenses against either outside low wage expectations or against the home grown race to the bottom (recently introducing whole-segment unemployment to middle class, would-have-been supermarket employees).
Add a Comment
You must be logged in to comment. Log in or Register