Paul Krugman on the Income Gap

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.


The income gap is huge and a growing problem.

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