Inequality, Unbelievably, Gets Worse

THE Democrats’ drubbing in the midterm elections was unfortunate on many levels, but particularly because the prospect of addressing income inequality grows dimmer, even as the problem worsens.
To only modest notice, during the campaign the Federal Reserve put forth more sobering news about income inequality: Inflation-adjusted earnings of the bottom 90 percent of Americans fell between 2010 and 2013, with those near the bottom dropping the most. Meanwhile, incomes in the top decile rose.

            Declining Incomes, But Not at the Top

Percent change in median family income, 2010-2013.
Top 10 percent
Next 10 percent
60th–80th percentiles
40th–60th percentiles
20th–40th percentiles
Bottom 20 percent
All U.S. families
Perhaps income disparity resonated so little with politicians because we are inured to a new Gilded Age.
But we shouldn’t be. Nor should we be inattentive to the often ignored role that government plays in determining income distribution in each country.
Here’s what’s rarely reported:
Before the impact of tax and spending policies is taken into account, income inequality in the United States is no worse than in most developed countries and is even a bit below levels in Britain and, by some measures, Germany.
However, once the effect of government programs is included in the calculations, the United States emerges on top of the inequality heap.


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