When I first heard the Gap was expanding, my mind immediately conjured up an image of a trendy and color-coordinated crowd of twenty-somethings dancing for joy in a choreographed fashion. I then rolled my eyes and reached for the Pepto-Bismol, to avoid inadvertently jettisoning my breakfast. Not wanting to dismiss this tidbit of news out of hand, I bravely forged aheadâ€”once my queasiness had abatedâ€”and delved deeper into the topic. To my surprise and chagrin, I discovered that the gap that was expanding was not the trÃ©s chic retail store but, as reported by the New York Times, the chasm that exists between the richest and the poorest of Americans, which was approaching a level not seen since Herbert Hoover occupied the White House. Regrettably, no amount of Pepto-Bismol was now adequate to the task of managing my expanding nausea. Read on, at your own risk…
Income inequality grew significantly in 2005, with the top 1 percent of Americans â€” those with incomes that year of more than $348,000 â€” receiving their largest share of national income since 1928, analysis of newly released tax data shows.
The top 10 percent, roughly those earning more than $100,000, also reached a level of income share not seen since before the Depression.
While total reported income in the United States increased almost 9 percent in 2005, the most recent year for which such data is available, average incomes for those in the bottom 90 percent dipped slightly compared with the year before, dropping $172, or 0.6 percent.
The gains went largely to the top 1 percent, whose incomes rose to an average of more than $1.1 million each, an increase of more than $139,000, or about 14 percent.
The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.
Prof. Emmanuel Saez, the University of California, Berkeley, economist who analyzed the Internal Revenue Service data with Prof. Thomas Piketty of the Paris School of Economics, said such growing disparities were significant in terms of social and political stability.
â€œIf the economy is growing but only a few are enjoying the benefits, it goes to our sense of fairness,â€? Professor Saez said. â€œIt can have important political consequences.â€? [full text]