Some Data on Income Inequality in the US and Implications

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By now everyone is familiar with the notion that inequality is increasing both globally and within the US. This article describes the pattern in the US. The implication of rapid income growth in the top percentiles is that income does not grow as fast, or at all, in the lower levels.

Our slow recovery from the Great Recession may be partially caused by rising income inequality. The large middle class has less to spend and the top percentiles save a good share of their gains in income. This reduces GDP and our large multinational corporations shift their focus to countries with a rising middle class. The upper echelons of these corporations do not care where the revenue or profit growth comes from. They cut costs by off shoring to lower wage countries and watch their profits and stock prices increase as their price to earnings ratios increase. There is no recession for most of them and for many in the professional class.