Tuesday, September 29, 2009

Recession increases US income gap

We talk often of how the global recession has hurt the poorest countries the hardest, but an article we found today examines how the recession has hurt the poorest Americans the hardest. The many job layoffs that took place throughout the recession has hurt low to middle income Americans, while the wealthiest Americans only had reductions in pay or benefits.

The US Census Bureau says that the income gap between the poorest and richest Americans is now at it's widest ever. Income gap from country to country is important to consider because the wider a gap is, the harder it is for the poorest to climb up the income ladder.

From this Associated Press article that we found at the Sun News, writer Hope Yen takes another angle at the Census Bureau numbers.

The wealthiest 10 percent of Americans - those making more than $138,000 each year - earned 11.4 times the roughly $12,000 made by those living near or below the poverty line in 2008, according to newly released census figures. That ratio was an increase from 11.2 in 2007 and the previous high of 11.22 in 2003.

Household income declined across all groups, but at sharper percentage levels for middle-income and poor Americans. Median income fell last year from $52,163 to $50,303, wiping out a decade's worth of gains to hit the lowest level since 1997.

Poverty jumped sharply to 13.2 percent, an 11-year high.

"No one should be surprised at the increased disparity," said Richard Freeman, an economist at Harvard University. "Unemployment hurts normal workers who do not have the golden parachutes the folks at the top have."

Analysts attributed the widening gap to the wave of layoffs in the economic downturn that have devastated household budgets. They said while the richest Americans may be seeing reductions in executive pay, those at the bottom of the income ladder are often unemployed and struggling to get by.

Large cities such as Atlanta, Washington, New York, San Francisco, Miami and Chicago had the most inequality, due largely to years of middle-class flight to the suburbs. Declining industrial cities with pockets of well-off neighborhoods, such as Pittsburgh, Cleveland and Buffalo, N.Y., also had sharp disparities.

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