The Income Gap: How Much Is Too Much?
In the debate over income inequality, the right and left seem to agree on one point: The U.S. is the land more of equal opportunity than equal outcomes.
But what's the real relationship between the growing income gap and opportunity? A new report out last week has triggered more debate about the haves and the have-nots.
The study, led by Raj Chetty of Harvard University, says it's not any harder to achieve economically in the U.S. today than it was 20 years ago. That flies in the face of growing criticism that the income gap is putting some opportunities beyond the reach of average Americans.
A National Challenge
President Obama last month called income inequality and economic mobility "the defining challenge of our time." The president, who is set to deliver his State of The Union message on Tuesday, also promised to keep those issues front and center for the remainder of his presidency.
"While we don't promise equal outcomes, we've strived to provide equal opportunity," he said.
Historically, however, the country's policies have sought to address both. President Lyndon Johnson's War on Poverty created early childhood education programs and investments in poorer schools. But it also tried to address the income gap by creating social safety net programs like Medicare and food stamps.
Sheldon Danziger, president of the Russell Sage Foundation, a progressive think tank, says in the decades that followed, that approach worked. Wages rose for everyone. The economy bounced back quickly from brief recessions.
Neither of those things, he says, are true about the U.S. economy today.
"What's not going to happen is a return to the golden age, when a rising tide lifted all boats," he says.
A Fading American Dream?
Danziger argues that the yawning gap in the income distribution between the top earners and those at the bottom is becoming self-perpetuating. He says the rich get richer from investments in the financial markets, and secure better educations for their children.
Minimum-wage and middle-income earners, meanwhile, cannot keep pace, making it less likely their children will have the opportunities to move up.
Economy
Study: Upward Mobility No Tougher In U.S. Than Two Decades Ago