“The vast majority of American workers have not benefited from the nation’s economic growth over the past three decades,” according to the findings of “The State of Working America,” 12th edition. This comprehensive analysis of trends for working Americans, which was released today by the Economic Policy Institute (EPI), shows that the typical American family has added hundreds of extra hours of work each year, and has earned better education credentials, yet is still struggling to keep up.

The report’s timing is fortuitous because it coincides with a week-long series of blog posts initiated yesterday by the Wisconsin Budget Project on the subject of widening income disparities in Wisconsin.  On a daily basis for the rest of the week, those posts will chart recently released Dept. of Revenue data to illustrate the income gap in Wisconsin and its growth since the 1990s.  The EPI report explains the national trends and policy choices that help make sense of the increasing disparities in our state.“The State of Working America, 12th edition” contrasts the trends in family income and asset accumulation over the past three decades with the period between World War II and the late 1970s, when increases in productivity resulted in rising income and wealth for all Americans. Since 1979, median family income has no longer been growing with productivity; instead, nearly all the fruits of income growth have been enjoyed by people at the top of the income scale. The report spells out the consequences of the widening gap between the rich and the rest of us:

• The annual income of middle-income households was almost $19,000 lower in 2007 than it would have been if all incomes had grown at the same rate since 1979. 
• Wealth has also been diverging, and the median family lost wealth between 1983 and 2010, with a net worth that year less than half of the $119,000 families would have had if wealth had grown equally across all households. 
• Looking specifically at the past 10 years, wages for college graduates in almost every occupation have been flat or have fallen. 
• The poverty rate began to rise even before the Great Recession, going from 11.3% in 2000 to 12.5% in 2007, largely due to rising income inequality. 

Although many reports focus just on the growing gap in wages and total income, findings in The State of Working America demonstrate an even wider divide in household wealth, and it shows how there is an especially pronounced racial and ethnic disparity in wealth. The chart vividly illustrates that disparity in 2010, when the median net worth of Hispanic households and African American households was $1,300 and $4,900, respectively, compared to $97,000 for white households.

Figures in the report also show that gender disparities persist. Although gaps in labor market outcomes have closed in recent decades, the report concludes that much of the narrowing in the gender disparities is because men lost ground, not because women gained it.

“The State of Working America, 12th Edition” explains that economic policies, including policymakers’ actions and failures to act, have undercut the ability of workers to benefit from economic growth in the United States. Some of the key economic policies include: (1) acceptance of high unemployment rates; (2) globalization and the failure to manage destructive international trade imbalances; (3) tolerance of employer practices hostile to unions; (4) privatized and deregulated industry, including the financial sector; and (5) eroded labor standards.

Tax policy changes favoring the wealthy, such as taxing income earned from capital less than wages, have been exacerbating the divide caused by the underlying economic factors.

Watch the Budget Project blog posts this week for interesting data on the widening income disparities in Wisconsin.

 Jon Peacock