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Thursday, March 23, 2006
The Debate on Income Inequality
The Treasury has measured that the income gap has grown narrower between 2000 and 2003, with Secretary John Snow telling reporters yesterday, "There has been a decline in the inequality." This statement is based on the fact that in 2003, the top 5 percent of Americans earned earned 15.4 percent of the nation's after-tax income in 2003, down from 19 percent in 2000. The bottom 20 percent earned 2.5 percent of all U.S. after-tax income, up from 2.3 percent in 2000. The Treasury data also shows, however, that the gap was larger in 2003 than it was in 1990. As this Washington Post article points out, however:
Much of the decline in inequality during that period reflected the popping of the stock market bubble, which peaked in 2000, when executives pocketed fat bonuses and stockholders reaped huge profits from selling shares, according to economists inside and outside the Bush administration. The fall in stock prices during those years disproportionately affected high-income households and helped compress the distribution of income.
We believe that income inequality has intensified under President Bush, and in fact wrote on the issue in the last edition of the Watcher. One exerpt:
The federal minimum wage still sits at $5.15 per hour and has lost over 17 percent of its purchasing power since 1997. In 2005, minimum wage workers earned only 32 percent of the average hourly wage and in fact, the wage would have to rise to $8.20 just to reach half of the current average hourly wage. If Congress fails raise the minimum wage this year, it will mark the longest stretch the wage has remained unchanged since it was instituted in 1938 and the greatest inequality between minimum wage and average wage earners since the end of World War II.
Watcher: Income Inequality Has Intensified Under Bush
Posted by Becky Lewis
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