Why U.S. Income
Inequality Is More
Frightening Than Europe's
By JORDAN WEISSMANN
Income inequality is not a uniquely American problem. Over the past 30
years, it's surged across the developed world, driven by everything from the
insane wealth generated by big finance to the victory of computers (and
offshoring) over blue-collar labor.
That said, there's a case to be made that U.S. income inequality is in fact
exceptional, and not just because of its severity. I was reminded of that last
night, when I saw this graphic from a 2008 report by the OECD making its
way around Twitter. In broad terms, what it tells us is that in many
developed countries, a rising tide has truly lifted all boats, with the wealthy
rising a bit faster. In the United States, the tide is lifting up the rich, while
drowning many of the poor.
The chart shows the average annual rate at which earnings rose for fulltime working men (in dark blue) and women (in light blue) in each 10
percent bracket from 1980 to 2005. So the poorest men and women are on
the left of each chart, and the richest are on the right.
Like their peers across the developed world, American women's earnings
rose as they broke into the labor force -- though less so for lower-income
women. For American men, it was a different story. Among the uppermiddle-class and rich, male earnings inched up on the whole. Among the
lower-middle class and poor, their incomes shrank. The only other country
that saw a similar phenomenon was Canada, where incomes seemed to
stagnate in general.*
That's what's so frightening about the way the U.S. economy was changing
even before the Great Recession. It's not just that the rich saw their
finances improve faster than everyone else's. It's that many Americans
were seeing the value of their work, and in some cases their standard of
living, decline. And that makes us at least a little bit special, in a very
unfortunate way.