Rich-poor income gap growing in America
(AP)
Updated: 2006-01-28 06:38

The disparity between rich and poor is growing in America as the federal minimum wage has remained flat for years, union membership has declined and industries have faced global competition, according to a study released Thursday.

The report by the Center on Budget and Policy Priorities and the Economic Policy Institute, both liberal-leaning think tanks, found the incomes of the poorest 20 percent of families nationally grew by an average of US$2,660, or 19 percent, over the past 20 years. Meanwhile, the incomes of the richest fifth of families grew by US$45,100, or nearly 59 percent, the study by the Washington-based groups said.

Families in the middle fifth saw their incomes rise 28 percent, or US$10,218.

The figures, based on U.S. Census data, compare the average growth from 1980-82 to 2001-03, after adjusting for inflation.

The poorest one-fifth of families, the report said, had an average income of US$16,780 from 2000-03, while the top fifth of families had an average income of US$122,150 — more than seven times as much. Middle-income families' average income was US$46,875.

Trudi Renwick, an economist with the union-backed Fiscal Policy Institute in New York, said globalization, the decline of manufacturing jobs, the expansion of low-wage service jobs, immigration and the weakening of unions have hurt those on the lower end of the economic scale.

In 38 states, the incomes of high-income families grew by a higher percentage than those of the lowest-income families; Alaska was the only state in which the reverse was true. The 11 states where the high and low incomes increased at about the same rate were mostly in the West and Midwest.

The greatest disparity between rich and poor was in New York, where the top 20 percent of wage earners had average incomes 8.1 times larger than the poorest 20 percent in the early 2000s. Texas had only a slightly smaller gap; Wyoming had the smallest disparity at a 5.2 to 1 ratio.

Matthew Maguire, a spokesman for the Business Council of New York state, said the money earned by the state's wealthiest residents is "something that everybody who cares about New York should be pleased about."

"New York's wealthy pay huge sums in taxes and those wealthy people and their taxes make it possible for New York to provide the nation's most generous social service programs to less fortunate New Yorkers," he said. "It also reflects the fact the state is a magnet for immigrants who come from the four corners of the globe to a state they see as symbol of economic activity."

Renwick said the government "needs to continue its commitment to correcting the natural outcomes of the marketplace" by raising the minimum wage with inflation and by tax policies like the earned income tax credit.

Renwick also suggested that governments, when giving tax breaks to companies, insist those companies provide jobs that pay higher wages.