In the U.S., the Rich Are Getting Richer While the Poor Get Poorer

Income inequality in the United States and other advanced economies is rising.

ByABC News
June 13, 2013, 1:31 PM

June 13, 2013— -- The economy might be growing, but a lot of Americans aren't feeling it.

Middle-wage jobs have been gutted, forcing some of the people who used to hold those gigs down the proverbial pay ladder. That, in turn, has shoved some off the ladder entirely and into poverty.

Half of the people in this country are now considered poor or low-income, and the median household income actually fell for the second straight year in 2011 to just more than $50,000. That's not a very promising statistic for a place that's widely regarded as the "Land of Opportunity."

At the same time, the ranks of the very wealthy and very prominent -- think Microsoft's Bill Gates, Berkshire Hathaway's Warren Buffett and Oracle's Larry Ellison -- have swelled in recent years.

And we don't fair much better when compared to other nations. According to a report out this month from the International Labour Organization, the gap between rich and poor in the United States is worse than in other industrialized countries.

The decline of the middle-income group in the U.S. may have to do with the decline in trade unions, which advocated for worker rights and represented a significant portion of mid-wage jobs, according to the report. It might also have to do with the decline in the top personal tax rate, which has let post-tax income distribution skew toward high-income brackets. The report found that better health and education are correlated with strong middle-income populations. So policies that promote a living minimum wage and worker benefits might help.

Other developing countries that have been faster to rebound from the economic downturn offer some insight. Chile and Colombia have both seen employment grow since 2007, and youth unemployment in Chile declined by nearly 10 points from 2009 to 2012. The report indicates that part of that has to do with the fact that Chile devoted millions to infrastructure spending and $1 billion to a state-owned copper export company, the largest in the world. Both governments took measures to protect the most vulnerable residents -- such as making low-balance savings accounts easier to obtain.

That said, globally, unemployment has gone up. And while it appears that some countries have curbed unemployment, places like the United States have also seen increases in the number of discouraged people who have been out of a job for a long time. Some of those people are still unemployed but they've stopped looking for work so they no longer fall into the unemployed statistic.

In general, while income inequalities have narrowed in emerging and developing economies, that just hasn't held true for advanced economies like ours.