The Recession Made Income Inequality Even Worse

http://thinkprogress.org/economy/2014/05/05/3434120/oecd-income-inequality/



The gap between the rich and the poor across the world has grown faster since the financial crisis than it did during the entire decade before it, according to a new report from the Organisation for Economic Co-operation and Development (OECD). On top of that, inequality in earnings from work and investments increased as much during the first three years of the crisis as in the 12 years before it.

Today, the average income of the world’s richest 10 percent is now about 9.5 times what the poorest 10 percent make. A quarter century ago, that figure was just 7 times. Meanwhile, the Gini coefficient, which measures income inequality, increased from 0.29 percent in the mid-1980s to 0.32 in 2010.

These trends have been particularly pronounced in the United States. Here, 47 percent of total income growth between 1976 and 2007 went to the top 1 percent, one of the biggest increases among OECD countries. They earned 20 percent of total income in 2010, the highest share out of the 34 member countries. In 2012, the wealthiest 10 percent took home half of the country’s total income, the largest share ever recorded.

While things have been going well at the top, the opposite is true in the middle and at the bottom. The United States is one of a handful of countries where the share of income going to the middle class, or the middle three quintiles of the income distribution, has fallen over time. Relative poverty is also particularly high here, or the share of people whose income is less than half of the national median. Around 11 percent of the population in OECD countries lives in relative poverty, but in Chile, the U.S., and Japan, that share is between 16 and 18 percent. The share of people who work and still find themselves living in poverty is also high here, at more than 12 percent.