By MICHAEL GERSTEIN
Capital News Service
LANSING – Income inequality – long a social reality in America – may be permanent, a new study by the Brookings Institution in Washington, D.C., suggests.
The study reveals continuing opulence for a few top-earners and an ever-slimmer slice of the economic pie for the rest.
And the inequality gap in Michigan is wider than in many other states.
It ranks as the 11th most unequal, according to Michigan State University economist Charles Ballard.
Shrinking higher education funding, a deregulated financial market and weaker unions all contribute to the disparity, Ballard said.
But he said he doubts the new right-to-work law will further weaken unions because they’re already weak.
The legislation serves as an illustration of political attitudes, he said. “The majority in the Legislature is pretty comfortable with the increase in income inequality. Certainly their votes on policy indicate that they’re comfortable with it.
“The increase in income inequality is the biggest story of the U.S. economy in my lifetime. And I was born in 1954,” Ballard said.
Meanwhile, poverty levels across the state are slowly inching up, according to the Michigan League for Public Policy.
Melissa Smith, a policy analyst for the advocacy and research group, said it’s impossible to measure income inequality on a county level. But poverty is measurable, and so too is median, or middle, household income.
“Has poverty really changed since 1980? Sure it has,” Smith said. But statistics become meaningful only “if you can match that to a political or economic change.”
One big change was the housing market crash in 2007.
The whole state took a hit during that time, and it’s still struggling to recover. But recent data from the league shows some counties fared much worse.
For example, Macomb County was hit the hardest, with a 69.9 percent spike in poverty levels from 2007 to 2011. It now has the highest poverty levels in Michigan.
At the same time, median household incomes rose in some counties. In spite of the recession, for example, Livingston County saw a 5.5 percent increase from 2007 to 2011, and it has the highest in the state, at $72,700.
Still, researchers say to understand disparity it’s essential to look at those at the top – the 1 percent. Their incomes continue to skyrocket faster than ever.
But income distribution was much more equal during the first half of the 20th century. At that time, unions were stronger, the financial market was more tightly regulated and the wealthy were taxed at a higher rate.
“These things didn’t just happen,” Michigan State’s Ballard said. “They were the result of political decisions where the American voting public said, ‘We want more for the bottom 99 percent, and we don’t need as much for the top 1 percent.’”
Are those days gone forever?
Brookings Institution researchers studied U.S. tax returns from 1987 to 2009 to reach their conclusion that the gap may be permanent.
And disparity has been on the rise nationally since the 1960s, an 18 percent increase, according to the U.S. Census Bureau.
Ballard said recent research shows a direct relationship between higher education funding and income inequality.
States spending more public money for colleges have a more equal distribution and a higher average income, he said.
For example, residents of Connecticut average the most money compared to other states, at $58,908. Michigan residents make an average of $37,497, 35th in the nation. The state also has one of the smallest budgets for higher education, compared to other states.
The U.S. average per-capita income is $42,693.
Online resources for CNS editors:
By MICHAEL GERSTEIN