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With income gap at 80-year high, solutions remain elusive
A new report shows that the income gap between rich and poor in America is at an eight-decade high–the largest differential since the period immediately preceding the Great Depression. And economists fear that the education and job-creation programs that could bridge this gap are lacking in the recessionary economy.
On June 25, the Center on Budget and Policy Priorities released a report on the growing income gap in the United States. While the data it studies are not new–the income stats end at 2007, just before the advent of the current recession–the report synthesizes both census and Internal Revenue Service information to paint a more complete picture of the finances of the various strata of American society.
"It's given us the first clear, comprehensive picture of income distribution over the economic cycle that ended in 2007," said Arloc Sherman, senior researcher at the CBPP. "Now we know definitively that income inequality grew in that cycle. Just before the recession hit, we know that inequality was heading into record-breaking territory."
In 2007, 17.1 percent of all after-tax income in the country went to the top one percent of earners. According to Emmanuel Saez, an economist at the University of California, Berkeley, who used a slightly different methodology in calculating his figures, the proportion of the country's income going to the top one percent is at its highest since 1928.