As Income Inequality Rises in U.S., Society Suffers

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April 27, 2011; Source: Daily Yonder | According to a new study by the Southern Rural Development Center (SRDC), income inequality is rising in the U.S. That’s not necessarily news, as numerous media reports during the current financial crisis have noted that income inequality in this country is at a historic level, unequaled since the Great Depression.

This study, however, not only sheds new light on patterns of income distribution, but also explores whether differences in county level per capita income are associated with other social issues. The authors conclude that the correlations are striking, and that rising income inequality therefore needs far more attention from policy makers.

Specifically, SRDC studied county level data on per capita income in 1980, 1990, 2000 and 2008, the most recently available census income. The data purposefully includes only market-generated income (wages, pensions, business income and interest), excluding government transfer payments. The authors argue that such data more accurately reflects the effect of markets on income inequality.

The authors compared per capita market income changes in each county over this time period, and concluded that the gap between high income and low income counties nationally has grown between 1980 and 2008 (in 2008 dollars), in both urban and rural areas. Per capita market income in the most wealthy (top 10 percent) counties in the nation increased by 63.8 percent over this time period, as compared with a 38.3 percent increase in the poorest (bottom 10 percent) of counties. Per capita market income growth in rural counties lagged behind urban counties, but the gap between wealthy and poor rural counties was less pronounced than the gap between wealthy and poor urban counties.

To examine the potential correlation between income inequality and social issues, the authors divided the counties into ten groups, based on their per capita market income. They then compared several social indicators for which county-level data is available within each decile. The findings? As income inequality increases in U.S. counties, so does the violent crime rate, the property crime rate, the teenage birth rate, the general incidence of poverty, and the incidence of child poverty in particular.

Although this data illustrates correlation, not causation, the trends are consistently associated, and that should cause concern. As the authors note, “We would suggest that policy makers consider the continuing increase in income inequality in this country – and the ill effects associated with this trend.”—Kathi Jaworski

  • David Cearley

    While I completely agree we have a income problem, I reject the idea that the solution is increasing taxes on the most productive citizens so their money can be redistributed as political patronage. Wealth is NOT a zero sum game. In other words, if one person makes money, they don’t do it by taking food out of people’s mouths. Each of us is capable of creating wealth through work or value creation someone is willing to pay for, whether our product is art, music, crafts, computers, or intellectual property. Our fixation on confiscating the “excess” wealth of the rich is seriously misguided. We could take every dime earned by our richest 1% last year (who paid 40% of all income taxes) and wouldn’t even be able to pay off deficit spending for one year. Our education system is still trying to pump out industrial workers in An age of intellectual property as our leading wealth cation machine.

  • James


    I do agree with David that to reduce the inequality of income is not to increase the taxes of those who are successful.But I would suggest that ways be made to empower new entrants to create their small business and create employment for the jobless.Yes to remove all oppressive legislations that discriminate against the marginalised.I am sure this would be also the desire of all who has made it in life.

  • 3rdsectorradiousa

    Thanks for publishing this article. The two commentators, however, need to get a grip. The article speaks of monetary wealth, which is a social construct. As such it is of course finite. The Fed and the mega banks determine how much capital resource there is in the US, and use policies intended to keep the elite in power.

    Yes, the rest of us DO need to find alternatives to capital assets, and yes, with our professional-consumerist turn in society we have not been good at doing that. The point of the article is that an increase in income disparity correlates with an increase in social problems. Conversly, a levlling of income disparity decreases social problems–one only need to look to nations in which income disparity is less than ours.

    Centralizing control of assets in a small percentage of people–like the Soviet Union did–is not only undemocratic (thus weakening our society), it is also inefficient (the Soviet Union collapsed on itself). Spreading the wealth more equitably is in line with the testament of Christ, Adam Smith’s decentralized market economy, and a representative democracy. There, I said it. If we reject these values, what values are we professing?