Why denounce the wealth gap?

Tuesday, November 15th, 2011 at 9:00 pm

Why denounce the wealth gap?

Article by Evangeline Selden

The Americans may have to disturb two reports reminding them of a widening gap between rich and poor.

The Center on Budget and Policy Priorities and the Economic Policy Institute, two liberal research groups, has launched a collapse of the state by state data from the Census Bureau, found nine states (led by New York ) in which 20 percent of households now earn at least 11 times the income of the poorest 20 percent. This indicates much sharper difference between the top and bottom than existed two decades ago.

So the Federal Reserve Bank released its latest survey of consumer economics. It showed that the average net worth of families earning less than $ 10,000 per year fell by $ 6,600 over the last three years, while households earning more than $ 100,000 a year have seen their wealth jump by more than $ 300,000 .

Our answer is: So what?

Few of us should be surprised - or threatened - by statistics on inequality. Some Americans believe the more equality the better, but the fact is that the distribution of income and wealth is not arbitrary. According to the general trends of the economy and is a by-product of a decade that created 17 million jobs and added 20 percent to median household net worth.

Not specified indirectly by the state by state report is that states where income disparities are lower are somehow "right" that states with high disparities. But the truth is that among the communities, states and regions, income and wealth vary for many reasons, many of which are unavoidable and laudable.

Consider, for example, that income varies with education. According to census data serves high school dropouts in the workforce by an average of $ 26,207, while employees with a professional degree averaged $ 127,499. Census figures show that most states with income gaps have greater diversity in higher levels of education than states with smaller income differences. Twenty-six percent of those 24 years in New York - the state with the greatest income disparity - have at least a bachelor's degree, while Indiana, who was among the seven countries with the smallest gap income, only 16 percent do. Should we lament that so many New Yorkers went to college?

Another nefarious reason for differences in income can be increased immigration. Immigrants are a collection of groups with low and high income. So it is not surprising that the seven most unequal states - New York, Arizona, New Mexico, Louisiana, California, Texas and Rhode Island - about 13 percent of the population is foreign born (in California, is 25 percent). Of the seven states of the lowest income, the immigrant population is only 3.8 percent.

The abandonment of production is also a factor. Service workers ranging from hotel maids to brain surgeons, while the pay scale is generally narrower in the manufacturing sector. States that are industrial tend to have more equal income distribution. Data from the Bureau of Labor Statistics show that about 10 percent of workers in Arizona, Louisiana and New York have manufacturing jobs, while states such as Indiana and Wisconsin equal the figure is 23 percent .

Also in the seven states with the biggest income gaps, home to more than 80 percent of people in or near metropolitan areas. In countries like the most, only about half. If we were to go back 100 years and once again become a largely rural nation, we could not see such large income disparities, but that's because American cities are our engines of wealth and a greatest opportunity for those who succeed.

Inequality is not inequity. Artificial efforts to try to curb wealth differences always do more harm than good. Tax increase would reduce the gap between rich and poor, but it would be a Pyrrhic victory if the economy slows. What Americans should be more careful to maintain our growth, not the Red Herring of gaps in income and wealth.

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