TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, August 11, 2014

Task Force of Mayors Assails Growing Income Inequality

The United States Conference of Mayors, Income and Wage Gaps Across the U.S.:

Report coverThe Wage Gap in the US:

  • The US has regained the 8.7 million jobs that were lost during the Great Recession, and employment has surpassed its pre-­‐recession peak of 138.4 million jobs in 2008.
  • Average annual wage of jobs lost in 2008-­‐09 was $61,637, and average wage of job gains through the second quarter of 2014 equaled $47,171. This wage gap of 23% is significantly larger than that of the earlier recession and recovery (2000-­‐2006), and implies $93 billion in lower wage income.
  • In comparison, the wage gap following the 2000-­‐2003 recession was 12%. Wages earned in advancing sectors fell $27 billion short of the annual wages lost in the declining sectors over 2000-­‐2003.
  • Extensive job losses in high-­‐wage manufacturing ($63K) and construction ($58K) sectors were replaced by jobs in the lower wage sectors of hospitality ($21K), health care ($47K), and administrative support ($37K). 

The Income Distribution in the US:

  • The 2012 household median income of $51,017 was, in real terms, the lowest since 1995. The median was greater in the West ($55,157), and Northeast ($54,627), than in the South ($48,033) and Midwest ($50,479).
  • The highest-­‐earning 20% of households saw their share of income rise from 43.6% in 1975 to 51.0% in 2012. Most of this gain was among those in the highest 5% of income, which rose from 16.5% in 1975 to 22.3% in 2012, a gain of $490 billion in 2012.
  • Each of the lower quintiles experienced a declining share of income since 1975. The lowest two quintiles, or 40% of households, received just 6.6% of all US income gains since 2005, and 9.5% of gains since 1995.
  • The highest 20% of households captured 60.6% of total income gains from 2005 to 2012, and the top 5% received 27.6% of total gains.
  • In 2012 the 80th percentile (the lowest income in the top 20%) income of $104,906 was more than double (2.04x) the median. That ratio has increased from 1.73 in 1975.

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