Follow
U.S. Rep. Bobby Scott, who had recently voted against the Trans-Pacific Partnership agreement, argued that the trade deal would further shrink U.S. workers’ wages. He also added that the income disparities are “the worst since the 1920s,” so a large-scale trade deal wouldn’t be appropriate at the moment.
Additionally, Rep. Scott concerns over U.S. income disparity are not unique. Two other politicians that otherwise have little to nothing in common, Bernie Sanders and Ted Cruz, expressed similar views during their presidential campaign.
But Scott was the only one to back his statements. He said that there were at least two reports that drew the conclusion that the gap between the rich and the rest of the society was even larger than it was a hundred years ago.
The first report was issued by the Center on Budget and Policy Priorities and published early this year. The report is actually a review on several studies focused on income inequality in the U.S., including a study from the U.S. Census bureau and the Congressional Budget Office. But those studies analyzed the data on income disparity dating back to the 1970s.
Nevertheless, the second report has data from the beginning of the 20th Century. Its authors – University of California, Berkeley’s Emmanuel Saez and colleagues – sifted through data on U.S. income disparity since 1913. The data contained statistics from 30 states which had gathered the information from millions of tax returns their residents had filed.
As of 2012, the U.S. top earners, which account for 1 percent of the U.S. population, made 18.88 percent of the U.S. income. That figure was only overshadowed by a 19.6 percent recorded in 1928.
Still, Prof. Saez acknowledged that the information may not be accurate because many high-pay earners cashed investments in 2012 to dodge a tax on capital gains slated for the following year.
But the following year, the share of all income of the one percent was still high – 17.54 percent, which is one of the highest figure in more than a century and the latest available. In 1936, the nation’s rich managed to gain 17.64 of total earnings.
Critics, however, claim that Prof. Saez research may be biased. For instance, Gary Burless from Brookings argues that the University of California, Berkley professor failed to take into account gains from stock market investments, rents, dividends and self-employment earning of the rest of the 99 percent.
Moreover, food stamps, unemployment and social security benefits, federal reimbursement for health care costs among others were also not taken into account.
Prof. admitted to Mr Burless’ statements but he also said that those benefits started in the 1940s or even decades later. So, income disparity could have been even worse before that date.
Image Source: Hampton Roads
