"The view that income inequality harms growth – or that improved equality can help sustain growth – has become more widely held in recent years," World Bank economist Branko Milanovic said in a September report. Not that long ago "the reverse position – that inequality is good for growth – held sway among economists."
That conclusion is by no means settled, and this article will lay out the best arguments of both sides – some of those arguments voiced by ordinary Americans. But what now seems established is that income disparity has risen in recent years within the United States, as well as within other economically advanced nations.
An overview for the US: Over the past three decades, average incomes have grown for typical households at all parts of the earnings scale, but earnings have truly soared for the rich.
Average income for a household in the top 1 percent has more than tripled, from $350,000 in 1979 to $1.3 million in 2007, according to data tracked by Lane Kenworthy, a University of Arizona sociologist drawing on numbers crunched by the Congressional Budget Office. These figures are adjusted for inflation and look at household income after taxes and any transfer payments from the government.
By comparison during those three decades, households in the middle 60 percent saw average real income go from $44,000 to $57,000. For the bottom 20 percent, this gauge shows average household income rising from $15,500 to $17,500.