Income inequality continues to grow; Pa. earns middling score on income gap

Income gaps are wide in Pennsylvania: The incomes of the richest fifth of households were 7.2 times bigger than the incomes of the poorest households in the late 2000s. The incomes of the richest five percent of households were 11.7 times bigger than the incomes of the poorest fifth in that same period.
Nominate a Top Woman in Business. Click here. Nominate an NEPA business professional under 40. Click here.

For the Record

Sign up now for full access to Local Business Deeds, Bankruptcies, New Incorporated and Local Stock Activity from the Northeast Pennsylvania Business Journal. (read more)

20 Under 40: JenniferDessoye

Photo: N/A, License: N/A, Created: 2016:11:17 11:10:02

Dr. Jennifer Dessoye is assistant professor of occupational therapy at Misericordia University and owner of Bright Beginnings Early Learning Academy (BBELA). Discontent with the early education curriculum and understanding of human development and neurolo (read more)

20 Under 40: Amy Hlavaty Belcher

Photo: N/A, License: N/A, Created: 2016:11:09 13:55:46

Amy Hlavaty Belcher, 39, owner and artistic director of Abrabesque Academy of Dancing, believes that for those who have been given much, much is expected. “I just try hard to do my best,” she said. I have been blessed with many opportunities and many gift (read more)

20 Under 40: Christopher Hetro

Photo: N/A, License: N/A, Created: 2016:11:14 11:21:35

Chris Hetro, 33, works hard and plays hard. “A strong work ethic is important, but finding balance outside of work is important because life is too short and you need to enjoy it,” he explained. As an electrical engineer and project manager at Borton-Laws (read more)

20 Under 40: C. David Pedri

Photo: N/A, License: N/A, Created: 2016:11:14 15:19:17

For attorney C. David Pedri, 37, it’s all about a combination of qualities that contribute to success. “My philosophy is simple: be open and honest, treat people the way you would want to be treated, with respect, and work hard to attain your dreams. The (read more)

20 Under 40: Ed Frable

Photo: N/A, License: N/A, Created: 2016:11:09 11:13:04

Ed Frable, 28, believes “if I work hard and stick to my word, good things will happen. My crew will not be deterred. We will re-evaluate our game plan and not give up until the job is complete,” explained Frable, the owner/operator of Ed Frable Constructi (read more)

20 Under 40: William H. Bender II

Photo: N/A, License: N/A, Created: 2016:11:16 13:11:08

William H. Bender II, CFP, CIMA, CRPC, loves what he does. “I’m lucky. I come to work every day excited to help the people and institutions we work with,” explained Bender, 34, first vice president at Bender Wealth Management Group, Merrill Lynch. The fam (read more)

20 Under 40: Angelo Venditti

Photo: N/A, License: N/A, Created: 2016:11:14 16:09:11

Angelo Venditti, 38, heard a call to the helping professions early on. Geisinger Northeast’s chief nursing officer answer was to volunteer for his local fire company. After high school, he became a paramedic, then enrolled in nursing school. Three years a (read more)

20 Under 40: Donald Mammano

Photo: N/A, License: N/A, Created: 2016:11:17 12:38:37

At 20, Donald Mammano began his own company, while attending the University of Scranton. Mammano, now 33, and president of DFM Properties, recalls, as a youngster, holding a flashlight while his father fixed the kitchen sink. “From that point on I was fas (read more)

20 Under 40: William J. Fennie III

Photo: N/A, License: N/A, Created: 2016:11:15 09:50:19

William J. Fennie III, 27, is always knocking on the proverbial door, because he knows one day, one will open. As an investment specialist with Integrated Capital Management (iCM) he cannot take “no” for an answer. “I make cold calls every day to invite f (read more)

20 Under 40: Marcus Magyar

Photo: N/A, License: N/A, Created: 2016:11:14 13:25:24

As an advisor at CAPTRUST Financial Advisors, Marcus N. Magyar, CFP, 30, provides comprehensive wealth management and investment portfolio services to business owners, executives, families and high-net worth individuals. His multi-disciplinary team of pro (read more)

20 Under 40: Heather Davis

Photo: N/A, License: N/A, Created: 2016:11:10 13:34:44

Heather M. Davis, 33, director of marketing and communication, is responsible for creating, overseeing and implementing a strategic marketing and comprehensive communications plan for The Commonwealth Medical College (TCMC). She is also responsible for pr (read more)

20 Under 40: Alexandria Duffney

Photo: N/A, License: N/A, Created: 2016:11:14 14:24:50

Alexandria Duffney, 30, is competitive by nature and loves a good challenge. These qualities have led her to her position as associate director of graduate admission at Wilkes University. Here she works with prospective students interested in enrolling in (read more)

20 Under 40: John Culkin

Photo: N/A, License: N/A, Created: 2016:11:07 17:18:26

John Culkin’s tenets inform: “Less haste equal more speed; the same boiling water that softens the potato hardens the egg, it is all about what you are made of, not the circumstances surrounding you; and don’t ask someone to walk a mile in your shoes, bef (read more)

20 Under 40: Conor O'Brien

Photo: N/A, License: N/A, Created: 2016:11:14 17:19:58

“What could be worse than getting to the end of your life and realizing you hadn’t lived it,” mused Conor O’Brien.” As co-founder and executive director of the Scranton Fringe Festival, O’Brien, 25, is responsible for leading the development of the overal (read more)

20 Under 40: Jessica Siegfried

Photo: N/A, License: N/A, Created: 2016:11:10 14:12:08

Jessica Siegfried, 38, is senior designer with BlackOut Design Inc., where she is responsible for all creative design at the full-service agency, from traditional branding and print to collateral and front end web design. “I’ve always had an interest in t (read more)

20 Under 40: David Johns

Photo: N/A, License: N/A, Created: 2016:11:08 10:15:37

David Johns’ career path has been shaped by his diverse experiences. As director of structural engineering at Greenman-Pedersen Inc., Moosic, Johns, 39, ensures that his engineering and consultant teams provide clients with their best effort. “We complete (read more)

20 Under 40: Robyn Jones

Photo: N/A, License: N/A, Created: 2016:11:14 12:41:32

Robyn Jones, 38, president of ReferLocal LLC, has learned just as many lessons from her business successes as she’s had from her failures — and she believes it’s important to share that knowledge with her employees. After graduating from American Universi (read more)

20 Under 40: Nisha Arora

Photo: N/A, License: N/A, Created: 2016:11:14 10:02:06

Nisha Arora, 36, tries to be the best version of herself every day. As general counsel for ERA One Source Realty Inc., she realized she cannot control other’s behavior so “I try to focus on myself and how I can be better,” she explained. Arora’s responsib (read more)

20 Under 40: Justin Sandy

Photo: N/A, License: N/A, Created: 2016:11:10 14:59:27

Starting at a young age in Hazleton, Justin C. Sandy, 33, found a passion for running. He became a member then a coach for Misericordia University’s cross country and track and field programs. “It was at Misericordia that I also garnered the profound sati (read more)

20 Under 40: Dr. Ariane Conaboy

Photo: N/A, License: N/A, Created: 2016:11:16 09:38:07

As a doctor of internal medicine at Physicians Health Alliance, Dr. Ariane M. Conaboy, 34, realizes the importance of human life and how fragile it can be at times. Conaboy graduated from Scranton Prep and the University of Scranton with a double major in (read more)

Find us on Facebook!

Photo: N/A, License: N/A

"Like" us on Facebook for all of the latest news! (read more)

Follow us on Twitter!

Photo: N/A, License: N/A

Follow us for constant updates! (read more)

Article Tools

Font size
+
Share This
EmailFacebookTwitter

Photo: Source: EPI, License: N/A

In every state plus the District of Columbia, incomes grew faster among the top fifth of households than the bottom fifth. Nationally, the richest fifth of households enjoyed larger average income gains in dollar terms each year ($2,550, after adjusting for inflation) than the poorest fifth experienced during the entire three decades ($1,330).

The Economic Policy Institute, a liberal think tank funded in part by labor unions, on Nov. 15 released a study, “Pulling Apart: A State-by-state Analysis Of Income Trends.” The Center on Budget and Policy Priorities co-authored the report. The report’s executive summary finds:

A state-by-state examination finds that income inequality has grown in most parts of the country since the late 1970s. Over the past three business cycles prior to 2007, the incomes of the country’s highest-income households climbed substantially, while middle- and lower-income households saw only modest increases. As of the late 2000s (2008-2010, the most recent data available):
n In the United States as a whole, the poorest fifth of households had an average income of $20,510, while the top fifth had an average income of $164,490 — eight times as much. In 15 states, this top-to-bottom ratio exceeded 8.0. In the late 1970s, in contrast, no state had a top-to-bottom ratio exceeding 8.0.
n Nationally, the average income of the richest fifth of households was 2.7 times that of the middle fifth. The five states with the largest such gaps are New Mexico, California, Georgia, Mississippi, and Arizona.

Gaps separating high-income households from others grew prior to recession

The long-standing trend of growing income inequality continued between the late 1990s and the mid-2000s.

  • On average, incomes fell by close to 6 percent among the bottom fifth of households between the late 1990s and the mid-2000s, while rising by 8.6 percent among the top fifth. Incomes grew even faster — 14 percent — among the top 5 percent of households.
  • The average income of the top 5 percent of households was 13.3 times the average income of the bottom fifth. The states with the largest such gaps were Arizona, New Mexico, California, Georgia, and New York, where the ratio exceeded 15.0.

Similarly, income gaps between high- and middle-income households remain large.

In 45 states and the District of Columbia, average incomes grew more quickly among the top fifth of households than among the bottom fifth between the late 1990s and the mid-2000s. In no state did the bottom fifth grow significantly faster than the top fifth.

Similarly, households in the middle of the income distribution fell further behind upper-income households in most states between the late 1990s and the mid-2000s.

  • On average, incomes grew by just 1.2 percent among the middle fifth of households between the late 1990s and the mid-2000s, well below the 8.6 percent gain among the top fifth. Income disparities between the top and middle fifths increased significantly in 36 states and declined significantly in only one state (New Hampshire).

An examination of income trends over a longer period — from the late 1970s to the mid-2000s — shows that inequality increased across the country.

  • In every state plus the District of Columbia, incomes grew faster among the top fifth of households than the bottom fifth. Nationally, the richest fifth of households enjoyed larger average income gains in dollar terms each year ($2,550, after adjusting for inflation) than the poorest fifth experienced during the entire three decades ($1,330).
  • Middle-income households also lost ground compared to those at the top. In all 50 states plus the District of Columbia, the income gap between the average middle-income household and the average household in the richest fifth widened significantly over this period.

Top 5 percent of households pulling away even faster

  • The widening income gap is even more pronounced when one compares households in the top 5 percent of the income distribution to the bottom 20 percent over the last three decades. EPI conducted this part of its analysis for the 11 large states that have sufficient observations in the Current Population Survey to allow the comparison of the average income of the top 5 percent of households between different time periods. (These states are California, Florida, Illinois, Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio, Pennsylvania, and Texas.)
  • In these 11 large states, the average income of the top 5 percent rose between the late 1970s and mid-2000s by more than $100,000, after adjusting for inflation. By contrast, the largest increase in average income for the bottom fifth of households in these states was only $5,620.
    n In the 11 states, the incomes of the top 5 percent of households increased by 85 percent to 162 percent between the late 1970s and mid-2000s. By contrast, incomes of the bottom fifth of households didn’t grow by more than 27 percent in any of these states, and in one state —Michigan — they actually fell.

The average income of the top 5 percent pulled away from those in the middle as well. In the late 1970s, the incomes of the top 5 percent were 2.5 to 3 times those of the middle fifth in these 11 states. By the 2000s they were more than 4 times as much in all 11 states.

Causes of rising inequality

  • Growth in wage inequality. The erosion weakness of wage growth for workers at the bottom and middle of the income scale reflects a variety of factors. Over the last 30 years, the nation has seen increasingly long periods of high unemployment, more intense competition from foreign firms, a shift in the mix of jobs from manufacturing to services, and advances in technology that have changed jobs. The share of workers in unions also fell significantly. At the same time, the share of the workforce made up of households headed by women — which tend to have lower incomes — has increased. Government policies such as the failure to maintain the real value of the minimum wage and to adequately fund supports for low-wage workers as well as changes to the tax code that favored the wealthy have also contributed to growing wage inequality.
  • Only in the later part of the 1990s did this picture improve modestly, as persistent low unemployment, an increase in the minimum wage, and rapid productivity growth fueled real wage gains at the bottom and middle of the income scale. Yet those few years of more broadly shared growth were insufficient to counteract the decades-long pattern of growing inequality. Today, inequality between low- and high-income households — and between middle- and high-income households — is greater than it was in the late 1970s or the late 1990s.
  • Government policies.
  • Government actions — and, in some cases, inaction — have contributed to the increase in wage and income inequality in most states. In addition, changes in federal, state, and local tax structures and benefit programs have, in many cases, accelerated the trend toward growing inequality emerging from the labor market.
  • Expansion of investment income.
  • Forms of income such as dividends, rent, interest, and capital gains, which primarily accrue to those at the top of the income structure, rose substantially as a share of total income during the 1990s. (Our analysis captures only a part of this growth, as we are not able to include capital gains income due to data limitations.) The large increase in corporate profits during the economic recovery after the 2001 recession also widened inequality by boosting investors’ incomes.