Open the White House Watch newsletter for free
Your guide to what the 2024 US elections mean for Washington and the world
It's a strange thing. Between 1980 and the late 1990s, the English-speaking world witnessed an explosion in concerns about inequality, corresponding to an apparent widening of the gap between rich and poor on both sides of the Atlantic. But the second sharp rise in public concern about income inequality over the past decade occurred during a period when most people's income fluctuated Measures of inequality It shows no increase, or even a slight decrease.
By inequality we mean some measure of the dispersion between the top and bottom. The Gini coefficient for income inequality, which captures overall distributive fairness, has been either flat or falling over the past two decades in Britain, America and much of Western Europe. The ratio between the earnings of the top and bottom 10 percent is not different. If anything, it has been downfall.
It is clear that public concern about income gaps has become disconnected from measured reality, but why? One theory is that what people They really feel it It is the recent slowdown in economic growth. This is almost certainly true, but I think there may also be something else at work.
You can think of the ratio between the highest and lowest incomes as the product of two ratios: the gaps between the top and the middle, and between the middle and the bottom. It turns out that a flat or falling combined gap hides contradictory stories in these two halves of the equation.
The disparity between incomes at the top and the middle has become wider since the turn of the millennium, which is consistent with how the public feels. But on the other end of the spectrum, the gap between the bottom and the middle has narrowed significantly.
Since the late 1990s, the lowest earners have experienced the fastest wage growth in both the United States and the United Kingdom. Continued increases in the minimum wage have been a big part of this story in Britain. In both countries, low-skilled workers benefited (and medium-skilled workers suffered) from hollowing out in the middle of the job distribution as well as Overall tight job market.
So we haven't seen any increase in overall inequality. For the lowest paid, the story is an unambiguously good one, but for the most part, people who sit somewhere in the middle, the two disparate trends arguably combine to form a decidedly uncomfortable situation.
If the middle class looks up, the rich look further away. A first-class life seems more out of reach than ever. But look down, and you'll find that the floor is rising quickly. This simultaneous rise in feelings of discontent and vulnerability constitutes a dangerous cocktail, and it could certainly have been fueled Recent political trends.
Professions that were once considered aspirational have come to a sharp end. In Britain, the income ratings of doctors, nurses and police officers have declined in recent years. In the United States, the highest-paying jobs are increasingly shared among a handful of very high-status occupations. Technology workers now account for one in six of the top 5 percent of salaries, compared to one in 20 in 1990. No single group has had this dominance in the past.
This is important because we tend to think of ourselves as members of groups, not just individuals. In the 1980s, 40% of the highest paying jobs in America did not require a college degree. The upper echelons of the income scale included many engineers and doctors, but also senior school teachers and the most skilled factory and construction workers. People from all kinds of backgrounds and all kinds of skills can dream of making them.
Today, the top of the scale is dominated by highly skilled technology and healthcare workers. Nearly half of the top jobs require an advanced degree. A large segment of the population knows at an early age that they are not on this path.
To be clear: these transformations are organic and not intentional. Economies are changing. Professions rise and fall in rewards and prestige. It's a tale as old as time. But this does not mean that it should be ignored.
Aggregate inequality statistics certainly have their place, but they can mask important nuances. These may be more useful in explaining how a large portion of the population experiences differences in opportunities and outcomes. The gap between rich and poor may not be widening, but it is not unreasonable for the middle classes to feel that their standing in society is declining.
