The gap between rich and poor in the United States is widening with the recession and ultimately, that will create irreparable damage to society, according to researchers. What's clear now is that the US has split into three groups – households in danger of losing their homes and whose kids are surviving on food stamps; people who are just managing but who are worried about losing their jobs and a small number of bankers and stock brokers who are taking home even more than they did in 2007 because of the appalling culture of bonuses where they made a killing in good times, and a killing in bad.
Let's look at the numbers first. Part of it's racial. According to this United For A Fair Economy report, State of the Dream: Drained, 16.2% of African Americans and 12.9% of Latinos are unemployed, compared to 9% of whites as of December 2009. Blacks earn 62 cents for every dollar of white income, and Latinos earn 68 cents for every dollar of white income and 2.9 and 2.7 times as likely, respectively, to live in poverty as whites. This is in the richest country in the world.
But some of of this inequality goes beyond race, it's hitting cities and states. As reported in the New York Daily News, places like Atlanta, Washington, New York, San Francisco, Miami, Chicago, Pittsburgh, Cleveland and Buffalo in New York had sharp disparities in income. And, according to the report, it's getting worse. "The wealthiest 10 percent of Americans – those making more than $138,000 each year – earned 11.4 times the roughly $12,000 made by those living near or below the poverty line in 2008, according to newly released census figures. That ratio was an increase from 11.2 in 2007 and the previous high of 11.22 in 2003. Household income declined across all groups, but at sharper percentage levels for middle-income and poor Americans. Median income fell last year from $52,163 to $50,303, wiping out a decade's worth of gains to hit the lowest level since 1997. Poverty jumped sharply to 13.2 percent, an 11-year high."
According to this report, two British academics Richard Wilkinson and Kate Pickett, recently on a speaking tour in the US, have found that income inequality kills people. Their research shows that people living in societies where wealth has concentrated at the top of the economic ladder live significantly shorter, less healthy lives than people who live in societies that spread their wealth more evenly. It's not just health either. It covers everything from homicides to teen pregnancies.
When you look at that, you can start to see why the Obama administration has now taken the populist line of bank bashing. The banks should be careful because it could be a battle that they will struggle to win. If they're smart, they will try and get some of compromise going.
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