U.S. Wage Disparity Took Another Turn for the Worse Last Year

The rich-poor pay gap is getting wider
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Workers load tobacco stakes onto a tractor at a burley tobacco field in Simpsonville, Ky., on  Aug. 24, 2016.

Photographer: Luke Sharrett/Bloomberg

The picture on income inequality in America just got a little bleaker.


Top wage earners last year made 5.05 times what their lowest-income counterparts took home, the widest gap in data going back to 1979, according to the Labor Department. What’s worse, it shows the most recent improvement -- in 2014 -- was just a blip, and the trend is again moving in the wrong direction seen over almost four decades.

Resilient economic growth and a solid stretch of hiring the past few years had raised expectations that the gap between rich and lower-income workers would shrink in a sustained manner. The reality was disappointing. The growing divide underscores the angst that helped land President Donald Trump in the White House, with his appeal to working-class voters feeling left behind in the economy.

Americans near the top of the income scale, whose weekly earnings exceed those of 90 percent of all full-time wage and salary workers, made at least $2,095 in a typical week last year, according to the report released Jan. 24. Those in the bottom 10 percent earned less than $415.

It's not all bad news: The latest figures show overall median weekly earnings for the 101 million workers 25 years or older last year climbed about 3 percent to $885, from $860 in 2015. The 2016 figures were reported by the Labor Department this week along with its fourth-quarter data from a survey of U.S. households.

Wage disparities tend to be counter-cyclical, rising during times of slower economic growth, and usually shrinking when the business cycle accelerates. Of course, inclusive policies and opportunities to move up the socioeconomic ladder also play a huge role.

While the economy has grown at a historically modest 2.1 percent rate on average in the current expansion that began in mid-2009, the U.S. is almost at full employment now and the tight labor market has sparked hope that workers across the board will eventually see a lasting pickup in wage growth. Whether paychecks also reflect less inequality in coming years is anyone’s guess.

Meanwhile, a stubborn gender gap persists among workers 16 years or older, the age-group usually used for such comparisons. Women's weekly take-home pay relative to men’s has hovered within a narrow range during most of this economic recovery, instead of building on the improvement seen in prior decades.

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