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Michael R. Strain

Yes, Income Inequality Has Stopped Growing

The U.S. needs policies to promote wage growth, not to close the wealth gap.

It helps to be skilled.

It helps to be skilled.

Photographer: Jonathan Wiggs/Boston Globe via Getty Images

Growth in income inequality has markedly slowed in the past decade. Yes, that’s right. Though few seem to care or have noticed, this trend has important implications for economic policy.

A recent report from the nonpartisan Congressional Budget Office has analyzed the data over the last four decades. From 1979 through 2007, inequality increased significantly, no matter how income was measured — whether or not it was based on market income (the sum of employment, business and capital income), or if it included government social insurance and safety-net payments, or if it subtracted federal tax payments. Depending on the income measure, the CBO found that inequality increased in this period between 23 percent and 31 percent.