Wealth gap widens here, nationwide
A recent study shows another unwelcome outcome of the drift of the economy and the wake of the Great Recession – a widening gap between those who have more and those who have less.
North Carolina and the High Point area reflect the national trend of the top tier of people gaining more money while middle and lower income families slip in relation to the richest.
The gap between the incomes of the wealthiest groups and low- and middle-income households is accelerating in most states, reports the Center on Budget and Policy Priorities.
“Prolonged growth in income inequality undermines the basic American belief that hard work should pay off,” said Elizabeth McNichol, co-author of the report for the Washington, D.C.-based center. “Anyone who contributes to the nation’s economic growth should reap the benefits of that growth.”
In North Carolina during a decade-long period, the income of the poorest fifth of state residents declined 3.7 percent while the income of the richest fifth of state residents increased 5.5 percent, according to the study. The wealthiest 5 percent of North Carolinians had their income increase 8.8 percent during the period, the study indicates.
“In a free market economy, a certain level of income inequality is to be expected. However, we are experiencing historically high levels of income inequality,” said Tazra Mitchell, public policy fellow with the N.C. Budget and Tax Center out of Raleigh. “Climbing the income ladder becomes more difficult as each step in the ladder grows farther apart.”
The same trends affect the divide between rich and poor in the High Point area. Last year, the wealthiest 5 percent of Guilford County households had an average income 7.5 times greater than the poorest fifth, according to U.S. Census Bureau data supplied by the Budget and Tax Center. In Davidson County, the richest 5 percent had an average income 5.4 times greater than the poorest fifth, while in Randolph County the gap was 3.4 times a difference.
In Guilford County, the wealthiest fifth of households held 51.3 percent of all household income in the county, according to the census data. In Davidson County, the wealth holding of the top fifth of households was 47.9 percent, while it was 44 percent in Randolph County.
The Great Recession did dent the incomes of a cross-section of income groups, but not with the same severity. From 2007-11, the income of the bottom fifth of the state’s population dropped by 10.4 percent, Mitchell said. During the same period, the income of the top fifth dropped by 6.4 percent.
However, what research shows is that top earners, since the end of the Great Recession, have bounced back in their income while other groups continue to lag, Mitchell said. The median household in North Carolina lost $4,000 since 2007, “but that hasn’t been the case for the very top earners,” she said.
One year into the economic recovery in 2010, the top 1 percent of U.S. earners captured as much as 93 percent of the nation’s income growth, according to a study through the University of California at Berkeley economics department.
“Widespread income inequality demonstrates a troubling trend for the fabric of our society,” Mitchell said. “It’s very harmful to family economic well-being, and it has negative effects on other indicators, like health, housing and education.”
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