Recently on Facebook someone posted the following statement:
there is a basic flaw in the assumption that income disparity is a bad thing. Just because the gap is wider, that doesn't mean the poor are poorer. Yes, the rich are richer in this country, but so are the poor. There is no finite amount of wealth in the world, where if the rich have more, that means the poor have less. It doesn't work that way.
As a result of that statement the Wonk Monkey decided to look into income disparity in the United States in order to see how true this statement was. Fortunately the Census of 2009 has provided some fresh data.
USA Today Reported:
The income of American households fell only slightly last year despite the severe recession because of income gains among the elderly, the Census Bureau reported Thursday.
But the number of people in poverty reached its highest level in 51 years.
Median household income was $49,777 in 2009, down 0.7% from a year earlier, a change that was not statistically different from 2008, the agency said.
According to the article the income gains among the elderly was due to increased social security payments which altered the numbers. Without increased Social Security payments the median income numbers would have dropped even more.
In addition the article states:
The poverty rate rose to 14.3%, up from 13.2% in 2008.
A total of 43.6 million people lived in poverty last year, up from 39.8 million in 2008 — the third consecutive annual increase. Extended unemployment benefits lifted 3.3 million people out of poverty, compared with 900,000 in 2008.
So this article only dealt with the poverty rate. In short, the people in the median dropped a little and more more people fell into poverty.
Now for the income disparity:
The income gap between the richest and poorest Americans grew last year to its widest amount on record as young adults and children in particular struggled to stay afloat in the recession.
The top-earning 20% of Americans — those making more than $100,000 each year — received 49.4% of all income generated in the U.S., compared with the 3.4% earned by those below the poverty line, according to newly released Census figures. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968
A different measure, the international Gini index, found U.S. income inequality at its highest level since the Census Bureau began tracking household income in 1967. The U.S. also has the greatest disparity among Western industrialized nations.
Some other findings were:
The poorest poor are at record highs. The share of Americans below half the poverty line — $10,977 for a family of four — rose from 5.7% in 2008 to 6.3%. It was the highest level since the government began tracking that group in 1975.
The 2009 poverty level was set at $21,954 for a family of four, based on an official government calculation that includes only cash income. It excludes non-cash aid such as food stamps.
So lets go back to the core of the original statement:
Yes, the rich are richer in this country, but so are the poor.
This statement does appear to be partially true based upon the latest census numbers. The rich are richer. But considering that the median income fell and there are more people listed in extreme poverty it would appear the second part of the statement is false. The poor are not richer, only poorer.
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