BY IGOR VOLSKY
President Barack Obama will focus on what he has described as “the defining challenge of our time” during the State of the Union address on Tuesday: the nation’s growing gap between the rich and poor. What economists saw as a temporary aberration in the early 1970s — the first time since the end of World War II when the incomes of lower- and middle-income Americans failed to keep pace with those of the rich — has in the intervening 40 years become a full-blown crisis.
From 1979 to 2007, the top 1 percent of families experienced a 278 percent increase in their real after-tax income, while families in the middle 60 percent saw an increase of less than 40 percent. During this period, many blue collar jobs become automated by advances in technology, American workers started competing against cheaper overseas labor, and the number of workers represented by unions dropped from 20 percent in 1983 to 11 percent today. As the earnings of lower and middle income Americans stalled, however, CEOs — particularly in the financial industry — saw astronomical economic benefits and, thanks to tax changes in the early 2000s, began paying some of the lowest tax rates in the country’s history.
Read the most shocking consequences of this income inequality…
