The income gap

  @FortuneMagazine August 19, 2013: 12:02 PM ET
EDD02 income inequality
(Fortune)

President Obama pushing his economic agenda got me thinking about income equality lately. Some basic questions: Is it really true that income disparity in America has increased over the past several decades? If so, why? Is income disparity irrefutably a bad thing? And finally, if we agree that it is bad, how do we fix it?

Let's start with the first question. Both liberal and conservative economists agree that, yes, income inequality has increased since the 1970s. The Congressional Budget Office October 2011 report "Trends in the Distribution of Household Income Between 1979 and 2007" shows that during that 28-year period overall real average (after-tax) household income grew 62%. But for the top 1% of earners, income grew 275%, and for the bottom 20% of earners, household income grew only 18%. Pretty bald, I'd say.

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