The growing gap between rich and poor is poor policy

Journal Record, The (Oklahoma City), Sep 28, 1999 by Tom Teepen Cox News Service

One of these days, we'll have to pay this sly piper for dancing to his happy tune. Call it the "Gimme Gavotte."

Several recent studies agree: Our unrivaled gap between the well- off and the poor continues to grow, as more wealth is concentrated in fewer hands, the stock market boom favors the few and executive pay zooms ahead while wages for working stiffs only creep.

The ratio of top executive pay to factory wages ballooned from 42 to 1 in 1980 to 419 to 1 last year.

If workers' incomes had kept pace, the average production employee would be making more than $110,000 a year. It's really $29,000.

A study of Congressional Budget Office data by the Center for Budget and Policy Priorities finds the average inflation-adjusted, after-tax income of the richest 1 percent of us will have more than doubled between 1977 and 1999, while the average for middle incomes will have increased only 8 percent.

The wealthiest 2.7 million Americans have combined incomes equal to those of the bottom 100 million. The richest 1 percent of households owned nearly 40 percent of the nation's wealth in 1993; the bottom 80 percent, 16 percent.

A rising tide may raise most if not all boats -- but not evenly.

Workers on average have increased their productivity 12 percent over this decade but have pocketed a real income boost of only 1.9 percent.

Many factors are at play here -- weak unions, Congresses that balk at raising the minimum wage. A less progressive income tax. Rocketing stock prices have hyper-inflated executive income, of which stock options are a growing part.

Welfare reform has slightly increased income for most former recipients, but the poorest 10 percent has suffered a 15 percent income drop.

The working poor get a break with the Earned Income Tax Credit, which exempts them from most federal income tax. They still, however, pay disproportionately high payroll (Social Security) and excise (gas, alcohol) taxes.

And the lowest 20 percent of working-age couples pay 12.4 percent of their income in state and local taxes, while the top 1 percent pay 5.8 percent.

Well, hooray for doing well and, yes, the rich get richer and the poor get poorer. But that is not fate. It is part luck, part skill and initiative -- and part policy.

No other industrial nation of 22 analyzed two years ago has such a wide gap between its rich and poor. No other suffers, either, such large swamps of poverty or lives with the miasma of social problems they give off.

Even to mention such matters is to be accused of inciting class warfare, but American class warfare is fought top down. The Republican tax cut would further widen the rich-poor gap.

Web-site barons and software swanks are throwing up castles as casually as medieval princelings.

The starter mansions of their new rich courtiers spring up overnight behind gated walls.

But even this historic boom hasn't reached our poorest. You have to wonder if there isn't a due bill out there somewhere. And if there shouldn't be.

Tom Teepen is national correspondent for Cox Newspapers. He is based in Atlanta. He may be reached by e-mail at teepencolumn