Since the Global Financial Crisis of 2007 inequality has been rising faster than ever before,according to a new report from the Organization for Economic Cooperation and Development.
According to the OECD, “inequality has increased by more over the past three years to the end of 2010 than in the previous twelve.” Things were already pretty bad in 2007, but inequality in America today exceeds the records last reached in the 1920s.
The United States has the fourth-highest level of inequality in the developed world, trailing only Chile, Mexico, and Turkey. That is to say, if you consider Chile, Mexico, and Turkey to be “developed” countries.
The OECD report measures inequality using a statistic called the Gini coefficient. The Gini coefficient runs from a minimum of 0 (perfect equality) to 100 (total inequality). Different countries have different ways of calculating Gini coefficients, but the OECD implements the same method across all countries to create comparable figures.
America’s Gini coefficient, as calculated by the OECD, stands at 38. Most developed countries have Gini coefficients that run much lower. The United Kingdom (35) is the developed country that comes closest to the United States, followed by Australia (33), Canada (32), France (30), Germany (29), Belgium (26), and Denmark (25).
No other developed country comes
A typical professional with a by Supreme Savings” href=”http://inequality.org/oecd-report-inequality-rising-faster/”>room attendantat a major law firm may make $20,000 per year, a partner in the same law firm may make $320,000 per year.
Among OECD countries, only Mexico and Turkey have higher 90/10 ratios than the United States. The average 90/10 ratio across all OECD countries is 9.4. In Canada, just across the border, the ratio is 9. In other words, American professionals make 16 times as much as theirForbes reports that 2013 rates as a record year for billionaires and their fortunes.
Well-off Americans — those in the top 7 percent — have seen their wealth expand by 28 percent in recent years, according to a study from the Pew Research Center, while the rest have seen their wealth drop.
The Great Depression of the 1930s saw a different story. Back then, nearly everyone suffered. Of course, in the 1930s the poor suffered much more than the rich, but rich people ended up much worse off in 1939 than they had been in 1929. Maybe that’s why they were so keen to do something about it.
In today’s Great Recession the rich seem much more complacent. They can afford to be. We’re not experiencing a recession for the rich, only a recession for the rest.
This week’s OECD report shows that America isn’t the only country experiencing rising inequality in a time of economic stagnation. Inequality rose in 27 out of 33 countries the study spotlights. The difference: Inequality in the United States had already reached a record high in 2007.
The report ends with an ominous warning. The OECD’s new statistics only cover the period up through 2010. Things have likely gone, the OECD suggests, from bad to worse since then. The United States has certainly seen no let up in pressures on ordinary people and the poor.
We may not know how to restart economic growth, but we know how to fight inequality. We can raise the minimum wage, increase taxes on investment income, expand public education, and make it easier for workers to join unions. We can start now. We don’t have to wait for the next OECD report to show that America remains at the bottom.