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It’s a curious thing. Around the late 1980s and 1990s, the English-speaking world saw an explosion in concern about inequality, coinciding with the apparent widening of the gap between rich and poor on both sides of the Atlantic. But the second sharp rise in public concern over income inequality in the past decade has come at a time when most System of discrimination Show no growth, or even a slight decline.
By inequality we mean some measure of dispersion between top and bottom. The Gini coefficient of income inequality, which captures the overall fairness of distribution, has been either flat or declining over the past two decades in Britain, America and much of Western Europe. The ratio between the earnings of the top and bottom 10 percent is not different. If anything, it has fallen.
Public concern about the income gap has clearly doubled from measured reality, but why? One theory is that what people do really feel The recent slowdown in economic growth. This is almost certainly true, but I think there may be something else at work.
You can think of the ratio between top and bottom incomes as the product of two ratios: the top and middle and the gap between middle and bottom. And it turns out that these two parts of the equation are the opposite story of flat or falling combined gap masks.
The disparity between top and middle incomes has trended wide since the turn of the millennium, matching public sentiment. But at the other end of the spectrum, the gap between the bottom and the middle has narrowed significantly.
Since the late 1990s, the lowest earners have experienced the fastest wage growth in both the United States and the United Kingdom. Sustained increases in the minimum wage are a big part of this story in Britain. In both countries, low-skilled workers have benefited (and middle-skilled workers have suffered) in addition to being displaced from the middle of the job distribution. A tight labor market is more common.
So we didn’t see any increase in overall inequality. The story is unequivocally better for the lowest paid but for most people who sit somewhere in the middle, it could be argued that two different trends converge to make for a decidedly uncomfortable situation.
While the middle class is looking up, the rich are pulling further away. A top-level life feels more out of reach than ever. But look down, and the floor is coming fast. This simultaneous increase in resentment and uncertainty is a dangerous cocktail, and certainly one that can be fed Recent political undercurrents.
Careers once considered aspirational are at the sharp end. In Britain, doctors, nurses and police officers have all fallen down the income rankings in recent years. In the United States, the highest-paying jobs are increasingly shared among a handful of ultra-high-status occupations. Tech workers now make up one in six of the top 5 percent of earners, up from one in 20 in 1990. No single group had this dominance in the past
This is important because we think of ourselves as members of groups, not just individuals. In the 1980s, 40 percent of the highest paying jobs in America did not require a degree. The top end of the income scale included many engineers and doctors, but also senior school teachers and the most skilled factory and construction workers. People from all kinds of backgrounds with all kinds of skills can dream of making it.
Today, the upper end of the scale is dominated by highly skilled technology and healthcare workers. About half of the top jobs require an advanced degree. And a large portion of the population knows at a very young age that they are not on that path.
To be clear: these changes are organic rather than by design. Changes in the economy. Scholarships rise and fall in awards and prestige. It’s a story as old as time. But that doesn’t mean it should be ignored.
Aggregate disparity statistics certainly have their place, but they can mask important nuances. And they may be more useful in explaining how large segments of the population experience differences between opportunities and outcomes. The gap between the richest and the poorest may not be widening, but it is not unreasonable for the middle class to feel that their position in society has diminished.
