Research shows that inequality is bad in any number of circumstances. So why are we so reluctant to look at the effects of excessive wage inequality in the U.S.?

• Unlike economists throughout history, modern economists seem unwilling to address the negative effects of rising income inequality. There is no convincing evidence that shows it supports economic or individual success in America, but experts in this case avoid making value judgments when it comes to money.
• Studies show that money can buy happiness – up to a point. But because of hugely inflated wages for the extremely wealthy, Americans become trapped in a cycle: their peers spend ever-increasing amounts of money on their lifestyles simply because they can, and everyone who can afford it follows suit.
• This cycle trickles down from class to class in “expenditure cascades,” until soon enough everyone feels the psychological distress of never having enough. This distress results in higher divorce rates, longer commutes, and voters who are less interested in spending on public services like road rehabilitation.

Facts & Figures

• In 1976, 8.9% of the country’s income went to the top 1% of earners.
• In 2007, 23.5% of the country’s income went to the top 1%.
• Between 1976 and 2007, the average hourly wage went down by more than 7%.

Tags: income disparity, inequality, Poverty, wealth