5 MIN READ
Income Inequality is Growing. Here are 5 Real Ways You Can Fight It
Do you feel like you can’t get ahead?
That no matter how hard you try, the other half seems to be getting further and further away from you?
It’s not your imagination.
A recent study by three scholars from the University of California Berkeley and the Paris School of Economics examined American tax, survey and national accounts data to produce a comprehensive report about the distribution of national income since 1913.
And the results are striking.
Proof Your Piece of the Pie’s Been Disappearing
At its simplest, they found there’s been a “sharp divergence” between the bottom 50% of earners and the rest of the country over the past 30+ years.
The rich are continuing full steam ahead — the rest of us are standing still.
Between 1980 and 2014, the average national income grew by 60%, the study reports.
While that sounds wonderful, it’s mostly due to increases at the top: The average pre-tax income of the top 1% rose from $420,000 to about $1.3 million.
Compare that to the average pre-tax income of the bottom 50%, which hasn’t moved at all: stagnant at about $16,000 per adult.
Look only at working-age adults, the numbers are even worse: The income of the bottom 50% has decreased 20% for people ages 20-45, and 8% for people ages 45-65.
In terms of our national income pie, the share held by the entire bottom 50% has “collapsed” from 20% in 1980 to 12% in 2014, while the share of the top 1% increased from 12% to 20%.
Basically, over the past 30 years, 8% of our country’s income went straight from the paychecks of the bottom 50% to those of the top 1%. And it’s important to remember that, by definition, the bottom 50% has 50 times more people than the top 1%.
The bottom line?
“While top 1% adults earned 27 times more income than bottom 50% adults on average in 1980, they earn 81 times more today,” the report states.
The study’s authors see this as evidence that government redistribution programs — including the Earned Income Tax Credit, Medicaid and Medicare — aren’t as effective as we thought.
“Even after taxes and transfers, there has been close to zero growth for working-age adults in the bottom 50% of the distribution since 1980,” they write. “Transfers that go to the bottom 50% have not been large enough to lift income significantly.”
They argue policies should focus on improving education and teaching skills, workplace reforms like an increased minimum wage, and “steeply progressive taxation.”
These issues are systemic, and much of the change needs to come from our nation’s leadership. But as we all know, that could take a very long time.
So you need to take action against income equality yourself. Here are five ideas for getting ahead in spite of a difficult situation.
As I said, these are big issues that our government needs to address. That doesn’t mean you’re helpless, though — you can make your voice heard by voting.
And not only in the presidential election, either.
Many of the most important changes happen on the local and state level, so attend city council meetings and learn about the issues and the candidates. And when the elections roll around, head to the polls to support people who will represent you and your needs.
2. Educate Yourself
As the study’s authors pointed out, education is paramount.
Although college undoubtedly helps and grads earn about a million dollars more than non-grads over their lifetimes — it’s not the only answer.
3. Ask for What You Want
During a training last year, a journalist told us, “Never say no for someone else.” It’s great advice as a reporter, and also for life in general.
Because if you don’t, you might never get it.
4. Eat Healthy and Exercise
If you think this has nothing to do with money, you’re dead wrong.
Much of the “paltry increase” in the disposable income of the bottom 50% “has been absorbed by increased health spending,” the study explains.
Again, the rising cost of healthcare and insurance is a much bigger issue than can be addressed here — but that doesn’t mean there’s nothing you can do.
Taking care of yourself could lead to cheaper medical bills, lower costs for unhealthy food and entertainment options, and fewer sick days at work.
5. Move to a Different City or State
If you can’t support your family where you live, it might be time to move. It’s a hard (and expensive) decision, but if it makes the difference between struggling and getting ahead, it’s probably worth it.
Your Turn: Are you discouraged by this report? What’s your advice for getting ahead despite the circumstances?
Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at susanshain.com, or say hi on Twitter @susan_shain.