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Viral Video Shows the Extent of U.S. Wealth Inequality. The Minimum Wage and Economic Growth. In his State of the Union address to Congress President Obama called for a higher minimum wage. The purchasing power of the minimum wage peaked in the late 1960s at $9.22 an hour in 2012 dollars. That is almost two dollars above the current level of $7.25 an hour. Most of the efforts to raise the minimum wage focus on restoring its purchasing power to its late 1960s level, setting a target of around $10 an hour for 2015 or 2016, when inflation will have brought this sum closer to its previous peak in 2012 dollars. While this increase would lead to a large improvement in living standards for millions of workers who are currently paid at or near the minimum wage, it is worth asking a slightly different question. This should not seem like a far-fetched idea. As the graph below shows, the minimum wage generally was increased in step with productivity over these years. This link between productivity and the minimum wage ended with the 1970s.

(Only one link allowed per comment) American Public Opinion on Economic Inequality, Taxes and Mobility. (iStock) Income inequality in America rose during the Gilded Age over a century ago but declined in the wake of two World Wars for several decades. Inequality measures began to rise again in 1975 and by 2000 the country had returned to the same levels of income concentrations recorded in the 1910s. Income inequality has been linked to outcomes such as who gets to attend college or secure health insurance. Fueled by the events that precipitated the Great Recession, citizen groups such as Occupy Wall Street attempted to give voice to this rising inequality. But did Americans hear — and agree with — the message?

A 2012 study from Illinois Wesleyan University published in Public Opinion Quarterly, “American Public Opinion on Economic Inequality, Taxes, and Mobility: 1990-2011,” analyzed trends in Americans’ perceptions towards divisions of wealth and taxes over this two-decade period. Key findings include: Tags: metastudy, economy By Chrissie Long | September 25, 2012 Analysis assignments. Why Has Regional Income Convergence in the U.S. Stopped? Zoning and Inequality. Tallahassee map (Wikimedia) Early in U.S. history, per-capita incomes varied widely, with some richer states boasting more than four times the average income of poorer ones. From 1880 to 1980, though, the gap closed steadily — a phenomenon scholars call “income convergence.” Part of the reason was labor mobility, as lower-income workers were able to move relatively easily to locations with higher-paying jobs. But why did this leveling effect slow about 30 years ago?

Research suggests that the phenomenon may be partly explained by housing prices and more stringent land use and zoning laws that made certain housing markets increasingly unaffordable for lower-wage workers. The concept of more restrictive zoning — even deliberately exclusionary zoning — in high-income neighborhoods is a familiar one in many regions, and it turns out that the aggregate effects may have helped reshape opportunity in the United States. The study’s findings include: Tags: poverty, economy, inequality.

Effects of raising the minimum wage: Research review and key lessons. (Wikimedia) The U.S. federal minimum wage was first established during the Depression, and since 1933 has risen from 25 cents to $7.25 per hour. Despite the increases, inflation has eroded its value; returning it to the value it held in 1968 would require an increase to nearly $10 per hour. In his 2013 State of the Union address, President Obama called for raising the minimum wage to $9 per hour, which in adjusted terms would put it back at its early 1980s level. According to administration estimates, this would boost the wages of some 15 million people. In February 2014, the nonpartisan Congressional Budget Office issued a new report, “The Effects of a Minimum-Wage Increase on Employment and Family Income,” that explores two scenarios: Raising the minimum wage to $10.10 or to $9.00.

Critics assert that the real effects of minimum-wage increases are negative: they hurt businesses, raise prices and ultimately are counterproductive for the working poor, as they can lead to unemployment. The Great Divide: Global income inequality and its cost. In cities around the world, the gap between the rich and the poor is widening. And in each of these cities, that growing inequality comes with a cost. The greatest cost is the political and economic instability that accompanies vast disparities of wealth, Nobel Prize-winning economist Joseph Stiglitz told GlobalPost, using the United States as an example.

“We are paying a very high economic price for this inequality — our economy is less productive and efficient,” Stiglitz said. “We are also paying a price in terms of our politics and our society — inequality is undermining our democracy and our basic values.” In this first set of stories of a GlobalPost Special Report titled “The Great Divide,” correspondents around the world are examining the global phenomenon of income inequality and why it should matter to all of us. To most Americans, this inequality seems an obvious and age-old reality of the developing world, a cliché of the global economy. By Charles M. Charles Murray on the New American Divide. Can the Middle Class Be Saved? - Magazine. The Great Recession has accelerated the hollowing-out of the American middle class.

And it has illuminated the widening divide between most of America and the super-rich. Both developments herald grave consequences. Here is how we can bridge the gap between us. Andy Reynolds/Wonderful Machine In October 2005, three Citigroup analysts released a report describing the pattern of growth in the U.S. economy. To really understand the future of the economy and the stock market, they wrote, you first needed to recognize that there was “no such animal as the U.S. consumer,” and that concepts such as “average” consumer debt and “average” consumer spending were highly misleading. In fact, they said, America was composed of two distinct groups: the rich and the rest.

In a plutonomy, Kapur and his co-authors wrote, “economic growth is powered by and largely consumed by the wealthy few.” Income inequality usually shrinks during a recession, but in the Great Recession, it didn’t.