'The New Gilded Age'
Illinois income inequality tops national average, but Lincoln among most equal U.S. cities
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By Ted Cox
A new national study finds that the rich are getting richer and leaving everyone else behind.
The study by the Economic Policy Institute, called "The New Gilded Age," finds that the gap between the top earners and average income has widened in every state since the 1970s, with Illinois ahead of the national average.
Using what it claims is the same methodology employed by French economist Thomas Piketty in his landmark 2014 book "Capital in the Twenty-First Century," the study found that the average salary of the top 1 percent of U.S. earners was $1.3 million in 2015, 26.3 times the average salary of everyone else: $50,000.
Illinois was one of eight states to top that disparity, but it was closest to the national average. In Illinois, the average income for the top 1 percent was $1.4 million, 27 times greater than the average salary for the other 99 percent: $52,000.
It took income of $421,000 to make the top 1 percent nationally, $456,000 in Illinois.
Lake County was among the top counties in the nation for what it takes to make the top 1 percent of residents, with a threshold of $994,000, 18th in the United States. The average income for the top 1 percent there was $3.1 million, 37.4 times greater than the average salary for the other 99 percent of $83,000.
Even among the very rich, Illinois held its own. The study found that, of all income going to the top 1 percent nationally, half that figure was accrued by families in five states: California, New York, Texas, Florida, and Illinois.
Frank Manzo IV, of the Illinois Economic Policy Institute, which is not affiliated with the national organization, said the data match his for Illinois. According to Manzo, 57,421 Illinois tax filers topped $500,000 in income in 2015, slightly more than 1 percent of the 5,667,344 total. With an average income of $1.56 million, they claimed 21.7 percent of all adjusted gross income statewide.
Chicago did not make the top 25 metropolitan areas for income inequality. In fact, the Paducah, Ky., area, including southern Illinois, was the metropolitan area with the widest income disparity in the state, with the top 1 percent averaging $1.1 million, 30 times greater than the average salary for everyone else of $38,000.
One of the most equal towns in the nation, however, turned out to be Lincoln, northeast of Springfield, where the top 1 percent averaged $354,000 in income and everyone else $40,000. The difference of top average income being 8.8 times greater than the average for everyone else placed Lincoln 900th among 916 metropolitan U.S. areas in disparity.
The study found that economic growth was "broadly shared" from the end of World War II to 1973, but has been "highly unequal" since, a trend that escalated following the Great Recession a decade ago, although the middle class has bounced back slightly of late.
The study found that the top 1 percent claimed 22 percent of all U.S. income in 2015, close to the record of 24 percent posted in 1928 ahead of the Great Depression.
The top 1 percent claimed just 9.2 percent of all U.S. income in 1973, but that rose to 21.7 percent by 2007. In Illinois, the top 1 percent claimed 23.6 percent of all income in 1928, 9 percent in 1973, 22.8 percent in 2007, and 21.5 percent in 2015.
The study echoes Piketty's position that widening income inequality causes social unrest and threatens cultural stability.
It places blame that "unionization and collective bargaining levels are at historic lows not seen since before 1928," while "the federal minimum wage purchases fewer goods and services than it did in 1968." Meanwhile, pay for top executives "has gone from 20 times greater than typical workers’ pay in 1965 to 271 times greater in 2016."
The authors, French economist Estelle Sommeiller and Mark Price of Pennsylvania's Keystone Research Center, conclude: "The gains of those at the top have come at the expense of the vast majority of working families," adding, "Yet more troubling, the rapid rise in top incomes in this new gilded age — which started as a rise in labor income for top executives — has, since 2000, been driven by capital income derived from the ownership of assets. The idle rich in America are in ascendance at a time when ... the children of affluent parents typically grow up to be affluent, and the children of the poor remain poor. Today at elite colleges more students come from families in the top 1 percent of the income distribution than from the bottom 50 percent. Meanwhile U.S. public colleges have become increasingly unaffordable, further limiting opportunity for children of lower-income households."
“The gains of those at the top have come at the expense of the vast majority of working families.”
They warn that the gap between the very rich and everyone else is likely to get worse under President Trump: "Federal policy in the last year has also changed in ways that are likely to further increase income inequality. The Trump administration has abandoned a rule that would have expanded automatic eligibility for overtime to 12.5 million workers, ensuring that they would be paid time-and-a-half when they work more than 40 hours in a week. The administration has delayed the implementation of the fiduciary rule, which requires investment advisers to act in their clients’ best interests. The administration has also sided with corporate interests seeking to permit companies to force workers to sign arbitration agreements with class-action waivers — forcing workers to give up their right to file class-action lawsuits, taking them out of the courtrooms and into individual private arbitration when their rights on the job are violated. Finally, the Tax Cuts and Jobs Act passed in December 2017 is expected to distribute 83 percent of its benefits to the top 1 percent. All of these actions are a step in the wrong direction if the country is going to shrink the gap between those at the top and everyone else."
It urged improved child care, focusing on education, and a living wage for all working families to level the economic playing field so that everyone shares in prosperity.
"The Gilded Age," of course, generally refers to the late 1800s as derived from the title of Mark Twain's 1873 novel about social disparity.