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Archive for Sunday, September 3, 2000

Americans working more, falling behind

Economic report shows incomes, debt both rising

September 3, 2000

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— On this Labor Day, the typical American is working harder but earning more, getting richer but falling behind.

If you're this typical American, your job probably provides you with health insurance but not a pension.

You're earning more, finally, after years of losing the battle to inflation. But you're working harder and longer, especially if you're a woman.

You may own a little stock and your net wealth is going up. But your borrowing is going up even faster, to the point that your debt is greater than your annual salary.

If you're a Midwesterner, be thankful. For 10 years, median wages and income have been growing faster in the Midwest than anywhere else; they have actually been falling in the West and Northeast. Only 10 percent of Midwesterners live in poverty, well below the rate everywhere else.

No matter where you live, you're falling further behind the truly rich. Earnings for workers at the bottom and in the middle of the wage scale are rising, but income for those at the top has been rising much faster. As a result, the gap between poor and middle class is shrinking, but the gap between the rich and everybody else is wider than ever.

This snapshot comes from "The State of Working America 2000-01," the latest edition of facts, statistics and analysis published every two years by the Economic Policy Institute, a Washington think tank.

"The State of Working America" has become a fixture on the bookshelves of policymakers and analysts, and even those who question the institute's agenda concede the accuracy and honesty of its statistics, which come from government sources.

The picture from this new report showed a nation balanced between some truly spectacular gains, broad progress and unresolved problems. Here are some of the highlights:

Low unemployment has finally done what the earlier years of the Clinton boom failed to do -- raise incomes across the board. The turnaround came in 1995 and, since then, incomes have gone up each year, but without narrowing inequality gaps.

For low-income families, incomes rose an average 1.9 percent, from $20,847 per year to $22,077. For middle-income families, the increase was 2.3 percent per year, from $53,549 to $57,257. For high-income families in the upper 5 percent, the increase was sharpest, 3.2 percent per year, from $135,178 to $148,406.

This increase has two sources -- better pay and harder work. Hourly wages rose, the report said, but Americans are working longer than ever. An average middle-class husband and wife worked 3,885 hours in 1998, up 247 hours, or more than six workweeks, since the decade began. Most of this increase reflects more working women, and longer hours for women.

African-Americans worked harder to stay even or get ahead. The average African-American middle-class family worked 4,278 hours in 1998, nearly 500 hours, or 12 workweeks, longer than in 1989. The reason was the same: More wives went to work, and wives moved from part-time to full-time jobs.

Tax policies helped the rich a lot without pulling more than a minority of the poor out of poverty. The poorest one-fifth saw its average after-tax income fall 8.9 percent from 1979 to 1999, to only $8,761 per household. But the after-tax income of the richest 1 percent rose 93.4 percent, to an average of $515,612 per household.

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