News Column

Fla. Income Gap Holds Back Poor, Middle-class Workers

Nov. 15, 2012

Emily Roach

The wealthy in Florida have eight times the household income compared to the poorest households, a widening gap that is seen in nearly a third of the nation, according to an income inequality study released today.

In Florida, the richest 5 percent have incomes 13.5 times as large as the bottom 20 percent and 4.5 times as large as the middle 20 percent, according to a report by the Center on Budget and Policy Priorities and the Economic Policy Institute. Most jobs in the state added since the recession are low-wage, part-time jobs such as food servers, home health aides and retail clerks.

"We are the ultimate county of the haves and have-nots," said Patrick Franklin, president and CEO of the Urban League of Palm Beach County.

The income gap thwarts efforts to lift the next generation out of poverty through education, because families cannot pay for college even with financial aid, he said. In the long run, that will cost those with higher incomes because they'll pay more for social services.

"If we can't push this group through the pipeline, then we're very much going to lose this generation," Franklin said.

Over the past 30 years and during the last economic cycle from the late 1990s to mid-2000s, poor and moderate-income families saw their incomes grow only slightly, if at all, adjusting for inflation. The richest households gained considerably, the report said.

Everyone lost ground during the recession, but since it ended in December 2009, the rich have begun pulling away again. Those at the bottom and in the middle continue to stagnate, according to the study.

Income inequality stifles the nation's workforce, said Elizabeth McNichol, co-author of the report and senior fellow at the Center on Budget and Policy Priorities.

"Prolonged growth in income inequality undermines the basic American belief that hard work should pay off," she said.

The wealthy become isolated in the suburbs, making for educational divides and a lack of awareness of the issues of poverty. Low-income families have problems lifting their children out of poverty and fewer opportunities discourage middle-income families.

The report calls the years from the late 1990s to mid-2000s a "lost decade" for low-income and moderate-income families. The bottom fifth of households lost 6 percent of their incomes during that time, on average. The middle fifth gained 1.2 percent, while the top fifth gained 8.6 percent.

The South is worse than most areas of the country for income disparity, said Doug Hall, co-author of the report and Director of the Economic Analysis and Research Network at the Economic Policy Institute.

Elizabeth McNichol, co-author of the report and senior fellow at the Center on Budget and Policy Priorities, said often the gap is caused by growth in wages and salaries, which most decidedly is faster at the top end of the income scale.

Long periods of unemployment have led to sluggish wage growth, she said, because employers don't have to give raises to keep employees. States such as Florida also tend to have lower wages because jobs are non-unionized, she said.

Florida is one of nearly 20 states where the gap between the rich and poor continues to widen.

Budget challenges and conservative policies at the state level threaten a continuation of the problem, McNichol said. Balancing tax structures and raising the minimum wage can help, she said.

"Anything that Florida could do to lift up folks at the bottom end" would be welcomed, Hall said.



Source: (c)2012 The Palm Beach Post (West Palm Beach, Fla.) Distributed by MCT Information Services


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