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Growing Apart

A Political History of American Inequality

Colin Gordon, Author

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Mind the Gap

Let’s start with the dimensions of the problem. For this, we start with three nested measures of relative economic well-being. The first of these is wages and earnings. Wages are the compensation paid directly to workers on an hourly or salaried basis. Earnings is a more expansive measure which includes business or proprietors’ income, subtracts workers’ payroll taxes, and adds employers’ contributions to pension, health care, and social insurance programs. The second is income.   Income includes non-wage forms of income like return on investment or capital gains, and it groups individuals into families, households, or tax units. The third is wealth.  Wealth measures accumulated assets or “net worth.” This includes savings, home equity, and investments (and subtracts debts).

While inequality is usually expressed as a wealth or income gap-- between rich and poor, between the very poor and everyone else, or (more recently) between the very rich and everyone else--other gaps are also important.  We turn to these in the  last of the sections below.  Demographic gaps, particularly by race and gender, shape the distribution of inequality and, as consequences of deep historical patterns of discrimination, contribute to inequality as well.  Geographic gaps--between regions, between states, and particularly between neighborhoods--both reflect background economic inequalities, and help to widen and perpetuate them.  And mobility (either within the labor market or across generations) offers a measure not of inequality itself, but of the likelihood or possibility of escaping it.

Choose the path below or go to: Wages and Earnings

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