Question: I am interested in the question of income inequality or distribution in the United States. Are there any statistics that indicate the degree of inequality by industry in the U.S., like in the banking industry, higher education etc.?
Paul Solman: I don’t know of specific data within industries but the general trend toward divergence of income and wealth has long been noted. Bear with me for a bit of relevant background.
In the decades after World War II, one of the glories of the America was its growing economic EQUALITY. The haves did indeed have more, but the have-lesses were gaining on them. One happy by-product: The better-compensated didn’t have to worry about losing their jobs, because, hey, how far were you likely to fall? As for the worse-off, things were constantly looking up! Economic historian Claudia Goldin has dubbed this era – the 1940s through the early ’70s – “The Great Compression.” And Nobel laureate Simon Kuznets drew a hump-shaped graph called the Kuznets Curve, which depicted market economies DI-verging in income in the early stages of industrialization, then CON-verging as they matured over time.
And then along came globalization, the ’70s and, following them, Reaganomics and its ethos, featuring deregulation, weaker unions, and declining inflation-adjusted minimum wage and lower tax rates for the better-off: a return to laissez-faire, that is (relatively speaking, of course). Small wonder income and wealth began to DI-verge once more. The worm had turned, and the Kuznets Curve along with it.
In 1983, economists Barry Bluestone and Bennett Harrison published a book, The Great U-Turn, locating the inflection point in the ’70s. In recent years, Cornell economist Bob Frank has analyzed the downside of the divergence- in, for example, his book, co-authored with Philip Cook, “The Winner-Take-All Society.” [See our NewsHour piece on the book..
But the fact of divergence itself has become a commonplace. Look at the widening gap between CEO pay and that of the lowest-paid worker in the same firm. Estimates vary, and the gap has closed some during the past decade and Great Recession. But between 1980 and 2000, for example, the ratio high-jumped from something like 42:1 to 525:1.
Or look at the gap between the top star on an NBA team and the lowest-paid regular: something like 50:1, and only that narrow because there are rules in basketball governing the maximum a team can pay to any one player, as there are in professional football.
The trend within industries, then, seems to be what it has been in the economy as a whole.