The income gap between the rich and the poor remains near its highest level ever, according to a new report released today by the Wisconsin Budget Project and COWS at-UW-Madison. The wide chasm between the very highest earners and everyone else poses hardships for Wisconsin’s families, communities, and businesses, the report says.
“Pulling Apart 2016: Focus on Wisconsin’s 1 Percent” found that the economy is growing again, but gains are concentrated on the state’s richest residents. As in the nation, inequality is on the rise. Over the last 40 years, Wisconsin’s richest residents have experienced dramatic increases in income, yet the rest of the state’s residents have experienced little or no income growth.
In 2013, 15.9 percent – nearly 1 out of every 6 dollars of income in Wisconsin – wound up in the pockets of the top 1 percent of earners. That group has an average income of $888,000. The share of income going to the top 1 percent in Wisconsin has more than doubled since the 1970s.
Key findings of the report include:
◆ Between 1979 and 2013, the average income of the top 1 percent in Wisconsin grew by almost 120 percent, while the average income of the remaining 99 percent grew by only 4 percent.
◆ The top 1 percent in Wisconsin had an average income of $888,000 in 2013, 19 times the average income of the remaining 99 percent.
◆ The gap is even wider at the national level, with the top 1 percent making 25.3 times as much as the average income of the 99 percent.
◆ The top .01 percent in Wisconsin – the top 1 out of 10,000 – took home 3.3 percent of total income in Wisconsin and had an average income of $18.9 million.
The report contains data on the income disparities in every Wisconsin county and the larger cities. It discusses the implications of the wide income gap in Wisconsin and policy options for narrowing that gap. This analysis is based on figures in income inequality in the U.S. by state, metropolitan area, and county, written by the Economic Policy Institute.
COWS is a research and policy center based at the University of Wisconsin-Madison dedicated to improving economic performance and living standards in the state. The Wisconsin Budget Project, which is an initiative of the Wisconsin Council on Children and Families, is a nonpartisan research group focusing on tax and budget policy.
Their report went on to say that the widening chasm between the very highest earners and everyone else poses hardships for Wisconsin’s families, businesses, and communities. Families can’t thrive when income growth is nearly non-existent for everyone except those at the top, and businesses need a strong middle class bolstered by broad-based income growth to generate customers. Wisconsin communities pay the price if too many families and businesses fail to prosper.
Growing income inequality is also bad for Wisconsin’s economic growth. To build a solid, fast-growing economy, the report says that we need to make sure that Wisconsin has a healthy, well-educated workforce. But if nearly all the gains from economic growth benefit only a few, many Wisconsin residents won’t have the resources they need to become the kind of skilled workers our economy needs for the future.
The report outlines a number of strategies for mitigating the effects of growing income inequality:
• Raising the minimum wage and giving a boost to the lowest-paid workers.
• Building the skills and education of Wisconsin’s workforce by investing in technical colleges and improving the connections between training and employment.
• Ensuring that workers have access to affordable health care.
• Supporting working families. Paid family leave and sick time will help more Wisconsin residents succeed in the workforce, as will a strong child care system and improvements to tax credits for working families.
• Making state taxes more equal across income groups. People with high incomes should pay at least as much taxes relative to income as people with lower incomes do.
• Easing driving suspensions that create barriers to work for people who are unable to pay state or local fines.