Incomes of the country’s wealthiest families have climbed substantially over the past three decades, while middle- and lower-income families have seen only modest increases.  When you account for the longer hours middle and lower-income families put in now as compared to then, (largely as a result of more women working), that increase disappears.  This trend is in marked contrast to the broadly shared growth in prosperity between World War II and the 1970s.  The income stagnation of recent decades also does not support the idea that rising productivity leads to higher incomes as there has been a substantial increase in productivity over this same period.

On a state level, the gap between the highest-income families and poor and middle-income families grew significantly between the early 1980s and the early 2000s, according to an analysis of Census data. (1)  Looking closer at King County, we find that in 2006 the richest 20 percent of King County residents received nearly half of total income for that year, while the poorest 20 percent of the population received only 3.5 percent.  

Compared with most of the country, our region has seen some of the biggest income gains, largely concentrated at the top end of the pay scale.  As evidence, a recent study found that much of the increase in income inequality in the 1990s in the U.S. resulted from large income changes in just a handful of locations around the country - New York, three areas in California (Santa Clara, San Mateo and San Francisco) and right here in King County. (2) 

Our understanding is that growing inequality is a complex situation with many, interconnected pieces.  At the end of the day, upper-income families have access to a structure of opportunity for further gain that is less available to middle and lower-income families.  To wit: housing affordability by location often determines school quality.  Education levels, the availability and competition for high-wage jobs, unionization and voter participation, all play major roles in growing income inequality here in Central Puget Sound.

According to a 2007 study, as few as 1 in 5 job openings in the Northwest offer a wage that could support a working family, while another study found that of the top 25 jobs with the highest number of vacancies in King County, 73% paid a median wage of $10 per hour or less. (3) While there may be many jobs that pay good wages, these often require higher levels of skills and training (e.g., computer software engineers, registered nurses).  The good news is that a little education can go a long way.  A recent state-wide study for Washington found that just 1-12 months of training can translate into an increase of about $14,000 in earnings annually.

On the political front, increases in both voter participation and union membership have positive effects on increasing equity.  Upper-income Americans participate in the electoral process at much higher levels than middle- and low-income Americans.  Inevitably, this leads to policies that favor those in higher income brackets.  Union membership boosts both union and non-union wages. 

Income inequality all too often means unequal treatment as well – in the workplace, getting a job, or obtaining a loan – which, in turn, affects how income gaps develop and persist.  A recent survey found that people in households in King County that earn less than $15,000 per year were significantly more likely to experience discrimination (64%) than those who earn $50,000 or more (19%).  

These disparities also have tangible consequences. As wages and buying power stagnate at the lower income levels under growing income inequality, more and more people are plunged into poverty or near poverty.  People struggle to cover their basic needs, such as food. Poor neighborhoods are subject to conditions that lead to poor health, underemployment, poor education, loss of opportunity and an unsafe living environment. Incarceration and teen births rates increase, making life even more precarious. 

Income inequality also holds real consequences for the middle class. Growing inequality means that the desirable school districts are growing fewer in number and more expensive to live in.  Middle class folks concerned to send their children to the best schools take on mortgages they can’t afford.   The rise in personal debt mainly reflects increased spending on housing, driven by the competition to get into good school districts.