inequality grows

Inequality, a new report from the OECD says, is getting worse.

" It was most marked in the United States: prior to the onset of the financial and economic crisis in 2008, the share of the richest 1% in all income reached close to 20%. However, it was also large in a number of other English-speaking countries (Australia, Canada, Ireland and the United Kingdom)."

In the UK where the average income of the richest 10% of earners in the UK was almost twelve times that of the bottom 10% of the population by 2008, up from eight times in 1985. The share of the top 1% of income earners increased from 7.1% in 1970 to 14.3% in 2005. Just prior to the global recession, the OECD says the very top of British society – the 0.1% of highest earners – accounted for a remarkable 5% of total pre-tax income, a level of wealth hoarding not seen since the second world war.

The annual average income in the UK of the top 10% in 2008 was just under £55,000, about 12 times higher than that of the bottom 10%, who had an average income of £4,700.

All countries are unequal, but some are more unequal than others. The report makes clear that even in countries viewed as "fairer" – such as Germany, Denmark and Sweden – this pay gap between rich and poor is expanding.

Working women have been the main driver of the rise in living standards and less determined by a growth in wages in the UK over the last 40 years for low- and middle-income families, a comprehensive study has shown. Between 1968 and the financial year of 2008-09, over a quarter of all growth in household wealth from such households came from women working.

Gavin Kelly, Chief Executive of the Resolution Foundation said: "But given female employment has now flat-lined – and with cuts to tax credits and less support for childcare – it's not obvious how families are going to raise their incomes in the future."
Almost two-thirds of people in Britain believe the current generation of children will have a lower standard of living than their parents. In America, where there has been a steady erosion for three decades in the real incomes of low-to-middle earners, this economic reality has already destroyed much of the optimism of the current generation about the prospects for the next one where 44% thought young people were likely to enjoy a better life than their parents.

Using four surveys administered between August 2009 and August 2011, the John J. Heldrich Center for Workforce Development at Rutgers University determined that only 7% of those who became unemployed during the first 12 months of the financial crisis have gotten new jobs that pay them the same amount, (or more), than their previous positions. The large majority say they have diminished lifestyles, and about 36% have experienced severe reductions in income. These latter Americans fear their situation will be permanent. Those aged 45-59 were the most likely to consider themselves “devastated.” A majority of all who lost their jobs, even those who are “recovering,” experienced strain in their family relations. Of those whose lifestyles were downsized or devastated, a majority felt ashamed or embarrassed, borrowed money from family or friends, reduced spending on food and sold possessions to make ends meet.