Over the past 30 years, the experience of those at the top of the economic ladder has diverged dramatically from those of everyone else, as income inequality has surged in North Carolina and across the nation. In newly released data on income inequality from the Economic Policy Institute, lopsided income growth characterizes every state in the nation between 1979 and 2007. And North Carolina is no exception. In the Tarheel State, the top 1 percent saw their incomes grow by 98.4 percent while the bottom 99 percent saw just 9.2 percent income growth over the same period.
Even more troubling, North Carolina is one of only 17 other states that have seen the top 1 percent grow their incomes since the Great recession ended at the same time as the bottom 99 percent experienced incomes decline.
This highly lopsided growth stands in sharp contrast to the experience of the American economy in the decades following World War II, when New Deal policies helped promote rising minimum wages, low levels of unemployment, widespread collective bargaining in the private sector and progressive taxation to fund critical investments in infrastructure and education.
There is growing evidence that many of the factors that strengthen economic growth are inhibited by income inequality. For example, high income inequality is one of five significant factors that reduce economic mobility in a region; greater income inequality serves as a deterrent to entrepreneurial ventures and it can also deter workers from moving careers or finding a better match for their skills, thus resulting in an underutilization of human capital. Beyond growth, however, there are other important reasons to care about inequality. Basic tenets of the American social contract include the ideas that work should pay off, that there should be equality of opportunity, and that upward mobility should be available to all. Growing income inequality threatens the fabric of this social contract and with it the foundations of democracy.
It is time to recognize the important role that public policy can play in holding income inequality in check.