Study: Gap in income growing

PORTLAND – The disparity between rich and poor is growing in America and in Maine as the federal minimum wage has remained flat for years, union membership has declined and industries have faced global competition, according to a new study.

The report, released Thursday by the Center on Budget and Policy Priorities and the Economic Policy Institute, both liberal-leaning think tanks, found the incomes of the poorest 20 percent of families nationally grew by an average of $2,660, or 19 percent, over the past 20 years.

Meanwhile, the incomes of the richest fifth of families grew by $45,100, or nearly 59 percent, the study by the Washington-based groups said. Families in the middle fifth saw their incomes rise 28 percent, or $10,218.

In Maine, the average income for the poorest 20 percent of families grew about 13 percent in the past two decades, to $15,975, the report said. At the same time, the average income for the richest 20 percent of families rose 58 percent, to $103,785.

The widening gap was no surprise to Edward Gorham, president of the Maine AFL-CIO, an organization of labor unions.

“We’ve known for a long time that the gap was widening,” said Gorham. “The rich are getting richer, the poor are getting poorer and the middle class is shrinking.”

The report was based on U.S. Census data and compared the average income growth from 1980-82 to 2001-03, after adjusting for inflation.

The poorest one-fifth of families nationwide had an average income of $16,780 in 2000-03, while the top fifth of families had an average income of $122,150 – more than seven times as much, the report said. Middle-income families’ average income was $46,875.

Trudi Renwick, an economist with the union-backed Fiscal Policy Institute in New York, said globalization, the decline of manufacturing jobs, the expansion of low-wage service jobs, immigration and the weakening of unions have hurt those on the lower end of the economic scale.

In 38 states, the incomes of high-income families grew by a higher percentage than those of the lowest-income families; Alaska was the only state in which the reverse was true. The 11 states where the high and low incomes increased at about the same rate were mostly in the West and Midwest.

The greatest disparity between rich and poor was in New York, where the top 20 percent of wage earners had average incomes 8.1 times larger than the poorest 20 percent in the early 2000s. Wyoming had the smallest disparity at a 5.2 to 1 ratio.

In Maine, the average income of the top 20 percent was 6.5 times that of the bottom 20 percent. That’s up from a ratio of 4.7 in the early 1980s, the report said.

To help close the gap, the report’s authors say it’s critical to increase the minimum wage and shore up other policies that help U.S. workers improve their lot. Maine has a minimum wage of $6.50 per hour, compared with the $5.15 federal minimum wage.

The report also recommends adjusting tax policy to help low-income families and increasing spending on higher education and job training.