The one thing pretty much all of us agree on is the importance of equal opportunity. Opinion is divided about the significance of rising income inequality per se. Some see it as a problem in and of itself. But for others, a growing economic divide, so long as it is meritocratic, is a healthy characteristic of a growing, entrepreneurial society.
Nowadays, though, no one is in favor of a caste-based society. Income inequality is one thing, but a permanent division into the haves and have-nots is an entirely different thing – and much less acceptable.
That is why new economic research, released at a conference this week at the Brookings Institution in Washington, is so important. The comprehensive study is by five economists, including two who work at the Federal Reserve Board, Vasia Panousi and Ivan Vidangos, and one, Shanthi Ramnath, of the U.S. Treasury Department. It draws on a powerful new data set: a one-in-5,000, random and confidential sample of the population of U.S. taxpayers.
Its conclusions are sobering: Rising inequality in the United States is “permanent.” It isn’t the function of a bad year, a temporary economic downturn, or personal decisions to move to new jobs or new places, with consequent dips in income. Instead, rising income inequality is the statistical reflection of an increasingly calcified society – the rich are staying rich, and the poor are staying poor, even as the gap between them grows.
This result is the most stark when it comes to male earnings. The “entire increase” in the inequality in male wages over the period the paper investigates, 1987 to 2009, was “permanent.”