Growth masks growing inequality

Michael Jacob

Wisconsin could lose its standing as one of the most economically equal states in the nation, according to the Center on Wisconsin Strategy.

The analysis, based on a report released April 23 by the Economic Policy Institute and the Center on Budget and Policy Priorities, notes that despite Wisconsin’s strong economic growth and tight labor markets in the late 1990s, income disparity is greater than it was two decades ago.

During the decade of the 1990s, inequality grew rapidly in the state. The income of Wisconsin’s poorest families grew only two percent while the income of the state’s highest income families grew 30 percent. Wisconsin’s recent growth in inequality far outstrips the national trend.

The COWS analysis says the data make clear that the gap between the rich and the poor has grown more rapidly in Wisconsin than in the nation as a whole. Economic growth and prosperity are not being equally shared; in fact, rewards of prosperity in the 1990s were heavily concentrated on the richest 20 percent of families.

While the data available leaves out the current recession, it is very unlikely that the downturn will turn around the trend towards increasing inequality.

“These figures should really shake us up,” says COWS director Joel Rogers. “What’s in question now are not just individual differences in income, but a way of life in this state. Wisconsin historically has done great things because we felt we were ‘all in it together.’ When that feeling goes, so goes greatness.”

“The divide between the rich and the poor is growing more rapidly in Wisconsin than in the nation as a whole,” says Anne Arnesen, executive director of the Wisconsin Council on Children and Families, which participated in the analysis. “That is especially disturbing for Wisconsin’s children, as their opportunities and economic circumstances drift farther apart.”

COWS and WCCF offer a number of strategies to prevent a deepening divide between the rich and poor in Wisconsin, such as:

• Raising and indexing the minimum wage.
• Improving access to educational opportunities and training for low-wage parents.
• Modernizing the unemployment insurance system.
• Reviewing the structure of benefits and taxes to reduce the current disincentives for certain parents to seek higher-paying jobs.
• Ensuring that the tax system does not require low-income families to pay a higher percentage of their income for taxes than other Wisconsin families.