Growing Income Gap

The Eroding Base

Pew Research published a report about the shrinking middle class. I remember learning that the strength of this country was it's robust middle class. According to Pew the middle class has been eroding steadily for the past four decades.

Looking at the chart below reveals growth of the wealthy ranks and the poorer ranks. The result is an increasing income disparity.

Why does this matter?

According to a report from the Organization for Economic Co-operation and Development, there is a reduction in economic growth as wealth becomes concentrated among a smaller portion of the global population.

The International Monetary Fund released a report in June, 2015 that outlined the problems created by the rising inequality in income distribution.

• Inequality affects growth drivers.
• Inequality dampens investment, and hence growth, by fueling economic, financial, and political instability. 

           Financial crises.
           Global imbalances.
           Conflicts.

• Inequality can lead to policies that hurt growth. 
• Inequality hampers poverty reduction. 

You can read more at Causes and Consequences of Income Inequality:A Global Perspective

The prospect of increasing crisis, global imbalances and conflicts does not seem to be a bright prospect. If you take the downturn of the middle class and combine it with the growing ranks of impoverished, you can see the consequences of the continued accumulation of wealth among the top one percent and what it means for the rest of us.