“Inequality of earnings in the U.S. rose to a postwar high even as transfers of wealth, such as unemployment benefits, reached a record in 2010, according to the Federal Reserve Bank of Minneapolis.
“The bottom 20 percent of the U.S. population has never done so poorly, relative to the median, during the whole postwar period,” Fabrizio Perri and Joe Steinberg wrote in a paper released Tuesday by the Minneapolis Fed. “Low-earning households have become, during the course of the Great Recession, more vulnerable due to large losses in wealth.”
President Barack Obama has made inequality a rallying point for his re-election campaign, calling for legislation to raise taxes on millionaires after Congress extended a temporary payroll tax-cut for workers.
“My message to Congress is, don’t stop here. Keep going,” Obama said Tuesday of the payroll-tax cut at an event meant to highlight U.S. workers who will benefit.
The Senate and the House of Representatives cleared the $145 billion payroll package on Feb. 17, and the White House said Obama plans to sign it into law this week.
Money earned by the bottom 20 percent of U.S. households fell by about 30 percent compared with the median during the recession as workers lost their jobs or decided to leave the labor market, according the Minneapolis Fed study.
After Paying Taxes
Households that were in the bottom 20 percent of earnings in both 2006 and 2008 experienced a $159 decrease in disposable income, or money available after paying income taxes, said the Minneapolis Fed’s Perri, a consultant, and Steinberg, a research analyst. Those that moved into the bottom quintile from a higher-earning category had $12,236 less to spend in 2008 than in 2006, the study found….”
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