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Late Breaking News |
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| Date: July 15, 1998 9:33 am Contact: Keystone Research Center Carol Ramsey - 717-255-7181 |
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Latest News Releases
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Middle and Low-Income Families Being Left Behind in State's Economic Recovery | ||
| HARRISBURG, Pa. - July 15 - The benefits of Pennsylvania's economy are
still flowing only to the Commonwealth's richest families, according to a study released
today by the Keystone Research Center. While it may be old news that working class
families in the state were hard hit from the late 70s to the mid-80s, the study reveals
that the last decade did not treat them much better. The bulk of Pennsylvania's families
have gained little or nothing from the nation's current economic recovery. ``The wealthiest 20% of Pennsylvanians are taking their slice of the Commonwealth's economic pie, and more and more of everyone else's piece too,'' says Howard Wial, the research economist who wrote the study. ``In terms of today's spending power, our poorest families have seen their income fall 9% since 1986 and a staggering 24% since 1979. The richest families have seen their income grow 31% just since 1985. Middle class families have eeked out a 6% raise since 1987. ``The gaps that separate the rich and the rest in Pennsylvania are not as wide as much of the rest of the country as a whole,'' Wial continues. ``But these gaps are growing faster here than they are in all but a handful of other states.'' Had income distribution remained constant since the late 1970s, the state's middle income and poorest families would now receive almost $6,000 more each year than they actually do. Keystone's Executive Director Steve Herzenberg says sustained economic expansion makes this an ideal time for a serious debate about how to achieve growth with equity. ``For too long we've chosen to sweep the problem of inequality under the rug. Governor Ridge and key bipartisan legislators should organize a summit of the leaders of the state -- political, business, labor, religious and academic -- to ensure that we maintain the state's rich tradition of broadly shared prosperity. ``We didn't open these chasms between the haves and the have-nots overnight, and we aren't going to correct them overnight,'' Herzenberg concludes. ``But if our political leaders will acknowledge and confront this problem, we can create a better Pennsylvania for all of us, rich, middle-class and poor.'' Howard Wial is a Research Fellow of the Keystone Research Center. He holds a Ph.D. in economics from the Massachusetts Institute of Technology and a law degree from Yale University. He is co-author of the forthcoming Cornell book New Rules for a New Economy. Wial has published widely in law reviews, industrial relations journals and books on topics such as the structure of the labor market for young men, immigration, job instability, labor and employment law and new forms of labor organizing. The Keystone Research Center (KRC), a non-partisan think-tank based in Harrisburg, conducts research on the Pennsylvania economy and labor markets. This research documents current conditions and seeks to develop innovative policy proposals to improve state economic, labor market and social performance. The following is a first-page excerpt from this report by the Keystone Research Center: Pulling Apart in Pennsylvania: The Incomes of Pennsylvania Families Since the 1970s This briefing paper documents both bright and dark sides to the economic fortunes of Pennsylvania families since the 1970s. The bright side is that Pennsylvania is a relatively prosperous state and the fruits of its prosperity are slightly more equally distributed than in the United States as a whole. The dark side is that, during two decades of rising inequality across the nation, family income inequality has grown more in Pennsylvania than in all but a handful of states. It is by now old news that Pennsylvania's working families were devastated from the late 1970s to the mid-1980s. This briefing paper shows that the period since the middle 1980s has not treated poor and middle-income families much better. Only affluent Pennsylvania families are benefiting substantially form the state's prolonged economic ``recovery.'' It is imperative that state policy focus now on how to create economic growth that benefits all Pennsylvania families. If we don't confront this task with official unemployment below 5 percent and into our seventh year of economic expansion, when will we? This paper proposes that Pennsylvania raise its minimum wage and make its tax system fairer to low- and middle-income families. It also proposes that Governor Ridge organize a summit on rising inequality and that the state legislature establish a permanent Pennsylvania commission on growth with equity. The tables and figures in this paper detail income trends for families with children in Pennsylvania and nationally. The highlights: -- The average income of Pennsylvania families with children exceeds the national average by nearly 8 percent. -- However, the richest 20 percent of Pennsylvania families now earn $37.128 more than in the late 1970s, while middle-income families earn only $2.177 more. The poorest 20 percent of families now earn $3.235 less. -- From the 1970s to the 1980s and from the 1980s to the 1990s, Pennsylvania was one of the ten states in which income inequality grew the most. -- In the late 1970s, Pennsylvania was in the one-third of states with the most equitable family income distributions (whether equity is measured by comparing the income of rich to poor families or the income of rich to middle-income families). By the mid-1990s, Pennsylvania had slipped into the bottom half of states by both measures of family income equity. -- In the Northeast since the late 1970s, family income inequality between the rich and the poor and between the rich and the middle class grew faster in Pennsylvania than in all but two other states (New York and Connecticut). -- If Pennsylvania's family income distribution were as equal today as it was in the late 1970s, middle-income and poor families would each have almost $6,000 more to spend. By contrast, even if all the cash assistance now received by welfare recipients were eliminated and used to lower state income taxes, a family of four would receive less than $300. Despite claims to the contrary, it is not welfare spending but rising inequality that has put the squeeze on working families. The data here report the pre-tax incomes of families with children under 18 years of age. These data cover the years 1978-1980, 1985-1987, and 1994-1996. Family incomes are adjusted for inflation and expressed in 1997 dollars (i.e., the buying power of incomes at 1997 prices). ### |
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