Income inequality is the defining issue of the 2016 election. It fueled Bernie Sanders’ near upset win over Hillary Clinton, and it is fueling Trump’s candidacy. People are working harder and making less. They’re angry.
The American middle class flourished after World War 2 up until the mid-1970s, when a curious thing happened. Whereas between the New Deal and the mid-1970s, workers got a big share of economic growth, after that point, their share steadily shrank until it became negligible. Today, if the economy grows, the average American sees almost none of it. Who gets it? You guessed it–the top 1-5%. The people who are most influential in government policy.
These people don’t like to share. A recent study confirmed their attitude. Doesn’t matter if you’re Republican or Democrat, if you’re rich, you likely just don’t care that other people work hard but are barely making it.
Economists don’t know why this happened, but Stan Sorscher of the Economic Opportunity Institute has an idea. Check it out here. His answer is economic policies that favor Capital over Labor, enacted by governments influenced disproportionately heavily by America’s investor class.
The Economic Policy Institute chimes in on the issue here. They call for economic policies that not only encourage economic growth but reconnect that growth with gains in worker pay.